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TMI Blog2021 (12) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... para No. 4.8 of the order of the ld CIT(A), a finding is recorded that the ld AO of the searched persons has not recorded any satisfaction with respect to any of a material, which pertains to assessee company. On plain reading of the section it is apparent that there has to be a satisfaction in case of the persons searched by assessing officer that particular material or valuable articles found during the course of that search does not belong to the person who has been searched but that material is pertaining to the 3rd party. This is necessary to assume jurisdiction in the case of the third party. In present case there is no such satisfaction recorded by the learned assessing officer of the searched person. Further, there is no reference of any material pertaining to the assessee in the satisfaction note recorded by the ld AO of the assessee i.e. third person. Thus, the issue is squarely covered in favour of the assessee. - ITA No. 2894/Del/2015 CO No. 107/Del/2016 ITA No. 2885/Del/2015 CO No. 102/Del/2016 ITA No. 2882/Del/2015 CO No. 100/Del/2016 ITA No. 2880/Del/2015 CO No. 98/Del/2016 - - - Dated:- 25-11-2021 - SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized from the premises of other persons pertaining to property not owned by the assessee, is illegal and unjustified and, therefore, ought to be deleted. 5. That no show cause notice or any other notice with respect to any adverse inference drawn by the Assessing Officer for making any addition of any nature whatsoever for the year under consideration was ever served upon the assessee and, therefore, the consequential assessment order is illegal and void. 6. That the charging of interest u/s 234B is illegal, unjustified and ought to be deleted. 4. ITA No. 2885/Del/2015 is also filed by the ld ACIT, Central Circle-7, New Delhi in case of Karat 87 Hotels Pvt. Ltd for Assessment Year 2008-09 against the order passed by the ld CIT(A)-24, New Delhi dated 27.02.2015 raising following grounds of appeal:- 1. The order of Ld. CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in quashing the order passed by the Assessing Officer by treating the assumption of jurisdiction u/s 153C bad in law by relying on the ratio of judgment of the Hon'ble High Court in the case of M/s Pepsi Foods (P) Ltd. (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no show cause notice or any other notice with respect to any adverse inference drawn by the Assessing Officer for making any addition of any nature whatsoever for the year under consideration was ever served upon the assessee and, therefore, the consequential assessment order is illegal and void. 7. That the charging of interest u/s 234A and 234B is illegal, unjustified and ought to be deleted. 6. ITA No. 2894/Del/2015 for Assessment Year 2005-06 is filed by the ld ACIT, Central Circle-07, New Delhi in case CS Leasing Pvt. Ltd raising following grounds of appeal:- 1. The order of Ld. CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in quashing the order passed by the Assessing Officer by treating the assumption of jurisdiction u/s 153C bad in law by relying on the ratio of judgment of the Hon'ble High Court in the case of M/s Pepsi Foods (P) Ltd. (supra) and M/s PepsiCo India Holdings Pvt. Ltd. (Supra). 3. On the fact and circumstances of the case the Ld. CIT(A) has erred in law in deciding the case without going into merits of the case. 7. CO No. 107/Del/2016 is filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, ought to be deleted. 6. That, on the facts and circumstances of the case, the addition of ₹ 1,25,00,000/- u/s 69 in respect of unexplained investment on account of alleged accommodation entries received as beneficiaries, is illegal and unjustified and therefore, ought to be deleted. 7. That the addition on account of alleged accommodation entries received as beneficiaries is illegal because it is nowhere the allegation of Assessing Officer that the assessee had not recorded any asset in his books of accounts due to such alleged accommodation entries. 8. That the addition of ₹ 1,25,00,000/- on account of alleged accommodation entries is illegal because the addition was made without making any inquiry from the provider of amounts to the assessee. The addition is based merely upon the whims, fancies and caprices of the Assessing Officer. 9. That no show-cause notice or any other notice with respect to any adverse inference drawn by the Assessing Officer for making any addition of any nature whatsoever for the year under consideration was ever served upon the assessee and, therefore, the consequential assessment order is illegal and void. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee over the impugned property though the revenue had even searched all the premises of the assessee and in the absence of any direct incriminating material, any addition merely on the basis of fair market value hypothetically calculated by the assessing officer in respect of property not owned by the assessee, is illegal and unjustified and therefore, ought to be deleted. 5. That no show cause notice or any other notice with respect to any adverse inference drawn by the Assessing Officer for making any addition of any nature whatsoever for the year under consideration was ever served upon the assessee and, therefore, the consequential assessment order is illegal and void. 6. That the charging of interest u/s 234A and 234B is illegal, unjustified and ought to be deleted. 10. To note down the brief facts of the case in all these appeals are identical. The facts of the case in ITA No. 2880/Del/2015 in case Karat 87 Inn Pvt. Ltd is culled out from the records and orders of the lower authorities, which shows that search and seizure u/s 132 of the Act was carried out on M/s. Sat Prakash and Brother group of cases on 28.10.2010 headed by Shri Satya Prakash Gupta. M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... searched persons has not recorded any satisfaction note. Therefore, he quashed the assessment order on this ground. He did not deal on the merits of the addition. The LD AO is aggrieved with the order of the LD CIT(A) and therefore, has preferred this appeal. 