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DATE: February 12, 2021 (Date of pronouncement)
DATE: March 3, 2021 (Date of publication)
AY: -
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CITATION:
S. 153A, 153C search assessments: (i) A statement recorded u/s 132(4) has evidentiary value but cannot justify the additions in the absence of corroborative material. (ii) The statement also cannot, on a standalone basis, constitute 'incriminating material' so as to empower the AO to frame a block assessment u/s 153A (iii) If the statement was recorded in the course of search conducted in the case of a third party, and assuming the statement is construed as 'incriminating material belonging to or pertaining to a person other than person searched', the only legal recourse available to the department is to proceed in terms of S. 153C of the Act by handing over the same to the AO who has jurisdiction over such person. An assessment framed u/s 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act) is not valid. The Assessee also had no opportunity to cross-examine the said witness (All imp judgements referred)

Now, coming to the aspect viz the invocation of section 153A on the basis of the statement recorded in search action against a third person. We may note that the AO has used this statement on oath recorded in the course of search conducted in the case of a third party (i.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure under section 153C has not been followed.

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DATE: March 5, 2020 (Date of pronouncement)
DATE: March 7, 2020 (Date of publication)
AY: 2008-09
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CITATION:
S. 153C: Compliance with the requirements of s. 153C is mandatory. (i) If the AO of the searched person is different from the AO of the other person, the AO of the searched person is required to transmit the satisfaction note & seized documents to the AO of the other person. He is also required to make a note in the file of the searched person that he has done so. However, the same is for administrative convenience and the failure by the AO of the searched person to make a note in the file of the searched person, will not vitiate the proceedings u/s 153C. (ii) If the AO of the searched person and the other person is the same, it is sufficient for the AO to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, the requirement of s. 153C is fulfilled. In such case, there can be one satisfaction note prepared by the AO, as he himself is the AO of the searched person and also the AO of the other person. However, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the AO of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself

This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of the Act in the case of Calcutta Knitwears (2014) 6 SCC 444 as well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd (367) ITR 112 (Delhi). As held, before issuing notice under Section 153C of the Act, the Assessing Officer of the searched person must be “satisfied” that, inter alia, any document seized or requisitioned “belongs to” a person other than the searched person. That thereafter, after recording such satisfaction by the Assessing Officer of the searched person, he may transmit the records/documents/things/papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed 7 to issue a notice for the purpose of completion of the assessment under Section 158BD of the Act and the other provisions of Chapter XIV-B shall apply.

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DATE: February 5, 2020 (Date of pronouncement)
DATE: February 8, 2020 (Date of publication)
AY: 2008-09
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CITATION:
S. 153A: Once the assessment gets abated, the original return filed u/s 139(1) is replaced by the return filed u/s 153A. It is open to both parties, i.e. the assessee and revenue, to make claims for allowance or disallowance. The assessee is entitled to lodge a new claim for deduction etc. which remained to be claimed in his earlier/ regular return of income (Continental Warehousing Corporation 374 ITR 645 (Bom) referred)

In view of the second proviso to Section 153A(1) of the said Act, once assessment gets abated, it is open for the assessee to lodge a new claim in a proceeding under Section 153A(1) which was not claimed in his regular return of income, because assessment was never made/finalised in the case of the assessee in such a situation

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DATE: August 20, 2019 (Date of pronouncement)
DATE: August 24, 2019 (Date of publication)
AY: 2009-10
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CITATION:
S. 153A, 153C Search Assessments: The Act has separate provisions for making assessment in case of material found in the course of search from premises of assessee (s. 153A) as well as material found in course of search at premises of third party (S. 153C). Even if search happens in case of assessee, the AO cannot initiate proceedings u/s 153A if incriminating material is found during search of other person. Proceedings should be initiated u/s 153C and failure to do so renders the addition in the s. 153A assessment void-ab-initio (Vinod Kumar Gupta 165 DTR 409 (Del) distinguished)

In the case of Vinod Kumar Gupta the Hon’ble High Court held that as search and seizure was conducted through one authorization, there was no requirement of issuing separate notice under section 153C of the Act and following separate procedure under section 153C of the Act. But in the instant case, separate search warrant has been issued in the case of the assessee as well in the case of Sh. Ashok Chowdhary and the Assessing Officer has used the material found in the course of search at the premise of Sh. Ashok Chowdhary, which is not permitted in view of the express provision of the law.

