TaxTMI 
TaxTMI 
2015 (3) TMI 355
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....peal: "1. That on the facts and circumstances of the case and the provision of law the Ld. CIT(Appeals) has failed to appreciate that the notice issued u/s 153C and assessment order passed by the Ld. AO u/s 153C is illegal, bad in law, time barred and without jurisdiction. 2. That the Ld. CIT(Appeals) has failed to appreciate that on the facts and circumstances of the case and the provisions of the law, the proceedings initiated u/s 153C is illegal, bad in law and without jurisdiction and as such the assessment order passed in consequence thereof also becomes illegal, bad in law and without jurisdiction. 3. That the Ld. CIT(Appeals) has failed to appreciate that on the facts and circumstances of the case and the provisions of the law the assessment framed is against the statutory provisions of the act and without complying the procedures prescribed under section 153C of the act and as such the assessment being bad in law deserves to be quashed. 4. That the Ld. CIT(Appeals) has failed to appreciate that assessment framed is against the scheme of the Act whereby the reassessment in such search cases is to be confined to the additions and disallowances consequent to the ma....
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....153C r.w.s 153A of the Act were initiated. The assessee in response to the notice u/s 153C of the Act filed a return on 02.11.2010 for the assessment year under consideration declaring Nil income. However, the assessment was framed by the AO at an income of Rs. 38,96,700/- vide order dated 31.12.2010. 5. Being aggrieved the assessee carried the matter to the ld. CIT(A) and challenged the validity of the initiation of the proceedings u/s 153C of the Act. The ld. CIT(A) did not find merit in the submissions of the assessee by observing that the recording of satisfaction was irrelevant in so far as the determination of this assessment years in respect of which assessment is to be made u/s 153A r.w.s 153C of the Act. However, on merit, the ld. CIT(A) allowed part relief. 6. Now the assessee is in appeal and the department has also filed the cross appeal. The ld. Counsel for the assessee submitted that the AO had not recorded satisfaction which is the basic requirement in initiating the proceedings in the case of searched person. He drew our attention towards page no. 23 of the assessee's compilation which is the copy of the letter dated 10.06.2013 written to Sh. B. K. Dhingra by ....
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.... Nos. 36, 37 & 39 of 2012 order dated 10.06.2014 of Hon'ble Bombay High Court • Dr. D. Y. Patil Pratishtan Vs DCIT, ITA Nos. 1587 to 1611/PN/2011 order dated 07.09.2012 of ITAT Pune Bench 'B', Pune • Natural Products Bio Tech Ltd. Vs DCIT, ITA Nos. 3086 to 3089/Del/2013 order dated 28.11.2014 of ITAT Delhi Bench 'E', New Delhi • Nageshwar Investment Ltd. Vs DCIT, ITA Nos. 5393 to 5396/Del/2012 of ITAT Delhi Bench 'E', New Delhi • Global Heritage Venture Ltd. Vs DCIT, ITA No. 3196/Del/2013 order dated 26.12.2014 of ITAT Delhi 'C', New Delhi • CIT Vs DSL Properties Pvt. Ltd., ITA 585/2013 order dated 05.12.2014 of Hon'ble Delhi High Court • Sanjay Agarwal Vs DCIT, ITA No. 3184/Del/2013 order dated 16.06.2014 of ITAT Delhi Bench 'G', New Delhi • Tanvir Collections Pvt. Ltd. Vs ACIT, ITA No. 2421/Del/2014 order dated 16.01.2015 of ITAT Delhi Bench 'H', New Delhi • Sh. Bhupinder Pal Singh Sarna Vs ACIT, ITA Nos. 3037 & 3695/Del/2013 order dated 06.01.2015 of ITAT Delhi Bench 'A', New Delhi 9. In her rival submissions the ld. CIT DR su....
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....t. Ltd., search & seizure took place u/s 132 on 20.10.2008. The undersigned is the jurisdictional AO of this case. During the course of search & seizure documents/papers at pages 101 to 132 of Annexure A-30, Page 144 of Annexure 7 and pages 33 to 48 of Annexure 22 seized by Party R-2, are found to belong to M/s Tanveer Collection Pvt. Ltd., RZ-126, West Sagar Pur, Shankar park, New Delhi. I have examined the above mentioned documents/papers and provision of section 153C is invokeable in this case. As the undersigned is also the jurisdictional AO of M/s Tanveer Collection Pvt. Ltd., RZ-126, West Sagar Pur, Shankar Park, New Delhi. This satisfaction note is recorded and is placed in the file before issuing notice u/s 153C. ACIT, Central Circle - 17, New Delhi" 13. It can be seen from the assessment order that notice u/s 153C was issued to the assessee by the ACIT, Central Circle-17 on 08.09.2010, being the same date on which the above satisfaction was recorded. It is apparent that it was : ' Satisfaction Note for issuing Notice u/s 153C of the I.T. Act, 1961 in the case of M/s Tanveer Collection Pvt. Ltd.' It is further noticeable from the above that : 'This satisfaction note is r....
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....faction by the AO of the person searched provided by the statute can be substituted with anything else. There is an underlying rationale in providing for recording of such satisfaction by the AO of the person searched. As the money, bullion, jewellery, books of account or documents etc. always come to the possession of the AO of the person searched who has to frame assessment, it is only he who can find out that which of such documents etc. do not belong to the person searched and are relevant for the assessment of the other person. It is not as if all the books of account and documents etc. found during the course of a search are evaluated by a separate authority to figure out that which of these documents belong to the person searched and to the others and thus handed over to the concerned AOs of the person searched and others for making assessment. As it is only the AO of the person searched who can reach a conclusion that some of the documents etc. do not belong to the person searched but to some other person, the legislature has provided for recording of such satisfaction by the AO of the person searched. It is not permissible under the law to require the AO of the other perso....
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.... the relevant assessment year or years referred to in sub-section (1) of section.' 19. The above substitution has the effect of now making it mandatory for the AO of the 'other person' also to record satisfaction that the books of account or documents, etc., have a bearing on the determination of the total income of such 'other person' before embarking upon the exercise of his assessment or reassessment. Therefore, now under the law, w.e.f. 1.10.2014 it has become obligatory not only for the AO of the person searched to record satisfaction before handing over books of account or documents, etc., to the AO of the 'other person', but, such AO of the 'other person' is also required to record satisfaction that the books of account or documents, etc. have a bearing on the determination of the total income of such other person. In the pre-substitution era of the relevant part of sub-section (1) of section 153C covering the period under consideration, the jurisdictional condition remains that the satisfaction is required to be recorded by and in the case of the person searched so as to enable the AO of the 'other person' to start with the proceedings for making assessment or reassessme....
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....s etc. found from the persons searched did not positively indicate the existence of some income in the hands of the assessee. The argument is simply confined to non-recording of satisfaction by the AO of the persons searched. Instead of supporting the Department's case, we find that this judgment strengthens the assesasee's case by making it clear in no uncertain terms that the AO of the person searched is obliged to record the satisfaction. The relevant observations of the Hon'ble High Court contained in para 15 merit reproduction as under: - 'It needs to be appreciated that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in Section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income.' 24. It is pretty clear from the above extraction that the satisfaction as referred to ....