Income Tax Appellate Tribunal – Ahmedabad
Shri Pranav Jayantibhai Panchal, … vs The Dy.Cit.,Cent.Circle-1,, … on 22 November, 2021 आयकर अपीलीय अिधकरण, अहमदाबाद ायपीठ “ए” अहमदाबाद।
IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH, AHMEDABAD
(through web-based video conferencing platform)
]
]
BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT
AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER
IT(SS)A Nos. 265 & 266/Ahd/2019
Assessment Years : 2012-13 & 2013-14
Pranav Jayantibhai Panchal, Dy. Commissioner of
17, Kunj Society, Alkapuri, Vs Income-Tax,
Vadodara-390007 Central Circle-1,
PAN : ADXPP 0629 C Vadodara
IT(SS)A Nos. 268 & 269/Ahd/2019
Assessment Years : 2012-13 & 2013-14
Jayantilal Dlsukhbhai Panchal, Dy. Commissioner of
17, Kunj Society, Alkapuri, Vs Income-Tax,
Vadodara-390007 Central Circle-1,
PAN : ADXPP 0631 J Vadodara
अपीलाथ /
अपीलाथ (Appellant) त्यथ /
यथ (Respondent)
Assessee by : Shri S.N. Soparkar, Sr. Advocate
Shri Parin Shah, AR
Shri Mukund Bakshi, AR
Revenue by : Shri Virendra Oza, CIT-DR
सुनवाई क तारीख/ Date of Hearing : 12/10/2021
घोषणा क तारीख / Date of Pronouncement: 22/11/2021
आदेश/O R D E R
PER RAJPAL YADAV, VICE PRESIDENT :
The appellants are father and son. Their appeals for Assessment
Years 2012-13 and 2013-14 were decided by the learned Commissioner of
Income-Tax (Appeals)-12, Ahmedabad [“CIT(A)” in short] by separate
orders passed in the case of each assessee on 14th March 2019. Hence, by
way of the present four appeals, they are impugning the two orders of the
learned CIT(A) passed on their respective appeals for Assessment Years
2012-13 and 2013-14.
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
2
2. The facts on all vital points are common in all these appeals;
therefore, for the facility of reference, we are taking up the facts mainly from
IT(SS)A No. 268/Ahd/2019 in the case of Shri Jayantilal Dalsukhbhai
Panchal. The grounds of appeal taken by both the assessees are descriptive
and argumentative in nature. In brief, they have raised two fold of
grievances. Under the first fold of grievance, the assessee have challenged
the validity of assessment order passed under Section 153A of the Income-
Tax Act, 1961 (“the Act” in short) in their cases for both the assessment
years. Under the second fold of grievance, they have challenged the
addition made on account of alleged allegation of payment of “on-money”
for purchase of land.
3. The learned Counsel for the assessee, at the outset, argued only the
first fold of contention, i.e. validity of assessment order passed under
Section 153A of the Act. We have heard these appeals on 12th October 2021
and passed an interim order whereby we took cognizance of the
submissions made by the learned Counsel for the assessee and the stand of
the Revenue. The order dated 12th October 2021 reads as under:-
“The present four appeals are directed at the instance of two assessees, i.e.
father and son namely Jayantibhai Dalsukhbhai Panchal & Pranav Jayantibhai
Panchal for Assessment Years 2012-13 and 2013-14.
