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TMI Blog2014 (4) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, it was regular assessment u/s. 143(3), i.e., after search was completed - the conditions of section 153C are not satisfied, thus, there is no justification to sustain the initiation of proceedings u/s 153C of the IT Act – the order of the CIT(A) set aside – Decided in favour of Assessee. - ITA No. 200/Agra/2013, ITA No. 305/Agra/2013, ITA No. 306/Agra/2013 - - - Dated:- 29-11-2013 - SHRI BHAVNESH SAINI AND SHRI PRAMOD KUMAR, JJ. For the Appellant : Shri Pankaj Gargh, Advocate For the Respondent : Shri Anirudh Kumar, CIT/DR ORDER Per: Bhavnesh Saini: All the appeals by different assessees on the same matter in issue were heard together and are decided by this common consolidated order. Both the parties mainly argued in the case of Smt. Nirmala Devi Keshwani and stated that issue is same in other appeals. Therefore, we take up the appeal of Smt. Nirmala Devi Keshwani for the purpose of disposal of all the appeals. ITA No. 200/Agra/2013 (Smt. Nirmala Devi Keshwani) : 2. This appeal by the assessee is directed against the order of ld. CIT(A)-I, Agra dated 08.02.2013 for the assessment year 2006-07. 3. In this appeal the assessee challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings u/s. 153C against the assessee. The ld. counsel for the assessee submitted that assessment year 2008-09 did not pertain to the proceedings u/s. 153C because regular assessment order u/s. 143(3) has been passed, therefore, it is not relevant to the assessment year under appeal. He has submitted that the issue is covered by the order of ITAT, Agra Bench in the case of Hardevi Keshwani vs. DCIT in ITA No.369, 339, 340 341/Agra/2012 dated 31.05.2013 (copy of order placed on record, which also pertained to the same Shanker Gutkha group). 6. We have considered the rival submissions and find that the issue is covered in favour of the assessee by the order of ITAT, Agra Bench in the case of Hardevi Keshwani (supra) in which, the findings of the Tribunal in para 3 to 7 are reproduced as under : 3. Briefly, the facts of the case are that the cases pertain to Shanker Gutka group, in which search and seizure operations were conducted u/s. 132(1) of the IT Act on 31.01.2008.Thereafter, the proceedings u/s. 153C read with section 153A were initiated and after considering the material available on record and submissions of the assessee, the AO made additions on account of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities below and submitted that no search has been conducted in the name of the assessee u/s. 132 of the IT Act, therefore, the proceedings u/s. 153C have been initiated and the assessment orders are also passed u/s. 153C of the IT Act. He has submitted that since no material is found against the assessee during the course of search of other persons and no satisfaction has been recorded before initiating the proceedings u/s. 153C of the IT Act, therefore, initiation of proceedings u/s. 153C is illegal and bad in law. Vide order dated 30.11.2012, the ld. DR was directed to file satisfaction note of the AO. Further time was extended for complying with the above order. However, no satisfaction note u/s. 153C has been produced before us. During the course of hearing, the ld. DR submitted that no formal satisfaction note has been recorded in this case u/s. 153C of the IT Act for initiating the proceedings against the assessee u/s. 153C of the IT Act. The ld. DR, however, relied upon the orders of the authorities below. 6. We have considered the rival submissions and the material available on record and find that the issue is squarely covered in favour of the assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 153B. (1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment,- (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of section 153A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed : [Provided that in case of other person referred to in section 153C, the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a) or clause (b) of this subsection or one year from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person referred to in section 153C, a reference under sub-section (1) of section 92CA- (i) was made before the 1st day of June, 2007 but an order under sub-section (3) of section 92CA has not been made before such date; or (ii) is made on or after the 1st day of June, 2007, the period of limitation for making the assessment or reassessment in case of such other person shall, notwithstanding anything contained in clause (ii) of the second proviso, be the period of thirty-three months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed or twenty-one months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later.] Explanation.-In computing the period of limitation for the purposes of this section,- (i) the period during which the assessment proceeding is stayed by an order or injunction of any court; or (ii) the period commencing from the day on which the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A :] [Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. (2) Where books of account or documents or assets seized or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er person. The conditions precedent for invoking the provisions of section 158BD, thus, are required to be satisfied before the provisions of the said Chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under section 132A of the Act. It was further held Law in this regard is clear and explicit. The only question which arises for our consideration is as to whether the notice dated February 6, 1996, satisfies the requirements of section 158BD of the Act. The said notice does not record any satisfaction on the part of the Assessing Officer. Documents and other assets recovered during search had not been handed over to the Assessing Officer having jurisdiction in the matter. It was also held that As the Assessing Officer has not recorded his satisfaction, which is mandatory; nor has he transferred the case to the Assessing