TaxTMI 
TaxTMI 
2016 (11) TMI 530
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....satisfaction as contemplated under section 153C of the Act of the A.O. of the searched persons in the case of the appellant." 3. It was submitted by the ld. AR of assessee that as per the provisions of section 153C of the I.T. Act, the AO of the searched person has to record satisfaction and only after that, the AO of any other person can initiate proceedings u/s. 153C against such other person. In support of this contention, he placed reliance on the Tribunal's order rendered in the case of Shri Vinod Kumar Chaurasia v. ACIT in ITA No.245 to 251/LKW/2012 dated 10.12.2014. He submitted a copy of this Tribunal's order and pointed out that in this order, the Tribunal has considered and followed the judgment of Hon'ble Apex Court rendered in the case of CIT v. Calcutta Knitwears in Civil Appeal No.3958 of 2014 dated 12.03.2014. 4. As against this, it was submitted by the ld. DR of revenue that written submissions has been filed by her on 10.08.2016 and the same should be considered for deciding this additional ground because it is her submission that in the present case, the AO of assessee and AO of the searched persons i.e., Shri K. Raghavacharyulu and Mrs. G. Renuka is same i.....
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....covered under provisions of Section 158BD and therefore the issue of "transmission of records" (refer Para 39) came up before the Hon'ble Court and consequently the issue of the "who should recording of satisfaction" and "at what point of time the satisfaction should be recorded was also considered". In this context the Hon'ble court stated that the satisfaction can be recorded at any of the 3 stages - (1) At the time of initiation of proceedings u/s 158BC, (2) along with the proceedings U/S 158BC and (3) immediately after concluding the proceedings U/S 158BC. 3. The aforesaid decision of CIT Vs Calcutta Knitwears 43 taxmann.com 446 (SC) is NOT applicable to the case of the assesse for the following reasons: (i) as the assessments of the assessee are completed under different provisions of the statute as they which relate to the new search assessment procedure as contained under sections 153A to 153A which are brought into statute w.e.f 1-6-2003. (ii) The assessing officer of the person covered under provisions of Section 153 A is the same as the officer of the person covered under provisions of Section 153C and ,therefore, there is NO issue of "t....
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....e is as under:- "Recording of satisfaction note before issuance of notice under section 153C: Name of the assessee: Sri Gali Janardhana Reddy (Ay: 2005-06 to 2010-11) A search u/s. 132 was conducted on 25/10/2010 in the case of Mr K. Raghvacharyulu at flat No.402, Kakateeya Residency, Kappagal Road, Bellary. During the course of the search, following documents/books of account belonging to Sri Gali Janardhana Reddy were seized and the contents are explained in brief as below- RB/1 Page No.2 This page contains application filed by Mr G Janardhana Reddy before the Returning Officer while contesting for the election to the Member of Legislative Council in the State of Karnataka. RB/1 Pages 27-32 These pages contain details of Assets (movable, immovable, assets etc) belonging to Mr Janardhana Reddy, his spouse and dependents. RB/1Pages 116-121 This contain instruments of Partnership deed entered on 8.1.2006 between Sri B Srininivas Reddy, Sri Parameshwara Reddy, Sri B Sreeramulu, Sri G Karunakar Reddy, Sri Somashekhar Reddy, Smt G Lakshmi Aruna in the name and style of Hotel Nagarjun. A search u/s....
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..... 153C of the Act is not required to be issued in the case of searched person, but in the case of the other person i.e., the present assessee. In our considered opinion, even if the AO of assessee and the searched person is one and the same, then also, the satisfaction note has to be recorded by the AO in his capacity as AO of the searched person and not in his capacity as AO of the other person in whose case notice u/s. 153C is required to be issued. 8. In the light of the above facts, now we examine the applicability of the Tribunal's order cited by the ld. AR of assessee having been rendered in the case of Shri Vinod Kumar Chaurasia v. ACIT (supra). In that case, the judgment of Hon'ble Allahabad High Court has been cited before the Tribunal rendered in the case of CIT v. M/s. Gopi Apartment in ITA No.60 of 2014. The relevant portion of the judgment of the Hon'ble Allahabad High Court rendered in the case of CIT v. M/s. Gopi Apartment has been reproduced by the Tribunal in that case on pages 5 & 6 of that order and the same is reproduced hereinbelow for the sake of ready reference:- "5. Having given a thoughtful consideration to the rival submissions and from a....
