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TMI Blog2014 (5) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... e of notice u/s 153C to the assessee, i.e. 'the other person' - though the AO (of the other person) in the assessment order had stated that satisfaction for issuing notice u/s 153C was recorded on examination, it was seen that recording of satisfaction alleged to be recorded by the AO was not available thus, there was no substantial question of law arises in the appeal for interference with the judgment u/s 260-A of the Act – Decided against Revenue. - Income Tax Appeal No. - 60 of 2014 - - - Dated:- 1-5-2014 - Hon'ble Amreshwar Pratap Sahi And Hon'ble Rajan Roy,JJ. ORDER For the Appellant : Ashok Kumar, Bharat Ji Agrawal (Delivered by Hon'ble Rajan Roy,J.) This is an appeal of the Revenue under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as 'the I.T. Act, 1961'). The facts of the case giving rise to the instant appeal are as under: A search and seizure operation under Section 132(1) of the I.T. Act, 1961 was conducted on 17.10.2006 in 'Banarasi Group of Cases' encompassing residential and business premises of the said Group. It is alleged that during the search and also during the assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: 5.4 In absence of the 'Satisfaction Note' prepared by A.O. of the searched person, it has to be held that the A.O. Of the instant assessee could not have assumed jurisdiction u/s 153C of the Act. Thus, all the proceedings undertaken u/s 153C are to be declared as invalid, being annulled for want of jurisdiction. Since the assessment framed u/s 153C has been annulled, no useful purpose shall be served by adjudicating on merits of the case and/ or other arguments of the appellant. The C.I.T. (A) I, Kanpur relied upon the law declared by the Supreme Court in the case of Manish Maheshwari Vs. Assistant Commissioner of Income Tax and another, (2007) 289 ITR 341 (SC) and by the Delhi High Court in the case of New Delhi Auto Finance (P) Ltd. Vs. Joint Commissioner of Income Tax, Special Range-15, (2008) 170 ITR 83 (Delhi), which were based on the provisions contained in Section 158BD, which are pari materia with the provisions of Section 153C of I.T. Act, 1961. Being aggrieved by the aforesaid order dated 04.06.2012, the Revenue preferred an appeal before the I.T.A.T., Lucknow Bench, Lucknow, which was decided on 25.10.2013, the order of the C.I.T. (Appeals) was aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, there was no requirement of handing over of the books of account or documents or assets seized or requisitioned, as is mentioned in Section 153C nor there was any necessity of recording a prior satisfaction before proceeding to assess the 'other person'. The satisfaction subsequently recorded in the assessment order in respect of the 'other person' was sufficient compliance of provisions of Section 153C, which, in any case, was procedural in nature. The A.O. of both the proceedings, being the same, he was neither required to handover the documents to another Assessing Officer nor he had to record any satisfaction for the purpose of any other Assessing Officer since same Assessing Officer of the same designation is having jurisdiction over both the persons, i.e. 'searched person' and the 'other person' (not searched). Sri Agrawal relied upon a Division Bench judgment of this Court rendered in the case of Commissioner of Income Tax Vs. Classic Enterprises, (2013) 358 ITR 465. It was contended that the Tribunal was not justified in quashing the notice under Section 153C, instead of deciding the question on merits as to whether additions ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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. The aforesaid provision is contained in Chapter- XIV of the Income Tax Act, which contains the procedure for assessment. A somewhat similar provision exists in Section 158BD under Chapter XIV-B, which contains the procedure for assessment of searched cases, which reads as under: 158BD. Where the Assessing Officer is 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 any assets were requisitioned under section 132A, then, the books of account, other 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 [under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is clear and unambiguous. The legislature has not imposed any embargo on the assessing officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person. 44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of the appeals that the assessing officer had not recorded the satisfaction note as required under Section 158BD of the Act, therefore, the Tribunal and the High Court were justified in setting aside the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed person', may, if he is satisfied, that any money, document etc. belongs to a person other than the searched person, then such money, documents etc. are to be handed over to the Assessing Officer having jurisdiction over 'such other person'. (2) The second stage commences from the recording of such satisfaction by the Assessing Officer of the 'searched person' followed by handing over of all the requisite documents etc. to the Assessing Officer of such 'other person', thereafter followed by issuance of the notice of the proceedings under Section 153C read with section 153A against such 'other person'. The initiation of proceedings against 'such other person' are dependant upon a satisfaction being recorded. Such satisfaction may be during the search or at the time of initiation of assessment proceedings against the 'searched person', or even during the assessment proceedings against him or even after completion of the same, but before issuance of notice to the 'such other person' under Section 153C. Even in a case, where the Assessing Officer of both the persons is the same and assuming that no handing over of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied 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. The ratio of the judgment in Manish Maheshwari's case also applies to the provisions of Section 153C and to the facts of this case. In the instant case, a categorical finding has been recorded by the C.I.T. (Appeals) and the I.T.A.T. that there is no material showing the recording of satisfaction by the Assessing Officer of the 'searched person' prior to issuance of notice under Section 153C to the respondent assessee, i.e. 'the other person'. It was the admitted case of the Revenue before the C.I.T. (Appeals) and the I.T.A.T. that though the Assessing Officer (of the other person) in the assessment order had stated that satisfaction for issuing notice under Section 153C was recorded, however, on examination, recording of such satisfaction alleged to be recorded by the Assessing Officer was not available. In view of the legal position, as already discussed above and the admitted factual position as aforesaid, we are unable to accept the contentions of Sri Agrawal. We are also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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