THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 14.08.2014
+ WP (C) No.414 of 2014 & CM No.822 of 2014
PEPSICO INDIA HOLDINGS PRIVATE LIMITED ... Petitioner
Versus
ASSISTANT COMMISSIONER
OF INCOME TAX & ANR ... Respondents
WITH
WP (C) No.566 of 2014 & CM No.1149 of 2014
PEPSICO INDIA HOLDINGS PRIVATE LIMITED ... Petitioner
Versus
ASSISTANT COMMISSIONER
OF INCOME TAX & ANR ... Respondents
AND
+ WP (C) No.567 of 2014 & CM No.1150 of 2014
PEPSICO INDIA HOLDINGS PRIVATE LIMITED ... Petitioner
Versus
ASSISTANT COMMISSIONER
OF INCOME TAX & ANR ... Respondents
AND
+ WP (C) No.572 of 2014 & CM No.1156 of 2014
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 1 of 17
PEPSICO INDIA HOLDINGS PRIVATE LIMITED ... Petitioner
Versus
ASSISTANT COMMISSIONER
OF INCOME TAX & ANR ... Respondents
AND
+ WP (C) No.573 of 2014 & CM No.1157 of 2014
PEPSICO INDIA HOLDINGS PRIVATE LIMITED ... Petitioner
Versus
ASSISTANT COMMISSIONER
OF INCOME TAX & ANR ... Respondents
AND
+ WP (C) No.574 of 2014 & CM No.1158 of 2014
PEPSICO INDIA HOLDINGS PRIVATE LIMITED ... Petitioner
Versus
ASSISTANT COMMISSIONER
OF INCOME TAX & ANR ... Respondents
Advocates who appeared in this case:
For the Petitioner : Mr Deepak Chopra, Ms Rashi Khanna &
Mr Harpreet Ajmani, Advs.
For the Respondents : Mr Rohit Madan, Adv.
CORAM:
HON'BLE MR. JUSTICE BADAR DURREZ AHMED
HON'BLE MR. JUSTICE NAJMI WAZIRI
JUDGMENT
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 2 of 17
BADAR DURREZ AHMED, J. (ORAL)
1. These six (6) writ petitions raise a common issue and therefore the
same are being decided together. The relevant Assessment Years are
2006-2007 to 2011-2012. By way of these writ petitions the petitioner
(PepsiCo India Holdings Private Limited) has sought the quashing of the
notices issued on 02.08.2013 under Section 153C of the Income Tax Act,
1961 (hereinafter referred to as the ,,said Act).
2. A search and seizure operation under Section 132(1) of the said
Act was conducted on 27.03.2012 on the Jaipuria Group. It is the case of
the Revenue that during the said operation certain documents "belonging"
to the petitioner were found. Consequently, the Assessing Officer of the
Jaipuria Group prepared a Satisfaction Note dated 29.07.2013 to the
effect that the documents mentioned therein belonged to the petitioner. It
is thereafter that the Satisfaction Note as well as the said documents were
symbolically handed over to the Assessing Officer of the petitioner. We
use the expression "symbolically handed over" because of the fact that
the Assessing Officer of the Jaipuria Group and the Assessing of the
petitioner was one and the same person. It is thereafter that the said
Assessing Officer issued notices to the petitioner, all dated 02.08.2013,
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 3 of 17
under Section 153C of the said Act seeking to reopen the assessments of
the petitioner for the years 2006-2007 to 2011-2012 and to follow the
procedure prescribed under Section 153A of the said Act.
3. In response to the said notices, the petitioner submitted its
objections on 09.10.2013. Those objections were rejected by an order
dated 02.12.2013 passed by the Assessing Officer. Pursuant thereto, the
petitioner, being aggrieved by the action taken and proposed to be taken
against the petitioner, has filed these writ petitions seeking the quashing
of the said notices under Section 153C of the said Act.
4. Before we examine these writ petitions in detail it would be
pertinent to point out that recently in the case of Pepsi Foods Pvt. Ltd.
Vs. Assistant Commissioner of Income Tax, WP (C) No.415/2014 and
other connected matters, this court had occasion to examine the very
provisions which are under consideration in the matters before us. In the
judgement delivered on 07.08.2014 in the case of Pepsi Foods Pvt. Ltd.