2. The learned Counsel for the assessee submitted that learned CIT(A) has
decided the appeals of both the assessees by separate orders on 14.03.2019 for
Assessment years 2012-13 and 2013-14. The assessees have taken eight
grounds of appeal. They have contended that the learned CIT(A) has erred in
confirming the action of the Assessing Officer of making addition to the
returned income under Section 153A of the Income-tax Act despite the fact
that no incriminating material was found during the course of search. The
learned Counsel for the assessee, while impugning the orders of the Revenue
Authorities, contended that there was a survey in the case of Rashmikant
Bhatt Group on 09.01.2013 and certain incriminating materials related to the
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
3
assessees alleged to have been found and impounded. Subsequently, a search
was conducted upon the assessees on 13.11.2014. On the basis of alleged
incriminating material found at the premises of third person namely
Rashmikant Bhatt Group on 09.01.2013, a notice under Section 148 was
issued for reopening of the assessments in the cases of both the assessees for
Assessment Years 2012-13 and 2013-14. However, somehow, the proceedings
were not culminated to logical end and, in between, notice under Section
153A of the Act was issued on 16.09.2015. He further submitted that on the
returns filed by the assessees under Section 139(1), a notice under Section
143(2) of the Act could be issued for scrutinizing those returns by 30.09.2013
in AY 2012-13 and 30.09.2014 in AY 2013-14. No notice under Section
143(2) was issued in these years. The first notice has been issued under
Section 148 which is dated 27.04.2015. Therefore, on the date of search, no
assessment proceedings or re-assessment proceedings were pending in these
assessment years qua the assessees. The assessments are to be treated as
completed assessments. The proceedings will not abate; hence, addition under
Section 153A of the Act could only be made if some incriminating material
was found during the course of search. This aspect was argued elaborately
before the learned First Appellate Authority and the learned First Appellate
Authority took cognizance of all these facts in the submissions as well as in the
decision. But, ignoring the fact of service of notice under Section 148 on
27.04.2015, the learned First Appellate Authority has concluded that
reassessment proceedings was pending; therefore, that would abate and
assessments in these two years would be passed as if a regular assessments.
The learned Counsel for the assessee took us through the findings of the
learned CIT(A) in paragraph No.5 to 5.3 which read as under:-
“5. I have perused the assessment orders and the appellant’s
submissions.
5.1 In the facts and circumstances of the case it appears appropriate that
the grounds No. 1 and 2 are taken up together wherein the additions
made to the total income in the impugned assessment u/s 153A have
been challenged on the ground that there was no incriminating material
found during the course of search and that as the AO has relied upon the
documents found during the course of search in the case of other party,
the assessment ought to have been done invoking the provisions of
section 153C.
5.2 In these regards, no doubt that as of now it is the law (as laid down
by various Courts and Tribunals including the jurisdictional High
Court of Gujarat and jurisdictional ITAT Ahmedabad, some of which are
relied upon by the appellant and are mentioned in the submissions) that
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
4
pursuant to a search, additions to the total income for the elapsed
assessment years (the years for which either the assessments/ re-
assessments have been completed or the time limits for issue of notice u/s
143(2) have elapsed) can be made by the AO only on the basis of the
incriminating materials (relevant to such additions made) found during
the course of search. In other words no addition to the total income can
be made in the re-assessment u/s 153A/153C if there are no relevant
incriminating materials. These constraints laid down by the Courts and
the Tribunals, to my mind, are not applicable for the remaining
assessment years other than the elapsed assessment years.
5.3 Now from the assessment orders for A.Y. 2012-13 as well as the
appellant’s submission it is seen that during the survey proceeding
carried out in Samarpan Infrastructure Pvt. Ltd. on 09/01/2013 (as part
of search in Rashmikant Bhatt Group of cases on 09/01/2013) some
incriminating materials related to the appellant was found and
impounded. Based on these impounded material the case of the appellant
was reopened u/s 147 for the A.Y. 2012-13 and A.Y. 2013-14 by the then
AO, the DCIT, CC-2, Baroda after duly recording the reasons thereof.
While the assessment u/s 147 was still pending a search u/s 132 was
carried out in the Narayan Realty Group of cases on 13/11/2014 wherein
the appellant was also covered. Pursuant to this, search notice u/s 153A
was issued for various years including A.Y. 2012-13. As the assessment
for the A.Y, 2012-13 was pending, the proceeding abated. There should
not be any dispute by the appellant that the assessment proceedings for
A.Y. 2012-13 have not abated u/s 153A and therefore the additions to be
made are not required to be restricted to the incriminating material
found during the course of search in Narayan Realty Group. The
assessment and additions made for the A.Y. 2012-13 are not hit (against
the Revenue) by the case laws relied upon by the appellant in this regard.
