AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (7) TMI 593
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....o the A.O. to examine an investigate into the matter of violation of Rule 46A of the I.T. Rules, 1962. 2. Deleting the addition of Rs. 25,00,000/- made by the A.O. on account of unexplained investment in the expenditure on acquisition of house property at 106, Malviya Nagar, Bhopal, particularly when the assessee failed to substantiate the source of funds during assessment proceedings before the A.O. 3. Deleting the addition of Rs. 1,50,000/- out of total addition of Rs. 2,00,000/- made on account of unexplained household expenses without assigning substantial reasoning contrary to the proper reasons and findings made by the A.O." IT(SS)A No. 90/Ind./08 "On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in- 1. Deleting the addition of Rs. 6,06,125/- out of total addition of Rs. 6,38,025/- made by the A.O. on account of unexplained investment in the property at Dynamic Centre holding that the assessee was earning only brokerage/commission and confirmed only 5% of the receipts as his commission even through the assessee failed to discharge the onus as regards to t....
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.... thereof. 3. Deleting the addition of Rs. 6,31,000/- made on account of unexplained deposits in bank accounts even though no cash flow statement or statement of affairs was produced before the A.O. during the assessment proceedings in spite of repeated opportunities given to the assessee. 4. Deleting the addition of Rs. 1,65,000/- out of total addition of Rs. 2,60,000/- made on account of unexplained household expenses without assigning substantial reasoning contrary to the property reasons and findings made by the A.O. IT(SS)A No. 92/Ind./08 "On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in - 1. Deleting the addition of Rs. 48,650/- out of total addition of Rs. 51,210/- made by the A.O. on account of unexplained investment in the property at Dynamic Centre holding that the assessee was earning only brokerage/commission and confirmed only 5% of the receipts as his commission even though the assessee failed to discharge the onus as regards to the assessee being holder of power of attorney and he was not the real owner of the property. 2. D....
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....eal owner ignoring the fact that the addition was made on the basis of seized documents and various bank details obtained during the assessment proceedings for which the assessee could not give convincing reply. 3. Deleting the addition of Rs. 2,64,000/- made by the A.O. on account of undisclosed rental income received by the assessee without appreciating the fact that the assessee is the real owner of all the properties mentioned in the assessment order and continues to enjoy the rights thereof. 4. Deleting the addition of Rs. 3,15,050/- made on account of unexplained deposits in bank accounts even though no cash flow statement or statement of affairs was produced before the A.O. during the assessment proceedings in spite of repeated opportunities given to the assessee. 5. Deleting the addition of Rs. 8 lakhs out of total addition of Rs. 10 lakhs made by the A.O. on account of unexplained investment in the purchase of land at Bawadiya Kalan, Bhopal ignoring the fact that no cash flow statement in the purchase of land at Bawadiya Kalan, Bhopal ignoring the fact that no cash flow statement was produced before the A.O. durin....
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....00/- out of total addition of Rs. 3,25,000/- made on account of unexplained household expenses without assigning substantial reasoning contrary to the proper reasons and findings made by the A.O." In the cross-objections, the assessee has taken the following grounds :- C.O. No.34/Ind./09 "1. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the total addition and upholding the addition of Rs. 50,000/- towards Household Expenses. 2. On the facts and in the circumstances of the case, the CIT(A) was not justified in not cancelling the notice u/s 274 read with section 271(1)(c)." The assessee has also taken the following additional ground :- "On the facts and in the circumstances of the case, notice issued u/s 153C of the Income Tax Act, 1961 is "invalid and without Jurisdiction". C.O. No.35/Ind./09 "1. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the entire addition of Rs. 3,00,000/- and thereby upholding the addition of Rs. 15000/- on account of commission on the sale proceeds of parts of commercial property in Dynamic Centre and also on ....
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....s of commercial property in Dynamic Centre and also on the amounts of rentals and lease rentals released during the year. 2. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting total additions of Rs. 3,57,700 containing rental income from various properties and thereby in maintaining addition of Rs. 1,63,700/-. 3. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the total addition and upholding the addition of Rs. 95,000/- towards Household Expenses. 4. On the facts and in the circumstances of the case, the CIT(A) was not justified in not cancelling the notice u/s 274 read with section 271(1)(c)." The following additional grounds are also taken by the assessee :- "On the facts and in the circumstances of the case, notice issued u/s 153C of the Income tax Act, 1961 is without jurisdiction and invalid as : (a) there was no relevant evidence or seized material on the basis of which there could be any reason to believe or satisfaction to issue notice u/s 153C. (b) no satisfaction was recorded for issue of noti....
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....e Income tax Act, 1961 is without jurisdiction and invalid as : (a) there was no relevant evidence or seized material on the basis of which there could be any reason to believe or satisfaction to issue notice u/s 153C. (b) no satisfaction was recorded for issue of notice u/s 153C." CO No. 40/Ind./09 "1. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the entire addition of Rs. 3,00,000/- and thereby upholding the addition of Rs. 30,000/- on the commission on the sale proceeds of parts of commercial property in Dynamic Centre and also on the amounts of rentals and lease rentals released during the year. 2. On the facts and in the circumstances of the case, the CIT(A) was not justified in not deleting the total addition and upholding the addition of Rs. 1,35,000/- towards Household Expenses. 3. On the facts and in the circumstances of the case, the CIT(A) was not justified in not cancelling the notice u/s 274 read with section 271(1)(c). The following additional grounds are also taken by the assessee :- "On the facts and in the circumstances of the case, n....
