Hitesh Ashok Vaswani Vs DCIT (ITAT Ahmedabad)

IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD – BENCH ‘A’
[Conducted Through Virtual Court]
BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT
AND
SHRI WASEEM AHMED, ACCOUNTANT MEMBER

3. In order to give logical end to the search, the ld.AO had issued notice under section 153A, 153C and 148 of the Income Tax Act as required in the particular case of an assessee, and directed them to file their return. The returns were filed. The assessments have been completed, and the appeals have been decided by the ld.CIT(A) vide orders impugned in these appeals.

4. At the time of hearing, we have appraised the parties as to how they would argue the appeals, because, if we look to the total number of appeals, and papers submitted therein, then details on different issues in all these appeals must be running in more than 20,000 pages. The ld.counsel for the assessee has submitted that he has divided his submissions in four compartments, and most of Shri Dilipkumar Lalwani and Others (107 Appeals) these submissions are related to jurisdictional and legal issues. The adjudication of these jurisdictional grounds would be the basis for proceeding further on merit. Broadly, both the parties have agreed for commencing the hearing in the manner suggested by the ld.counsel for the assessee. Four compartments are –

(i) whether the assessment proceeding undertaken under section 153C is sustainable in the eyes of law. For this proposition, the lead matter has been suggested as ITA No.75/Ahd/2019 of the assessee’s appeal, and cross appeal of the Revenue i.e. ITA No.195/Ahd/2019 for the Asstt.Year
2009-10;

(ii) Whether the assessments under section 153A is to be framed strictly on the basis of incriminating material found during the course of search in the case of concerned assessee. The lead matter suggested for the proposition is IT(SS)A.No.95Ahd/2019 and IT(SS)A.No.235/Ahd/2019 for the Asstt.Year 2009-10 in the case of Rajesh Sunderdas Vaswani.

(iii) Whether the assessments completed under section 153A are within the limitation or not. The lead matter suggested by the parties for the proposition is Ashok Sunderdas Vaswani, IT(SS)A.No.88/Ahd/2019 and cross appealbearing no.IT(SS)A.No.241/Ahd/2019 for the Asstt.Year 2009-10;

iv) Ithas been pleaded that whether reopening of the assessment in the Asstt.Year 2008-09 in the case of Ashok Sunderdas Vaswani is justifiable. This is the single assessment order in the case of Ashok Sunderdas Vaswani for the Asstt.Year 2008-09, ITANo.456/Ahd/2019, and ITA No. 806/Ahd/2019 are to be taken together.

v) The last compartment of the argument is with regard to the appeal in ITA No.837/Ahd/2019 in the case of Venus Infrabuild for the Asstt.Year 2015-16. It is also to be decided independently on merit.

5. Thus, as agreed by the ld.representatives, we have heard first proposition canvassed by the ld.counsel for the assessees on 25.8.2020. The issue under the first proposition is, whether the proceedings initiated under section 153C are valid? According to the ld.counsel for the assessee, this proposition would be applicable on the 43 appeals mentioned in serial no.1 to 43 of the cause-title.

6. The ld.counsel for the assessee would submitted that search in the present case was commenced on 10.3.2015 and concluded on 13.3.2015. Taking us through section153C, he submitted that this section has been amended subsequent to the search w.e.f. 1-6-2015. An action under section 153C can only be initiated if the documents belongs to person other than the person referred to section 153A of the Act. Thus, according to him, primarily the Act expects that cognizance of searched material should be taken primarily in the case of searched persons, except that, if the AO of the searched person is satisfied that the seized material belongs to some other persons. Once the AO of the searched person arrives at the decision that material belongs to some other persons, then he would record his satisfaction to that effect, and transmit those materials to the AO having jurisdiction over other such persons. He submitted that prior to 1.6.2015, the section contemplates that material found during the course of search and considered by the AO of the searched person, belongs to some other person. However, after amendment in section 153C w.e.f. 1.6.2015 this expression “belongs” or “belong” to has been restricted with regard to any money, bullion, jewellery and other valuable article or things seized or requisitioned during the course of search. With regard to any books of accounts or documents seized or requisitioned, the expression “belongs to” and “belong to” has been eliminated; and in place of this expression “pertains to” or “pertain to” or any information contained therein relates to, has been used. Thus,according to the ld.counsel for the assessee the expression “pertains” or “pertain” to or any information contained therein relates to, has wider scope for taking action under section 153C instead of expressions “belongs or belong to”used in the original section prior to its amendment w.e.f. 1.6.2015. The ld.counsel for the assessee further submitted that action under section 153C could be taken against the assessee if during the course of search any money,bullion, jewellery or other valuable article or thing; or any books of account or documents, seized or requisitioned, were found to be belonged to or belong to,other than the searched person. In that situation, the AO of the searched person would recordhis satisfaction that the action is required against other such person with regard to undisclosed income embedded in that evidence. He took us through the satisfaction-note recorded by the AO, for example in the case of Dilipkumar Lalwani [IT(SS)A.No.75/Ahd/2019] and others.

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