Because of the search in the Narayan Realty Group of case wherein the
appellant himself was searched, the pending assessment proceedings u/s
147 (initiated on account of incriminating material found during the
course of survey of Samarpan Infrastructure Pvt. Ltd, on 09/01/2013)
get merged {in other words abates) with the later assessment proceedings
initiated u/s 153A (on account of search conducted in the case of
appellant himself). In view of these undisputed facts, I see no
justification in the grounds of the appellant disputing the additions made
by the AO based on the incriminating material found during the course
of earlier survey. The appellant is not at all protected by -the case laws
relied upon by him. The appellant is not at all justified in raising the
bogey that the AO has erred in making additions to the return income for
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
5
the A.Y. 2012-13. The related grounds taken by the appellant are
dismissed.”
3. He pointed out that, in paragraph No.5.2, the learned First Appellate
Authority has rightly construed and highlighted the position of law on the
points raised by the assessee; but somehow failed to apply this position of law
on the facts of the present appeals.
4. At this stage, learned CIT-DR submitted that the Revenue be given an
opportunity to verify as to whether the notice issued under Section 148 dated
27.04.2015 is the only notice or prior to that, i.e. even prior to the date of
search i.e. 13.11.2014, any notice under Section 148 was issued and served
upon the assessee. The learned Counsel for the assessee emphasised that copy
of the notice has been placed in the paper-book and this specific issue was
brought to the notice of the learned CIT(A) and the learned CIT(A) failed to
reject the submissions of the assessee by a categorical finding of fact.
However, considering all these aspects, we have concluded the hearing; but,
before pronouncing the decision on the above arguments, we further provide a
period of 10 days to the learned CIT-DR to verify as to whether any notice
under Section 148 of the Act was issued prior to the date of search. If it was
issued, then copy of the same be supplied to the Bench Clerk on or before 25th
October 2021. If issuance of some notice and its service upon the assessee will
be brought to our notice, then we will re-fix the appeal for hearing on merits;
otherwise, we will adjudicate on the preliminary issue. With the above
observations, we reserve the judgement. Copy of this order-sheet be supplied
to both the parties.
4. We gave time to the learned CIT-DR upto 25th October 2021, but till
today, i.e. on 17th November 2021, no material has been filed by the
Revenue. Therefore, we proceed to pass the final order.
5. The brief facts of the case are that the assessee, Shri Jayantilal
Dalsukhbhai Panchal, had filed his return of income under Section 139(1) of
the Income-Tax Act on 27.09.2012 declaring total income at Rs.2,31,79,910/-
for Assessment Year 2012-13. Similarly, for Assessment Year 2013-14, he
filed such return on 05.08.2013 declaring total income of Rs.1,86,12,350/-.
His son Shri Pranav Jayantibhai Panchal did not file any return under
Section 139(1) of the Act for Assessment Year 2012-13; however, for
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
6
Assessment Year 2013-14, he has filed his return of income under Section
139(1) of the Act on 31.10.2013 declaring total income of Rs.1,95,35,690/-.
All these returns were processed under Section 143(1) of the Income-Tax
Act. It emerges out from the assessment order that a search and survey
under Section 132/133A of the Income-Tax Act was carried out in the case
of Rashmikant Bhatt Group of cases on 09.01.2013. According to the
Assessing Officer, some incriminating materials related to the assessee were
found and impounded during the course of survey proceedings carried out
at Samarpan Infrastructure Pvt. Ltd. Therefore, based on the impounded
material, the case of both the assessees were reopened under Section 147 of
the Act for both the assessment years. Subsequently, a search under Section
132 of the Income-Tax Act was carried out in the Narayan Reality Group of
cases, including the case of the assessees, on 13.11.2014. Consequently, the
cases of both the assessees were centralized and proceedings under Section
147 of the Act were dropped and proceedings under Section 153A of the Act
were initiated. Ultimately, the assessment orders were passed under
Section 153A r.w.s. 143(3) of the Act on 22.12.2016 in the cases of both the
assessees. The additions have been made on account of unexplained on-
money paid by them for purchase of land at Block No.81-85 and 87, Village
Kotali, Waghodia, admeasuring 49547 sq. mtrs. This on-money has been
worked out on the basis of loose papers impounded from Samarpan
Infrastructure Pvt. Ltd. as Annexure-BF16. The learned Assessing Officer
has made reference to various pages of these seized material and tabulated
them on page Nos. 3 & 4 of the assessment order. Before the learned First
Appellate Authority, it was contended by both the assessees that the time
limit to issue notice under Section 143(2) of the Act in both these years was
over before the search was carried out upon both the assessees. It was also
contended that the notice issued under Section 148 of the Act is dated
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
7
27.04.2015 which is subsequent to the search carried out at the premises of
the assessees on 13.11.2014. Therefore, on the date of search, no assessment
proceedings were pending which could be abated. The assessments under
Section 153A of the Act in the years, where the assessments already stand
completed can only be tinkered with if some incriminating materials were
found during the course of search. The learned First Appellate Authority
has taken into cognizance this argument, but somehow did not record any
finding on this aspect; rather recorded the finding that since the
reassessment proceedings were pending before the issuance of notice under
Section 153A of the Act, that proceedings would abate and the assessments
have been rightly passed under Section 153A of the Act. We have taken
cognizance of these findings in our interim order extracted supra.
