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TMI Blog2015 (3) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... d with section 143(3) pertaining to the Assessment Year 2003-04 is quashed. - Decided in favour of assessee. - I.T.A. Nos. 2358, 2359, 2360, 2361, 2362, 6362/Del/2014, I.T.A. Nos. 3306, 3307, 3308, 3309, 3310/Del/2014 & 08/Del/2015 - - - Dated:- 13-3-2015 - Shri G. D. Agrawal And Shri Kul Bharat JJ. For the Appellant : Shri Kapil Goel, Adv. For the Respondent : Shri Syd.Nasir Ali, CIT DR ORDER Per Bench: This is bunch of 12 appeals filed by assessee against separate orders of Ld. CIT(A)-II, New Delhi dated 10.03.2014, 10.03.2014, 11.03.2014,11.03.2014, 12.03.2014 and 10th Oct., 2014 respectively pertaining to Assessment Years 2003-04, 2004-05, 2005-06, 2006-07, 2007- 08 and 2008-09. Out of 12 appeals, 6 appeals are cross appeals filed by Revenue in Assessment Years 2003-04 to 2008-09. The similar and identical grounds have been raised in all these appeals. Therefore, all these appeals were taken up for hearing together and are being disposed of by way of a consolidated order for the sake of convenience. 2. At the outset, Ld. Counsel for the assessee submitted that the assessment framed by the A.O. u/s 153C read with Section 143(3) of the I. T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings were initiated in the case of the assessee company u/s 153C read with section 153A of the I.T.Act. The case of assessee was initially centralized with ACIT, Central Circle-7 u/s 127 of the I.T.Act by Commissioner of Income Tax, Delhi-IV, New Delhi vide order F.No. CIT-IV/Cent./121/2009-10/1343 dated 30.07.2010. Notice u/s 153C dated 14.09.2010 was issued to the assessee by the ACIT, CC-17, New Delhi requiring the assessee company to file return of income within 15 days of service of the notice. 7.1 From the above it is evident the basis of initiating proceeding u/s 153C is that certain documents belonging to the assessee company were found at the searched premises bearing no. F 6/5 Vasant Vihar, New Delhi in the case of Sh. B.K.Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd. belonging to the assesssee. The contention of Ld. Counsel is that the AO of the searched party should have recorded satisfaction but from the replies furnished under the Right to Information Act no such satisfaction was recorded. The contents of reply furnished by Revenue reads as under :- 2. From the assessment records of Sh. Bhupesh Kumar Dhingra, which is covered under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before 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, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.] 153A. Assessment in case of search or requisition.- (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, which reads as under :- 8. The Revenue has raised four fold objections against quashing the assessment order. Firstly, it was argued that there is no requirement under the law that the satisfaction should be recorded. The satisfaction can be inferred by implication, had the intent of legislation been so, the word record as enshrined in Section 148(2) would have been incorporated. Therefore, there is no need of satisfaction note and on the basis of absence of satisfaction note Assessment cannot be annulled. In support of this submission the reliance is placed on the judgment Hon ble Kerala High Court rendered in the case of Dr. K.M. Mehboob Vs. DCIT Anr. (2012) 76 DTR (Ker) 90. Secondly, it was pointed out that Ld. CIT(A) in para 4.3 of the impugned order has observed that the Assessee has no objection in respect of initiation of proceedings. Now the assessee cannot be allowed to blow hot and cold at the same time. Thirdly, it was contended that the provision should be literally construed. There is no scope of adding of new word and or imparting a new meaning, when there is no ambiguity, this being well settled proposition of law. Lastly, it was contended that technicalities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stronics Ltd., 192C, J K Pocket, Dilshad Garden, New Delhi. I have examined the above mentioned documents/papers and provision of section 153C is invokeable in this case. As the under signed is also the jurisdictional AO of M/s. Instronics Ltd., 192C, J K Pocket, Dilshad Garden, New Delhi, this satisfaction note is placed in the file before issuing notice u/s. 153C Sd/- 30.09.2010 ACIT, Central Circle-17, New Delhi Reasons for aforesaid satisfaction note is not valid to assume the jurisdiction u/s 153C of the Act: That it is not recorded by specified authority that