(supra), after examining the provisions of Sections 153C, 132(4A)(i) &
292C(1)(i) of the said Act, this Court had observed as under:
"6. On a plain reading of Section 153C, it is evident that 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. It is only then that the
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 4 of 17
Assessing Officer of the searched person can handover such
document to the Assessing Officer having jurisdiction over such
other person (other than the searched person). Furthermore, it is
only after such handing over that the Assessing Officer of such
other person can issue a notice to that person and assess or re-
assess his income in accordance with the provisions of Section
153A. Therefore, before a notice under Section 153C can be
issued two steps have to be taken. The first step is that the
Assessing Officer of the person who is searched must arrive at a
clear satisfaction that a document seized from him does not
belong to him but to some other person. The second step is after
such satisfaction is arrived at that the document is handed over
to the Assessing Officer of the person to whom the said document
"belongs". In the present cases it has been urged on behalf of the
petitioner that the first step itself has not been fulfilled. For this
purpose it would be necessary to examine the provisions of
presumptions as indicated above. Section 132(4A)(i) clearly
stipulates that when inter alia any document is found in the
possession or control of any person in the course of a search it
may be presumed that such document belongs to such person. It is
similarly provided in Section 292C(1)(i). In other words,
whenever a document is found from a person who is being
searched the normal presumption is that the said document
belongs to that person. It is for the Assessing Officer to rebut that
presumption and come to a conclusion or "satisfaction" that the
document in fact belongs to somebody else. There must be some
cogent material available with the Assessing Officer before he/she
arrives at the satisfaction that the seized document does not
belong to the searched person but to somebody else. Surmise and
conjecture cannot take the place of "satisfaction".
xxxx xxxx xxxx xxxx xxxx
"11. It is evident from the above satisfaction note that apart from
saying that the documents belonged to the petitioner and that the
Assessing Officer is satisfied that it is a fit case for issuance of a
notice under Section 153C, there is nothing which would indicate
as to how the presumptions which are to be normally raised as
indicated above, have been rebutted by the Assessing Officer.
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 5 of 17
Mere use or mention of the word "satisfaction" or the words "I am
satisfied" in the order or the note would not meet the requirement
of the concept of satisfaction as used in Section 153C of the said
Act. The satisfaction note itself must display the reasons or basis
for the conclusion that the Assessing Officer of the searched
person is satisfied that the seized documents belong to a person
other than the searched person. We are afraid, that going through
the contents of the satisfaction note, we are unable to discern any
"satisfaction" of the kind required under Section 153C of the said
Act."
5. While coming to the aforesaid conclusions the court had also
examined the decisions which had been cited on behalf of the Revenue
and which are, once again, being reiterated by the learned counsel for the
Revenue before us. Those decisions are Kamleshbhai Dharamshibhai
Patel v. Commissioner of Income Tax: (2013) 214 Taxman 558;
Commissioner of Income Tax v. Classic Enterprises: (2013) 358 ITR
465 and a decision of a Division Bench of this Court in SSP Aviation
Ltd. v. Deputy Commissioner of Income Tax: (2012) 346 ITR 177. This
Court had indicated in its judgement in Pepsi Foods Pvt. Ltd. (supra) that
the case of Kamleshbhai Dharamshibhai Patel (supra) was
distinguishable on facts. Those observations would apply to the present
writ petitions also. As regards the decision of the Allahabad High Court
in Classic Enterprises (supra), this Court had indicated that it could not
agree with the conclusions and observations of the Allahabad High Court
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 6 of 17
inasmuch as the decision of the Allahabad High Court was premised on a
consideration of the provisions of Section 158BD of the said Act which
are entirely different from the provisions of Section 153C of the said Act.
Furthermore, with regard to the decision in SSP Aviation Ltd. (supra),
this court had noted that the said decision does not militate against the
view taken in Pepsi Foods Pvt. Ltd. (supra).