6. The contentions of the learned Counsel for the assessee have been
noticed by us in paragraph No.2 of the interim order dated 12.10.2021. At
the cost of repetition, we would observe that his main contention is that the
time limit to issue notice in both these years under Section 143(2) of the
Income-Tax Act for scrutinizing the returns was 30.09.2013 in Assessment
Year 2012-13 and 30.09.2014 in Assessment Year 2013-14, but no notice was
issued in these years. The first notice was issued under Section 148 of the
Act which is dated 27.04.2015. This notice is after the search which was
conducted upon the assessee on 13.11.2014. Thus, according to the learned
Counsel for the assessee, the additions in the hands of both the assessees
could be made if any incriminating documents exhibiting the fact of
payment of on-money were found during the search at the premises of the
assessee. The learned Assessing Officer has been harboring upon the
information/loose papers collected from the third person which cannot be
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
8
used against both the assessees. The learned Counsel for the assessee relied
upon the following decisions:-
1. PCIT Vs. Saumya Construction (P.) Ltd., [2016] 387 ITR 529 (Guj.),
2. Pepsico India Holdings (P.) Ltd Vs. ACIT, [2015] 370 ITR 295 (Delhi),
3. Hon’ble Gujarat High Court judgment in the case of PCIT vs.
Chartered Speed Pvt Ltd, in Tax Appeal Nos. 126 & 127 of 2015,
4. Krishna Textiles Vs. CIT, [2009] 310 ITR 227 (Guj.)
5. Tribunal decision in the case of Hitesh Ashok Vaswani & others Vs.
DCIT in IT(SS) Nos. 118 to 123/Ahd/2019, decided on 12.11.2020.
7. On the other hand, learned CIT-DR was unable to controvert the
contentions raised by the learned Counsel for the assessee. He requested
that the Department be given time to find out as to whether any other
notice, except the notice dated 27.04.2015, was issued under Section 148 of
the Act or not. In other words, he wanted to verify as to whether any
reassessment notice was issued prior to the date of search. We have
noticed this fact categorically in paragraph No.4 of the interim order
extracted supra. In spite of sufficient time provided by us, nothing has been
placed on record by the Revenue.
8. One of the decisions relied upon by the learned Counsel for the
assessee is the case of Hitesh Ashok Vaswani (supra). It has been authored
by the “JM/VP” and by this very Bench. In this judgment, we have
discussed the scope of Section 153A of the Act on the strength of judgment
of Hon’ble Delhi High Court in the case of CIT Vs. Kabul Chawla, 380 ITR
573 (Del) as well as on the strength of the judgment of Hon’ble jurisdictional
High Court in the case of Pr. CIT vs. Saumya Construction, 387 ITR 529
(Guj.). We have also taken note of the decision of Hon’ble ITAT Delhi
Bench in the case of DCIT Vs. Smt. Shivali Mahajan and others, rendered in
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
9
ITA No. 5585/Del/2015 wherein the ITAT Delhi Bench has specifically held
that the material recovered from the premises of third person cannot be
used in the hands of searched persons. For that purpose, an assessment
under Section 153C or 147 of the Act is to be made. In order to appreciate
this aspect, we would like to take note of the findings recorded by us in the
case of Shri Hitesh Ashok Vasvani & Others in IT(SS)A Nos. 118 to
123/Ahd/2019, decided on 12.11.2020. The discussion made by us
expounding the scope of Section 153A reads as under:-
“29. We have duly considered rival contentions and gone through the record
carefully. Before adverting to the facts and alleged seized material considered
by the ld.AO for making the addition in the hands of the present three
assessees, we deem it appropriate to bear in mind the position of law
propounded in various authoritative judgments recording scope of section
153A of the Act. We are of the view that in this regard, there were large
numbers of decisions. First we refer to the decision of Hon’ble Delhi High
Court in the case of CIT Vs. Kabul Chawla, 380 ITR 573 (Del). Hon’ble
Delhi High Court after detailed analysis has summarized the following legal
position:
37. On a conspectus of Section 153A(1) of the Act, read with the
provisos thereto, and in the light of the law explained in the
aforementioned decisions, the legal position that emerges is as under:
i. Once a search takes place under Section 132 of the Act, notice under
Section 153 A(1) will have to be mandatorily issued to the person
searched requiring him to file returns for six AYs immediately
preceding the previous year relevant to the AY in which the search
takes place.
