TaxTMI 
TaxTMI 
2015 (3) TMI 837
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....ised. We take up Revenue's appeal pertaining to Assessment Year 2003-04 in ITA No. 6404/Del/2013 and cross objection no. 353/Del/2014 in ITA No. 6404/Del/2013 Assessment Year 2003-04 as lead case for the purpose of narrating facts. In ITA No. 6404/Del/2013, the Revenue has raised the following grounds : "1. The Commissioner of Income Tax (Appeal) erred in law and on facts in deleting the addition of Rs. 15,01,580/- on account of unexplained purchase u/s 69C of the Act. 2. The Commissioner of Income Tax (Appeal) erred in law and on facts in deleting the addition of Rs. 4,62,316/- on account disallowance of expenditure. 3. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." However, the assessee in Cross Objection no. 353/Del/2014 has raised the following grounds : "1. That on the facts and circumstances of the case and the provision of law, the Ld. CIT (A) has failed to appreciate that the notice issued uls 153C and assessment order passed by the Ld. AO u/s. 153C/143(3) is illegal, bad in law, time barre....
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....ion of law, the Ld. CIT (A) has erred in wrongly directing the AO to work out the peak from the entries in the cash book of the appellant company for the relevant year and make a singular addition of the said amount, as unexplained INVESTMENT/expenditure, ignoring the fact that the same has duly been entered in the audited books of accounts of the appellant for the year under consideration; B) That the Ld CIT (A) did not give sufficient opportunity of being heard to the appellant company and ignored the concept of 'Real Income' and wrongly directed the AO to work out the peak from the entries in the cash book of the appellant company for the relevant year, without granting the credit of the peak of FINANCIAL transactions as per the cash book for the preceding years. 8. That on the facts and on the circumstances of the case and the provision of law, the CIT (A) has erred in ignoring the fact that the AO has erred both on facts and in law, in using statement of various persons without giving a copy of the same and opportunity to cross examine. 9. That on the facts and circumstances of the case, the various observations and findings of the Ld CIT (A) and Ld AO in the impugn....
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.... the AO of searched party is sine qua non for assuming jurisdiction for making assessment under 153C read with section 143(3) of the Act. He submitted that under the identical facts the Assessment framed u/s 153C of the Act has been quashed by the co-ordinate Benches of this Tribunal following the judgment of Jurisdictional High Court rendered in the case of Pepsi Foods (P) Ltd. Vs. ACIT [2014] 52 taxman.com 220(Delhi). Therefore, he requested that the matter may be decided on this ground alone. Ld. CIT(DR) submitted that he has no objection, however he pointed out that the Assessee has not taken any specific ground in his cross objection against satisfaction note. Admittedly, there is no specific ground against non-recording of satisfaction (satisfaction note) by the Assessing Officer, however same goes to the issue of jurisdiction because satisfaction of the AO of searched party that any money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized on requisitioned belong to a person other than the person referred to in Section 153A, then the books of accounts or documents or assets or requisitioned shall be handed over to the Assessing Of....
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....conduct of AO. He further submitted that there is no ambiguity in the provision, therefore, the literal meaning should be adopted for interpreting the same. He drew our attention to Section 148(2) and 153(C) of the Act to buttress his contention that had such intention of legislation would have been then as the word 'record' as enshrined in Section 148(2) would have been Incorporated in Section 153(C) as well. He submitted that the entire assessment cannot be annulled on the basis of technical defect. He submitted that technicalities should not hold the dispensation of justice, and cannot be allowed to benefit a wrong doer. He further pointed out that the assessee is blowing hot and cold at the same time. He submitted that Ld. CIT(A) in para 4.3 of the impugned order has categorically recorded that the Assessee has no objection with regard to initiation of proceeding u/s 153C of the Act. He submitted that under these facts the issue under consideration does not need any further examination and decision by this Tribunal. In rejoinder Ld. Counsel for the Assessee submitted that the objection of Ld. CIT(DR) are misconceived. He submitted that the issue under consideration goe....
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....Dhingra, which is covered under section153A, for the Asstt. Years from 2003-04 to 2008-09 (Block period) it is noticed that there is no 'satisfaction note'available/recorded in respect of other entities. 3. In case you intend to file the appeal, you may file the same before the Addl. Commissioner of Income Tax, Central Regnge-2, 3rd Floor, ARA Center, E-2, Jhandewalan, New Delhi within 30 days from receipt of this letter." The above replies supports the contention of Ld. Counsel for the Assessee that no satisfaction was recorded by the AO of the searched party. 7.2. Before adverting to the rival contentions of the parties it would be appropriate to reproduce the relevant provisions of law. Section 153C 153C. 3[(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 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 t....
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....tion 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this subsection pending on t....
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....echnicalities should not come in the way of dispensation of justice. It was submitted that non recording of satisfaction is only a technical defect this should not be sole ground for annulling the assessment. It was therefore, contended that the assessment should not be quashed. 9. On the other hand, it is contended by the Counsel for the Assesssee is that issue is no more res-integra and has been decided in favour of the Assessee by the Authoritative Judicial Pronouncement by the Hon'ble High Court of Delhi, other High Courts and the co-ordinate Benches of this Tribunal. Therefore, it is prayed that Assessment order be quashed being illegal and nullity in the eyes of law. The brief synopsis as filed is reproduced herein below for the sake of clarity :- "Before the Hon'ble Income Tax Appellate Tribunal, 'C' Bench, New Delhi In the matter of Instronics Limited F-345, Lado Sarai, New Delhi-110030 PAN : AAACI0163R Vs ACIT, Central Circle -21 Room No. 344, ARA Centre, Jhandewalan Extension, New Delhi - 110055 Assessment Years: 2003-2004 to 2008-09 ITA Nos.6336/Del/2014 to 6341/Del/2014 (Filed by Assessee on 19.11.2014) AND DCIT, Central Circle - 21, ....