6. The learned counsel for the Revenue has cited an additional
decision before us today and that is the case of Sarvesh Kumar Agarwal
Vs. Union of India & Ors. [2013] 353 ITR 26 (All). This decision also,
in our view, does not advance the case of the Revenue. This would be
evident from the observations of the Allahabad High Court in paragraphs
19 to 21 of the said decision, which read as under:
"19. In Manish Maheshwaris case (Supra) the Supreme Court
observed that taxing statute must be constructed strictly. The
Court, however, shall not interpret statutory provisions in such a
manner, which would create an additional physical burden on a
person. In case of any doubt or dispute, construction is to be
made in favour of the tax payer and against the revenue.
20. In the present case we do not find anything wrong in the
satisfaction note and the forwarding of the entire matter by the
Income Tax Officer, Ward-III (2), Ahmedabad to the Assessing
Officer of the petitioner at Bareilly. All the requirements of
Section 153(c) were complied with by the Income Tax Officer,
Ward-III (2), Ahmedabad. A search under Section 132A was
carried out and bullion was seized. The case was selected for
compulsory scrutiny for six assessment years. The assessee
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 7 of 17
established that the seized silver belongs to M/s Sarvesh
Jewellers, Bareilly the petitioner. The ownership and
consignment of the petitioner was also confirmed by the
Assessing Officer of the petitioner at Bareilly. The Income Tax
Officer, Ward-III (2), Ahmedabad did not commit any error in
law, in recording the satisfaction note requesting the petitioners
Assessing officer to proceed under Section 153(c) of the I.T. Act.
21. After the assessment of the person in respect of whom
search action was carried out is completed, the officer under
Section 153C, where he find that seized articles belong to some
other person, has to forward a satisfaction note to the Assessing
Officer on such person. The satisfaction in such case is in respect
of the material and disclosures of the person with which the
articles or assets are found and not in respect of the person who
whom they belong."
(underlining added)
7. The above extract makes it clear that a taxing statute must be
construed strictly and in the case of a doubt or dispute the construction in
favour of the assessee has to be adopted. Apart from this, the material
observation of the Allahabad High Court in the case of Sarvesh Kumar
Agarwal (supra) is to be found in paragraph 20 thereof where it has been
observed that the assessee established that the seized silver belongs to
M/s. Sarvesh Jewellers, Bareilly the petitioner. In other words, the
person from whom the bullion was seized was able to establish that it did
not belong to him but to Sarvesh Jewellers. It is in that context that the
provisions of Section 153C of the Act were invoked inasmuch as the
Assessing Officer would then be considered as having been satisfied that
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 8 of 17
the bullion which was seized from the searched person did not belong to
the searched person but to some other person (in that case M/s. Sarvesh
Jewellers, Bareilly).
8. From the foregoing discussion it is evident that in order that the
Assessing Officer of the searched person comes to the satisfaction that
documents or materials found during the search belong to a person other
than the searched person, it is necessary that he arrives at the satisfaction
that the said documents or materials do not belong to the searched person.
We may point out that in the course of the arguments we had asked the
learned counsel for the Revenue as to whether the documents in question
had been disclaimed by the Jaipuria Group. The learned counsel for the
Revenue, on instructions, states that this was not the case. In other
words, it follows that the Jaipuria Group did not say that the documents
did not belong to them.
9. It would now be necessary for us to examine the Satisfaction Note
dated 29.07.2013. The said Note is as under:
"M/s Pepsico India Holding Pvt. Ltd.,
Satisfaction Note
A.Y. 2006-07 to 2011-12
29-07-2013 Satisfaction Note for issue of Notice u/s 153C of
Income Tax Act, 1961 in the case of M/s Pepsico India Holding
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 9 of 17
Pvt. Ltd. (PAN: AAACP1272G), for the Assessment Years 2006-
07 to 2011-12
In the case of Jaipuria Grrup, search and seizure action u/s 132(1)
of I.T. Act, 1961 was carried out on 27.03.2012 and during the
course of search and seizure action certain documents/papers were
found and seized. The following documents which were found
and seized during the course of search and seizure action u/s 132
(1) of I.T. Act, 1961 are found to be belonging to M/s Pepsico
India Holding Pvt. Ltd. (PAN: AAACP1272G) over which the
jurisdiction lies with the undersigned:
Party/Annx./Page No. Description of Annexure
B-2/A-11/34-35 These two pages are the 10 years
Cumulative Redeemable preference Shares
of Rupees.10/- each, purchased by M/s
PepsiCo India Holding Ltd. from M/s
Tripty Drinks Ltd. And 10 years
Cumulative Redeemable Preference Shares
of Rupees 10/- each, purchased by M/s
PepsiCo India Holding Ltd. from M/s SMV
Beverages Ltd.