Officer having jurisdiction over the matter, we are of the opinion that the impugned judgments of the High Court cannot be sustained, which are set aside accordingly. The appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 132A, the AO shall proceed to assess undisclosed income in accordance with provisions of Chapter XIV-B for making assessment for block period but in the block assessments, the question of assessing an undisclosed income in relation to any AY was restricted to the incriminating material on undisclosed assets discovered during the course of search and seizure or in the post search inquiry the material was relatable to such evidence discovered in search. The income assessed in the regular assessments was not to be considered in the block assessments. However, in the present provisions u/s 153A, there is no such provision provided in the Act. Once warrant of authorization is issued and the search is conducted and panchnama is drawn, the assessments for all the seven years including the current year have to be completed u/s 153A, 153B and 153C. Even the assessments which are completed before the date of search shall get reopened and those assessments where the proceedings are pending at the time of search shall abate. The AO, therefore, shall assess or reassess such income for all these years. 9.4 Sec. 153C of the IT Act however provides for taking recourse to a assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue such other person notice and assess or reassess income of such other person. However, there is a distinction between the two provisions inasmuch as under section 153C notice can be issued only where the money, bullion, jewellery or other valuation article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the Assessing Officer was satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he could proceed against such other person under section 158BC. Thus a condition precedent for issuing notice under section 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable articles or thing or books of account or documents seized or requisitioned should belong to such person. If the requirement is not satisfied, recourse cannot be had to the provisions of section 153C. Held, allowing the petition, that admittedly, the three loose papers recovered during the search p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere recorded any satisfaction as required u/s. 153C of the IT Act. Due to the same reason, the same was not communicated to the assessee. The issue is, therefore, squarely covered by the judgments noted above and therefore, the decision in the case of Digvijay Chemicals (supra) cannot be given preference. We, therefore, do not find any infirmity in the order of the ld. CIT(A) in quashing the assessment order u/s. 153C of the IT Act. In the result, ground No. 1 of departmental appeal fails and is dismissed. Since we have confirmed the quashing of proceedings u/s. 153C of the IT Act, therefore, all additions made in the assessment order would stand deleted. However, we find that similar issues are coming up in the subsequent assessment years, therefore, we find it appropriate to discuss the issues on merits briefly in this order in one of the appeals only. 6.1 Considering the facts of the case, it is clear that no search was conducted against the assessee u/s. 132 of the IT Act, therefore, proceedings u/s. 153C have been initiated. The AO did not make any addition against the assessee on the basis of any adverse material. The AO passed the assessment order u/s. 153C of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash the proceedings u/s. 153C of the IT Act. Therefore, all the additions made in the assessment orders u/s. 153C would stand deleted. 7. In the result, all the appeals of the assessee are allowed. 7. It is admitted fact that no satisfaction note has been recorded in this case before initiating proceedings u/s. 153C of the IT Act. The AO did not make any addition against the assessee on the basis of any adverse material. No material is produced before us to prove that the AO in the case of person searched was satisfied that any money, bullion, jewellery or other valuable articles or things or books of accounts, or documents seized or requisitioned belong to or belonging to a person other than person referred to in section 153A of the IT Act. No material is produced before us to show if any satisfaction was recorded by the AO in that case that the seized material belongs to the assessee. The ld. DR admitted that no such satisfaction note has been recorded in this case. The issue is, therefore, clearly covered in favour of the assessee by the judgment in the case of Hardevi Keshwani (supra). Hon ble Gujrat High Court in the case of Vijaybhai N. Chandrani vs. ACIT, 333 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to the matter in issue. Since the conditions of section 153C are not satisfied in this case, we, therefore, do not find any justification to sustain the initiation of proceedings u/s. 153C of the IT Act. We accordingly set aside the orders of the authorities below and quash the proceedings u/s. 153C of the IT Act. All additions made in the assessment order/order of ld. CIT(A) stand deleted. In the result, the appeal of the assessee is allowed. ITA Nos. 305 306/Agra/2013 (Smt. Madhu Keshwani Smt. Nisha Keshwani. 8. Both the appeals by the different assessees are directed against the orders of the ld. CIT(A)-I, Agra dated 31.03.2013. In these appeals, the assessee has challenged initiation of proceedings u/s. 153C and additions on merits on account of capital gains and unexplained cash. Both the parties admitted that the issue is same as is considered and decided in the case of Smt. Nirmala Devi Keshwani. We, therefore, following the order in the case of Smt. Nirmala Devi Keshwani (supra), set aside and quash the proceedings u/s. 153C of the IT Act and all additions would stand deleted. In the result, both the appeals of the assessees are allowed. 9. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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