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.... has not brought seized record which will need in the matter, therefore, department may be given more time to produce the same. He also filed written submission with regard to additional ground raised by the assessee in the Cross Objections, with a copy to ld. counsel for the assessee. In view of this, last opportunity is given to department to produce the seized record. Matter is adjourned to 20.4.11 as suggested by both sides. Announced in the open Court. Sd sd AM JM 20.4.11 Present Sh. H.P. Verma & A. Goyal, Sh. Keshav Saxena, CIT DR Due to paucity of time, this group is adjourned to 16.6.11. Ld. CIT DR is directed to comply with earlier order sheets. Announced in the open Court. Sd sd AM JM Some of the aforesaid notings in the note sheet are self-explanatory as even the order sheet was sent to the learned CCIT, Bhopal, learned CIT DR and the Assessing Officer for compliance and necessary action (order sheet entry dated 7.1.2011). On 7.1.2011 the learned CIT DR merely filed the appraisal report in the case of Raj Builders & Asnani Group of Bhopal wherein at serial no. 14 the name of the assessee....
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.... of the Act. The opening word of section 153C speaks that notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153, where the Assessing Officer is "satisfied" that any money, jewellery or books of account or documents seized or requisitioned belongs to a person other than the person referred to in section 153A, meaning thereby the Assessing Officer is to record a satisfaction to the effect that such jewellery or document so seized does not belong to the searched person but to some other person referred to in section 153A of the Act. Thus, the pre-requisite of section 153C is that the Assessing Officer making the assessment of the searched person has to satisfy himself that some material found during the course of search and seizure belongs to some person other than the searched person. Then the Assessing Officer making the assessment of searched person has to hand-over the said incriminating material belonging to some person other than the searched person to the Assessing Officer having jurisdiction over the said other person. Thereafter, the Assessing Officer having the jurisdiction over the person other than the searched person shall issue a notice u/s 153C ....
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....ssing Officer in the case of searched person to the effect that some incriminating material so found belongs to some other person, the assessment framed u/s 153C will be liable to be quashed. However, detailed finding has been recorded by the learned Commissioner of Income-tax (Appeals) after examining the assessment records of the concerned person/parties to the effect that no satisfaction has been recorded by the Assessing Officer of the searched person. This finding of the learned Commissioner of Income-tax (Appeals) has not been controverted by the department by bringing any positive material on record. Accordingly, applying this propostion of law, the assumption of jurisdiction and framing of assessment in the instant cases by the Assessing Officer u/s 153C were bad in law. 79. It was argued by Shri K.K. Singh, the learned CIT DR, that satisfaction note, as stipulated u/s 153C of the Act, is to be seen in the context of satisfaction note prepared by the ADIT in the form of appraisal note after the search is over. He placed on record a copy of the appraisal note which is prepared by the ADIT after the search was over wherein details of search having been carried out along with....
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....missioner or Joint Director, who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on or assigned to an Assessing Officer. As per the learned CIT DR, under the new scheme of section 153A/C, there is no need to find out undisclosed income, but the assessment is made after the search is carried out to assess or reassess the income of the assessee for the immediately preceding six assessment years and the current assessment year falling up to the date of search. He further contended that under the old scheme of section 158BC/158BD of the Act, the department was to assess the undisclosed income on the basis incriminating documents found during the course of search whereas under the new scheme of section 153A/153C, where a search is initiated u/s 132 or books of account or other documents or any assets are requisitioned u/s 132A, then the department has to assess or reassess the total income of such assessee for six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Accordingly, it was pleaded that judicial ....
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....(supra) and G.K. Drive Shaft; 259 ITR 19 and the decision of the jurisdictional Tribunal in the case of Rishi Construction; 10 ITJ 346 and Asnani Builders; 10 ITJ 618. 81. We have deliberated upon the contentions of the learned CIT DR, Shri K.K. Singh and learned counsel for the assessee, Shri H.P. Verma, with regard to interpretation of recording of satisfaction while assuming jurisdiction u/s 153C of the Act. Even in the new scheme of framing of assessment in case of search cases, the Legislature has clearly stipulated the requirement for recording of satisfaction while assuming jurisdiction to issue notice and frame assessment u/s 153C of the Act which requires that satisfaction to be recorded with reference to the documents and other materials found during the course of search belonging to a person other than the searched person. Prima facie, Assessing Officer of searched person should form an opinion with regard to any document, valuable, etc. as found during the course of search that such document, which is declined by the searched person, actually belongs to some other person against whom proceedings u/s 153C are required to put into operation. After such recording, of sati....
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....urisdiction to issue notice and to frame assessment u/s 153C of the Act, the pre-requirement is recording of satisfaction with reference to the documents and other material, if any, found during the course of search, belonging to a person other than the searched person. Prima facie the Assessing Officer of the searched person should form an opinion with regard to any document, valuables, etc., as found during the course of search, and that such document, which are declined by the searched person, actually belongs to some other person against whom proceedings u/s 153C are required to be put into operation. After recording of such satisfaction, the document so seized should be handed over to the Assessing Officer having jurisdiction over such other person, therefore, the requirement of recording of such satisfaction cannot be substituted by an appraisal note which is prepared by the search party after completion of search. Appraisal note is a secret internal document of the department for its internal use and the contents of the same are not conveyed to the assessee nor its copy supplied to the assessee even on making a written request, therefore, it cannot be treated at par with the....