ii. Assessments and reassessments pending on the date of the search
shall abate. The total income for such AYs will have to be computed
by the AOs as a fresh exercise.
iii. The AO will exercise normal assessment powers in respect of the six
years previous to the relevant AY in which the search takes place.
The AO has the power to assess and reassess the ‘total income’ of the
aforementioned six years in separate assessment orders for each of the
six years. In other words there will be only one assessment order in
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
10
respect of each of the six AYs “in which both the disclosed and the
undisclosed income would be brought to tax”.
iv. Although Section 153 A does not say that additions should be strictly
made on the basis of evidence found in the course of the search, or
other post-search material or information available with the AO
which can be related to the evidence found, it does not mean that the
assessment “can be arbitrary or made without any relevance or
nexus with the seized material. Obviously an assessment has to be
made under this Section only on the basis of seized material.”
v. In absence of any incriminating material, the completed assessment
can be reiterated and the abated assessment or reassessment can be
made. The word ‘assess’ in Section 153 A is relatable to abated
proceedings (i.e. those pending on the date of search) and the word
‘reassess’ to completed assessment proceedings.
vi. Insofar as pending assessments are concerned, the jurisdiction to
make the original assessment and the assessment under Section
153A merges into one. Only one assessment shall be made separately
for each AY on the basis of the findings of the search and any other
material existing or brought on the record of the AO.
vii. Completed assessments can be interfered with by the AO while
making the assessment under Section 153 A only on the basis of
some incriminating material unearthed during the course of search
or requisition of documents or undisclosed income or property
discovered in the course of search which were not produced or not
already disclosed or made known in the course of original
assessment.”
30. ITAT, Delhi Bench in the case of DIT Vs. Smt. Shivali Mahajan and
others, rendered in ITA No.5585/Del/2015 (copy of the decision placed on
record) has considered this aspect in its decision. Thereafter, the Tribunal has
specifically held that serial no.(iv) of the above proposition, the Hon’ble Delhi
High Court has specifically held that assessment under section 153A of the
Act has to be specifically made on the basis of seized material. ITAT Delhi
Bench was considering an aspect whether the evidence in the shape of books
of accounts, money, bullion, jewellery found during the course of search
relates to other person than the searched person, can that be considered while
making assessment under section 153A of the Act. Like in the present
appeals, simultaneous search was carried out at the premises of the Venus
Infrastructure and Ashok Sunderdas Vaswani, and the material found
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
11
during the search of Venus Infrastructure Developers or Ashok Sunderdas
Vaswani could be used while framing the assessment of Rajesh Sunderdas
Vaswani and Deepak Budharmal Vaswani under section 153A of the Act.
ITAT Delhi Bench has specifically held that material recovered from the
premises of other person cannot be used in the hands of the searched person.
For that purpose an assessment under section 153C or 147 is to be made. At
this stage, in order to fortify ourselves, we would like to make reference to the
following paragraphs of the ITAT Delhi Bench’s order. It reads as under:
“15. Thus, when during the course of search of an assessee any books,
document or money, bullion, jewellery etc. is found which relates to a
person other than the person searched, then the Assessing Officer of the
person searched shall hand over such books of account, documents, or
valuables to the Assessing Officer of such other person and thereafter, the
Assessing Officer of such other person can proceed against such other
person. However, in the case under appeal before us, admittedly, Section
153C is not invoked in the case of the assessee and the assessment is
framed under Section 153A. We, respectfully following the above
decisions of Hon’ble Jurisdictional High Court, hold that during the
course of assessment under Section 153A, the incriminating material, if
any, found during the course of search of the assessee only can be utilized
and not the material found in the search of any other person.”
