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TMI Blog2021 (3) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings u/s 153C of the Act. Accordingly, we uphold the order passed by the learned CIT(A) in both the years under consideration. - Decided against revenue. - ITA No. 326/Bang/2018 ITA No. 327/Bang/2018 CO No. 73/Bang/2018 CO No. 74/Bang/2018 - - - Dated:- 18-3-2021 - Shri George George K, JM And Shri B. R. Baskaran, AM Revenue by : Sri. Muzaffar Hussain, CIT-DR Assessee by : Sri. S. Ramsubramaniyam, CA ORDER Per Bench : Both the appeals filed by the Revenue and both the cross objections filed by the assessee are directed against the orders dated 15.11.2017 passed by the learned CIT(A)-3, Bangalore and they relate to the assessment years 2007-2008 and 2008- 2009. 2. In both the years, the Revenue is challenging the decision of the learned CIT(A) in holding that the proceedings initiated u/s 153C of the Act is not valid. 3. In its cross objections filed for both the years, the assessee is aggrieved by the decision of the learned CIT(A) in not disposing the issues urged on merits. 4. The facts relating to the case are stated in brief. The Revenue carried out search and seizure operations u/s 132 of the Act, in the hands of a group concern of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds urged on merits on the reasoning that they become academic in nature. Against the order so passed by the learned CIT(A), the Revenue has filed appeals in both the years and the assessee has filed cross objections contending that the learned CIT(A) ought to have adjudicated the grounds urged on merits. 6. We heard the parties and perused the records. For the sake of convenience, we extract below the order passed by the learned CIT(A) on this legal issue:- 4.3 A copy of the remand report along with the comments of JCIT was provided to the appellant and it filed its rejoinder on the same vide letter dt 15.11.2012. The reply of the appellant and reports of the AO and JCIT have duly been considered. It is important to note that assessment proceedings of the appellant for the Assessment Year 2003-04 to Assessment Year 2009-10 were pending at that point of time when these reports were called for. Of course, AY 2003-04 to AY 2008-09 involved the identical issue of challenge to the validity of assessment proceeding initiated under section I53C of the Act. The appeals of the appellant for A Y 2004-05, 2005-06, 2006-07 and 2009- 10 were decided by CIT(A) vide his order dt 21.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdictional High Court in appellant's own case for A Y 2004-05 to A Y 2006-07, the additional ground of appeal 1 raised vide letter dt 19.09.2011 is allowed. 7. Before us, the learned CIT- DR reiterated that the Assessing Officer has recorded satisfaction for initiation of proceedings u/s 153C of the Act. He also took us through the satisfaction note. The Ld A.R, on the contrary, submitted that similar kinds of satisfaction note was available in AY 2004-05 to 2006-07 also and the High Court has decided the legal issue in favour of the assessee, since there is no mention about availability of undisclosed income. 8. We notice that the Hon ble jurisdictional Karnataka High Court has considered the provisions of sec.153C relevant for AY 2004-05 to 2006-07 and the relevant observations made by the High Court are extracted below:- 45. Sections 153A, 153B and 153C were inserted by the Finance Act, 2003, with effect from 1/6/2003. They have replaced the post-search block assessment scheme in respect of any search or requisition made after 31/5/2003. Sub-section (1) of Section 153A inter alia deals with assessment in case of search or requisition. It begins with a non-obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the other person in accordance with the provisions of Section 153A, if that Assessing Officer is satisfied that the books of account or documents or valuable assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of Section 153A. Sub-section (2) of Section 153C states that where books of account or documents or valuable assets seized or requisitioned as referred to in subsection (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under Section 132 or requisition is made under Section 132A and in respect of such assessment year - (a) no return of income has been furnished by such other person and no notice under sub-section (1) of Section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of Section 143 has been served and limitation of serving the notice under sub-section (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and based on the said decision, the Central Board of Direct Taxes has also issued circular dated December 31, 2015, vide No. 24 of 2015.The relevant extract of the circular for ready reference can be extracted as under (see [2016] 380 ITR (St.) 32 ) : The issue of recording of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation. 2. The hon'ble Supreme Court in the case of Calcutta Knitwears in its detailed judgment in Civil Appeal No. 3958 of 2014, dated March 12, 2014 (available in [2014] 362 ITR 673 (SC) ; NJRS at 2014-LL- 0312-51) has laid down that for the purpose of section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the Assessing Officer before he transmits the record to the other Assessing Officer who has jurisdiction over such other person under section 158BD. The hon'ble court held that 'the satisfaction note could be prepared at any 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 ; or (b) in the course of the assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There has been no single decision cited by the learned counsel for the Revenue where the assumption of jurisdiction of the Assessing Officer is in the absence of any incriminating material or undisclosed income having been detected during the course of search leading to reopening of a concluded assessment. In the instant case, though documents belonging to the assessee were seized at the time of search operation, there was no incriminating material found leading to undisclosed income. Therefore, assessment of income of the assessee was unwarranted. Consequently, no satisfaction was recorded in the case of the assessee. We answer the substantial question of law No. 2 by holding that the Tribunal was not correct in holding that the assessment under section 153C was valid despite there being no satisfaction recorded to the effect that the documents found during the search on June 17, 2008 were incriminating in nature and prima facie represented undisclosed income. 10. There is no dispute that there is parity of facts between the years decided by the Hon ble jurisdictional Karnataka High Court and the years under consideration. Further the same provisions of sec.153C are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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