Cit v. Renu Constructions Pvt Ltdrespondentthrough:mr. Piyush Kaushilc, Advocate

$-16 - 20 IN THE HIGH COURT OF DELHI AT NEW DELHI 16+ITA 499/2011 CIT Appellant Through:Mr. Asheesh Jain, Sr. StandingCounsel for the RevenueCounsel for the Revenue versus RENU CONSTRUCTIONS PVT LTDRespondentThrough:Mr. Piyush Kaushilc, Advocate WITH 17 +ITA 32/2012 CIT AppellantThrough:Mr. Ashok K. Manchanda, Sr.Standing Counsel for the Revenue versus ANKIT GUPTARespondentThrough:Mr. Piyush Kaushik, AdvocateThrough:Mr. Piyush Kaushik, Advocate 18 + CIT WITH ITA 35/2012 Appellant Through:Mr. Ashok K. Manchanda, Sr.Standing Counsel for the RevenueStanding Counsel for the Revenue versus ANKIT GUPTA Respondent Through:Mr. Piyush Kaushik, Advocate ITA 499/2011 & connected cases WITH + ITA 41/2017 PR. COMMISSIONEROFINCOMETAX, DELHI - 12 Appellant Through:Ms. LakshmiGurung,counselfor the Revenue versus ANKIT GUPTA, L/H MANOJ KUMARRespondentThrough:Mr. Piyush Kaushik, Advocate 20 + AND ITA 125/2017 PR. COMMISSIONEROFINCOMETAX, DELHI - 12 Appellant Through:Mr. Ashok K. Manchanda, Sr.Standing Counsel for the Revenue versus ANKIT GUPTA, L/H MANOJ KUMARThrough: RespondentMr. Piyush Kaushik, Advocate CORAM: JUSTICE S. MURALIDHARJUSTICE PRATHIBA M. SINGH % ORDER06.09.2017 1. ITA No. 499 of 2011, ITA Nos. 32 and 35 of 2012 are appeals by theRevenue under Section 260A of the Income Tax Act, 1961 ('Act') against acommon order dated IS^*" June 2010 passed by the Income Tax Appellate Tribunal (ITAT) in ITA Nos. 4566 to 4568/Del/2009 for Assessment Year(AY) 2002-03. By an order dated 15^*^ November 2011, while admittingthese appeals, the following questions were framed for consideration by thisCourt: "1. Whether the Income Tax Appellate Tribunal is correct inannulling the block assessment order? 2. Whether the Income Tax Appellate Tribunal has erred in lawin presuming that the seized document did not belong to therespondent? 3. Whether the order of Income tax Appellate Tribunal isperverse in the facts and circumstances of the case?" 2. ITA Nos. 41 and 125 of 2017 are directed against a common order dated10^*^ December 2015 in ITA Nos. 41 and 42/Del/2010 for AYs 2000-01 and2002-03. While admitting these appeals on 21^' March 2017, this Courtframed the following question of law for consideration: "Was the ITAT justified in holding that the block assessment order inthe present case was not in accordance with law." 3. A search and seizure operation took place in the BM Gupta group ofcases. In the course of the search, certain documentswere found which ledto notices being issued to the Respondents-Assessees under Section 153C ofthe Act in their capacity as 'other persons'. After assessments were framedby the concerned Assessing Officers (AOs) making additions in thesubsequentassessments, theAssessees wentinappeals before theCommissioner of Income Tax (Appeals) ['CIT (A)']. 4. By ordersdated 29^^ September2009 (in the case ofRenu ConstructionsPvt. Ltd.) and 30^^ October2009 (in the case of Mr. Ankit Gupta), CIT(A)held that the assumptionof jurisdictionunder Section 153C of the Act waserroneous. 5. The Revenue then went in appeal before the ITAT. By the impugnedorders dated 18"" June 2010 and 10^^ June 2011 the ITAT concurred with theCIT(A) that since the seized documents did not 'belong' to the Assessees,although they may have pertained to them, the assumption of jurisdictionunder Section 153C stood vitiated. 4. By ordersdated 29^^ September2009 (in the case ofRenu ConstructionsPvt. Ltd.) and 30^^ October2009 (in the case of Mr. Ankit Gupta), CIT(A)held that the assumptionof jurisdictionunder Section 153C of the Act waserroneous. 5. The Revenue then went in appeal before the ITAT. By the impugnedorders dated 18"" June 2010 and 10^^ June 2011 the ITAT concurred with theCIT(A) that since the seized documents did not 'belong' to the Assessees,although they may have pertained to them, the assumption of jurisdictionunder Section 153C stood vitiated. 