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DATE: May 1, 2019 (Date of pronouncement)
DATE: May 11, 2019 (Date of publication)
AY: 2008-09 to 2013-14
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CITATION:
Natural Justice: The assessee cannot be kept in the dark. Adverse statements or materials cannot be kept away from his eyes. If the AO intends to use it to draw adverse inference/finding, the assessee should be provided the adverse material/statements in order to rebut/cross examine the provider/maker of the adverse material. Failure to do so is a serious flaw which renders the assessment a nullity (All imp judgements referred)

It has to be kept in mind that the AO is empowered to collect materials behind the back of the assessee, however if he intends to use it adversely against the assessee, then it is incumbent upon him to furnish a copy of the materials/statements to the assessee and the assessee should be provided an opportunity to rebut/cross examine the provider/maker of the adverse material. The assessee cannot be kept in the dark and the adverse statements or materials cannot be kept away from his eyes, and if the AO was intending to use it against the assessee to draw adverse inference/finding, then the assessee should be provided the adverse material/statements in order to rebut/cross examine the provider/maker of the adverse material, which is a natural right of the assessee and we find that it has not been done in this case, resulting in violation of natural justice. We are therefore of the considered view that the general statements recorded from the alleged entry operators by themselves with the legal infirmities pointed out, supra, did not constitute incriminating material for the purposes of Section 153A of the Act

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DATE: June 6, 2018 (Date of pronouncement)
DATE: June 7, 2018 (Date of publication)
AY: 2010-11
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CITATION:
Applicability of s. 80 to s. 153A returns: A return filed u/s 153A is deemed to be a return filed u/s 139(1). Accordingly, the restrictive provisions of s. 80 do not apply. The return u/s 153A, once accepted and assessed, replaces the original return filed u/s 139. Therefore, the assessee is eligible for carry forward business loss

Therefore, if the assessee has filed a loss return u/s. 139(3) within the period provided under the Act and if the assessee has filed a revised loss return under Sub- section (5) thereof again within the prescribed time limit, the A.O is bound to take cognizance of the revised return because the original return is replaced by the revised return, held the Tribunal. In the present case before us, undisputedly, the assessment u/s. 153A r.w.s. 143(3) of the Act has been framed on the basis of return filed in response to notice issue u/s. 153A of the Act. Hence, now it is not open to raise contention by the revenue that return was filed beyond the prescribed time period mentioned in the notice issued u/s. 153A of the Act. The return of income filed in response to the notice u/s. 153A on the basis of which assessment in question has been framed thus has replaced the original return for determining the net income in the assessment u/s. 153A of the Act. Thus, in a sense, return filed in response to the notice issued u/s. 153A was a revised return and the assessment was re- assessment

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DATE: October 3, 2017 (Date of pronouncement)
DATE: October 7, 2017 (Date of publication)
AY: -
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CITATION:
S. 153A search assessment: Supreme Court stays operation of the judgement of the Delhi High Court in Dayawanti Gupta vs. CIT 390 ITR 496 (Del). The High Court dealt with the issue whether an assessment u/s 153A can be made even if no incriminating material has been found during s. 132 search proceedings

In Dayawanti Gupta vs. CIT 390 ITR 496 (Del), the assessee argued before the Delhi High Court that since no incriminating material was found during or pursuant to the search, additions, made on the basis of block assessment, were unsustainable inasmuch as they revisited finally settled assessments. It was submitted that for completing a block assessment, founded on search proceedings and notice under Section 153A, the assessing officer has to base the order on fresh materials found during the search, in the form of books of accounts, articles seized, or other similar materials. In this case, the revenue could not substantiate its plea that the assesses had concealed their income, because nothing suspect which could result in an addition to the income assessed during the previous years was in fact seized or taken into custody. Therefore, the four assessments for the block period in question had to be set aside

