TaxTMI 
TaxTMI 
2015 (12) TMI 1115
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.... of Income Tax (Appeals) should have held so. 2. On the facts and circumstances of the case and in law, the notice u/s 153C is illegal & without jurisdiction. The assessing officer has not complied with the provisions of section 153C and other allied provisions for issuance of such notice. Accordingly the notice u/s 153C alongwith the assessment order passed on the foundation of such notice is liable to be quashed and the Commissioner of Income Tax (Appeals) should have held so. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of assessing officer of completing the assessment at income of Rs. 4,42,00,592/- instead of loss of Rs. 1,15,89,312/- as returned by the assessee. 4a. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of assessing officer of not allowing set-off of loss of Rs. 2,47,96,658/- for the year as claimed by the assessee. b. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of assessing officer of not allowing set-off of loss of Rs. 1,15,89,312/- for the year as claimed by the assessee. ....
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....O of the searched person, that the documents found and seized during the course of search belonged to "other person" against whom notice u/s 153C of the Act is proposed to be issued. It was further submitted that as per the provisions of Section 132(4A)(i), the presumption is that the documents belong to such person from whose possession, the documents were seized. Therefore, the AO of the searched person is also required to record satisfaction that documents do not belong to the searched person and belonged to other person, but in the present case, no satisfaction had been recorded by the AO of the searched person rebutting the presumption u/s 132(4A)(i) of the Act. The reliance was placed on the judgment of the Hon'ble Delhi High Court in the case of Pepsi Foods India Pvt. Ltd. Vs ACIT (2014) 367 ITR 112. It was further submitted that in terms of provisions of Section 153C of the Act, the satisfaction has to be recorded by the AO of the searched person, even when the Assessing Officer of searched person and the person other than the searched person (against whom proceedings u/s 153C are supposed to be initiated) are the same and that the requirement of recording the satisfact....
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....son is only required to record satisfaction that documents belong to other person and then to handover those documents to assessing officer of person other than the searched person. The A.O. of the searched person is not empower to issue notice u/s 153C or to give direction for issue of notice u/s 153C. This authority of issue/giving direction for issue of notice u/s 153C lies solely with the assessing officer of the "other person." As can be seen from the last para of the so called satisfaction note the A.O. has mentioned that _Quote___ "Accordingly it is directed to issue such person (M/s Super Malls Pvt. Ltd.) notice and assess and reassess income in accordance with the provisions of section 153A of the Act.___" Unquote. The aforesaid remarks proves beyond doubt that the satisfaction note has been recorded by the assessing officer in his capacity as the A.O. of the assessee (the other person) and not as the A.O. of searched person because it is only the A.O. of "other person" who can issue/give direction for issue of notice u/s 153C as has been given in the satisfaction note. V. There is yet another fact that establishes that the satisfaction u/s 153C ....
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.... Karnal, Regd. Officer at 51 - Transport Centre, Punjabi Bagh, New Delhi PAN : AAICS2163F Status : Company Reasons/Satisfaction note for taking up the case of M/s Super Malls (P) Ltd. Sector-12, HUDA, Karnal, Regd. Office at 51- Transport Centre, Punjabi Bagh, New Delhi under section 153C of the Income Tax Act, 1961. The jurisdiction of this case has been assigned to this office u/s 127 of Income Tax Act, 1961 by the worthy Commissioner of Income Tax-III, New Delhi vide order F.No. CIT- III/Delhi/Centralization/2012-13/2455 dated 15.01.2013. By virtue of the authorization of the Director of Income Tax (Investigation), Chandigarh, a search & seizure operation u/s 132(1) of the Act was carried out on 08/09.04.2010 at the residential/business premises of Sh. Tejwant Singh & Sh. Ved Prakash Bharti Group of cases, Karnal, Panipat & Delhi and a survey u/s 133A of the I.T. Act, 1961 was also carried out at the business premises of M/s Super Malls (P) Ltd., Karnal & New Delhi. During the course of search on 08/09.04.2010 at residence of Sh. Ved Prakash Bharti who is a Director in the assessee company M/s Su....
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....153A r.w.s. 153C. In view of the above, I am of the considered opinion that the assessee's contentions are unfounded, and therefore fail in Grounds of Appeal no. 1 to 3." 8. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submission made before the authorities below and further submitted that a search and seizure operation u/s 132(1) of the Act was carried out at the residence of Sh. Ved Prakash Bharti Group of cases on 08/09.04.2010, on the basis of this search, proceedings u/s 153C of the Act were initiated against the assessee by issuing the notice dated 22.02.2013 u/s 153C of the Act but no satisfaction had been recorded by the AO of the searched person and that no document belonging to the assessee was found and seized during the course of search. Therefore, the notice issued u/s 153C of the Act was bad in law and without jurisdiction because there had been no handing over of the seized documents as required u/s 153C before initiation of proceedings under that section. It was stated that the even when the searched person and the person other than the searched person (against whom proceedings u/s 153C of the Act were supposed to be....
