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Heera Singh Bhola A-30, Sham Nagar New Delhi Vs. DCIT Central Circle-8 New Delhi
April, 21st 2021

1 ITA Nos. 3977 & 3978/Del/2015

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: ‘A’ NEW DELHI

BEFORE SHRI R. K. PANDA ACCOUNTANT MEMBER
AND

MS SUCHITRA KAMBLE, JUDICIAL MEMBER

I.T.A. No. 3977/DEL/2015 (A.Y 2009-10)
&

I.T.A. No. 3978/DEL/2015 (A.Y 2010-11)

(THROUGH VIDEO CONFERENCING)

Heera Singh Bhola Vs DCIT
A-30, Sham Nagar Central Circle-8
New Delhi New Delhi
BHGPS0586M (RESPONDENT)
(APPELLANT)

Appellant by Sh. P. C. Yadav, Adv
Respondent by Sh. Satpal Gulati, CIT(DR)

Date of Hearing 09.03.2021

Date of Pronouncement 20.04.2021

ORDER
PER SUCHITRA KAMBLE, JM

These two appeals are filed by the assessee against order dated 25/-
3/2015 passed by CIT(A)-XXV, New Delhi for assessment year 2009-10 &
2010-11 respectively.

2. The grounds of appeal are as under:-
I.T.A. No. 3977/DEL/2015 (A.Y 2009-10)

1. That on facts and circumstances of the case, the order passed by the Ld.
CIT (Appeal) is bad both in the eyes of law and on facts.
2. That the Ld. CIT (Appeal) has erred in law and on facts in not admitting
the following additional grounds of appeal involving the issue related to
recording of proper and conclusive satisfaction before issue of notice u/s
153C.


2 ITA Nos. 3977 & 3978/Del/2015

1. That the issue of notice u/s 153C, under the facts and circumstances, is bad in law.
2. That the impugned assessment order is bad in law as no satisfaction has been
recorded by the Assessing Officer of the person searched that the document belongs to a
person (the appellant) other than searched person.
3. That the impugned assessment order is bad in law as the notice under section 153C
has been issued without arriving at a conclusive satisfaction, cogent material and basis
of arriving at the satisfaction..
3. That the Ld. CIT (Appeal) has erred in law and on facts in not admitting
the above mentioned additional grounds of appeal involving the issue related
to recording of proper and conclusive satisfaction before issue of notice u/s
153C despite the fact that in the remand report, the AO has accepted that no
satisfaction was recorded in the case of the assessee.
4. That the Ld. CIT (Appeal) has erred in law and on facts in not admitting
the above mentioned additional grounds of appeal involving the issue related
to recording of proper and conclusive satisfaction before issue of notice u/s
153C despite the fact that the additional grounds are purely legal and can be
raised any time during the pendency of the proceedings.
5. That the Ld. CIT (Appeal) has erred in law and on facts in sustaining the
ex-parte assessment passed by the AO on the basis of the two notice issued
on 08.12.11, fixing the date of hearing on 14.12.11 and second and the last
notice was issued on 15.12.11 fixing date of hearing on 16.12.11 despite the
fact that the assessee was bed ridden and was not in a position to attend the
proceedings.
6. That the Ld. CIT (Appeal) has erred in law and on facts in sustaining the
ex-parte assessment passed by the AO wrongly stating that various notices
u/s 142(1) and 143(2) were issued despite the fact that no notice u/s 143(2)
was issued and only one notice u/s 142(l)was issued.
7. That the Ld. CIT (Appeal) has erred in law and on facts in confirming the
addition of Rs. 77,62,410/-in respect of investments in building despite the
fact that the same was made by the assessee out of the funds received from
his father.
3 ITA Nos. 3977 & 3978/Del/2015

8. That the impugned appellate order is arbitrary, illegal, bad in law and in

violation of rudimentary principles of contemporary jurisprudence.

Additional Grounds of I.T.A. No. 3977/DEL/2015 (A.Y 2009-10)

1. On the facts and circumstances of the case the Assessment Order passed

under section 143(3) read with 153C and affirmed by the CIT(A) is bad in law

as no satisfaction by the AO of the searched person, as mandated under the

provisions of section 153C has ever been recorded, and hence the assessment

framed is void ab initio.

I.T.A. No. 3978/DEL/2015 (A.Y 2010-11)

1. That on facts and circumstances of the case, the order passed by the Ld.

CIT (Appeal) is bad both in the eyes of law and on facts.

