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TMI Blog2018 (7) TMI 2021X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be validated on this count too. Accordingly, the proceedings u/s.153C and consequential assessment deserve to be quashed. Once, the impugned assessment u/s. 153C of the Act has been quashed on legal aspect of the case, as discussed above, we need not to adjudicate upon extensive arguments made by both the parties on the merits of the addition made and sustained by the authorities below. - Decided in favour of assessee. - ITA No. 807/Del./2017 - - - Dated:- 18-7-2018 - Shri Bhavnesh Saini, Judicial Member And Shri L.P. Sahu, Accountant Member For the Appellant : Shri Raj Kumar Gupta And Shri Sumit Goel, C.A. For the Respondent : Shri Vijay Verma, CIT/DR ORDER Per L.P. Sahu, A.M.: This is an appeal filed by the assessee against the order of ld. CIT(A)-5, Delhi dated 08.12.2016 for the assessment year 2010-11 on the following grounds : 1. That under the facts and circumstances, the impugned A.Y. 2010- 2011 being an unabated Asstt. Year and the documents relating to assessee found in search of a 3rd party are not incriminating in nature, hence, the A.O. exceeded his jurisdiction to frame Asstt. u/s 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um amount shown was more than the net worth of assessee company. The Assessing Officer also examined the financial results of the appellant. The Assessing Officer also examined the information received from the Assessing Officer of the person searched and also referred to the local enquiry made where the premises stated to be of M/s. Mridul Securities (P) Ltd. was found locked. On the basis of an enquiry made from RoC also, the Assessing Officer observed that no transaction was made by Mridul Securities with the appellant during the year under consideration. He, therefore, finding the explanations of the assessee as unsatisfactory, added a sum of ₹ 90,00,000/- u/s. 68 of the Act vide order u/s. 153C of the Act, treating the same to be the bogus share capital received by the assessee in the garb of accommodation entry. 3. The assessee carried the matter in appeal before the ld. CIT(A), where he challenged the validity of assessment proceedings u/s. 153C as well as the addition on merits. The ld. CIT(A) while deciding the appeal of assessee, rejected the legal pleas raised on the validity of assessment proceedings, but did not decide the addition of ₹ 90,00,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jainco Group of cases at G-10, Plot No.6, Aditya Commercial Complex, Preet Vihar, Delhi-92. The said documents were handed over to the then Assessing Officer of the assessee vide letter dated 21.02.2014 (placed at page 27 of DR s paper book). 4.2 Thereafter, the Ld. AR further referred to the satisfaction note dated 03.03.2014 recorded by the A.O. of the assessee, which reads as under : M/s Lucky Fashions Private Limited (A.Y.2010-11) A satisfaction note dated 21/02/2014 has been received from the DCIT Central Circle, Ghaziabad vide letter F.No.DCIT / CC / GZB / Agarwal Associates Group/2013-2014/2855 dated 21/02/2014 in this case. Search has taken place on 19/10/2011 in the case of M/s Agarwal Associates Group of Cases. In view of the details of satisfaction note received I am satisfied that it is a fit case for issue of notice u/s.153C for the assessment year 2010-11. Sd/- 4.3 Referring to the satisfaction note dated 21.02.2014, the ld. AR pointed out that in the said satisfaction note the seized pages have been identified as ....trial balance in the name of M/s Lucky Fashions Pvt. Ltd. for F.Y.2009-10 . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the satisfaction note must record that incriminating material has been found which belonged to 3rd person. In view of this, the Ld. AR argued that the proceedings initiated u/s.153C on the basis of such satisfaction notes cannot survive. The Ld. AR further contended that, even otherwise, none of the documents found and seized during the course of search are of incriminating nature. It has been submitted that all these documents relates to issuance of 36000 shares to M/s Mridul Securities Pvt. Ltd. for ₹ 90 lacs by assessee and this transaction of issuance of shares by assessee to M/s Mridul Securities Pvt. Ltd. stood recorded in the financial audited books of the assessee as well as of M/s Mridul Securities Pvt. Ltd., at the time when the said transaction took place in A.Y.2010-11 and much before the date of search on Jainco Group on 19.10.2011 (A.Y.2012- 13). It has been contended that when the said transaction has taken place in normal course, through banking channel and recorded in the books of both the parties, then the documents relating thereto cannot be held as of incriminating nature. It has been contended that certain documents, not fully filled up and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized in search of a party other than the assessee, should be incriminating in nature for initiating proceedings u/s.153C. The claim of the Ld. D.R. is that, the papers found and seized during search on a 3rd party, if relates to the assessee, this fact in itself is sufficient for providing the legally valid jurisdiction to the A.O. to initiate proceedings u/s.153C. It has been contended that it is not necessary that in the satisfaction note recorded by the A.O. of the assessee, the findings for the documents seized to be of incriminating nature must exists, nor is there any such mandate in the provisions of section 153C. The Ld. D.R. further submitted that the documents found during search relates to some transaction of issue of 36,000 shares of the assessee company to one M/s Mridul Securities Pvt. Ltd. for ₹ 90,00,000/- during the financial year relevant to assessment year 2010-11, however the documents being found at the place of searched party proves the nature and character of these documents as incriminating one. The Ld. D.R. also submitted that the said documents, at places, are not fully filled up in all respects which also makes them incriminating in nature. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suing notice u/s. 153C and assessing or re-assessing the income of such other person, is that the documents seized should belong to such other person. If such requirement is not satisfied, recourse cannot be had to the provisions of section 153C of the Act. In order to record valid satisfaction, the Assessing Officer of the searched person is also legally obliged to correctly record the documents seized in the search operation, which he thinks belonging to other person. In the case at hand, the satisfaction note, as reproduced above, unequivocally speaks of the documents seized as trial balance in the name of appellant for F.Y. 2009-10 and it is on the basis of this trial balance that the Assessing Officer of the searched person recorded the satisfaction that it pertains to the appellant. It is, however, admitted by the ld. DR that no such trial balance of assessee finds place in the documents seized on the impugned search nor any such trial balance was forwarded by the Assessing Officer of the searched person to the Assessing Officer of the assessee. On this premise only, we are of the opinion that the satisfaction note recorded by the searched party itself is defective. As alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument found and seized are incriminating in nature. It was contended that if there is no such finding in the satisfaction note, such satisfaction note cannot provide valid jurisdiction to initiate proceedings u/s.153C. It was also contended that the law never intended to initiate proceedings u/s.153C in all such cases where the documents are found and seized relating to a 3rd party in a search carried on someone, irrespective of the nature of such documents i.e. whether of incriminating nature or not. The detailed arguments on this aspect have been advanced by both the parties, as mentioned above. On examination of both the satisfaction notes dated 21.02.2014 and 03.03.2014, we find that there is not even a whisper that the documents found and seized, which are the basis of initiation of proceedings u/s.153C are incriminating in nature. The satisfaction notes simply mentions the documents seized w.r.t. the Pg. Nos. and nature thereof as trial balance of assessee for F.Y.2009-10. The satisfaction notes even do not mentioned that the said trial balance mentioned in the satisfaction note or any other document found seized is of incriminating nature. The question whether the satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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