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....marks proved beyond doubt that the satisfaction note had been recorded by the AO in his capacity as the AO of the assessee (the other person) and not as AO of searched person because it is only the AO of other person who can issue/give direction for issue of notice u/s 153C of the Act as has been given in the satisfaction note. It was pointed out that in the satisfaction note, the AO has stated that "these documents are required for assessment proceedings" which clearly establishes that the satisfaction has been recorded by the AO of the assessee and not the AO of the searched person. It was stated that had the satisfaction been recorded by AO in his capacity as AO of searched person then there would have been no need for him to mention about the requirements of seized documents because those were already in his possession. It was pointed out that the searched person in this case as per the satisfaction note is Ved Prakash Bharti, and date of search is 08/09.04.2010 and the AO was having jurisdiction over the searched person since at least February 2011 when notice u/s 153A was issued to Sh. Ved Prakash Bharti. Thus, the AO in his capacity as AO of searched person was having posses....
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.... the residence of Sh. Ved Prakash Bharti and some documents as per Annexure-A-1 were seized after taking print out from the pen drive and those documents contained the details of cash receipts on account of sale/office by the assessee. She further submitted that the print out of the pen drives revealed the transaction relating to the sale of shops/office pertaining to the assessee bearing sr. No., name of the purchaser, shop no., booking amount in cash and cheque, brokerage etc., which clearly shows that it was more than a mere reference of the assessee and it was evident that materials found during the survey were relatable with the materials seized during search, revealing element of income, thereby suggesting undisclosed income of the person other than the searched person. It was contended that the returns of income for the assessment years 2007-08 and 2008-09 were not filed u/s 139(1) of the Act and for the assessment years 2009-10 and 2010-11, unaccounted transactions were found in the course of search/survey. Therefore, the income or loss declared in the returns filed purportedly based on the unreliable books could not be held to be in order and the assessee had surrendered o....
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.... Raza Textiles Ltd. Vs ITO, Rampur (1973) 87 ITR 539 (SC) Valvoline Cummins Ltd. Vs DCIT 307 ITR 103 (Del) Sewlal Daga Vs CIT 55 ITR 406 (Cal) M/s Tansukhrai Bodulal Vs ITO 46 ITR 325 (Assam) P.V. Doshi Vs CIT 113 ITR 22 (Guj) Swaran Yash Vs CIT 138 ITR 734 (Del) Investors Industrial Corporation Ltd. VS CIT 194 ITR 548 (Bom) National Thermal Power Co. Ltd. Vs CIT (1998) 97 Taxman 358 (SC) CIT Vs Cochin Refineries Ltd. (1996) 220 ITR 398 (Ker) 12. We have considered the submissions of both the parties and gone through the material available on the record. In the present case, it is an admitted fact that a search was conducted at the premises of Ved Prakash Bharti Group of cases on 08/09.04.2012 and also at the residential premises of Sh. Ved Prakash Bharti who is a Director of the assessee company and in assessee's case only a survey u/s 133A of the Act was conducted. The assessee challenged the validity of the assessment on the basis that no satisfaction was recorded in the case of the searched person as per the provisions of Section 153 of the Act. The said provisions read as under: "153C.Ass....
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....om the said documents belonged. On receipt of the material/documents, the AO having jurisdiction on the other person is expected to conduct inquiry and due verification of the relevant facts before issuing a notice to other person under his jurisdiction on the basis of his own inquiry. Therefore, it is clear that firstly satisfaction has to be recorded by the AO who conducted search 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 searched person. In the present case, the claim of the department is that the satisfaction was recorded on 22.02.2013. We have perused the copies of the order sheet in the case of the assessee as well as the searched person Sh. Ved Prakash Bharti. In the order sheet entry belonging to Sh. Ved Prakash Bharti, the AO simply stated as under: "Statement of Mr. S. K. Chug recorded." And in the case of the assessee the order sheet entry reads as under: "Notice of 153C issued after recording reasons." 14. From the plain reading of the above notings, it is crystal clear that no satisfaction was recorded by the AO in the case of th....
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.... the provision of section 153A of the Act. -Sd- (VED PRAKASH KALIA) Asstt. Commissioner of Income Tax, Central Circle, Karnal Dated: 22.02.2013" 15. In the aforesaid satisfaction note, it has nowhere been stated by the AO that he is recording satisfaction in his capacity as AO of any searched person i.e. Sh. Ved Prakash Bharti. In the present case, the satisfaction has been recorded by the AO of the assessee (i.e. a person other than the searched person) which is evident from the top of the satisfaction note wherein the assessee's name and address has been mentioned. Therefore, it is clear that the AO of the assessee has recorded satisfaction as Assessing Officer of the assessee and not as the Assessing Officer of the searched person. In the instant case, the AO in order sheet entry dated 22.02.2013 has mentioned that notice u/s 153C issued after recording reasons but the AO of the searched person is not empowered to issue the notice to the person other than the searched person. In our opinion, even if the AO of the assessee and the searched person is the same, satisfaction must be recorded by the AO of searched person. In this regard, the....
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....tion 132(4A)(i) clearly stipulates that when, inter alia, any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in section 292C(1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he arrives at the satisfaction that the seized document does not belong to the person in respect of whom the search was conducted but to somebody else. Surmise and conjecture cannot take the place of "satisfaction". It has further been held that: "It was evident from the satisfaction note that apart from saying that the documents belonged to the assessee and that the Assessing Officer was satisfied that it was a fit case for issuance of a notice under section 153C, there was nothing which would indicate how the presumptions which were to be n....