2. That the Ld. CIT (Appeal) has erred in law and on facts in not admitting

the following additional grounds of appeal involving the issue related to

recording of proper and conclusive satisfaction before issue of notice u/s

153C.

1. That the issue of notice u/s 153C, under the facts and circumstances, is

bad in law.

2. That the impugned assessment order is bad in law as no satisfaction has

been recorded by the Assessing Officer of the person searched that the document

belongs to a person (the appellant) other than searched person.

3. That the impugned assessment order is bad in law as the notice under

section 153C has been issued without arriving at a conclusive satisfaction, cogent

material and basis of arriving at the satisfaction..

3. That the Ld. CIT (Appeal) has erred in law and on facts in not admitting

the above mentioned additional grounds of appeal involving the issue related

to recording of proper and conclusive satisfaction before issue of notice u/s

153C despite the fact that in the remand report, the AO has accepted that no

satisfaction was recorded in the case of the assessee.

4. That the Ld. CIT (Appeal) has erred in law and on facts in not admitting

the above mentioned additional grounds of appeal involving the issue related

to recording of proper and conclusive satisfaction before issue of notice u/s
4 ITA Nos. 3977 & 3978/Del/2015

153C despite the fact that the additional grounds are purely legal and can be
raised any time during the pendency of the proceedings.
5. That the Ld. CIT (Appeal) has erred in law and on facts in sustaining the
ex-parte assessment passed by the AO on the basis of the two notice issued
on 08.12.11, fixing the date of hearing on 14.12.11 and second and the last
notice was issued on 15.12.11 fixing date of hearing on 16.12.11 despite the
fact that the assessee was bed ridden and was not in a position to attend the
proceedings.
6. That the Ld. CIT (Appeal) has erred in law and on facts in sustaining the
ex-parte assessment passed by the AO wrongly stating that various notices
u/s 142(1) and 143(2) were issued despite the fact that no notice u/s 143(2)
was issued and only one notice u/s 142(l)was issued.
7. That the Ld. CIT (Appeal) has erred in law and on facts in confirming the
addition of Rs. 70,52,880/-in respect of investments in building despite the
fact that the same was made by the assessee out of the funds received from
his father.
8. That the impugned appellate order is arbitrary, illegal, bad in law and in
violation of rudimentary principles of contemporary jurisprudence.
Additional grounds in I.T.A. No. 3978/DEL/2015 (A.Y 2010-11)
a) On the facts and circumstances of the case the Assessment Order passed
under section 143(3) read with 153C and affirmed by the CIT(A) is bad in law
as no satisfaction by the AG of the searched person, as mandated under the
provisions of section 153C has ever: been recorded, and hence the
assessment framed is void ab initio.
b) The order of assessment framed by the AO under section 144 is void: as
the same has been passed ignoring the purport of the 1st proviso of section
153G, which provides that date of receiving of the documents would become
date of search, and six years accordingly to be reckoned.
c) The AO has erred in assessing the impugned year under the normal
provisions of section 144, ignoring that the year impugned is fail in block of
six previous years and hence without following the mandatory procedure of
5 ITA Nos. 3977 & 3978/Del/2015
section 153G assessment is void.”

3. The assessee is an individual and carrying out business of real estate. A
search was conducted on Shri Vipin Kumar and thereafter the cases of the
assessee for the present Assessment Years were reopened on the ground that
certain documents belonging to assessee were found during the search. The
Assessing Officer made addition of Rs.76,42,801/- in respect of Section 69C as
relate to unexplained expenditure. The Assessing Officer assesseed the total
income of assessee at Rs.77,62,407/-.

4. Being aggrieved by the assessment order, the assessee filed appeal before
the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5. The Ld. AR submitted that by virtue of additional grounds the assessee is
challenging the jurisdiction of the Assessing Officer assumed u/s 153C. It is
pertinent to mention, challenging the jurisdiction of the Assessing Officer, the
assessee has also taken additional grounds vide his applications dated
23.03.2018 and 29.06.2018. The Assessing Officer has incorrectly assumed the
impugned year as search year and hence erred in framing the assessment of
the impugned year without issuing Mandatory notice of 153C of the Act. No
satisfaction note in the file of searched person as per the guideline of Board
has ever been recorded by the Assessing Officer of searched person. Alleged
satisfaction note does not prove that anything incriminating against the
assessee was found in the search. The Ld. AR further submitted that before
going to issues and submission of the assessee, it is worthy to point out certain
dates which go to the root of the matter and would be helpful in deciding the
legal grounds raised by the assessee.
6 ITA Nos. 3977 & 3978/Del/2015