is AO of raided party during assessment proceedings which is fortified from: a) RTI replies dated 10.06.2013 28.06.2013 (pages 12 to 15 of Paper Book for the AY. 2003-04 to AY. 2008-09). b) On the very next day (01.10.2010) notice u/s 153C is issued; c) Tone and Tenor of Satisfaction note That is there is no remote indication in the given/aforesaid note that same is recorded during the course of assessment of a particular searched person on the contrary, from cursory look it is palpable that same is mere noting by AO of assessee (other person) before issuance of notice u/s 153C. It is supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers are loosely and vaguely mentioned which do not meet the basic criteria of any objective and rational satisfaction . That is there no clear finding in aforesaid note on i) nature of documents and ii) as to how Ld AO arrived at the satisfaction that same belongs to appellant here which is quite crucial and critical iii) the financial implications of documents on block period. Nothing is comprehensible from the aforesaid note. How can without enumeration of basic documents mere mentioning of Annexure No's can be treated as adequate for arriving at just and valid satisfaction u/s 153C which reflects mechanical recording of the same. On both the above counts, that is non recording of satisfaction by specified authority (being AO of a raided party) and for total lack of clarity of nature of documents seized and how treated to be belonging to, makes the instant proceedings null and void and the given note at page 1 cannot be treated as valid for assumption of jurisdiction. Jurisdictional and other available Hon'ble High Court Judicial Pronouncements: Issue is no longer res integra Noticeably, there are at least Four High Court Decisions (including two from jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed. (vide se decision in case of Vegetable Products 88 ITR 192). 4. Further where the issue is covered in favor of assessee on legal jurisdictional grounds there is no need to enter into merits at all is supported by Bombay High Court decision in case of M/s. Petroleum India International, Mumbai order Dated: 19th November, 2012 in Income Tax Appeal No. 2660 of 2009 wherein it is held that Once, it is held that the reopening of the assessment is bad in law, then, in our opinion, the CIT (A) as also the ITAT were not justified in dealing with the merits of the case Note on DELHI HIGH COURT decision in case of SSP Aviation (346 ITR 177) which is relied heavily by revenue at ITAT and CITA. Relevant facts of instant case/documents: i) Our first hand response to Ld. AO. In the month of November, 2010 during assessment proceedings (pages 22 to 28 of Paper Book for the AY. 2003-04 to AY. 2008-09) that seized document are fully disclosed and accounted and nothing is undisclosed as far as search related documents are concerned which remained uncontroverted; ii) At no stage it is controverted that seized documents found during search are fully disclosed and accounted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of account, as contended by the learned counsel, the Assessing Officer will drop the proceedings initiated under Section 153C ii) BENCH A , KOLKATA ,ITAT in Trishul Hi-Tech Industries case order dated 24.09.2014, IT(SS)A Nos. 84-86/KoI/2011 (Refer Case Law Paper Book Pages 197 to 209) has held that To put it simply this amendment to proviso to section 153C(1) by finance act 2014 of the Act debars the AO from making any assessment dehorse any incriminating material found during the search iii) Pune bench ITAT in Bharati Vidyapeeth Foundation duly approved by Bombay High Court on 10/06/2014 ITA No. 959/PN/10 to 967/PN/10 in turn based on Pune ITAT order reported at Singhad Technical Education 140 TTJ 233) iv) Pune bench ITAT in D.Y.Patil Pratshthan order dated 7/9/2012, ITA No. 1586/PN/2011 to 1591/PN/2011 Since in the instant case certain documents belonging to the assessee trust have been found during the course of search in the premises of the trustees, therefore, issue of notice u/s. 153C of the Income Tax Act by the AO is a valid notice in view of the decision of Hon ble Delhi High Court in the case of SSP Aviation Ltd. (Supra). However, since all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .K.Fiscal, ITA No. 5460/Del/2013 xvii) Parsvnath Developers Ltd. vs. DCIT, 5188/Del/2013 xviii) Special Bench of the ITAT in the case of All Cargo Global Logistic Ltd. vs. CIT; 137 ITD 287 (Mumbai) (S.B.) xix) Delhi ITAT Bench, D Bench New Delhi, Kurele Paper Mills Pvt. Ltd. 14.11.2014 (Case Law Paper Book Pages 172 to 186) xx) ITAT, Delhi A Bench, Anjoo Kashyap Order dated 19.12.2014 xxi) ITAT, Delhi F Bench Order, in the case of qualitron Comodities Pvt. Ltd. dated 06.01.2015 (Case Law Paper Book Pages 187 to 196) Submitted please, Sd/- AR Kapil Goel, Adv. 9.1. The Revenue has not disputed the fact that in the case in hand, there is no satisfaction note by the AO of the searched party. The explanation for not recording satisfaction is that law does not envisage that the satisfaction should be recorded. This contention is against the ratio laid down by the Hon ble Delhi High Court in the case of Pepsi Foods (P) Ltd. Vs. Assistant Commissioner of Income Tax [2014] 52 taxman. Com 220 (Delhi) in para 6 of the judgment has held as under :- 6. On a plain reading of Section 153C, it is evident that the Assessing Officer of the searched person must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason as 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 persons. It is pertinent to note here that the Hon ble Delhi High Court in the case of Pepsi Food (P) Ltd. Vs. ACIT (Supra) has held that the satisfaction note by the AO searched party is a condition precedent for issuance of notice u/s 153C of the Act. In the light of judgment of the Hon ble Delhi High Court, we cannot accept the argument of Revenue that no satisfaction is required to be recorded or the satisfaction can be inferred by implication i.e. from the conduct of Assessing Officer of the searched party and it would be sufficient if the AO of the searched party transfers the material belonging to other person to the Assessing Officer of such person. We do not agree with contention of Ld. CIT(DR) that non recording of satisfaction note is merely a technical defect. The satisfaction of the Assessing Officer of the searched party goes to very root of the assumption of jurisdiction by the Assessing Officer of other person for initiating proceeding u/s 153C of the Act. Therefore, we find no merit into this content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Therefore, we do not see any reason to take any contrary view, therefore, we are of the considered view that in the absence of a satisfaction recorded by the Assessing Officer of the searched persons, the Assessment framed u/s 153C of the Act by the Assessing Officer cannot be sustained, as such same is bad in law. 12. It is observed that the Revenue has not placed any material on record in respect of evidence qua the present assessee collected during the search operation. Moreover, the satisfaction as envisaged under Section 153C is also not placed on record. Therefore, we have no option but to accept the contention of Ld. Counsel for the assessee that no satisfaction was recorded by the Assessing Officer of the searched party, this contention is supported by the reply of Revenue furnished under Right to Information Act. It is expected that the Assessing Officer should be careful in complying with the mandate of law to avoid loss to exchequer. 13. Accordingly the ground raised by the assessee in cross objection, that the proceedings initiated under Section 153C is bad in law is allowed. The assessment framed u/s 153C read with section 143(3) pertaining to the Assessment Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record pertaining to Assessment Years 2003-04 to 2008-09. Therefore, in the absence of such satisfaction by the A.O. of the searched persons, the assessment framed by invoking the provisions of Section153C cannot be sustained. Accordingly, the assessment order pertaining to assessment yeas 2003-04 to 2008-09 are hereby quashed. Consequently, the cross appeals of the assessee in I.T.A.Nos. 2358, 2359, 2360, 2361, 2362, 6362/Del/2014 are partly allowed in terms indicated here in above and the cross appeals of Revenue in I.T.A.Nos. 3306, 3307, 3308, 3309, 3310/Del/2014 08/Del/2015 are dismissed following our decision in cross objection Nos. 353to 358/Del/2014 in case of IECS Ltd. (supra). 7. Since, we have decided the legal issue in favour of assessee other grounds of appeals are not being adjudicated upon. 8. In view of above all the appeals filed by assessee in I.T.A. Nos. 2358, 2359, 2360, 2361, 2362, 6362/Del/2014 Assessment years 2003-04 to 2008- 09 are partly allowed and cross appeals in I.T.A. Nos. 3306, 3307, 3308, 3309, 3310/Del/2014 08/Del/2015 (Assessment Years 2003-04 to 2008- 09) filed by Revenue are dismissed as infructuous. 9. Order pronounced in the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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