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.... seized or requisitioned, as is mentioned in Section 153C nor there was any necessity of recording a prior satisfaction before proceeding to assess the 'other person'. The satisfaction subsequently recorded in the assessment order in respect of the 'other person' was sufficient compliance of provisions of Section 153C, which, in any case, was procedural in nature. The A.O. of both the proceedings, being the same, he was neither required to handover the documents to another Assessing Officer nor he had to record any satisfaction for the purpose of any other Assessing Officer since same Assessing Officer of the same designation is having jurisdiction over both the persons, i.e. 'searched person' and the 'other person' (not searched). Sri Agrawal relied upon a Division Bench judgment of this Court rendered in the case of Commissioner of Income Tax Vs. Classic Enterprises, (2013) 358 ITR 465." It was contended that the Tribunal was not justified in quashing the notice under Section 153C, instead of deciding the question on merits as to whether additions are to be made and/ or to what extent the income is to be assessed in the hands of Gopi Apart....
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.... of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A." The aforesaid provision is contained in Chapter- XIV of the Income Tax Act, which contains the procedure for assessment. A somewhat similar provision exists in Section 158BD under Chapter XIV-B, which contains the procedure for assessment of searched cases, which reads as under: "158BD. Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed [under section 158BC] against such other person and ....
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....nd unambiguous. The legislature has not imposed any embargo on the assessing officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person. 44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of the appeals that the assessing officer had not recorded the satisfaction note as required under Section 158BD of the Act, therefore, the Tribunal and the High Court were justified in setting aside the orders of asses....
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....such a 'searched person', may, if he is satisfied, that any money, document etc. belongs to a person other than the searched person, then such money, documents etc. are to be handed over to the Assessing Officer having jurisdiction over 'such other person'. (2) The second stage commences from the recording of such satisfaction by the Assessing Officer of the 'searched person' followed by handing over of all the requisite documents etc. to the Assessing Officer of such 'other person', thereafter followed by issuance of the notice of the proceedings under Section 153C read with section 153A against such 'other person'. The initiation of proceedings against 'such other person' are dependant upon a satisfaction being recorded. Such satisfaction may be during the search or at the time of initiation of assessment proceedings against the 'searched person', or even during the assessment proceedings against him or even after completion of the same, but before issuance of notice to the 'such other person' under Section 153C. Even in a case, where the Assessing Officer of both the persons is the s....
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.... Section 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under Section 132A of the Act." The ratio of the judgment in Manish Maheshwari's case also applies to the provisions of Section 153C and to the facts of this case. In the instant case, a categorical finding has been recorded by the C.I.T. (Appeals) and the I.T.A.T. that there is no material showing the recording of satisfaction by the Assessing Officer of the 'searched person' prior to issuance of notice under Section 153C to the respondent assessee, i.e. 'the other person'. It was the admitted case of the Revenue before the C.I.T. (Appeals) and the I.T.A.T. that though the Assessing Officer (of the other person) in the assessment order had stated that satisfaction for issuing notice under Section 153C was recorded, however, on examination, recording of such satisfaction alleged to be recorded by the Assessing Officer was not available. In view of the legal position, as already discussed above a....
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....seized material, thus, the issue, which falls for consideration in this appeal, in fact, did not arise for consideration in the said appeal. In any case, the case at hand being squarely covered by the pronouncements of the Supreme Court, as already referred, the reliance placed by Sri Agrawal on the aforesaid judgment does not cut much ice." 6. Now it is clear from the record that satisfaction by the Assessing Officer of the searched person was not recorded before initiating proceedings under section 153C of the Act against the assessee and the impugned issue is squarely covered by the aforesaid judgment of the jurisdictional High Court. We, therefore, have no hesitation in holding that since the assessment was framed consequent to the proceedings initiated under section 153C of the Act, without recording satisfaction by the Assessing Officer of the searched person, the assessment is bad in law and deserves to be quashed. We accordingly set aside the order of the ld. CIT(A) and quash the assessment framed under section 153C read with 143(3) of the Act." 9. From the above Tribunal's order, it is seen that the Tribunal has not only followed the jud....