M/s. Sourya Rolling and Energy Private Limited vs DCIT Central Circle-27 Delhi

“1.

On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeal) (hereinafter referred to as CIT(A)] is bad both in the eye of law and on facts.

2.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that, the proceedings initiated under section 153C of the Act and consequently the order passed by the learned AO are illegal, Invalid, without jurisdiction, barred by limitation and hence liable to be quashed.

3.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the assessment order has been passed in clear violation of the statutory procedure and conditions prescribed under section 153C read with section 153A of the Act and as such the same is bad in the eye of law and liable to be quashed.

4.

On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the additions made by the AO in the assessment order passed under Section 153C of the Act are illegal, without jurisdiction and hence unsustainable in the absence of any incriminating material belonging to the assessee being found during the course of the search.

5.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under Section 153C of the Act and the consequent assessment order is illegal, without jurisdiction and hence liable to be quashed in the absence of any valid satisfaction being recorded by the assessing officer of the searched person that any money, bullion, jewellery or any other valuable article or thing seized belongs to; or any books of accounts or document seized during the course of the search pertain to, or any information contained therein relates to, the assessee.

6.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the learned AO has erred in issuing notice under section 153C of the Act and completing the assessment under the said section without recording any valid independent satisfaction upon the material or document relied upon by him, that has bearing on the determination of the total income of the assessee.

7.

On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO despite the fact that the satisfaction recorded by the assessing officer for initiating proceeding under section 153C is illegal, invalid, mechanical in nature and has been recorded without application of mind.

8.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under Section 153C of the Act and consequential assessment order are illegal, barred by limitation and thus, liable to be quashed as the satisfaction note has been recorded beyond the stipulated time limit.

9.

On the facts and in the circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the order of AO despite the fact that the notice issued under section 153C of the Act and the consequent reassessment proceedings are illegal, invalid and void ab initio in law, as the alleged "deemed date of search" under section 153C (being the date on which the material was handed over by the AO of the searched person to the AO of the assessee) falls on or after 01.04.2021, and therefore, in view of the amendments made by the Finance Act, 2021, the provisions of section 153C are not applicable and the AO was mandatorily required to follow the procedure prescribed under section 148 read with section 148A of the Act, hence the initiation of proceedings under section 153C of the Act is contrary to the law and the reassessment is liable to be quashed.

10.

On the facts and circumstances of the case, the proceedings under section 153C initiated against the assessee are beyond the permissible period as held by the Hon'ble Supreme Court in the case of Commissioner of Income-tax-III vs. Calcutta Knitwears [2014] 362 ITR 673 (SC) dated 12.03.2014 and accepted by the Central Board of Direct Taxes vide Circular No. 24/2015 dated 31.12.2015.

11.

On the facts and circumstances of the case, the assumption of jurisdiction under section 153C and the consequential reassessment order passed under section 153C read with section 143(3) are invalid, illegal, unsustainable and liable to be quashed, as the satisfaction note has been recorded by the Assessing Officer of the searched person and that of the assessee collectively for Assessment Years 2014-15 to 2020-21, and without identifying or linking alleged material to any specific Assessment Year.

12.

(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the learned AO has erred in passing the order under section 153C r.w.s 143(3) of the Act without obtaining valid prior approval under section 153D of the Income Tax Act.

(ii)

That the purported approval is illegal, mechanical in nature and has been given without application of mind.

13.

(i) On the facts and circumstances of the case, the learned AO has erred both on 'facts and in law in confirming addition of Rs. 82,110/- on account of interest expense claimed by the SOURYA MARGAUNG AND ENERGY PRIVATE L assessee, treating the same as unexplained expenditure invoking section 69C of the Act (ii) That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations brought on record by the assessee to prove the identity and creditworthiness of the lender as well as genuineness of the transactions.

(iii)

That the abovesaid addition has been confirmed despite the fact that the said expense laid out wholly and exclusively for the purposes of the business or profession and the addition is solely based on the presumptions and assumptions.

14.

On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the abovesaid additions despite the provision of section 69C is not applicable on facts of the present case.

15.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the learned AO has erred, in drawing adverse inference, by misinterpreting the statement recorded during the course of search on oath of third party without providing the opportunity to the assessee to cross examine the same.

16.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that learned AO has making above addition despite the fact that the same has been made merely by relying on borrowed satisfaction without independent application of his own mind.

17.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that abovesaid addition has been made on the basis of material collected at the back of the assessee without providing opportunity to the assessee to rebut the same in violation of principle of natural justice.

18.

On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that abovesaid addition has been made by indulging in surmises without bringing on any direct evidence against the assessee, only on the basis of presumptions and assumptions.

19.

The appellant craves leave to add, amend or alter any of the grounds of appeal.”

“(3)

Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1^st day of April, 2021.”

“4.1

The provisions of Sub-Section (3) of Section 153C states that “153C(3). Nothing contained in this Section shall apply in relation to a search initiated under Section 132 or books of account, other documents or any assets requisition under Section 132A on or after the 1^st day of April, 2021.” which means, if the search is initiated subsequent to 01.04.2021, the provision of Section 153C will not apply and accordingly, no proceedings can be initiated against the other person.

42.

According to the petitioner, the date of handing over of the seized materials, i.e. 25.11.2022, is the date of initiation of search. If the said contention of the petitioner is accepted, obviously, the issuance of impugned notices dated 07.02.2023 by the 2^nd respondent is without any authority and contrary to sub-section (3) of Section 153C of the Act and thus, the same is liable to be quashed.”