31. Order of the ITAT Delhi Bench in other cases viz. Asha Rani Lakhotia
vs. ACIT and Subhag Khattar Vs. ACIT are on the same line.
32. Hon’ble Delhi High Court in the case of Subhag Khattar in Tax Appeal
No.60 of 2017 has considered the following question of law:
“Did the Income Tax Appellate Tribunal (ITAT) fall into error in
holding that the additions made under Section 153A read with Section
143(3) of the Income Tax Act, 1961 in the circumstances of the case,
were not justified and supportable in law?”
33. After putting reliance upon its decision in the case of CIT Vs. Kabul
Chawla (supra) has replied this question as under:
“6. The Assessee went in appeal before the Commissioner of Income Tax
(Appeals) who dismissed it by an order dated 27th November, 2014. A
further appeal was filed by the Assessee before the ITAT. The ITAT, inter
alia, found substance in the contention of the Assessee that the
assessment under Section 153(A) of the Act, in the absence of any
incriminating material found during the search on the premises of the
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
12
Assessee was not sustainable in law. Reliance was placed on the decision
of this Court in Commissioner of Income Tax v. Kabul Chawla, [2016]
380 ITR 573.
7. A question was posed to the learned counsel for the Revenue whether
in the present case anything incriminating has been found when the
premises of the Assessee was searched. The answer was in the negative.
The entire case against the Assessee was based on what was found
during the search of the premises of the AEZ Group. It is thus apparent
on the face of it, that the notice to the Assessee under Section 153A of the
Act was misconceived since the so-called incriminating material was not
found during the search of the Assessee’s premises. The Revenue could
have proceeded against the Assessee on the basis of the documents
discovered under any other provision of law, but certainly, not
under Section 153A. This goes to the root of the matter.”
34. Hon’ble Court has specifically observed for the purpose of section
153A that only seized material is required. However, if there is any other
incriminating material belong to the assessee found at the premises of the
some other person, then the assessment has to be made under other
provisions and not under section 153A of the Act. Hon’ble jurisdictional
high Court has also considered the decision of Hon’ble Delhi High Court in
the case of CIT Vs. Kabul Chawla (supra). Hon’ble Gujarat High Court
framed the following question of law in the case of Pr.CIT Vs. Saumya
Construction (supra):
“[A] Whether the order of Tribunal is right in law and on facts in
deleting the addition made in assessment made u/s 153A of the
Act?
[B] Whether the Tribunal is right in law in holding that the addition
should be based on the incriminating material found during the
course of search under new procedure of assessment u/s 153A
which is different from earlier procedure u/s 158BC r.w.s. 158BB of
the Act and by reading into the section, the words ‘the
incriminating material found during the course of search’ which
are not there in section 153A?
[C] Whether the Tribunal erred in relying on the ITAT order in Sanjay
Aggarwal v. DCIT (2014) 47 Taxmann.Com 210 (Del) which has
interpreted undisclosed income unearthed during the search to
imply incriminating material, as against the finding of the Delhi
High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
13
555 wherein it is held that during the assessment u/s 153A
additions need not be restricted or limited to incriminating material
found during the course of search?”