6. Mr. Manchanda,learned Senior Standing Counsel appearingfor theRevenue, places reliance on decisions of the this Court in PrincipalCommissionerof Income Tax v. Super Malls Pvt. Ltd., [2017] 393 ITR557, PrincipalCommissionerof Income Tax Central Circle-IIv. SatkarFincap Ltd. [2017] 393 ITR 378 and Principal Commissioner of IncomeTax (Central-2)v. Nau Nidh Overseas Pvt. Ltd [2017] 394 ITR 753(Delhi) to urge that, notwithstanding the fact that the search in the presentcase took place prior to the amendment to Section 153C of the Act witheffect from 1^^ June 2015, it is sufficient,for the purpose of initiationofproceedings under Section 153C of Act, that the seized documents pertainedto the Assessee and did not have to be shown at that stage to be belonging tothe Assessee. 7. Learnedcounsel for the Respondents-Assessees,on the other hand,pointed out that this Court has, in Principal Commissioner of Income Tax (Central-2) v.Vinita Chaurasia [2017] 394 ITR758 (Del), afterconsideringthe aforementionedthree decisions,reiteratedthe settled legalposition as explained in Pepsico India Holdings P. Ltd. v. ACIT [2015]370 ITR 295 (Del), that for the purpose of initiating proceedings underSection 153C of the Act, the seized documents had to be shown to belong tothe other person and not merely pertaining to such other person. The changebrought about in this regard in Section 153 C of the Act by way ofamendment has been given prospective effect from 1st June 2015. Theamended provision therefore has no application to the cases on hand. 8. The recent decision of the Supreme Court in Commissioner of IncomeTax,Panev.SinhgadTechnicalEducationSociety[2017]84taxmann.com290 (SC) settles the legal position in favour of the Assessees.The Supreme Court, while affirming the judgment of the Bombay HighCourt, approved the decision of the Gujarat High Court in KamleshbhaiDharamshibhaiPatelv. Commissioner of IncomeTax-Ill,(2013) 263CTR (GuJ) 362 that a document seized 'should belong to a person other thanthe person referred to in Section 153A of the Act'. It has been categoricallyobserved by the Supreme Court that the above position of law laid down bythe Gujarat High Court is correct. 9. Consequently, this Court rejects the contention of the learned counsel forthe Revenue that even prior to 1st June 2015 at the stage of initiation ofproceedings under Section 153C of the Act, it is sufficient if the seizeddocument'pertainedto' the otherpersonandit is not necessaryto showthatthe seized materialto' the other Thishas 'belonged person. legal position ITA 499/2011&connectedcases been explainedby this Court in its recent decisiondated 10^'^July2017 inW.P. (C) No. 3241/2015 {Canyon Financial Services Ltd. v. Income TaxOfficer). 10. As far as ITA No. 499/2011 is concerned, the Court finds that there is anadditional ground to reject the appeal of the Revenue. The satisfaction noterecorded by the AO in that case does not even refer to the seized documents. 11. For the aforementioned reasons, Question No. 2 framed by the Court isanswered in the negative, i.e. in favour of the Assessees and against theRevenue. ITA 499/2011&connectedcases been explainedby this Court in its recent decisiondated 10^'^July2017 inW.P. (C) No. 3241/2015 {Canyon Financial Services Ltd. v. Income TaxOfficer). 10. As far as ITA No. 499/2011 is concerned, the Court finds that there is anadditional ground to reject the appeal of the Revenue. The satisfaction noterecorded by the AO in that case does not even refer to the seized documents. 11. For the aforementioned reasons, Question No. 2 framed by the Court isanswered in the negative, i.e. in favour of the Assessees and against theRevenue. 12. Consequently, Question No. 1 in ITA Nos. 499 of 2011 and ITA Nos. 32and 35 of 2012 is answered in the affirmative, i.e. in favour of the Assesseesand against the Revenue. In so far as the Revenue has been unable to showthat the impugned order of the ITAT is perverse, QuestionNo. 3 is answeredin the negative, i.e. in favour of the Assessee and against the Revenue.Thesolitary question framed in ITA Nos. 41 and 1265 of 2017 is answered in theaffirmative i.e. in favour of the Assessee and against the Revenue. 13. The appeals are accordingly dismissed. LIDHAR, J. SEPTEMBER 06, 2017/pk PRATHIBA M. SINGH, J. ITA 499/2011& connected cases