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TMI Blog2014 (11) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore, for the sake of convenience, a single and consolidated order is being passed. Earlier, cross objections were heard on 09.09.2014 however at the conclusion of hearing, Ld. D.R. had mentioned that she had written to A.O. for certain clarifications with regard to satisfaction note u/s 153C, which had not yet been received, therefore she wanted some time to file the same as and when the same are received. Therefore, before dictating the order, it was considered appropriate to refix the matter, therefore, the same was refixed and was finally heard on 26.09.2014. 2. At the outset, Ld. A.R. invited our attention to 1st ground of C.O. and argued that since assessee had raised legal ground for initiation of proceedings of assessment u/s 153C these should be first disposed off before hearing the matter on merits. Ld. A.R. invited our attention to paper book pages 34 to 38 and submitted that these are copies of letters obtained by assessee under RTI from various files of assessees whose premises were searched and action was initiated u/s 153A of the Act. It was submitted that from the letters obtained from the files of persons searched, it clearly emerges that no satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Bank of Patiala Vs S K Sharma (1996) AIR 1669. Without prejudice the Ld. D.R. filed a copy of letter dated 09.09.2014 written by the A.O. in which he had claimed to have enclosed satisfaction note recorded by the A.O. of such other persons Without prejudice to the above, Ld. D.R. further argued that assessee had not taken such legal grounds before Ld. CIT(A) and, therefore the assessee should not be allowed to take up such a stand at this stage. 4. Ld. A.R. in his rejoinder submitted that such ground was taken before Ld . CIT(A) also who had summarily dismissed this ground and in this respect, our attention was invited to paper book page 25 where a copy of written submissions before Ld . CIT(A) were placed. Our specific attention was invited to para 4-5 of such written submissions and commenting upon satisfaction note produced by Ld. D.R., the Ld. A.R. submitted that this satisfaction note as produced by Ld. D.R. relates to the satisfaction note recorded by A.O. of other person therefore, his contention that no satisfaction note was recorded by A.O. of searched persons with regard to other persons is correct. He submitted that the case law relied upon by him squarely cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undersigned is also the jurisdictional AO of M/s Akash Arogya Mandir Pvt. ltd., 192-C, J K Pocket, Dilshad Garden, New Delhi, this satisfaction note is placed in the file before issuing notice u/s 153C. 5.1 The fact that this satisfaction note is a satisfaction note recorded by A.O. of other entities also becomes verifiable from the fact that assessee under RTI Act had obtained information regarding the fact that satisfaction note in respect of other entities was not found in the files of A.O. of searched persons as is evident from paper book pages 34 to 38. 6. In such circumstances, Hon'ble Delhi High Court in the case of Pepsi Foods P. Ltd. Vs ACIT 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 search person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) is concerned, we are, with respect, unable to agree with the observations that as the proceedings are at the very initial stage the satisfaction is neither required to be firm or conclusive. We say so because we are of the view that this conclusion of the Allahabad High Court is premised on a consideration of the provisions of Section 158BD of the said Act which are entirely different from Section l53C. Under Section 158BD the Assessing Officer's satisfaction is with regard to 'undisclosed income' belonging to a person other than the searched person. It is obvious that such satisfaction under Section l58BD by its very nature has to be prima facie and tentative. The same methodology cannot be imported into Section 153C where, in our view, the Assessing Officer is required to arrive at a conclusive satisfaction that the document belongs to a person other than the searched person because such Assessing Officer has to rebut the normal presumptions which are suggested by the statute under Sections 132( 4A)(i) and 292C( 1 )(i) of the said Act. Therefore, the decision of the Allahabad High Court in the case of Classic Enterprises (supra) would not come to the aid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required for the manufacture f the beverage from PFL (Pepsi Foods Ltd.), or a manufacturer approved in writing by PFL (Pepsi Foods Ltd.) at a price and in accordance with the terms and conditions established by the seller. Being the sole supplier of concentrate to Jaipuria Group, Pepsi Foods Pvt. Ltd. is closely associated to Jaipuria Gr. During the post search investigation, summons were issued to M/s Pepsi Foods Pvt. Ltd. to furnish certain details. The complete details were not furnished. The following documents were also found and seized during the course of search and seizure action u/s 132( I) of T.T. Act, 1961 belonging to (PFL)' M/s Pepsi Foods Pvt. Ltd. (PAN:AAACP l557E) over which the jurisdiction lies