B-2/A-14/60 This is a cheque of Rs.1,66,84002/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s Neetar Beverages Pvt. Ltd.
on 30/6/2012.
B-2/A-14/61 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s Neetar Beverages Pvt. Ltd.
on 31.05.2011.
B-2/A-14/62 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s Neetar Beverages Pvt. Ltd.
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 10 of 17
on 31/5/2010.
B-2/A-14/63 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s Neetar Beverages Pvt. Ltd.
on 31/5/2009.
B-2/A-14/64 This is a cheque of Rs.54691818/- in favour
of Pepsico India Holding Pvt. Ltd. issued by
M/s SMV Agencies Pvt. Ltd. on 30/6/2012.
B-2/A-14/65 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s SMV Agencies Pvt. Ltd. on
31.05.2012.
B-2/A-14/66 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s SMV Agencies Pvt. Ltd. on
30.04.2012.
B-2/A-14/67 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s SMV Agencies Pvt. Ltd. on
30/06/2011.
B-2/A-14/68 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s SMV Agencies Pvt. Ltd.
dated: 30/04/2011.
B-2/A-14/69 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s SMV Agencies Pvt. Ltd.
dated: 30/6/2010.
B-2/A-14/70 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 11 of 17
issued by M/s SMV Agencies Pvt. Ltd.
dated: 30/04/2010.
B-2/A-14/71 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s SMV Agencies Pvt. Ltd.
dated: 30/04/2009.
B-2/A-14/72 This is the cheque of Rs.60000000/- in
favour of Pepsico India Holding Pvt. Ltd.
issued by M/s SMV Agencies Pvt. Ltd.
dated: 30/6/2009.
C-2/A-1/101-115 These pages relates to "supply and loan
agreement" made between Pearl Drinks Ltd.
and Pepsico India Holdings Pvt. Ltd. on 01-
10-2010.
I have examined the above mentioned documents/paper and
satisfied that the provisions of section 153C of I.T. Act, 1961 are
applicable in the case of M/s Pepsico India Holding Pvt. Ltd.
(PAN: AAACP1272G). As the undersigned is having the
jurisdiction over the case of M/s Pepsico India Holding Pvt. Ltd.
(PAN: AAACP1272G), notices u/s 153C of I.T. Act, 1961 are
issued on 29.07.2013 for the Assessment Years 2006-07 to 2011-
12.
(Pukini Lokho)
Asstt. Commissioner of Income Tax,
Central Circle-12, New Delhi"
10. On going through the Satisfaction Note it is evident that there are
three kinds of documents which are mentioned therein. First, are the
photocopies of Cumulative Redeemable Preference Shares purchased by
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 12 of 17
PepsiCo India Holdings Private Limited from M/s. Tripty Drinks Limited
and M/s. SMV Beverages Limited. The second set of documents are
cheques found in the cheque books of the Jaipuria Group companies.
These cheques are unsigned and they are the original leaves in the cheque
books themselves which belonged to the Jaipuria Group of companies.
Though, it must be pointed out that the cheques had been written in
favour of PepsiCo India Holdings Private Limited. The third document is
a photocopy of a Supply and Loan Agreement made on 01.10.2010
between Pearl Drinks Limited and PepsiCo India Holdings Private
Limited.
11. In the objections furnished by the petitioner, it had specifically
taken the point that the photocopies of the preference shares do not
belong to the petitioner. The photocopies belong to the Jaipuria Group.
It was, however, stated that the original preference shares certificates are
with the petitioner and it is the originals which belong to them and not the
copies. It was also contended by the petitioner in the objections that the
unsigned cheques could, by no stretch of imagination, belong to the
petitioner as they had not even been handed over to the petitioner and
were to be found in the cheque books of the Jaipuria Group companies
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 13 of 17
themselves. Insofar as the copy of the Supply and Loan Agreement was
concerned, the petitioner pointed out that the copy that was found in the
possession of the Jaipuria Group belonged to the Jaipuria Group whereas
the original which belonged to the petitioner was with the petitioner.