Important Dates and sequence of events in the case of Ambawatta Build

Well Pvt. Ltd. Sequence of event Page No of PB
Date

16.02.2010 Search action in the case of Vipin Pg -1 of
Kapoor was undertaken. So assessment
search year for Vipin Kapoor order
would be AY 2010-11 and F.Y
1.04.2009 to 31.03.2010

02.11.2011 Order u/s 127 transferring the Pg-1, Para-2
case of the assessee to central of
circle was made Assessment
order

08.12.2011 Satisfaction note recorded by the Pg-1, Para-3
AO of assessee has been recorded of assessment
order

08.12.2011 Notice u/s 153C was issued to A.O order
assessee for AY 2009-10. However
no notice for AY 2009-10 has ever
been recorded by the AO,
admitted fact

The Ld. AR submitted that before the CIT(A) assessee has challenged the
jurisdiction of the Assessing Officer under section 153C by way of additional
ground. However the CIT(A) dismissed the application of additional ground. The
Ld. AR pointed out that issue whether jurisdiction of theAssessing Officer u/s
153C can be challenged before appellate forum is now settled by Hon'ble Apex
Court in the case of Singhad Education Society reported in 397 ITR 344(SC)
wherein the Hon'ble Apex Court has held that Jurisdictional issue can be taken
up in appellate proceedings. Further CIT(A) failed to appreciate the judgment of
NTPC reported in 229 ITR 383(SC) and special bench judgment of Tribunal in
DHL Operations reported in 108 TTJ. The Ld. AR submitted that jurisdictional
issues can be raised at any stage of the proceedings. The Ld. AR submitted that
documents pertaining to the assessee were handed over to the Assessing
Officer after 02.11.2011, and hence as per the provisions of proviso to section
153C, the date of search in the case of the present assessee would probably
7 ITA Nos. 3977 & 3978/Del/2015

02.11.2011, which date falls under AY 2012-13. The proviso to section 153C

reads as under:-

“Provided that in case of such other person, the reference to the date of
initiation of the search under section 132 or making of requisition under
section 132A in the second proviso to [sub-section (1) of] section 153A shall be
construed as reference to the date of receiving the books of account or
documents or assets seized or requisitioned by the Assessing Officer having
jurisdiction over such other person:].”

The Ld. AR further submitted that by virtue of 1st proviso, embodied with
section 153C, the date of handing over the documents would become the date
of search in the case of other person and previous six year period would have
to be reckoned from this date. Which means the relevant assessment year of
search in the case of assessee would be 02.11.2011 which falls under AY 2012-
13 (not AY 2010-11) and six previous years would be as follows.

01.04.2011 to 31.03.2012 2012-13 (Search year
for 153C)
1.04.2010 to 31.03.2011 2011-12
01.04.2009 to 31.03.2010 2010-11
1.04.2008 to 31.03.2009 2009-10
1.04.2007 to 31.03.2008 2008-09
1.04.2006 to 31.03.2007 2007-08
1.04.2005 to 31.03.2006 2006-07

The Ld. AR further submitted that as per the sub-rule-5 of Rule 6F every
assessee under the Income Tax Act has to maintain the account of six previous
years for the purpose of Income Tax. Now supposing a search is conducted in
one year and documents of other person are handed over to the Assessing
Officer, of other person or to the Assessing Officer with whom jurisdiction is
centralized, after two years from the date of search, then for which six years
the other person would show his accounts, whether for the years which are
applicable for search person or for those years which are governed by the
proviso. The Ld. AR submitted that obviously for those years which are
8 ITA Nos. 3977 & 3978/Del/2015

governed by the proviso because the Income Tax Rules say so. And that is why
the legislature in its wisdom by virtue of proviso, has substituted the date of
search with the date of receiving of the documents pertaining to such other
person. Otherwise provisions of Rule 6F would become redundant and the
Assessing Officer can asked for records of those years also for which an
assessee is not obliged to maintain records. However, the Assessing Officer
assuming the impugned year, as a year of search, has framed the assessment
under normal provisions of Income Tax. The Ld. AR submitted that if we apply
the mandate of the proviso of section 153C read with 153A(1) and principle of
law as laid down by the Hon’ble Jurisdictional High Court in the case of RRJ
Securities reported in 380 ITR 612(Del) then the six years which were to be
covered are the years mentioned in above table. The Ld. AR relied upon the
following judgments:
a) Jasjit Singh Vs ACIT ITA No-1436/Del/2012 order dated-05.11.2014(
Affirmed by High Court)
b) CIT Vs RRJ Securties -380 ITR 612(Del)
c) CIT Vs Swar Agencies- 397 ITR 400(Del)-Delhi High Court wherein it
has been held that amendment brought by legislature w.e.f. 1.04.2017 which
says that year of assessment of searched person and other person covered
under section 153C is prospective.
d) Ambawatta Buildwell ITA No-2592/Del/2015 dated 18.09.2018.