35. Hon’ble Court concurred with the decision of Hon’ble Delhi High Court.
We deem it appropriate to take note of relevant part of the decision, which
reads as under:
“16. Section 153A bears the heading “Assessment in case of search or
requisition”. It is well settled as held by the Supreme Court in a catena of
decisions that the heading of the section can be regarded as a key to the
interpretation of the operative portion of the section and if there is no
ambiguity in the language or if it is plain and clear, then the heading
used in the section strengthens that meaning. From the heading
of section 153, the intention of the legislature is clear viz., to provide for
assessment in case of search and requisition. When the very purpose of
the provision is to make assessment in case of search or requisition, it
goes without saying that the assessment has to have relation to the search
or requisition. In other words, the assessment should be connected with
something found during the search or requisition, viz., incriminating
material which reveals undisclosed income. Thus, while in view of the
mandate of sub-section (1) of section 153A of the Act, in every case
where there is a search or requisition, the Assessing Officer is obliged to
issue notice to such person to furnish returns of income for the six years
preceding the assessment year relevant to the previous year in which the
search is conducted or requisition is made, any addition or disallowance
can be made only on the basis of material collected during the search or
requisition. In case no incriminating material is found, as held by the
Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier
assessment would have to be reiterated. In case where pending
assessments have abated, the Assessing Officer can pass assessment
orders for each of the six years determining the total income of the
assessee which would include income declared in the returns, if any,
furnished by the assessee as well as undisclosed income, if any, unearthed
during the search or requisition. In case where a pending reassessment
under section 147 of the Act has abated, needless to state that the scope
and ambit of the assessment would include any order which the
Assessing Officer could have passed under section 147 of the Act as well
as under section 153A of the Act.
17. In the facts of the present case, a search came to be conducted on
07.10.2009 and the notice was issued to the assessee under section
153A of the Act for assessment year 2006-07 on 04.08.2010. In response
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
14
to the notice, the assessee filed return of income on 18.11.2010. In terms
of section 153B, the assessment was required to be completed within a
period of two years from the end of the financial year in which the search
came to be carried out, namely, on or before 31st March, 2012. Here,
insofar as the impugned addition is concerned, the notice in respect
thereof came to be issued on 19.12.2011 seeking an explanation from the
assessee. The assessee gave its response by reply dated 21.12.2011 calling
upon the Assessing Officer to provide copies of statements recorded on
oath of Shri Rohit P. Modi and Smt. Pareshaben K. Modi during the
search as well as the copies of the documents upon which the department
placed reliance for the purpose of making the proposed addition as well as
the copy of the explanation given by Shri Rohit P. Modi and Smt.
Pareshaben K. Modi regarding the on-money received, copies of the
assessment orders in case of said persons and also requested the
Assessing Officer to permit him to cross-examine the said persons. The
Assessing Officer issued summons to the said persons, however, they
were out of station and it was not known as to when they would return.
In this backdrop, without affording any opportunity to the assessee to
cross-examine the said persons, the Assessing Officer made the addition
in question.
18. In this case, it is not the case of the appellant that any incriminating
material in respect of the assessment year under consideration was found
during the course of search. At the relevant time when the notice came to
be issued under section 153A of the Act, the assessee filed its return of
income. Much later, at the fag end of the period within which the order
under section 153A of the Act was to be made, in other words, when the
limit for framing the assessment as provided under section 153 was
about to expire, the notice has been issued in the present case seeking to
make the proposed addition of Rs.11,05,51,000/- on the basis of the
material which was not found during the course of search, but on the
basis of a statement of another person. In the opinion of this court, in a
case like the present one, where an assessment has been framed earlier
and no assessment or reassessment was pending on the date of initiation
of search under section 132 or making of requisition under section 132A,
while computing the total income of the assessee under section 153A of
the Act, additions or disallowances can be made only on the basis of the
incriminating material found during the search or requisition. In the
present case, it is an admitted position that no incriminating material
was found during the course of search, however, it is on the basis of some
material collected by the Assessing Officer much subsequent to the
search, that the impugned additions came to be made.
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
15
19. On behalf of the appellant, it has been contended that if any
incriminating material is found, notwithstanding that in relation to the
year under consideration, no incriminating material is found, it would
be permissible to make additions and disallowance in respect of all the six
assessment years. In the opinion of this court, the said contention does
not merit acceptance, inasmuch as, the assessment in respect of each of
the six assessment years is a separate and distinct assessment.
Under section 153A of the Act, an assessment has to be made in relation
to the search or requisition, namely, in relation to material disclosed
during the search or requisition. If in relation to any assessment year, no
incriminating material is found, no addition or disallowance can be made
in relation to that assessment year in exercise of powers under section
153A of the Act and the earlier assessment shall have to be reiterated. In
this regard, this court is in complete agreement with the view adopted by
the Rajasthan High Court in the case of Jai Steel (India), Jodhpur
(supra). Besides, as rightly pointed out by the learned counsel for the
respondent, the controversy involved in the present case stands
concluded by the decision of this court in the case of Jayaben Ratilal
Sorathia (supra) wherein it has been held that while it cannot be disputed
that considering section 153A of the Act, the Assessing Officer can
reopen and/or assess the return with respect to six preceding years;
however, there must be some incriminating material available with the
Assessing Officer with respect to the sale transactions in the particular
assessment year.
