TaxTMI 
TaxTMI 
2015 (10) TMI 2015
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....ossly erred in rejecting Grounds No. 1 and 2 of the appellant's appeal before him challenging the validity of the assessment order passed u/s 153C read with Section 153A and 143(3) of the Income-tax Act, 1961. 3. At the time of hearing before us, it was stated by the ld. Counsel for the assessee that a search action u/s 132 of the Income-tax Act was conducted in the case of Shri Rameshbhai Babulal Shah on 03.04.2008. During the course of search, a laptop which was found from him was seized. In the laptop, Shri Rameshbhai B. Shah maintained books of accounts in Tally Software in respect of 65 companies, including the assessee. The Assessing Officer issued notice u/s 153C r.w.s. 153A of the Income-tax Act to the assessee for all the six Assessment Years, i.e., AYs 2003-04 to AY 2008-09. He referred to the copy of the notice issued u/s 153C which is placed on record by the Revenue. From such notice, he pointed out that (i) no satisfaction was recorded by the Assessing Officer of person searched, (ii) no satisfaction was recorded by the Assessing Officer of the assessee before the issuance of the notice u/s 153C and (iii) in the notice u/s 153C the Assessing Officer mentioned about h....
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....Commission; and not for and on behalf of 65 entities. He, therefore, submitted that the affidavit supports the case of the assessee that the data, if any, in the computer of Shri Rameshbhai B. Shah were neither belonging to the assessee nor even relating to the assessee in view of the affidavit of Shri Rameshbhai B. Shah. 4. It is further stated by the ld. Counsel for the assessee that it is a settled position that, u/s 153C, the Assessing Officer of the person searched has to record the satisfaction that any money, bullion, jewellery or other valuable article/thing or books of account/documents belong to the person other than the person searched. After recording such satisfaction, he has to handover such valuable article/thing or books of accounts / documents to the Assessing Officer of such other person to whom such valuable article/thing or books of account/document belongs. Thereafter, the Assessing Officer of such other person has to issue notice u/s 153C. Admittedly, no satisfaction has been recorded by the Assessing Officer of the person searched. No valuable article/thing or books of accounts/documents belonging to the assessee was found from the person searched. Therefore....
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.... satisfaction by the Assessing Officer of the person searched. He also submitted that in the case under appeal, since the Assessing Officer of the person searched and the Assessing Officer of the assessee under appeal was the same, there was no necessity of recording of the satisfaction and handing over of the seized material. He, therefore, submitted that the order of the CIT(A) wherein he has considered all the issues raised by the assessee in this regard should be upheld. 7. In the rejoinder, it was pointed out by the ld. Counsel for the assessee that the assessee has relied upon the decisions of Hon'ble Kerala High Court in the case of CIT vs. Panchajanyam Management Agencies and Services, [2011] 333 ITR 281, which is followed by their Lordship in the second decision in the case of CIT vs. Bimbis Creams & Bakes, [2012] 24 taxmann.com 143, relied upon by the ld. Departmental Representative. He pointed out that subsequently the Hon'ble Kerala High Court in the case of Dr. T.M. Kuriachan, [2012] 23 taxmann.com 28 (Kerala), did not agree with the earlier decision of Kerala High Court in the case of Panchajanyam Management Agencies and Services (supra). He, therefore, submitted tha....
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....llion, jewellery or other valuable article/ thing or books of account/documents. Thereafter, the Assessing Officer of such other person shall proceed against the said person to assess or reassess his income in accordance with the provisions of Section 153A. Therefore, recording of satisfaction by the Assessing Officer of the person searched that any money, bullion, jewellery or other valuable article/thing or books of account/documents seized belong to the person other than the person searched is a sine qua non for initiating action under Section 153C. This interpretation of Section 153C by us is supported by the decision of Hon'ble Apex Court in the case of Manish Maheshwari Vs. ACIT and Another - (2007) 289 ITR 341 (SC) wherein their Lordships at page 348 held as under:- "The condition precedent for invoking a block assessment is that a search has been conducted under section 132, or documents or assets have been requisitioned under section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however, provides for takin....