Thus, the Ld. AR submitted that no satisfaction in the file of searched person
that is Vipin Kumar and thus, the assessment itself is bad in law.

6. Without prejudice to the above, the Ld. AR submitted it is an admitted
position of facts that the Assessing Officer has not recorded any satisfaction in
the file of the searched person. The CIT(A) mentioned in the order that the
Assessing Officer candidly admitted that he has not recorded any satisfaction
in the file of searched person. The Ld. AR submitted that there are two
Assessing Officers according to the provisions of Section 153C of the Income
9 ITA Nos. 3977 & 3978/Del/2015

Tax Act, 1961 the Assessing Officer of the searched person who had to record

his satisfaction in the file of the searched person mentioning that documents

found in search belongs to some other person and prima facie they are

incriminating. Thereafter, as per the provisions of Section 153C the (2nd)

Assessing Officer of other person shall proceed against such other person. In

simple words provisions of Section 153C mentions about of two Assessing

Officers, 1st, of the searched person and 2nd is of the other person and 153C

notice is to be issued by the 2nd Assessing Officer i.e. of the other person. This

aspect is further clear from the Circular of CBDT. The Ld. AR submitted that in

the present case the Assessing Officer of assessee while submitting the remand

report has candidly accepted that he has not recorded any satisfaction in the

file of searched person. He has just taken a plea that he was the Assessing

Officer of both searched person and of the assessee. The Ld. AR submitted that

recently the Tribunal in the case of Ambawatta Buildwell reported in ITA No

2591 of 2015 dated 09.04.2019, after considering the chronology of the

sequence of events, in a case where the Assessing Officer of the searched

person and person covered u/s 153C was same has observed as under:-

In so far as the dates referred to by the learned AR are concerned, absolutely
there is no dispute. Search in this matter was conducted on 9.11.2011 and
the seized documents belonging to the assessee were received in the Central
Circle on 29.8.2013. The satisfaction note was recorded by the ld. AO on
3.10.2013. Basing on this, as contended by the learned AR, it is evident that
the satisfaction note dated 3.10.2013 was recorded by the ld. AO of the
assessee and certainly, it could not be by the AO of the searched person
inasmuch as long prior to these dates, the ld. AO of the searched person
parted with the documents which were received in the Central Circle on
29.8.2013. Even if the AO of the searched person and the AO of the assessee
are one and the 'same, in view of the dates, namely, date of receipt of
documents by the Central Circle being 29.8.2013 and the date of satisfaction
note being 3.10.2013, the irresistible inference is that the satisfaction note
dated 29.8.2013 was recorded by the ld. AO as the AO of the other person i.e.
the assessee but not AO of the searched person. Had such a note been
recorded by the ld.AO any date prior to 29.8.2013 there would have been a
possibility of understanding that such a note could have been recorded by the
10 ITA Nos. 3977 & 3978/Del/2015

ld. AO as the AO of the searched person. However, in view of the admitted
dates of receipt of the seized documents by the Central Circle and. the
subsequent satisfaction note, there is no other way of understanding the
same except as the satisfaction recorded by the other person. Now coming to
the law applicable to these facts, both the assessee and the revenue are
relying on the decision of the Hon'ble' jurisdictional High Court in the case of
Ganpati Fincap Services P. Ltd. (supra).

The Ld. AR submitted that similarly the dates mentioned in the above Para

would show that the Assessing Officer has recorded the satisfaction on

08.11.2011 and documents related to assessee were received on 03.11.2011.