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....ly it is recorded that "In the case of She B.K. Dhingra, Smt. Poonam Dhingra and Mls. Mayank Traders Pvt. Ltd., Horizon Pvt Ltd. search & seizure took place u/s. 132 on 20.10.2008; ................ Secondly, documents/papers at pages 1 to 39 of Annexure A-87, Annexures A-96, A-97, A-98 and A-99, are found to belong to M/s. Instronics Ltd.," where multiple parties are mentioned (3 in no.); ii)" which sufficiently proves that instant note is recorded by AO of present assessee and is not the requisite "satisfaction" by any AO of any particular raided party during search assessment u/s 153A. Noticeably aforesaid features clearly establish that there is no valid satisfaction on part of Ld. AO. before issuing notice uls 153C of the Act. On identical facts, Hon'ble Delhi benches of ITAT on three different occasions in cases of Inlay MARKETING Pvt. Ltd. (Case Law Paper Book Pages 78 to 128), Akash Arogya Mandir Pvt. Ltd. (Case Law Paper Book Pages 129 to 144) and Tanvir Collections Pvt. Ltd. (Case Law Paper Book Pages 145 to 166) have quashed the similar proceedings being nullity for lack of jurisdiction. In these precedents, Coordinate bench decisions, Hon'ble Jurisdiction....
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....TR 467 Pepsi and Pepsico orders (Case Law Paper Book Pages 1 to 16) and other two from Allahabad High Court (Gopi Apartments 365 ITR 411) and Telangana & Andhra Pradesh High Court in Shetty Pharmaceuticals (26.11.2014) ITT A 662 of 2014 and batch) (Case Law Paper Book Pages 31 to 66) where in detailed principles on validity of proceedings U/S 153C are laid down which supports the view taken in cases of i) Inlay MARKETING Pvt. Ltd. (supra) ii) Akash Arogya Mandir Pvt. Ltd. (supra) iii) Tanvir Collections Pvt. Ltd. and iv) DSL Properties Pvt. Ltd. and our prayer(Supra). In aforesaid connection, it is very respectfully submitted that it is trite law that after various high court decisions on the issue, no question of debate and per incuriam and special bench can arise as it is held in Coordinate bench decision reported at 69 TTJ 550 (applied by Pune ITAT in Aurangabad resorts reported at 118 ITD 1/111 TTJ 741) that once an authority higher than tribunal has expressed its esteemed views on an issue, normally the decision of higher judicial authority is to be followed, even if higher judicial forum is non jurisdictional High Court (here T & AP High Court in Shetty case and ....
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.... assessee: '"The section merely enables the Revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not escape assessment in the hands of any other person merely because he has not been searched under section 132 of the Act. It is only a first step to the enquiry, which is to follow. The Assessing Officer who has searched the satisfaction that the document relates 'to a person other than the searched person can do nothing except to forward the document to the Assessing Officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to follow the procedure prescribed by section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such other person for the six assessment years, the proceedings will have to be closed. ....
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....nts as per the chart furnished by the assessee which have been reproduced at Para 9 of this order and which have been analysed above and which could not be controverted by the learned DR, therefore, in ivew of the decision of the Hon'ble Delhi High Court in the case of SSP Aviation Ltd. (Supra) further proceedings should have been closed by the AO. Otherwise it will cause undue harassment to the assessee. In our opinion, the AO in the garb of proceedings u/s 153C cannot make roving and fishing enquiries after assessee proves that entries recorded in the documents sized from the search party which belong to the assessee are already reflected in the regular books of account maintained. In this view of the matter and respectfully following the decision of the Hon'ble Delhi High Court in the case of SSP Aviation Ltd. (Supra) we hold that the notice issued u/s. 153 is a valid notice. However, since the assessee has satisfactorily explained that entries found in the seized documents are reflected in the regular books of account, further proceedings u/s. 153C will have to be closed and no further addition can be made by making roving and fishing enquiries since the assessee canno....
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....quisitioned "belongs to" a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). WP(C) 415/2014 & Ors. Page 9 of 15 Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or reassess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is - after such satisfaction is arrived at - that the document is handed over to the Assessing Officer of the person to whom the said document "belongs". In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section 132(4A)(i) c....
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....he mandate of the statutory provision under the garb of technical defect. 10. Ld. Counsel for the Assessee has relied on the decision of the decision of the co-ordinate Bench of this Tribunal in the case of Tanvir Finance & Leasing Ltd. Vs. DCIT in Cross objection nos. 268 to 271/Del/2014 (in ITA Nos. 14 to 17/Del/2014) Wherein under the identical facts has observed as under :- "We duly appreciate the concern of the Ld. DR for the exchequer. But we are reminded of the basic principle enshrined in Article 265 of the Constitution that no tax can be collected without authority of law. There can be no assessment in the absence of a proper jurisdiction of the authority. The question of jurisdiction is a very important aspect, which cannot be equated with a technical issue. Similar contention raised by the Ld. DR has been elaborately dealt with by the Tribunal in the case of Tanvir Collections P. Ltd. (supra). We, therefore, do not approve this contention." Respectfully following the decision of Hon'ble co-ordinate Bench, we hereby reject the contention Ld. CIT(DR) that non recording of satisfaction is only a technical defect, and the assessment cannot be annulled on this basis. ....