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TMI Blog2011 (7) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. - IT APPEAL NOS. 88 AND 90 TO 94 (INDORE) OF 2008 - - - Dated:- 28-7-2011 - JOGINDER SINGH, R.C. SHARMA, JJ. Darshan Singh for the Appellant. H.P. Verma and Girish Agrawal for the Respondent. ORDER Joginder Singh, Judicial Member. The revenue has come up in appeal whereas the cross objections have been filed by the assessee against the orders of the learned Commissioner of Income Tax (Appeals) dated 21.2.2008, 21.12.2007, 21.2.2008, 21.2.2008, 21.2.2008 and 21.2.2008 of the learned Commissioner of Income Tax (Appeals). In the appeals, the revenue has taken the following grounds :- IT(SS)A No. 88/Ind./08 "On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in 1. Deleting the addition of Rs. 25,00,000/- made by the A.O. on account of unexplained investment in the expenditure on acquisition of house property at 106, Malviya Nagar, Bhopal, by admitting fresh evidences produced during the appellate proceedings without giving an opportunity to the A.O. to examine an investigate into the matter of violation of Rule 46A of the I.T. Rules, 1962. 2. Deleting the addition of Rs. 25,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the A.O." IT(SS)A No. 91/Ind./08 "On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) erred in - 1. Deleting the addition of Rs. 45,962/- out of total addition of Rs. 48,382/- made by the A.O. on account of unexplained investment in the property at Dynamic Centre holding that the assessee was earning only brokerage/commission and confirmed only 5% of the receipts as his commission even though the assessee failed to discharge the onus as regards to the assessee being holder of power of attorney and he was not the real owner of the property. 2. Deleting the addition of Rs. 2,34,000/- out of total addition of Rs. 3,97,700/- made by the A.O. on account of undisclosed rental income received by the assessee without appreciating the fact that the assessee is the real owner of all the properties mentioned in the assessment order and continues to enjoy the rights thereof. 3. Deleting the addition of Rs. 6,31,000/- made on account of unexplained deposits in bank accounts even though no cash flow statement or statement of affairs was produced before the A.O. during the assessment proceedings in spite of repeated opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the A.O." IT(SS)A No. 93/Ind./08 "On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in - 1. Deleting the addition of Rs. 10,91,225/- out of total addition of Rs. 11,48,658/- made by the A.O. on account of unexplained investment in the property at Dynamic Centre holding that the assessee was earning only brokerage/commission and confirmed only 5% of the receipts as his commission even though the assessee failed to discharge the onus as regards to the assessee being holder of power of attorney and he was not the real owner of the property. 2. Deleting the addition made on account of undisclosed profit from sale of shops at Dynamic Centre by holding that the assessee was a broker in the transactions and not the real owner ignoring the fact that the addition was made on the basis of seized documents and various bank details obtained during the assessment proceedings for which the assessee could not give convincing reply. 3. Deleting the addition of Rs. 2,64,000/- made by the A.O. on account of undisclosed rental income received by the assessee without appreciating the fact that the assessee is the real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Deleting the addition of Rs. 2,93,550/- made on account of unexplained deposits in bank accounts even though no cash flow statement or statement of affairs was produced before the A.O. during the assessment proceedings in spite of repeated opportunities given to the assessee. 5. Deleting the addition made by the A.O. on account of unexplained investment in the purchase of property at E-1/41, Arera Colony, Bhopal particularly when the addition was made on the basis of seized documents which clearly indicates that the assessee had paid Rs. 5 lakhs as advance for the purchase of the said property. 6. Deleting the addition of Rs. 1,90,000/- out of total addition of Rs. 3,25,000/- made on account of unexplained household expenses without assigning substantial reasoning contrary to the proper reasons and findings made by the A.O." In the cross-objections, the assessee has taken the following grounds :- C.O. No.34/Ind./09 "1. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the total addition and upholding the addition of Rs. 50,000/- towards Household Expenses. 2. On the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 is without jurisdiction and invalid as : (a) there was no relevant evidence or seized material on the basis of which there could be any reason to believe or satisfaction to issue notice u/s 153C. (b) no satisfaction was recorded for issue of notice u/s 153C." CO No. 37/Ind./09 "1. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the entire addition of Rs. 3,00,000/-and thereby upholding the addition of Rs. 2420/- on the commission on the sale proceeds of parts of commercial property in Dynamic Centre and also on the amounts of rentals and lease rentals released during the year. 2. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting total additions of Rs. 3,57,700 containing rental income from various properties and thereby in maintaining addition of Rs. 1,63,700/-. 3. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the total addition and upholding the addition of Rs. 95,000/- towards Household Expenses. 4. On the facts and in the circumstances of the case, the CIT(A) was not justified in not cancelling the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f property and thereby maintaining the addition of Rs. 2,00,000/-. 4. On the facts and in the circumstances of the case, the CIT(A) was not justified in not cancelling the notice u/s 274 read with section 271(1)(c)." The following additional grounds are also taken by the assessee :- "On the facts and in the circumstances of the case, notice issued u/s 153C of the Income tax Act, 1961 is without jurisdiction and invalid as : (a) there was no relevant evidence or seized material on the basis of which there could be any reason to believe or satisfaction to issue notice u/s 153C. (b) no satisfaction was recorded for issue of notice u/s 153C." CO No. 40/Ind./09 "1. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the entire addition of Rs. 3,00,000/- and thereby upholding the addition of Rs. 30,000/- on the commission on the sale proceeds of parts of commercial property in Dynamic Centre and also on the amounts of rentals and lease rentals released during the year. 2. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the total addition and upholding the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order sheet be sent to ld. CCIT, Bhopal, ld. CIT, DR ld. A.O. for compliance and necessary action. Announced in the open Court. Sd Sd AM JM Present Sh. H.P. Verma A. Goyal Sh. Keshav Saxena, ld. CIT DR a/w Sh. Shrikant Namdev, A.O. 4.2.11 Ld. CIT DR submitted that A.O. has not brought seized record which will need in the matter, therefore, department may be given more time to produce the same. He also filed written submission with regard to additional ground raised by the assessee in the Cross Objections, with a copy to ld. counsel for the assessee. In view of this, last opportunity is given to department to produce the seized record. Matter is adjourned to 20.4.11 as suggested by both sides. Announced in the open Court. Sd sd AM JM 20.4.11 Present Sh. H.P. Verma A. Goyal, Sh. Keshav Saxena, CIT DR Due to paucity of time, this group is adjourned to 16.6.11. Ld. CIT DR is directed to comply with earlier order sheets. Announced in the open Court. Sd sd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person referred to in section 153A, then the books of account or the documents or assets seized or requisitioned, shall be handed over by the Assessing Officer of searched person to the Assessing Officer having jurisdiction over such other person and that the Assessing Officer shall proceed against each of such persons and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A of the Act. The opening word of section 153C speaks that notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153, where the Assessing Officer is "satisfied" that any money, jewellery or books of account or documents seized or requisitioned belongs to a person other than the person referred to in section 153A, meaning thereby the Assessing Officer is to record a satisfaction to the effect that such jewellery or document so seized does not belong to the searched person but to some other person referred to in section 153A of the Act. Thus, the pre-requisite of section 153C is that the Assessing Officer making the assessment of the searched person has to satisfy himself that some material found during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll force in case of initiation of proceedings u/s 153C. The assumption of jurisdiction and framing of assessment by the Assessing Officer u/s 153C without recording such satisfaction is void ab initio. Applying the proposition of law laid down by the Hon'ble Supreme Court, as discussed above, it is quite evident that recording of satisfaction before issue of notice u/s 153C is mandatory and in case where no such satisfaction has been recorded by the Assessing Officer in the case of searched person to the effect that some incriminating material so found belongs to some other person, the assessment framed u/s 153C will be liable to be quashed. However, detailed finding has been recorded by the learned Commissioner of Income-tax (Appeals) after examining the assessment records of the concerned person/parties to the effect that no satisfaction has been recorded by the Assessing Officer of the searched person. This finding of the learned Commissioner of Income-tax (Appeals) has not been controverted by the department by bringing any positive material on record. Accordingly, applying this propostion of law, the assumption of jurisdiction and framing of assessment in the instant cases by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur attention was also drawn to the provisions of sub-section (7A) of section 2 defining the Assessing Officer to mean Assistant Commissioner, Deputy Commissioner, Assistant Director, Deputy Director or the ITO, who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act and the Additional Commissioner or the Additional Director or Joint Commissioner or Joint Director, who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on or assigned to an Assessing Officer. As per the learned CIT DR, under the new scheme of section 153A/C, there is no need to find out undisclosed income, but the assessment is made after the search is carried out to assess or reassess the income of the assessee for the immediately preceding six assessment years and the current assessment year falling up to the date of search. He further contended that under the old scheme of section 158BC/158BD of the Act, the department was to assess the undisclosed income on the basis incriminating documents found during the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the department and which is not open to the assessee, therefore, cannot be treated at par with the satisfaction note as contemplated u/s 153C of the Act with regard to the documents seized during the proceedings u/s 132, which is alleged to be belonging to a person other than the person referred to in section 153A of the Act. Reliance was also placed on the proposition laid down by the Hon'ble Supreme Court in the case of Manish Maheshwari; 289 ITR 341(supra) and G.K. Drive Shaft; 259 ITR 19 and the decision of the jurisdictional Tribunal in the case of Rishi Construction; 10 ITJ 346 and Asnani Builders; 10 ITJ 618. 81. We have deliberated upon the contentions of the learned CIT DR, Shri K.K. Singh and learned counsel for the assessee, Shri H.P. Verma, with regard to interpretation of recording of satisfaction while assuming jurisdiction u/s 153C of the Act. Even in the new scheme of framing of assessment in case of search cases, the Legislature has clearly stipulated the requirement for recording of satisfaction while assuming jurisdiction to issue notice and frame assessment u/s 153C of the Act which requires that satisfaction to be recorded with reference to the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of satisfaction has not been controverted by the department by bringing any positive material on record. We, therefore, do not find any infirmity in the order of the learned Commissioner of Income tax (Appeals) quashing the assessments framed u/s 153C of the Act in the cases of all these assesses." 4. In the light of the above order, it is clear that even in the new scheme of framing of assessment in search cases, recording of satisfaction while assuming jurisdiction to issue notice and to frame assessment u/s 153C of the Act, the pre-requirement is recording of satisfaction with reference to the documents and other material, if any, found during the course of search, belonging to a person other than the searched person. Prima facie the Assessing Officer of the searched person should form an opinion with regard to any document, valuables, etc., as found during the course of search, and that such document, which are declined by the searched person, actually belongs to some other person against whom proceedings u/s 153C are required to be put into operation. After recording of such satisfaction, the document so seized should be handed over to the Assessing Officer having jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X
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