Rupesh Kantilal Savla v. ACIT

Case snapshot

Sections / provisions: 132; 153C; 69A

Questions before the Court / Tribunal

• Six-year search assessment block for non-searched person before Finance Act 2017: The reported Tribunal order holds that the ten-year section 153C reach introduced by the Finance Act 2017 could not be applied to an earlier search. On the reported dates, AY 2011-12 fell outside the permissible six-year block for the non-searched person and the assessment was quashed.

Material facts and background

Facts in brief are that the assessee filed original return of

income u/s.139 of the Income Tax Act,1961 declaring total income at Rs. 19,72,435/-. Assessment order u/s 143(3) of the Act was passed on 31.01.2014 assessing total income at Rs. 19,74,250/-. Subsequently, information was received from the office of the Pr. DIT(Inv.), Ahmedabad that the search and survey action was carried in the case of Globe Group. Ahmedabad on 23.01.2015. As per the statement recorded during the course of survey proceeding, these were the only paper companies and scrips were traded on stock exchange only by limited persons who had brought the shares off market and availed bogus Long Term Capital Gains. As per information, the he had sold 1,07,000/- shares for Rs. 2,51,38,729/-. As per the return of income and computation of income the assessee had shown sale price of the shares of Rs. 2,45,83,280/- and claimed exempt income from LTCG of Rs. 2,44,82,483/- u/s 10(38). Thus,it was observed that the assessee had obtained bogus LTCG of Rs. 2,44,82,483/-.On the basis of this information, the assessment was reopened u/s 147 and notice u/s 148 of the Act was issued on 29.03.2018 and duly served on the appellant. Subsequently, notice u/s 153C was

Page |4 ITA No. 4024 and 4512/Mum/2024 A.Y. 2011-12 Rupesh Kantilal Savla

issued on 04.04.2018 and the assessment u/s.143(3) r.w.s.153C of the Act was completed on 28/12/2018, assessing the total income of the assessee for the year under consideration at Rs. 3,98,57,530/-. While doing so, the AO made addition of Rs. 1,33,00,000/- towards unexplained money u/s.69A & Rs. 2,45,83,280/- towards unexplained cash credits u/s 68 of the act u/s. 143(3) r.w.s. 153C of the Act. 5.1 Before the ld.CIT(A),the ld.AR of the assessee has, in support of the additional ground relating to validity of assessment order on the issue of time limitation, submitted that initially the assessment was reopened u/s. 147 of the I.T. Act. on 29.03.2018 on the basis of information received by the A.O. regarding the availing of accommodation entries of bogus long term capital gains. During the pendency of this assessment proceedings u/s. 147, an information was received on 31.03.2018 from the office of DCIT CC-1(2) Ahmedabad that Search and seizure action was carried out u/s 132 in the case of Shri Anil H Shah, Sanket J Shah and Sarthav Infrastructure Pvt Ltd & Others on 4.12.2014 and in this search incriminating documents pertaining to the appellant were found. On the basis of this...

decision of Hon’ble Supreme Court in case of Jasjit Singh, the proceedings initiated u/s 153C are time-barred. However, he rejected the ground with the observation that

documents found pertaining to the appellant was received by the A.O on 31.03.2018. As per the decision of Hon'ble Supreme Court in case of Jasjit Singh, the First Proviso to Section 153C introduces a legal fiction based on which the commencement date for computation of the six year or the ten

Page |5 ITA No. 4024 and 4512/Mum/2024 A.Y. 2011-12 Rupesh Kantilal Savla

Appellant / assessee submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Revenue / respondent submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Court / Tribunal analysis and reasoning

satisfied that any books of accounts or documents or assets belong or pertain to other than the searched person (other person), then such books of accounts or documents or assets shall be handed over by the AO of the searched person to the AO of the other person. In the present case the AO of the searched person and the AO of the other person was same. Therefore, there was no requirement of actual handing over of the seized documents belonging to the assessee to any other AO. Nevertheless, in order to assume jurisdiction on the case of the other person it is necessary for the common AO to record his satisfaction that the seized document pertains/belongs to the other person. Until and unless he records such satisfaction, he can’t assume the jurisdiction to initiate proceedings u/s 153C of the Act in the case of other person. The condition of recording satisfaction note by the AO of the searched person was, therefore, required to be mandatorily complied in this case as well. 13.

