×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This appeal is filed by M/s AmbawattaBuildwell P. Ltd. ("the assessee") against the order dated 24.2.2015 in Appeal No. 73/2013-14 passed by the Learned Principal Commissioner of Income Tax [OSD], Gurgaon (hereinafter referred to as the “Ld. CIT”) for the Assessment year 2010-11.
2. Brief facts of the case are that the assessee, namely, M/s AmbawattaBuildwell P. Ltd. (ABPL) is a private limited company and is engaged in the business of real estate. There were search and seizure operations at the residential as well as office premises of Krrish Group on 9.11.2011 and consequently survey action u/s 133A of the Incometax Act, 1961 (“the Act”) was also carried out on 15.11.2011 at the business premises of the assessee company and its director Mr. Vinod Kumar. Notice u/s 153A/153C of the Act was issued on 3.10.2013. Assessee filed a copy of their return which was already filed on 6.10.2010 with a returned income of nil. During the course of assessment, learned AO observed that at the time of search on 9.11.2011, various incriminating papers were found and seized from the office as well as residential premises of the directors of the assessee and various documents were found and seized during the search/survey proceedings on Krrish Group at various premises and also from the premises of the assessee company and such documents were perused. By order dated 26.2.2014 passed u’/s 153A(1)(b) of the Act, learned AO made an addition of Rs.50 lacs and concluded the assessment at the assessed income of the assessee at Rs.50 lacs.
3. Challenging the same, assessee preferred an appeal before the learned CIT(A). By way of impugned order ld. CIT(A) dismissed the appeal and upheld the addition. Hence, the assessee is in this appeal before us stating that the assumption of jurisdiction by the ld. AO to initiate the assessment proceedings u/s 153C read with Section 153A(1)(b) of the Act was bad under law for want of recording mandatory satisfaction as contemplated in Section 153C of the Act. In so far as merits are concerned, the grounds of appeal show that the assessee is also challenging the confirmation of addition of Rs.50 lacs on account of investment made in cash from unexplained sources on the basis of collaboration agreements and receipts seized during the search and seizure operation without bringing the explanation along with the supporting documents that neither the payment in cash nor in cheque was made by the assessee as mentioned in the said seized collaboration agreement and receipts.
4. On the aspect of assumption of jurisdiction by the ld. AO, it is the submission of the ld. AR that in this matter the search was undertaken by the revenue on the Krrish group of cases on 9.11.2011, seized documents belonging to the assessee were received by the Central Circle on 29.8.2013 and satisfaction note was recorded by the ld. AO of the assessee and notice u/s 153C of the Act was issued on 3.10.2013. By drawing our attention to these dates, learned AR submitted that the documents belonging to the assessee were received by the AO of the searched person on 29.8.2013 and, therefore, the satisfaction note recorded on 3.10.2013 by the ld. AO is only in the capacity as the AO of the assessee but not as the AO of the searched person. He consequently submits that the law u/s 153 mandates that the AO of the searched person shall first record his satisfaction that the documents do not belong to the searched person but they belong to the other person, and then the documents could be transmitted to the AO of the other person, who shall proceed to examine the documents and to record satisfaction as to the escapement of income, if any. He, therefore, submits that in order to issue notice u/s 153C there shall be two circumstances, namely, the first satisfaction by the AO of the searched person as to the belongingness of the documents or material and the second satisfaction by the AO of the other person on the aspect of escapement of income.
5. Basing on the provisions u/s 153C and the decision of the Hon’ble jurisdictional High Court in the case of RRJ Securities, 380 ITR 612 (Del); Pepsi Foods, 367 ITR 297; and Adarsh Kumar vs DCIT, ITA No.5095 decided on 15.11.2017 by the Hon’ble jurisdictional High Court in the light of CBDT Circular No.24 of 2015, learned AR submitted that in the absence of any satisfaction recorded by the ld. AO of the searched person saying that the alleged documents do not belong to the searched person but belong to the assessee, assumption of jurisdiction to issue notice u/s 153C of the Act is bad in law. He further submitted that in the case of Ganpati Fincap Services P. Ltd. (2017) 395 ITR 692, the Hon’ble jurisdictional High Court categorically stated that the recording of satisfaction note qua the other person by the AO of the searched person is a sine qua non for triggering the proceedings against the other person u/s 153 of the Act.
6. Per contra, it is the submission of the learned DR that there is no merit in the contention of the assessee in respect of the satisfaction by the AO of the searched person because the AO of the searched person and the other person were the one and the same person. Further argument of the learned DR is that the amendment to Section 124(3) by Finance Act, 2016 by insertion of clause (c) w.e.f. 1.6.2016 prohibits the assessee from raising any jurisdictional issue after the expiry of one month from the date on which he was served with a notice u/s 153A(1) or 153(2) in case of no action taken under consideration u/s 132 or 132A of the Act or after the completion of assessment, whichever is earlier. Further, he placed reliance on the decisions reported in the case of PCIT vs. Sheetal International P. Ltd. (2017-TIOL-1355-HC-DEL-IT) for the proposition that proceedings u/s 153C cannot be invalidated merely