Delhi High Court

Pepsico India Holdings Private ... vs Assistant Commissioner Of Income ... on 14 August, 2014

        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

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,

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

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.

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

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 Maheshwari‟s 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

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 petitioner‟s 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

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

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.

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.