with the' undersigned: Ay/Ann./Page No. Description of Annexure C-4/A-2177 This page contains summary of PFL Claims as on 29-1/-2011 (Claims up to 31 II 0/20 II C-41 A-4118-20 These pages contain a detail of DVAT impact (April' 10- June' 10) Vs PFL Support report and MRP Plan. C-4/A-4/21-23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson is satisfied that the seized documents belong to a person other than the searched person. We are afraid, that going through the contents of the satisfaction note, we are unable to discern any satisfaction of the kind required under Section 153C of the said Act. 12. This being the position the very first step prior to the issuance of a notice under Section 153C of the said Act has not been fulfilled. Inasmuch as this condition precedent has not been met, the notices under Section 153C are liable to be quashed. It is ordered accordingly. The writ petitions are allowed as above. There shall be no order as to costs. 7. The Ld. A.R. had also invited our attention to a decision of Hon ble Tribunal in the case of M/s. DSL Properties (P) Ltd and had submitted that in that case as in the present cases, the A.O. of searched person and that of persons covered u/s 153C were same and the Tribunal had held that in spite of A.O. being same, separate satisfactions has to be recorded. The relevant findings of Tribunal are reproduced below: HELD ⦁From a reading of section 153C( 1) it is evident that action under section 153C can be taken in respect of any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as the assessee both were centralized with the ACIT, Circle 8. It also stated that since the Assessing Officer of both the persons was the same, there was no question of handing over and taking over of the documents. The Bench does not agree with this view of the revenue. If the Assessing Officer is assessing the person searched as well as other person whose assets, books of account or documents were found at the time of search, then also, first while making the assessment in the case of the person searched, he has to record the satisfaction that the money, bullion, jewellery or other valuable article or thing or books of account or documents belong to the person other than the person searched. Then the copy of this satisfaction note is to be placed in the file of such other person and the relevant document should also be transferred from the file of person searched to the file of such other person. Thereafter in the capacity of the Assessing Officer of such other person, he has to issue the notice under section 153C read with section 153A. The Assessing Officer of the person searched and such other person may be the same, but these are two different assessees and, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llected in search to the AO of an assessee other than the searched assessee, what is required to be satisfied is that the money, bullion, jewellery or other valuable article or thing or books of account or documents seized in the course of search of an assessee belong to or relate to a person other than the searched assessee. In other words, unlike under s. 158BD for transferring a file under s. 153C, there is no need to examine whether the books of accounts or other evidence or materials seized in the course of search of an assessee represents or proves undisclosed income of another assessee. On the other hand, for transferring the file to the AO of such other assessee, all what is required to be considered is whether the materials or books of accounts or evidence recovered relates to another assessee, which may or may not lead to an assessment in the ease of the other assessee after transfer of the file to his AO. This is only an internal arrangement to be made between two Departmental Officers and in this regard the only fact that needs to be verified is whether the assessee whose books of accounts or materials are recovered in the course of search of any other assessee, is a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r evidence or books of accounts or goods seized is wrong and that those do not belong to him. In other words, the transfer of recovered books of accounts, evidence or materials is only a procedural formality to be complied with by the AO who searched an assessee and recovered materials pertaining to another assessee, and the AO who takes up assessment under s. 153C against the latter we have full jurisdiction to appreciate evidentiary value of the books of accounts or materials or goods received from the other officer and proceed to make assessment in his own way. Therefore there is, no merit in the contention of the assessee's counsel that satisfaction is required to be recorded by the AO, who conducted the search before transferring materials or articles or things found belonging; to another assessee.- Dr. K.M. Mehaboob vs. Dy. CIT Anr. (2012) -76 DTR (Ker) 90 affirmed. 11. Therefore, there are conflicting views of Hon'ble Delhi High Court and Hon'ble Kerala High Court. The assessee falls into the jurisdiction of Hon'ble Delhi High Court in view of the case law of Pepsi Foods (P) Ltd., therefore, we held that recording of satisfaction by A.O. of searched pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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