29. Anilkumar Gopikishan
Agrawal vs. ACIT; [2019] 418 ITR 25
(Guj.) Date of order: 2nd
April, 2019 A.Ys.: 2008-09 to
2014-15
Search and seizure –
Assessment of third person – Section 153C of ITA, 1961 – Law applicable –
Amendment to section 153C w.e.f. 1st June, 2015 – Amendment expands
scope of section 153C and affects substantive rights – Amendment not
retrospective – Starting point for action u/s 153C is search – Search prior to
1st June, 2015 – Section 153C as amended not applicable
A search u/s 132 of the Income-tax Act, 1961 came to be conducted on
various premises of H.N. Safal group on 4th September, 2013, wherein
a panchnama was prepared on 7th September, 2013. On the basis
of the seized material, the AO initiated the proceedings against the petitioner
u/s 153C of the Act by issuing a notice dated 8th February, 2018. In
response to the notice the petitioner filed return of income on 1st
May, 2018. On 14th May, 2018, the AO furnished the satisfaction note
recorded by him and also attached therewith the satisfaction of the searched
person. From the satisfaction recorded, it was found that no document belonging
to the petitioner was found during the course of search.
However, a hard disc was seized and in the Excel sheet data taken from
the computer of the searched person, where there was reference to the
petitioner’s name. The petitioner raised objections to the proceedings u/s 153C
of the Act, inter alia contending that on the basis of the Excel sheet
data of the computer of the searched person wherein there was only reference to
the petitioner’s name, the AO could not have initiated proceedings against the
petitioner u/s 153C of the Act inasmuch as the conditions precedent for
invoking section 153C of the Act as it stood on the date of the search was not
satisfied. By an order dated 23rd July, 2018, the AO rejected the
objections filed by the petitioner. Being aggrieved, the petitioner filed a
writ petition and challenged the order.
The Gujarat High Court allowed the writ petition and held as under:
‘i) Section 153C of the
Income-tax Act, 1961 was amended w.e.f. 1st June, 2015 by virtue of
which the scope of the section was widened. By the amendment, a new class of
assessees are sought to be brought within the sweep of section 153C, which
affects the substantive rights of the assessees and cannot be said to be a mere
change in the procedure. The amendment expands the scope of section 153C by
bringing an assessee, if books of account or documents pertaining to him or
containing information relating to him have been seized during the course of
search, within the fold of that section.
ii) The trigger for initiating
action whether u/s 153A or 153C is the search u/s 132 and the statutory
provisions as existing on the date of the search would be applicable. The mere
fact that there is no limitation for the Assessing Officer of the person in
respect of whom the search was conducted to record satisfaction will not change
the trigger point, namely, the date of search. The satisfaction of the
Assessing Officer of the person in respect of whom the search was conducted
would be based on the material seized during the course of search and not the
assessment made in the case of the person in respect of whom the search was
conducted, though he may notice such fact during the course of assessment
proceedings. Therefore, whether the satisfaction is recorded immediately after
the search, after initiation of proceedings u/s 153A, or after assessment u/s
153A in the case of the person in respect of whom the search was conducted, the
trigger point remains the same, viz., the search and, therefore, the statutory
provision as prevailing on that day would be applicable. While it is true that
sections 153A and 153C are machinery provisions, they cannot be made applicable
retrospectively, when the amendment has expressly been given prospective
effect.
iii) The search was conducted in
all the cases on a date prior to 1st June, 2015. Therefore, on the
date of the search, the Assessing Officer of the person in respect of whom the
search was conducted could only have recorded satisfaction to the effect that
the seized material belongs or belong to the person. The hard disc containing
the information relating to the assessee admittedly did not belong to them,
therefore, as on the date of the search, the essential jurisdictional
requirement to justify assumption of jurisdiction u/s 153C in the case of the
assessees, did not exist. The notices u/s 153C were not valid.’