13. The LD DR advert to the facts of the case extensively and submitted that the learned CIT A erred in deleting the addition only on the basis of the technical ground and not considering the merits of the case. Her contention was that there are incriminating material found during the course of search pertaining to the assessee and based on this the LD AO has made addition to the total income of the assessee. He submitted that merely because the satisfaction note does not have any incriminating material referred into it, it does not mean that there is no incriminating material available. She further stated that the LD CIT(A) has wrongly deleted the addition of technical grounds. It was further stated that whether the substance is pitted against the technicalities then the ld CIT(A) has erred the giving unnecessary importance to the wording of section 153C of the Act in deciding the issue on the technicalities. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this order is as under:- 4. Determination 4.1 It is noted that the appellant has challenged the order of the AO on jurisdictional issue as well as on merit. The assessment order in the appellant s case is almost identical in all respects with the assessment orders in the case of other members of the group. In the present case, the assessment orders for all the A.Ys. involved namely A.Y. 2009-10 and A.Y. 2010-11 are identical excepting for the amount involved. The submissions of the AR are also same for all the A.Ys. except for the amount involved. Hence the appeals for A.Y. 2009-10 and A.Y. 2010-11 are 4.2 I have considered the submissions of the AR and the assessment order. The orders have been passed u/s 153C r.w.s. 143(3) of the Act. Before issuing notice u/s 153C, the AO has recorded a satisfaction note. The contents of the satisfaction note is reproduced below: - M/s Karat 87 Inn Pvt. Ltd. A.Ys. 2009-10 2010-11 24.04.2012 Order u/s 127 received. Case of the assessee (M/s Karat 87 Inn Pvt. Ltd.) centralized by order u/s 127 of the I.T. Act, 1961 of the CIT-II, New Delhi vide F.No. CIT-II/Delhi/127 Order/2012-13/173 dated 23/04/2012 Satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person other than the searched person. It has been held in the same case that the A.O. of the searched person must first arrive at a clear satisfaction that a particular documents seized did not belong to the person from whom it has been seized. Thereafter, he should form a satisfaction that the seized document belongs to such and such other person. U/s 132(4A)(i), there is a presumption that the documents seized from a person belonged to such person. There is also presumption u/s 292C(l)(i) that a document which is found from a person who was searched, would be belonging to that person. The Hon ble High Court has held that the A.O. must at the first instance rebut such a presumption provided in the Act itself and only thereafter he should come to the conclusion or satisfaction that the seized document belonged to someone else. There must be some cogent material available with the A.O. before he arrives at a satisfaction that the seized document did not belong to the searched person but to somebody else and that surmises and conjectures cannot take the place of satisfaction. 4.5 In the subsequent case of M/s Pepsico India Holdings Pvt. Ltd. Vs ACIT (2014) 270 CTR 467 (Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are afraid, that going through the contents of the satisfaction note, we are unable to discern any satisfaction of kind required under Section 153C of the said Act. 12. This being the position the very first step prior to the issuance of a notice under Section 153C of the said Act has not been fulfilled. Inasmuch as this condition precedent has not been met, the noticed under Section 153C are liable to be quashed. It is ordered accordingly. The writ petition are allowed as above. There shall be no order as to costs. 4.7 Since such satisfaction is not coming out of the note recorded by the A.O. before issuing notice u/s 153C, the action of the A.O. is bad in law as per the above decisions of the High Court. The AO not even mentions that any documents belonging to the appellant were found and seized. He has initiated the proceedings u/s 153C, only because assessee is related to Satya Parkash Group. 4.8 Further during appeal proceedings the AO was requested to produce copy of satisfaction note, if any, recorded in the case of Searched Person before handing over the seized documents to the AO of the present appellant. The AO has replied in the negative for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by following the decisions of Honourable High Court of Delhi, other grounds raised in the appeal do not survive. 18. The ld CIT(A) has extensively dealt with the satisfaction note dated 24.04.2012 recorded by the ld AO which does not have reference to any incriminating material found during the course of search. There is also no finding that such material pertaining to the assessee. Therefore, the issue is squarely covered by the decision of the Pepsico Food Products Ltd and Pepsico India holding pvt ltd. Further, based on the letter of ld AO dated 22.12.2014 referred to the para No. 4.8 of the order of the ld CIT(A), a finding is recorded that the ld AO of the searched persons has not recorded any satisfaction with respect to any of a material, which pertains to assessee company. 19. The provision section 153C are as under:- 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch 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 section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A. 20. Therefore, on plain reading of the section it is apparent that there has to be a satisfaction in case of the persons searched by assessing officer that particular material or valuable articles found during the course of that search does not belong to the person who has been searched but that material is pertaining to the 3rd party. This is necessary to assume jurisdiction in the case of the third pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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