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DATE: September 11, 2017 (Date of pronouncement)
DATE: September 15, 2017 (Date of publication)
AY: 2002-03
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CITATION:
S. 153A: Argument of the Dept that the law laid down in Continental
Warehousing/ All Cargo Global Logistics 374 ITR 645 (Bom) that assessment u/s 153A can be made only on the basis of incriminating material found in the search and no other issue can be taken is per incuriam in view of Rajesh Jhaveri Stock Brokers 291 ITR 500 (SC) is not correct. Bhola Shankar Cold Storage 270 ITR 487 (Cal) distinguished

The argument of Mr. Ahuja is that the view taken by the Tribunal based on its Special Bench decision in the case of All Cargo Global Logistics Ltd. v. Deputy Commissioner of Incometax, Central Circle44, [2012] 23 Taxman.Com 103 (Mum.) (SB) cannot be said to be correct. Mr. Ahuja’s argument is that though the assessee is heavily relying upon a Division Bench judgment of this Court in the case of Commissioner of IncomeTax v. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. and (2) All Cargo Global Logistics Ltd. Reported in [2015] 374 ITR 645 (Bom), still, the questions proposed by the Revenue in these Appeals ought to be entertained. These are substantial questions of law and the Division Bench judgment in Continental Warehousing Corporation and All Cargo Global Logistics (supra) is rendered in ignorance of a judgment of the Hon’ble Supreme Court reported in [2007] 291 ITR 500 (SC) (Assistant Commissioner of IncomeTax vs. Rajesh Jhaveri Stock Brokers Private Limited).

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DATE: August 29, 2017 (Date of pronouncement)
DATE: September 1, 2017 (Date of publication)
AY: 2002-03, 2003-04
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CITATION:
S. 153A/ 153C: The seized incriminating material have to pertain to the AY in question and have co-relation, document-wise, with the AY. This requirement u/s 153C is essential and becomes a jurisdictional fact. It is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in S. 153A. Kamleshbhai Dharamshibhai Patel 31 TM.com 50 (Guj) approved. SSP Aviation 20 TM.com 214 (Del) distinguished

Insofar as the judgment of the Gujarat High Court in Kamleshbhai Dharamshibhai Patel v. Commissioner of Income Tax-III, (2013) 31 taxmann.com 50 (Gujarat) relied upon by the learned Solicitor General is concerned, we find that the High Court in that case has categorically held that it is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act. This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well

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DATE: August 1, 2017 (Date of pronouncement)
DATE: August 12, 2017 (Date of publication)
AY: 2005-06 to 2009-10
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CITATION:
S. 68: Statements recorded u/s 132 (4) do not by themselves constitute incriminating material. A copy of the statement together with the opportunity to cross-examine the deponent has to provided to the assessee. If the statement is retracted and/or if cross-examination is not provided, the statement has to be discarded. The onus of ensuring the presence of the deponent cannot be shifted to the assessees. The onus is on the Revenue to ensure his presence

A copy of the statement of Mr. Tarun Goyal, recorded under Section 132 (4) of the Act, was not provided to the Assessees. Mr. Tarun Goyal was also not offered for the cross-examination. The remand report of the AO before the CIT(A) unmistakably showed that the attempts by the AO, in ensuring the presence of Mr. Tarun Goyal for cross-examination by the Assessees, did not succeed. The onus of ensuring the presence of Mr. Tarun Goyal, whom the Assessees clearly stated that they did not know, could not have been shifted to the Assessees. The onus was on the Revenue to ensure his presence. Apart from the fact that Mr. Tarun Goyal has retracted his statement, the fact that he was not produced for cross-examination is sufficient to discard his statement. Statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax v. Harjeev Aggarwal (supra)

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