TaxTMI 
TaxTMI 
2014 (5) TMI 158
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....9.2008 was issued, after recording of the requisite satisfaction calling upon the respondent to file its return. The respondent vide its reply dated 24.12.2008, submitted that the return of income, filed earlier, may be treated as filed in response to the notice under Section 153-C of the I.T. Act. The assessment in respect of the respondent-M/s Gopi Apartments was completed on 31.12.2008. The total income was assessed at Rs.1,05,93,010/- for A.Y. 2005-2006. The respondent assessee preferred an appeal before the C.I.T. (A) I, Kanpur against the assessment order dated 31.12.2008. The C.I.T. (A) I, Kanpur vide order dated 26.02.2010 deleted the entire addition by the Assessing Officer. The Revenue filed an appeal before the Income Tax Appellate Tribunal, Lucknow Bench, Lucknow (hereinafter referred to as 'the I.T.A.T.') against the appellate order dated 26.02.2010. The I.T.A.T. vide order dated 05.10.2010 deleted the additions. The Revenue again filed appeal before the I.T.A.T. against the said order, which was set aside on 26.04.2011 and the matter was remanded back to the C.I.T. (A) I, Kanpur. The C.I.T. (A) I, Kanpur, vide its order dated 04.06.2012, again allowed the a....
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.... 5, the Learned CIT(A) has reproduced the comments given by the Assessing Officer in the course of remand proceedings and as per the same, it was reported by the Assessing Officer that although the Assessing Officer in his assessment order has specifically stated that satisfaction for issuing notice under section 153C was recorded, however, on examination of records, such satisfaction recorded by the Assessing Officer is not available. This goes to show that it was not brought on record by the Assessing Officer before the Learned CIT(A) that on examination of records, any satisfaction recorded by the Assessing Officer is not available. Before us also, Learned D.R. of the Revenue has not brought on record the copy of any satisfaction recorded by the Assessing Officer of the searched person, which is necessary for issuing notice to the present asseessee u/s 153C of the Act. In the absence of such satisfaction having been recorded by the Assessing Officer of the searched person, the present proceedings initiated by the present Assessing Officer against the present assessee u/s 153C is without jurisdiction and in our considered opinion, the same has been rightly quashed by Learned CIT ....
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....o Section 153A and Section 158BD is equivalent to Section 153C. He also contended that the reliance placed by the I.T.A.T. upon the judgment of the Supreme Court in Manish Maheshwari (supra) was misplaced and the case, at hand, was squarely covered by the Division Bench of this Court in the case of Classic Enterprises (supra). In this regard, Sri Agrawal referred to the observation in Manish Maheshwari's case to the effect that "No proceeding under Section 158BC had been initiated. There is, thus, a patent non-application of mind.' Sri Ashish Bansal, learned counsel for respondent assessee, on the other hand, contended that the initiation of the proceedings under Section 153C against the respondent assessee itself was illegal, as no satisfaction was recorded by the Assessing Officer of the 'searched person' prior to initiation of such proceedings against respondent assessee as was mandatory. He invited the attention of the court to the specific finding recorded by the learned C.I.T. (Appeals), as upheld by the I.T.A.T., based on the admission by the A.O. before it, which has already been taken note of by us in the earlier part of the judgment. Sri Bansal relied up....
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....at fell for consideration before the Supreme Court, as mentioned in paragraph-3 of the judgment is being quoted hereinbelow: "3. The issue that falls for our consideration and decision in all these appeals is: at what stage of the proceedings under Chapter XIV-B does the assessing authority require to record his satisfaction for issuing a notice under Section 158BD of the Income Tax Act, 1961 ('the Act' for short)." After considering the rival contentions, relevant provisions of the Income Tax Act and the authorities on the subject, their Lordships held as under: "41. We would certainly say that before initiating proceedings under Section 158BD of the Act, the assessing officer who has initiated proceedings for completion of the assessments under Section 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched under Section 132 or the books of accounts were requisitioned under Section 132A of the Act. This is in contrast to the provisions of Section 148 of the Act where recording of reasons in writing are a sine qua non. Under Section 158BD the existence of cogent and demonstrative material is germane t....
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....tion 158BD of the Act. 46. With these observations, the appeals are disposed of." The provisions of Section 158BD being pari materia with the provisions of Section 153C, the ratio of the aforesaid judgment clearly applies to the present case also. The reference to the assessment proceedings under Section 158BC by the Supreme Court in the extracts quoted above is with regard to the 'assessment proceedings' in relation to the 'searched person' and not the 'other person' as referred to in Section 158BD. A bare perusal of the provision contained in Section 153C of the I.T. Act leaves no doubt that, as is provided under Section 158BD, where the Assessing Officer, while proceeding under Section 153A against a person who has been subjected to search and seizure under Section 132(1) or has been proceeded under Section 132A, is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer havin....
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....regard, the ratio of the judgment of the Supreme Court in the case of Commissioner of Income Tax-III Vs. M/s Calcutta Knitwears, Ludhiana (supra), as noted above, clearly applies to the proceedings under Section 153C also. The 'satisfaction' has to be in writing and can be gathered from the assessment order passed in respect of the 'searched person', if it is so mentioned/ recorded or from any other order, note or record maintained by the Assessing Officer of the 'searched person'. The word 'satisfaction' refers to the state of mind of the Assessing Officer of the person searched, which gets reflected in a tangible shape/ form, when it is reduced into writing. It is the conclusion drawn or the finding recorded on the foundation of the material available. In this regard, reference may be made to the pronouncements in the case of C.I.T. Vs. Radhey Shyam Bansal, (2011) 337 ITR 217 (Delhi) and the Division Bench judgment of this Court in the case of C.I.T. Vs. Classic Enterprises reported in (2013) 358 ITR 465 (Allahabad). In the case of Manish Maheshwari Vs. Assistant Commissioner of Income Tax and another, (2007) 289 ITR 341 (SC), their Lordships had....
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....recorded in the assessment order passed subsequently with regard to the other person, is also not acceptable for the reason that the Supreme Court in the case of M/s Calcutta Knitwears (supra) has already considered this aspect of the matter in the context of Section 158BD, and after taking note of the fact that the said provision is a machinery provision has interpreted the same. In the light of the interpretation given by it and in view of the ratio laid down therein, the contention of Sri Agrawal does not hold ground. A clear and plain reading of Section 153C leaves no doubt that recording of satisfaction by the Assessing Officer of the person searched is mandatory and it has to precede the initiation of proceedings against the other person (not searched). A specific query was put to Sri Agrawal as to whether, on the basis of the material collected during the search and seizure operation or during the assessment, proceedings against the 'searched person' or thereafter, any proceeding could be initiated against the 'other person' under any other provision of the Income Tax Act, he categorically replied that except Section 153C, there was no other provision under ....