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TMI Blog2016 (11) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... Neera Malhotra, CIT(DR) Shri S. Praveen S., DCIT, CC, 1(3) ORDER Per Bench All these 7 appeals are filed by the assessee which are directed against a combined order of ld. CIT(Appeals)-VI, Bangalore dated 25.8.2014 for the assessment years 2005-06 to 2011-12. All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience. 2. Apart from raising various grounds along with the appeal memo in all these 7 years, the assessee has also raised a common additional ground in all these years and hence, we first proceed to dispose of the additional ground of assessee s appeal, which is as under:- 9. For that the impugned additions are liable to be set aside since there is no satisfaction as contemplated under section 153C of the Act of the A.O. of the searched persons in the case of the appellant. 3. It was submitted by the ld. AR of assessee that as per the provisions of section 153C of the I.T. Act, the AO of the searched person has to record satisfaction and only after that, the AO of any other person can initiate proceedings u/s. 153C against such other person. In support of this contention, he placed relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Hon'ble Supreme Court in the case of CIT Vs Calcutta Knitwears 43 taxmann.com 446 (SC) , which is rendered in connection with search assessments under Chapter XIV-B (sections 158B to 158BI), which are different provisions compared to assessments of the assessee which relate to the new search assessment procedure as contained under sections 153A to 153A which are brought into statute w.e.f 1-6-2003. 2. Secondly, the facts in the case of CIT Vs Calcutta Knitwears 43 taxmann.com 446 (SC) are different from that of the assessee as the officer of the person covered under provisions of Section 158BC was different from the officer of the person covered under provisions of Section 158BD and therefore the issue of transmission of records (refer Para 39) came up before the Hon'ble Court and consequently the issue of the who should recording of satisfaction and at what point of time the satisfaction should be recorded was also considered . In this context the Hon'ble court stated that the satisfaction can be recorded at any of the 3 stages - (1) At the time of initiation of proceedings u/s 158BC, (2) along with the proceedings U/S 158BC and (3) immediately aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Knitwears 43 taxmann.com 446 (SC). 4. Therefore, in view of the fact that assessing officer of the person covered under provisions of Section 153 A being the same as the officer of the person covered under provisions of Section 153 C and the assessing officer having recorded the satisfaction before issuing notice u/s 153C, sufficient compliance has been made by the A.O as required under the provisions of the statute. Submitted for kind consideration. 6. We also reproduce the satisfaction note dated 14.12.2012 which has been submitted by the ld. DR of revenue along with her written submissions. The same is as under:- Recording of satisfaction note before issuance of notice under section 153C: Name of the assessee: Sri Gali Janardhana Reddy (Ay: 2005-06 to 2010-11) A search u/s. 132 was conducted on 25/10/2010 in the case of Mr K. Raghvacharyulu at flat No.402, Kakateeya Residency, Kappagal Road, Bellary. During the course of the search, following documents/books of account belonging to Sri Gali Janardhana Reddy were seized and the contents are explained in brief as below- RB/1 Page No.2 This page contains application filed by Mr G Janardhana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the last that Issue notice u/s. 153C of the Income Tax Act, 1961. This last line of the satisfaction note proves beyond doubt that such satisfaction note has been recorded by the same Officer who is the AO of assessee as well as of the searched persons in his capacity as AO of assessee and not in his capacity as AO of searched persons, because if satisfaction note is recorded by the AO of the searched person, it cannot be said in the said satisfaction note that Issue notice u/s. 153C of the Income-tax Act , because such notice u/s. 153C of the Act is not required to be issued in the case of searched person, but in the case of the other person i.e., the present assessee. In our considered opinion, even if the AO of assessee and the searched person is one and the same, then also, the satisfaction note has to be recorded by the AO in his capacity as AO of the searched person and not in his capacity as AO of the other person in whose case notice u/s. 153C is required to be issued. 8. In the light of the above facts, now we examine the applicability of the Tribunal s order cited by the ld. AR of assessee having been rendered in the case of Shri Vinod Kumar Chaurasia v. ACIT (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtracted hereunder:- We have heard Sri Bharat Ji Agrawal, learned senior counsel assisted by Sri Ashok Kumar, learned counsel for appellant and Sri Ashish Bansal, learned counsel for respondent assessee and have perused the records. The contention of Sri Agrawal is two fold. Firstly, he contends that in the instant case, the Assessing Officer of the 'searched person' and the 'other person' being 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the instant case, i.e. Section 153C is as under: 153C. Assessment of income of any other person. (1) Notwithstanding 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 158BC of the Act or during the stage of the assessment proceedings. It does not mean that after completion of the assessment, the assessing officer cannot prepare the satisfaction note to the effect that there exists income tax belonging to any person other than the searched person in respect of whom a search was made under Section 132 or requisition of books of accounts were made under Section 132A of the Act. The language of the provision 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 assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 132A against a person, who may be referred as 'the searched person'. Based on such search and seizure, assessment proceedings are initiated against the 'searched person' under Section 153A. At the time of initiation of such proceedings against the 'searched person' or during the assessment proceedings against him or even after the completion of the assessment proceedings against him, the Assessing Officer of such a 'searched 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whom search was made under Section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) The Assessing Officer has proceeded under Section 158BC against such other person. 11. 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. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faction' under Section 153C, which is required to be recorded in writing. However, on the other issues, the said judgment is distinguishable for the reason that in the said case, the Assessing Officer had recorded his 'satisfaction' and after recording the satisfaction on the subject matter on 02.08.2006 handed over the books of account and seized material, thus, the issue, which falls for consideration in this appeal, in fact, did not arise for consideration in the said appeal. In any case, the case at hand being squarely covered by the pronouncements of the Supreme Court, as already referred, the reliance placed by Sri Agrawal on the aforesaid judgment does not cut much ice. 6. Now it is clear from the record that satisfaction by the Assessing Officer of the searched person was not recorded before initiating proceedings under section 153C of the Act against the assessee and the impugned issue is squarely covered by the aforesaid judgment of the jurisdictional High Court. We, therefore, have no hesitation in holding that since the assessment was framed consequent to the proceedings initiated under section 153C of the Act, without recording satisfaction by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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