issuing notice under Section 153C of the Act the AO of the searched person must be satisfied that any document seized or requisitioned belongs to a person other than the searched person. The recording of satisfaction by the AO of the searched person is sine qua non to initiate proceeding u/s 153C of the Act, even in a case where the AO of the searched person and AO of the other person is common. To quote from the order of the Hon’ble Supreme Court: “ 6. This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of the Act in the case of Calcutta Knitwears (supra) as well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd. (supra). As held, before issuing notice under Section 153C of the Act, 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…. 6.1…. At the same time, the satisfaction note by the Assessing Officer of the searched person that the documents etc. so seized during the search and seizure from the searched person belonged to...

Further, it is only on the date of recording of satisfaction that the AO of the other person will assume the jurisdiction to initiate proceeding under Section 153C of the Act in respect of the other person. Therefore, the submission of the Revenue that only the date of search needs to be applied to calculate the time limit in the present case, is neither correct nor in accordance with the provision of law as well as the decision of Hon’ble Supreme Court in the case of Super Malls (P.) Ltd.(supra). It doesn’t matter whether the assessee is related or unrelated to the searched group. The date of recording of satisfaction by the AO of the searched person will be the relevant date to initiate the proceeding under Section 153C of the Act and the time limit of six assessment years has to be computed with reference to the date of recording of satisfaction by the AO of the searched person. The seized documents pertaining to the other person will be deemed to be transferred to the AO of the other person on the date of recording of satisfaction by the common AO. Since, the Revenue has not produced the satisfaction note recorded by the common AO in this case, one can only presume that...

over such other person. Thus, the date of receiving of the books of accounts by the AO of the other person shall be treated / deemed as date of search and six years preceding to that year will be construed as the relevant years for which proceedings under Section 153C of the Act can be initiated in respect of such other person. 17. The Hon’ble Delhi Court has categorically held in the case of PCIT vs. Ojjus Medicare (P.) Ltd.[2024] 161 com 160 (Delhi) that in case of a search assessment undertaken under Section 153C of the Act, the previous year of search would stand substituted by the date or the year in which the books of accounts / documents and assets seized are handed over to the jurisdictional AO of the other person as opposed to the year of search which constitutes the basis for an assessment under Section 153A of the Act. Thus, the block period for the proceedings under Section 153C of the Act has to be computed from the date of receipt of books of accounts or documents by the AO of the non-searched person. This principle has been upheld by the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (supra), wherein it was held that in case of other person the period for...

Operative decision and relief

आदे श की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2.

गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदे शानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अयधकरण / ITAT, Bench, Mumbai.

Authorities and precedents appearing in the judgment

• CIT vs. Jasjit Singh
• Jayantilal Patel vs. ITO in IT(SS)A No. 12/Ahd/2024 dated 01.07.2024
• Super Malls (P.) Ltd. vs. Pr. CIT
• Delhi Court has categorically held in the case of PCIT vs. Ojjus
• Supreme Court in the case of CIT vs. Jasjit Singh (supra)
• Supreme Court in Commissioner of Income Tax 14 vs. Jasjit Singh

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Six-year search assessment block for non-searched person before Finance Act 2017. The operative result is classified as Quashed / set aside. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Six-year search assessment block for non-searched person before Finance Act 2017. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Build a transaction-level evidence file: confirmations, bank trail, invoices, ledger, tax/GST records and counter-party material rather than relying on a generic explanation.
• Where the addition depends on a third-party statement or investigation report, record the request for the relied material and cross-examination at the earliest stage.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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