20. For the foregoing reasons, it is not possible to state that the impugned
order passed by the Tribunal suffers from any legal infirmity so as to
give rise to a question of law, much less, a substantial question of law,
warranting interference. The appeal, therefore, fails and is, accordingly,
dismissed.”
9. It is also pertinent to note that, in the case of Kabul Chawla (supra),
the Hon’ble Delhi High Court in its concluding paragraph has observed
that, on the date of the search, the assessments for assessment years 2002-03,
2005-06 and 2006-07 already stood completed and the returns in these years
were accepted under Section 143(1) of the Act and these acceptance of
returns processed under Section 143(1) of the Act was construed by the
Hon’ble Delhi Court as completion of assessments and this acceptance of
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
16
return, according to the Hon’ble Delhi High Court, could be tinkered with if
some incriminating material was found at the premises of the assessee.
10. The position of law in other decisions referred by the learned Counsel
for the assessee is identical; particularly we have already considered the
judgment of Hon’ble jurisdictional High Court in the case of Saumya
Construction Pvt Ltd (supra). In the light of above, if we examine the fact
from the record, then it would reveal that the Assessing Officer has not
made reference to any seized material which was found from the premises
of the assessee. He only made reference to the documents, i.e. the loose
papers impounded from Samarpan Infrastructure Pvt. Ltd. during the
survey. In paragraph No.5.2 of the assessment order, he tabulated all these
documents. The other material referred by him for buttressing his
contentions is the statement recorded under Section 131 of the vendors of
the land admitting the receipt of on-money. But, these aspects could only
be looked into in a regular assessment while scrutinizing the returns of the
assessee or in re-assessment proceedings and if these things are revealed
during the search on a third person, then by following the procedures as
contemplated under Section 153C of the Act. These aspects cannot be
looked into in an assessment framed under Section 153A of the Income-Tax
Act.
11. The facts in both the assessment years are common; only difference is
that the amount must have been transferred in two assessment years where
the allegation of on-money transactions is spread over two years.
13. In view of the above discussion, we are of the view that no addition is
sustainable in the assessments framed under Section 153A of the Income-Tax
IT(SS)A Nos. 265, 266, 268 & 269/Ahd/2019
Assessee : Jayantilal Panchal & Pranav Panchal
AY : 2012-13 & 2013-14
17
Act, in both assessment years under consideration, in both the hands of the
assessees. Therefore, we allow all these appeals and delete the additions.
14. In the result, the appeals of the assessees in both assessment years are
allowed.
Order pronounced in the Court on 22nd November 2021 at Ahmedabad.
Sd/- Sd/-
(WASEEM AHMED) (RAJPAL YADAV)
ACCOUNTANT MEMBER VICE-PRESIDENT
Ahmedabad, Dated 22/11/2021
*Bt
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबंिधत आयकर आयु / Concerned CIT
4. आयकर आयु (अपील)/ The CIT(A)-
5. िवभागीय ितिनिधअिधकरण अपीलीय आयकर ,/DR,ITAT, Ahmedabad,
6. गाड फाईल /Guard file.
आदेशानुसार/ BY ORDER,
TRUE COPY
सहायक पंजीकार (Asstt. Registrar)
आयकर अपीलीय अिधकरण
ITAT, Ahmedabad
1. Date of dictation- …17.11.2021……
2. Date on which the typed draft is placed before the Dictating Member …18.11.2021…………
Other member ……22.11.2021……………
3. Date on which the approved draft comes to the Sr.P.S./P.S. – ……22.11.2021…………
4. Date on which the fair order is placed before the Dictating Member for Pronouncement
…22.11.2021…
5. Date on which the file goes to the Bench Clerk…….22.11.2021…………
6. Date on which the file goes to the Head Clerk…………………………….
7. The date on which the file goes to the Assistant Registrar for signature on the order…………………
8. Date of Despatch of the Order………………
Comments