Therefore, it was contended that none of the documents found during the
course of searches conducted on the Jaipuria Group which find mention
in the Satisfaction Note dated 29.07.2013, could be said to have belonged
to the petitioner. Consequently, it was urged that the proceedings under
Section 153C of the said Act ought to be dropped.
12. However, by virtue of the order dated 02.12.2013, the Assessing
Officer rejected each one of these objections and observed that the
provisions of Section 153C of the said Act had been rightly invoked and
the petitioner was directed to comply with the assessment proceedings
under Section 153C read with Section 143(3) of the said Act insofar as
the Assessment Years 2006-2007 to 2011-2012 were concerned.
13. Having set out the position in law in the decision of this Court in
the case of Pepsi Foods Pvt. Ltd. (supra), it must be seen as to whether
the Assessing Officer of the searched person (the Jaipuria Group) could
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 14 of 17
be said to have arrived at a satisfaction that the documents mentioned
above belonged to the petitioners.
14. First of all we may point out, once again, that it is nobodys case
that the Jaipuria Group had disclaimed these documents as belonging to
them. Unless and until it is established that the documents do not belong
to the searched person, the provisions of Section 153C of the said Act do
not get attracted because the very expression used in Section 153C of the
said Act is that "where the Assessing Officer is satisfied that any money,
bullion, jewellery or other valuable article or thing or books of account or
documents seized or requisitioned belongs or belong to a person other
than the person referred to in section 153A ...." In view of this phrase, it
is necessary that before the provisions of Section 153C of the said Act
can be invoked, the Assessing Officer of the searched person must be
satisfied that the seized material (which includes documents) does not
belong to the person referred to in Section 153A (i.e., the searched
person). In the Satisfaction Note, which is the subject matter of these
writ petitions, there is nothing therein to indicate that the seized
documents do not belong to the Jaipuria Group. This is even apart from
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 15 of 17
the fact that, as we have noted above, there is no disclaimer on the part of
the Jaipuria Group insofar as these documents are concerned.
15. Secondly, we may also observe that the finding of photocopies in
the possession of a searched person does not necessarily mean and imply
that they ,,belong to the person who holds the originals. Possession of
documents and possession of photocopies of documents are two separate
things. While the Jaipuria Group may be the owner of the photocopies of
the documents it is quite possible that the originals may be owned by
some other person. Unless it is established that the documents in
question, whether they be photocopies or originals, do not belong to the
searched person, the question of invoking Section 153C of the said Act
does not arise.
16. Thirdly, we would also like to make it clear that the assessing
officers should not confuse the expression ,,belongs to with the
expressions ,,relates to or ,,refers to. A registered sale deed, for
example, ,,belongs to the purchaser of the property although it obviously
,,relates to or ,,refers to the vendor. In this example if the purchasers
premises are searched and the registered sale deed is seized, it cannot be
said that it ,,belongs to the vendor just because his name is mentioned in
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 16 of 17
the document. In the converse case if the vendors premises are searched
and a copy of the sale deed is seized, it cannot be said that the said copy
,,belongs to the purchaser just because it refers to him and he (the
purchaser) holds the original sale deed. In this light, it is obvious that
none of the three sets of documents copies of preference shares,
unsigned leaves of cheque books and the copy of the supply and loan
agreement can be said to ,,belong to the petitioner.
17. In view of the foregoing discussion, we do not find that the
ingredients of Section 153C of the said Act have been satisfied in this
case. Consequently the notices dated 02.08.2013 issued under Section
153C of the said Act are quashed. Accordingly all proceedings pursuant
thereto stand quashed.
18. The writ petitions are allowed as above. There shall be no orders
as to costs.
19. All pending applications also stand disposed of.
BADAR DURREZ AHMED, J.
AUGUST 14, 2014 NAJMI WAZIRI, J.
b'nesh
WP (C) Nos.414, 566, 567, 572, 573 & 574 of 2014 Page 17 of 17
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