Further the Assessing Officer has candidly admitted that he has not recorded

any satisfaction in the file of the searched person. The Ld. AR pointed out that

the circular of CBDT also clarifies that satisfaction is to be recorded separately

in the fife of the searched person. Therefore the jurisdiction of the Assessing

Officer is bad in law. The Ld. AR relied upon the following decisions:

a. CIT Vs Niki Drugs reported in 386 -ITR 68Q(Del)

b. CIT Vs RRJ Securties 380 ITR 612{Del)-

c. Peppsi foods Vs ACIT 367 ITR 297(Del)-

d. Adarsh Kumar Vs DCIT Central Circle ITA No-5095/Del/2015

6. The Ld. DR relied upon the assessment order and the order of the CIT(A).

7. We have heard both the parties and perused the material available on
record. It is pertinent to note that no satisfaction was recorded in case of
search person and thus, the assessment itself becomes null and void. In fact,
in the present case the Assessing Officer of assessee while submitting the
remand report has categorically accepted that he has not recorded any
satisfaction in the file of searched person. He has just taken a plea that he was
the Assessing Officer of both searched person and of the assessee. Besides this
the contentions of the Ld. AR that as per the sub-rule-5 of Rule 6F every
assessee under the Income Tax Act has to maintain the account of six previous
11 ITA Nos. 3977 & 3978/Del/2015

years for the purpose of Income Tax. Now supposing a search is conducted in

one year and documents of other person are handed over to the Assessing

Officer, of other person or to the Assessing Officer with whom jurisdiction is

centralized, after two years from the date of search, then for which six years

the other person would show his accounts, whether for the years which are

applicable for search person or for those years which are governed by the

proviso. Thus, for those years which are governed by the proviso because the

Income Tax Rules say so. And that is why the legislature in his wisdom by

virtue of proviso, has substituted the date of search with the date of receiving

of the documents pertaining to such other. Otherwise provisions of Rule 6F

would redundant and the Assessing Officer can asked for records of those

years also for which an assessee is not obliged to maintain records. However,

the Assessing Officer assuming the impugned year, as a year of search, has

framed the assessee under normal provisions of Income Tax. Thus, while

applying the mandate of the proviso of section 153C read with 153A(1) and

principle of law as laid down by the Hon’ble Jurisdictional High Court in the

case of RRJ Securities reported in 380 ITR 612(Del) then the six years which

were to be covered are the years mentioned in table given by the Ld. AR at the

time of hearing which is as follows:

01.04.2011 to 31.03.2012 2012-13 (Search year for 153C)
1.04.2010 to 31.03.2011 2011-12
01.04.2009 to 31.03.2010 2010-11
1.04.2008 to 31.03.2009 2009-10
1.04.2007 to 31.03.2008 2008-09
1.04.2006 to 31.03.2007 2007-08
1.04.2005 to 31.03.2006 2006-07

Thus, these contentions of the Ld. AR are sustainable under the provisions of
the Income Tax Act as well as Income Tax Rules. Besides this, the CIT(A) has
not taken the cognizance of the additional evidence filed by the assessee and
thus on the merit also, the assessee succeeds. Hence, the appeal of the
assessee being ITA No. 3977/Del/2015 is allowed.
12 ITA Nos. 3977 & 3978/Del/2015

8. In respect of ITA No. 3978/Del/2015 for Assessment Year 2010-11, the
assessment order is passed u/s 144 of the Income Tax Act, 1961. The
Assessing Officer assessed the income at Rs. 70,52,880/-, thereby making
addition in respect of expenditure reflected in the diary that of Rs.
1,45,76,091/- . This amount spread over two different assessment year 2009-
10 and 2010-11. Thus, the issue in the present Assessment Year 2010-11 is
identical to that of the A.Y. 2009-10 which is discussed hereinabove. No
distinguishing facts were brought on record by the Revenue. Hence, ITA No.
3978/Del/2015 is also allowed.

9. In result, both the appeals of the assessee are allowed.
Order pronounced in the Open Court on this 20th Day of April, 2021

Sd/- Sd/-
(R. K. PANDA) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER
JUDICIAL MEMBER
Dated : 20/04/2021
ASSISTANT REGISTRAR
R. Naheed * ITAT NEW DELHI

Copy forwarded to:

1. Appellant
2. Respondent
3. CIT
4. CIT (Appeals)
5. DR: ITAT
13 ITA Nos. 3977 & 3978/Del/2015

Date of dictation 10.03.2021
Date on which the typed draft is placed before 10.03.2021
the dictating Member 20.04.2021
Date on which the typed draft is placed before 20.04.2021
the Other Member 20.04.2021
Date on which the approved draft comes to the 20.04.2021
Sr. PS/PS 20.04.2021
Date on which the fair order is placed before 20.04.2021
the Dictating Member for pronouncement
Date on which the fair order comes back to the
Sr. PS/PS
Date on which the final order is uploaded on
the website of ITAT
Date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant
Registrar for signature on the order
Date of dispatch of the Order

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