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TMI Blog2015 (3) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Gunjan Prasad, CIT DR ORDER Per Bench: This is bunch of 06 appeals filed by assessee against separate orders of Ld. CIT(A)-II, New Delhi dated 05.09.2014, 08.09.2014, 09.09.2014, 10.09.2014 and 11.09.2014 pertaining to Assessment Years 2003-04, 2004- 05, 2005-06, 2006-07 and 2007-08. Out of 10 appeals, 4 appeals are cross appeals filed by Revenue in Assessment Years 2005-06, 2006-07, 2007-08 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. Act, 1961, is a nullity in the eyes of law for want of satisfaction recorded by the A.O. of the searched party. He submitted that from the information sought under Right to Information Act, it is evident that the A.O. of searched person has not recorded satisfaction. He submitted that the satisfaction note by the A.O. of searched person is a condition precedent for initiating proceedings u/s 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section153A, for the Asstt. Years from 2003-04 to 2008-09 (Block period) it is noticed that there is no satisfaction note available/recorded in respect of other entities. 3. In case you intend to file the appeal, you may file the same before the Addl. Commissioner of Income Tax, Central Regnge-2, 3rd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 should not come in the way of dispensation of justice. It was submitted that non recording of satisfaction is only a technical defect this should not be sole ground for annulling the assessment. It was therefore, contended that the assessment should not be quashed. 9. On the other hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 supported by i)firstly, Opening language and most importantly it is recorded that In the case of She B.K. Dhingra, Smt. Poonam Dhingra and Mls. Mayank Traders Pvt. Ltd., Horizon Pvt Ltd. search seizure took place u/s. 132 on 20.10.2008; ................ Secondly, documents/papers at pages 1 to 39 of Annexure A-87, Annexures A- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 jurisdictional High Court reported at 367 ITR 673, 367 ITR 112, 270 CTR 467 Pepsi and Pepsico orders (Case Law Paper Book Pages 1 to 16) and other two from Allahabad High Court (Gopi Apartments 366 ITR 411) and Telangana Andhra Pradesh High Court in Shetty Pharmaceuticals (26.11.2014) ITT A 662 of 2014 and batch) (Case Law Paper B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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. PARA 17 of aforesaid decision as applies to present case in favor of assessee: ' The section merely enables the Revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment 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 entries found in those documents have already been reflected in the books of accounts as per the chart furnished by the assessee which have been reproduced at Para 9 of this order and which have been analysed above and which could not be controverted by the learned DR, therefore, in ivew of the decision of the Hon ble Delhi High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x) 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 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). WP(C) 415/2014 Ors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contention of Ld. CIT(DR). Moreover, we cannot ignore the mandate of the statutory provision under the garb of technical defect. 10. Ld. Counsel for the Assessee has relied on the decision of the decision of the co-ordinate Bench of this Tribunal in the case of Tanvir Finance Leasing Ltd. Vs. DCIT in Cross objection nos. 268 to 271/Del/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved 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 Year 2003-04 is quashed. Since we have quashed the assessment on the legal issues. We are not adjudicating the other grounds raised in cross objection 353/Del/2014. The Revenue s appeal in I.T.A. No. 6404/Del/2013 pertaining to the Assessment Year 2003-04 is dismissed, as infructuous. In the result Assessee s cross objection no. 353/Del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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