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TMI Blog2019 (1) TMI 1493X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Since the instant additions have been made in the hands of the assessee, an individual, a hitherto partner of the firm M/s. K.R. Boob & Sons, we set-aside the same and order to delete them in the hands of the assessee. The AO is at liberty to take any other suitable remedial action as per the provisions of the Act, if any. We hold that the delay of 6-7 months in recording satisfaction from the completion of the assessment of the person searched cannot be held as vitiating the assessment on this count, but the delay beyond this period would call for quashing of assessment of the person other than the person searched on account of delay in recording satisfaction. CBDT Circular No.24/2015 dated 31-12-2015 has recognized that the judgment of Hon’ble Supreme Court in CIT Vs. Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] in the context of section 158BD applies to the assessment u/s.153C as well. As advert to the facts of the instant case, it is found that the assessment of Shri Shriram H. Soni, the person searched was completed on 27-03-2006. The AO of Shri Shriram H. Soni recorded satisfaction on 20-02-2007 and remitted the incriminating material etc. to the AO of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search carried out at Shri Shriram H. Soni, certain incriminating documents in the form of blank promissory notes (duly signed by borrowers), blank undated cheques (duly signed by borrowers with the amount of loan mentioned etc.) were found. Shri Shriram H. Soni had adopted the methodology of giving cash loans normally for 90 days after deducting the interest amount (varying from 1.5% to 2% per month) and the brokerage amount (between 0.25% to 0.50% per month). Thus, as against the loan of ₹ 1 lakh, the borrower received only a sum of ₹ 94,750/- after deduction of interest of ₹ 4,500/- @ 1.5% per month for 3 months and brokerage ₹ 750/- @ 0.25% per month for 3 months. At the time of borrowing, the borrowers handed over blank cheques of the full amount borrowed and also promissory notes. As per the incriminating documents seized from the premises of Shri Shriram H. Soni, the assessee, Mr. Pradip Kisanlal Boob, Nashik, was also found in the list of borrowers of Shri Soni. The AO of Shri Shriram H. Soni recorded his satisfaction that certain money, bullion, jewellery or other valuable articles etc. belonged to the assessee. The AO of the assessee issued notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole case of the AO is that the two cheques of ₹ 5 lakhs each issued by the assessee were found from the premises of Shri Shriram H. Soni along with promissory notes which evidenced that he took loan of ₹ 10 lakhs from Shri Shriram H. Soni on which interest and brokerage of ₹ 1,57,500/-, ₹ 2,10,000/- and ₹ 2,10,000/- were paid during the three assessment years under consideration out of unexplained income. We have gone through the copies of two cheques, which constitute the bedrock of the additions. A copy of first cheque for a sum of ₹ 5 lakhs has been placed at page 34 of the paper book, which has been signed by one Shri Boob as partner of M/s. K.R. Boob Sons. Second cheque, a copy of which is placed at page 36 of the paper book, is also for a sum of ₹ 5 lakhs which has also been signed by Mr. Boob as partner of M/s. K.R. Boob Sons. Copies of promissory notes have also been placed at page35 and 37 of the paper book. These promissory notes have also been signed by Mr. Boob as partner of M/s. K.R. Boob Sons. It is an undisputed position that M/s. K.R. Boob Sons was a partnership firm existing during the relevant period. A copy of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm, we fail to comprehend as to how the addition on account of interest and brokerage thereon could be made in the hands of the assessee in his individual capacity. In view of the foregoing discussion, we are satisfied that the addition in respect of any undisclosed income from the transaction of payment of interest and brokerage from undisclosed sources, if any, should have been considered only in the hands of M/s. K.R. Boob Sons, a partnership firm and not the assessee. Since the instant additions have been made in the hands of the assessee, an individual, a hitherto partner of the firm M/s. K.R. Boob Sons, we set-aside the same and order to delete them in the hands of the assessee. The AO is at liberty to take any other suitable remedial action as per the provisions of the Act, if any. 6. Notwithstanding the above factual position, the assessee has also raised a legal issue urging that the assessment in this case be quashed as the AO of Shri Shriram H. Soni recorded satisfaction much after the completion of assessment in the hands of Shri Shriram H. Soni before transmitting the incriminating material to his AO. A little narration of factual matrix is necessary. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Delhi High Court in CIT Vs. Bharat Bhushan Jain (2015) 370 ITR 695 (Delhi) . In that case, the satisfaction notes were recorded between 10 months to one and one half year. The Hon ble High Court held that the notices issued u/s.158BD were invalid for want of late recording of satisfaction. Similar issue came up for consideration before the Hon ble Gujarat High Court in Pr. CIT Vs. Jitendra H. Modi (HUF) (2018) 403 ITR 110 (Guj.) in which case, a delay ranging between 10 months to 1 years was held to be unduly delayed. Resultantly, the appeals were held to have been rightly dismissed. If we go through the ratio of the above referred decisions, it appears that whereas the Hon ble Supreme Court and the Hon ble Delhi High Court in the first case have held the recording of satisfaction after 3 and half months or five months from the assessment of the persons searched as valid, the Hon ble Delhi High Court in the later case and the Hon ble Gujarat High Courts have held the delay of 10 months to 1 and half year as fatal. Aligning these judgments in right perspective, we hold that the delay of 6-7 months in recording satisfaction from the completion of the assessment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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