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TMI Blog2018 (2) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee against the order of the CIT(A)-39, Mumbai dated 20.03.2014 for assessment years 2003-04 to 2006-07. Since all these appeals relate to the same assessee and issues are common, they are heard together and disposed off by this consolidated order for the sake of convenience and brevity. ITA No. 4574/Mum/2014 - A.Y. 2003-04 2. The assessee has raised the following rounds of appeal: - "1. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the action of the Ld. A.O. in issuing the notice dated 22/10/2010 u/s 153A r.w.s 153C without appreciating the fact that the A.Y.2003-04 does not fall within the purview of section 153C of the Income Tax Act and therefore the notice issued by the A.O. u/s 153 A r.w.s. 153C of the Income Tax Act is illegal, void, bad in law and /or without jurisdiction and therefore the impugned order is liable to be quashed. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the action of the Assessing Officer issuing the notice dated 22/10/2010 u/s 153A r.w.s 153C without appreciating the fact that no incriminating material or document was found during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orwarding the seized papers. 4. The brief facts of the case are that a search action was conducted under Section 132 of the Act in the case of M/s. Bhatia International Group on 25.09.2007. During the course of search, certain documents showing assessee's investments in M/s. Bhatia International Group was found and seized, which were forwarded to the AO of the assessee in May, 2010. The assessee is engaged in the business of hospitality, real estate,trading & investment. The said seized papers pertaining to the assessee comprised of regular bank statements of the assessee for March 2003, form of application of shares of Bhatia International Ltd dated 22.02.2003, copy of return of income filed on 31.10.2002 by the assessee for A.Y. 2002-03, details of payment made through cheque amounting to ₹ 4,00,000/- dated 23.03.2003, application to Board of Directors of Bhatia International Ltd and copy of the resolution certifying the limit of making investments as per companies Act. All these papers were already part of audited books of account of the assessee and were available on record and would in no way affect the income of the assessee in those years to which these papers pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said view/ground as raised by the appellant. On a plain reading of the provisions of section 153A/153C, it can be seen that the condition precedent for assumption of jurisdiction under s. 153C is the satisfaction reached that any money, bullion, jewellery or valuable article or thing or books of accounts or document seized or requisitioned belongs to a person other than a person searched. In the course of search in the premises of M/s Bhatia International group, certain documents belonging to the assessee were found and seized. According to the appellant, the documents seized are Balance Sheet and Profit & Loss Account and Bank statement, which are part of the regular returns filed and therefore cannot be treated as any incriminating material. The said contention of the appellant is not supported by the provisions of law. The relevant provision of the Act only speaks of 'documents'; there is no mandate in the Act that the documents ought to be incriminating documents so as to enable the Assessing Officer to assume valid jurisdiction. If such an interpretation is accepted, it would result in the said provision being rendered otiose. As observed by the Hon'ble Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. In view of the same strict compliance as to the provisions of the sub-section is to be followed. The learned A.R. relied on a series of decisions in defence of his argument: - i. CIT vs. MN Rajaraman 5 ITR 62 ITAT Chennai ii. Avinesh Estate and Resorts vs. DCIT 151 ITD 399 (Vizag) iii. CIT vs. Veerprabhu Marketing Ltd. 388 ITR 574 (Cal) iv. DSL Properties Pvt. Ltd. vs. DCIT ITA No. 1334/Del/2012 v. Beejay Security & Finance Ltd. ITA No. 4859/Mum/2009 The learned A.R. prayed before the Bench that the issue of non-recording of satisfaction is covered in favour of the assessee by the ratio laid down in the Hon'ble High Court and the Coordinate Benches. Therefore the proceedings under Section 153C of the Act and the consequent assessment framed deserved to be knocked down and quashed. The learned A.R. also brought to the notice of the Bench the distinction between the provisions of Section 153A and 153C of the Act and submitted that they are totally on different footings. He submitted that in respect of section 153A of the Act no sooner the search action is carried out, applicability of the provisions of Section 153A of the Act are automatic and no satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd are liable to be quashed on account of non recording of satisfaction by the AO of the searched person at the time of forwarding seized materials to the AO of the other person. A perusal of the order of the CIT(A) reveals that the CIT(A), after calling for the assessment records, observed that there is no express satisfaction recorded by the AO of the searched party as is clear from page 8 of the order of the CIT(A) which is extracted below: - "Besides, it can be seen that in the order of assessment, the Assessing Officer has stated that the seized documents belonging to the appellant herein were received in his office in May 2010. From the said statement it is implicitly clear that there was a satisfaction indicating that documents pertaining to the appellant herein were found at the time of search and that the act of forwarding of the material itself denotes satisfaction on the part of the Assessing Officer of the person searched." Thus, it is clear from the above that the CIT(A) on examination of the assessment records did not find any satisfaction recorded by the AO of the searched person and came to the conclusion that satisfaction was presumed and implied. We also notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction of third party would issue notice under Section 153C. In the case of Beejay Security & Finance Ltd. (supra) the Coordinate Bench held as under: - "11. We have carefully considered the rival contentions. We will first consider the plea of the Assessee regarding the existence of satisfaction on the part of the Assessing Officer of the person who was searched u/s.132 of the Act, to proceed against the Assessee (who was a person who was not searched u/.132 of the Act) u/s.153- C of the Act. In doing so we are presume that there was a satisfaction note recorded by the ACIT CC-10 on 23/3/2007 and we also presume that the notice under section 153A dated 26/3/2007 was in fact a notice under section 153C and there was a typographical error in such notice. We also presume that in the course of assessment proceedings section 153A was corrected as 153C after due consent by the accountant of the assessee ( in the notices as well as return filed by the assessee). We however hasten to add that we are not giving any finding on the claim of the Revenue or the Assessee regarding existence of satisfaction note or typographical error in the notice u/s.153-A of the Act. 12. The first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account or will not produce them or that the person is in possession of money, bullion or jewellery or other valuable articles or things which he has not disclosed or would not disclose for the purpose of the IT Act, 1961. Further a seizure of only documents which would not be produced by a person searched can be made. As far as the present case is concerned, we find that the assessee has entered into an agreement for lease of the property under lease agreement dated 6/8/2000. The assessee has been declaring income from letting out of the aforesaid property regularly in its books of account till the date of search and thereafter. Thus the factum of the assessee receiving income in the form of rent is very much in the knowledge of the department. In fact this fact has been duly informed by the assessee in its letter dated 22/1/2007 to the DDIT (Inv.), Unit 7(2). The satisfaction note under section 153C of the Act merely says that the documents were being sent to verify the transaction of lease. On the facts of the case it cannot be said that the AO was satisfied regarding existence of any undisclosed income which would warrant initiation of proceedings under section 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, only the assessments which are pending on the date of initiation of search abate. The effect is that complete assessments do not abate. There can be two assessments for the same assessment year. Assessments which are not pending before the AO on the date of search but are pending before an appellate authority will survive. (ii) An assessment can be said to be "pending" only if the AO is statutorily required to do something further. If a s. 143(2) notice has been issued, the assessment is pending. However, the assessment in respect of a return processed u/s. 143(1) is not "pending" because the AO is not required to do anything further about such a return. (iii) The power given by the Proviso to 'assess" income for six assessment years has to be confined to the undisclosed income unearthed during the search and cannot include items which are disclosed in the original assessment proceedings. (iv) On facts, the returns had been processed u/s. 143(1), the assessment were not "pending" and as no material was found during the search, the additions could not be sustained Respectfully following the same, we delete all the additions made and allow the appeals of the assessee." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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