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TMI Blog2019 (4) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... hed person qua the other person - assessment of jurisdiction for issuance of notice u/s 153C of the Act cannot be sustained and, on that ground, the assessee succeeds in this appeal. - Decided in favour of assessee. - I.T.A. No.2591/Del/2015 - - - Dated:- 9-4-2019 - Shri R.K. Panda, Accountant Member And Shri K. Narasimha Chary, Judicial Member For the Assessee : Shri P.C. Yadav, Advocate For the Department : Shri Sanjay Goyal, CIT-DR ORDER PER K. NARASIMHA CHARY, JM This appeal is filed by M/s Ambawatta Buildwell P. Ltd. ( the assessee ) against the order dated 24.2.2015 in Appeal No. 73/2013-14 passed by the Learned Principal Commissioner of Income Tax [OSD], Gurgaon (hereinafter referred to as the Ld. CIT ) for the Assessment year 2010-11. 2. Brief facts of the case are that the assessee, namely, M/s Ambawatta Buildwell P. Ltd. (ABPL) is a private limited company and is engaged in the business of real estate. There were search and seizure operations at the residential as well as office premises of Krrish Group on 9.11.2011 and consequently survey action u/s 133A of the Income tax Act, 1961 ( the Act ) was also carried out on 15.11.2011 at the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the searched person on 29.8.2013 and, therefore, the satisfaction note recorded on 3.10.2013 by the ld. AO is only in the capacity as the AO of the assessee but not as the AO of the searched person. He consequently submits that the law u/s 153 mandates that the AO of the searched person shall first record his satisfaction that the documents do not belong to the searched person but they belong to the other person, and then the documents could be transmitted to the AO of the other person, who shall proceed to examine the documents and to record satisfaction as to the escapement of income, if any. He, therefore, submits that in order to issue notice u/s 153C there shall be two circumstances, namely, the first satisfaction by the AO of the searched person as to the belongingness of the documents or material and the second satisfaction by the AO of the other person on the aspect of escapement of income. 5. Basing on the provisions u/s 153C and the decision of the Hon ble jurisdictional High Court in the case of RRJ Securities, 380 ITR 612 (Del); Pepsi Foods, 367 ITR 297; and Adarsh Kumar vs DCIT, ITA No.5095 decided on 15.11.2017 by the Hon ble jurisdictional High Court in the ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .8.2013. The satisfaction note was recorded by the ld. AO on 3.10.2013. Basing on this, as contended by the learned AR, it is evident that the satisfaction note dated 3.10.2013 was recorded by the ld. AO of the assessee and certainly, it could not be by the AO of the searched person inasmuch as long prior to these dates, the ld. AO of the searched person parted with the documents which were received in the Central Circle on 29.8.2013. Even if the AO of the searched person and the AO of the assessee are one and the same, in view of the dates, namely, date of receipt of documents by the Central Circle being 29.8.2013 and the date of satisfaction note being 3.10.2013, the irresistible inference is that the satisfaction note dated 29.8.2013 was recorded by the ld. AO as the AO of the other person i.e. the assessee but not AO of the searched person. Had such a note been recorded by the ld.AO any date prior to 29.8.2013, there would have been a possibility of understanding that such a note could have been recorded by the ld. AO as the AO of the searched person. However, in view of the admitted dates of receipt of the seized documents by the Central Circle and the subsequent satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C of the Act. (v) There do not have to be two separate satisfaction notes prepared by the AO of the searched person even where he is also the AO of the other person. In such event, the AO need make only one satisfaction note. That satisfaction note is qua the other person. Further it is sufficient that such satisfaction note is placed in the file of the other person by the AO in his capacity as the AO of such other person. (vi) It is only in certain cases, where the document is such that it may belong to more than one person (including the searched person) that the AO will have to indicate in the satisfaction note the reasons why he is of the opinion that the document belongs to the other person and not the searched person. (vii) Where the AO of the searched person records that the seized document in question belongs to the other person, and where necessary, gives the reasons therefor, the requirement of Section 153C stands satisfied. The failure by the AO in such case to record in the satisfaction note that such document does not belong to the searched person will not vitiate the proceedings under Section 153C against the other person. 9. It is, therefore, clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recorded u/s 153C of the Act. This decision is also not applicable to the facts of the case. Likewise, no decision is brought to our notice where the decision of the Hon ble jurisdictional High Court in the case of Ganpati Fincap Services ltd. (supra) was disturbed. 12. We are, therefore, of the considered opinion that the decision in the case of Ganpati Fincap Services ltd. (supra) holds the field and the recording of satisfaction not by the AO of the searched person qua the other person prior to the initiation of the proceedings against the other person is a sine qua non for triggering the proceedings against the other person u/s 153C of the Act and, therefore, in the absence of such recording of satisfaction by the AO of the searched person qua the other person, assumption of jurisdiction by the AO by issuance of notice u/s 153C of the Act cannot be sustained. 13. It is pertinent to note that in the case of Ganpati Fincap Services Ltd;(supra), Hon ble jurisdictional High Court stated that there do not have to be two separate satisfaction notes prepared by the AO of the searched person where such person happens to the AO of the other person but one satisfaction note by su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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