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....ection 132 or whose books of account or other documents or assets were requisitioned under section 132A, he shall proceed against such other person under section 158BC." 12. From the above and also from the comparison of language of Sections 153C and 158BD, we find that the condition for recording satisfaction by the Assessing Officer of the person searched is present in both the cases. In Section 158BD, the Assessing Officer of the person searched is to be satisfied that any undisclosed income belong to any person other than the person searched, while, in the case of Section 153C, the Assessing Officer of the person searched is to be satisfied that any money, bullion, jewellery or other valuable article/thing or books of account/documents belong to a person other than the person searched. Thereafter, the subsequent procedure in both Sections 158BD and 153C is the same, i.e., the Assessing Officer of the person searched has to hand over the books of account, documents or asset seized to the Assessing Officer having jurisdiction over such other person and thereafter, the Assessing Officer of such other person has to proceed to assess such other person. Thus, the basic condition of....
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....record his reasons for doing so. On the other hand, in case where search is made under Section 132 or documents or accounts are requisitioned under Section 132A, Chapter XIVB in Section 158BC provides for initiation of assessment of undisclosed income of block period, which is by calling for a return in Form No.2B. In fact, Section 158BC does not require the Assessing Officer to record his satisfaction for issuing notice for assessment of undisclosed income for the block period for assessing the assessee searched or whose accounts were called for under Section 132A of the Act. In fact, Section 158BD is only an enabling provision to assess any other assessee other than the searched assessee if in the course of search of another assessee evidence of undisclosed income is received in respect of the assessee who is not searched. However, the assessment pursuant to the enabling provision i.e. under Section 158BD also is an assessment under Section 158BC and the procedure contemplated is also one and the same. In fact, what Section 158BD says is that when the evidence collected in search of an assessee revealed undisclosed income of another assessee, who is not searched, the material or ....
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.... assessee in whose case the notice u/s 158BD was issued is the same, there is no requirement of recording of any satisfaction. However, the Hon'ble Jurisdictional High Court rejected the Revenue's contention and upheld the order of the ITAT which has quashed the notice issued u/s 158BD without recording the satisfaction of the Assessing Officer of the person searched. The Relevant finding of the Hon'ble Jurisdictional High Court in paragraph Nos. 5-8 of the report, i.e., 36 taxmann.com 554, reads as under:- "5. In the present appeal thus, we are essentially concerned with the question whether the Tribunal rightly quashed and set aside the notice under section 158BD and the assessment order passed incase of the assessee respondent on the ground that there was no valid satisfaction recorded by the Assessing Officer in case of the person searched prior to issuance of the notice to the assessee respondent. 6. We have heard learned counsel Shri K.M. Parikh for the department who has fervently argued before us that the Assessing Officer Shri A.K. Sinha was the Assessing Officer in case of both, searched and non searched assessees. He also further urged that the satisfaction recorded b....
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....ction of the Assessing Officer in case of the searched person (i.e. Jayraj Group), Revenue is unable to point out any such satisfaction of Assessing Officer in case of Jayraj Group. It had been emphatically argued before us that the Assessing Officer being the same person i.e. Shri A.K. Sinha, such satisfaction when recorded in case of the present assessee should be considered and construed as a due compliance under the provisions and there would not be any occasion to handover the materials to himself being the very officer. 13.As far as second requirement of endowing the papers to the Assessing Officer having the jurisdiction to initiate the proceedings under section 158BC is concerned, learned counsel Mr.Parikh is right and is also not being disputed by the respondent that such formal order of transfer to oneself would neither be warranted nor in any manner affect the validity of the proceedings. 14. However, the vital and mandatory requirement of recording the satisfaction under section 158BD is concerned, as has been rightly noted by the Tribunal, such satisfaction is absent as far as Jayraj Group is concerned in whose case search under section 132 of the Income Tax Act ha....
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....years in respect of which you are assessable under the Income-tax Act, 1961. The return should be filed in the appropriate form as prescribed in Rule 12 of the Income-tax Rules, 1962. It should be duly verified and signed in accordance with the provisions of Section 140 of the Said Act and delivered at my office as mentioned above within forty five days from the service of this notice. Sd/- (ILA PARMAR) Asstt. Commissioner of Income tax, Central Circle 2, Baroda" 18. From the above, it is clear no satisfaction is recorded by the Assessing Officer of person searched. The Assessing Officer of assessee did not record any satisfaction prior to issue of notice u/s 153C. The so-called satisfaction recorded in the notice u/s 153C is totally vague. It has not specified which valuable articles/things/books of accounts/documents were found from Shri Rameshbhai B. Shah which belongs to the assessee. In the assessment order the Assessing Officer has mentioned that in the laptop of Shri Rameshbhai B. Shah the data pertaining to the assessee were found and on that basis notices u/s 153C have been issued. However, in the notice u/s 153C, wherein the Assessing Officer is claimed to have be....