TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 286
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.... 44,19,031/- for A.Ys. 2007-08, 2008-09 and 2009-10 respectively from out of financial expenses and the learned CIT(A) was unjustified in only partly allowing the expenditure. On the facts and circumstances of the case, the expenditure is incurred for the purpose of business and therefore allowable. (3) That the learned CIT(A) erred in law and on facts in holding that the trading transaction, in which delivery is not enforced, constitutes speculative transaction. On the facts and circumstances of the case the trading transactions entered by the assessee are outside the purview the definition of speculative transaction as envisaged as per Section 43(5) of the Income Tax Act. (4) That the learned CIT(A) erred in law and on facts in holding that the financial expenses (partly) have been incurred for speculative transaction. On the facts and circumstances of the case, the funds available through LC transaction have been utilised for the working capital of the regular business of the assessee. (5) That the Assessing Officer erred in law and on facts in charging interest under section 234A, 234B and 234C and the learned C.I.T.(A) has erred in confirming the action of the Assessing ....
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....hat the order of AO is unjustified and liable to be set aside. 2.3 In addition to the fact that as noted in the assessment order, the appellant raised no substantial reason for its objection to notice u/s 153C, and the fact that the AO has noted that during the course of search several item of books of accounts and incriminating documents were found and seized and that the seized material vide Page No. 8 to 16 of A2(25) belong to the assessee which is incriminating in nature, and further that the authorized representative of the assessee inspected the seized material and took photocopies of relevant documents etc., the appellant's ground is held to be without substance and is dismissed." 5. On merits learned CIT(Appeals) partly sustained the addition made by the AO . 6. Against the above order of learned CIT(Appeals), assessee is in appeals before us. As emanating from the grounds of appeal referred above, the assessee at the threshold has raised the issue that learned CIT(Appeals) has erred in holding that the notice issued u/s 153C is valid. 7. We have heard both the counsel and perused the records. Learned counsel of the assessee submitted that the satisfaction of the AO of....
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.... assessments in all these cases have been completed earlier. Hence in the absence of incriminating material found during the search, no addition is sustainable u/s 153C. Learned counsel further submitted that no incriminating document was found during search. The documents in Page No. 8 to 16 of item 25 of Annexure A2 are sale invoices issued by the appellant company to Gupta Domestic Fuels (N) Ltd. and Gupta International Industries Ltd. on account of sale of Coal by the appellant to these companies. Once the invoices are issued by the appellant and have been received by the buyers viz. Gupta Domestics Fuels (N) Ltd. and Gupta International Industries Ltd. the same belongs to the buyers. If the seized document which forms the basis does not belong to the petitioner, there is no jurisdiction to issue notice u/s 153C and, therefore, the entire proceedings are null and void as held by Hon'ble Jurisdictional Bombay High Court in the case of CIT vs. Arpit Land Pvt. Ltd. in I.T. Appeal No. 83/2014 order dated 07-02-2017. The entries for the purchase by the aforesaid entities is duly found recorded in their books of accounts of assessee. The entries for sale are also found recorded in t....
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....found in the case of the searched persons, namely, Shri Mukesh Gupta Indl. and Gupta Coal India Ltd. were examined from the concerned assessment records brought by the learned D.R. Common satisfaction note in the case of Mukesh Gupta, Indl. Reads as under : "All the books and documents seized / impounded during the course of search / survey as also material gathered on enquiries and post search investigations and the various observations made in the appraisal report have been carefully examined and considered with reference to the regular books of accounts while framing the assessments for all the assessment years." Common satisfaction note in the case Gupta Coal India Ltd. reads as under: " All the books and documents seized/impounded during the course of search/survey as also material gathered on enquiries and post search investigations and the various observations made in the appraisal report have ben carefully examined and considered with reference to the regular books of accounts while framing the assessments for all the assessment years. Regarding quantity of coal received from and supplied to various parties information was called u/s 133(6) of the I.T. Act. The detai....
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....cer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made except in cases where any assessment or reassessment has abated.] 13. From the above provisions, it is clear that where the AO of the persons searched is satisfied that any money, bullion, jewellery, books of accounts or other documents etc. belong to a person other than a searched person, then such document or assets etc. shall be handed over to the AO of the other person and the later AO shall proceed against such other person to assess or reassess his income. Thus it is manifest before handing over such documents to the AO of the other person a satisfaction has to be recorded by the AO of the searched persons, that money, bullion or jewellery, etc.,found from the person searched belong to the 'other person'. Only when such 'satisfaction' is recorded by the AO of the person searched and such documents or assets seized, etc., are handed over to the AO of the 'other person', that the later AO acquires jurisdiction to make as....
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.... whose premises had been searched or whose documents and other assets had been requisitioned under s. 132A.s That the recording of satisfaction by the AO having jurisdiction over the person searched is an essential and prerequisite condition for bestowing jurisdiction to the AO of the other persons. 14. Now in this regard the CBDT has also issued notification as under : "CIRCULAR NO. 24/2015 F.No.279/Misc.l140 /2015/IT J Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 31 st December, 2015 Subject: Recording of satisfaction note under section 158BD/153C of the Act - reg.- The issue of recording of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation. 2. The Hon'ble Supreme Court in the case of Mls Calcutta Knitwears in its detailed judgment in Civil Appeal NO.3958 of 2014 dated 12.3.2014(available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of Section 15880 of the Act, recording of a satisfaction note is a prerequisite and thesatisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other....
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....s are liable to be quashed on account of lack of validity of jurisdiction. In this regard the case laws referred above by the learned counsel of the assessee support this proposition. We may gainfully refer to some of them as under : i) CIT vs. Shetty Pharmaceuticals & Biological Ltd. 232 Taxman 0268. (Andhra Pradesh H.C.) In this case it was held that section 153C and 153A mandates recording of satisfaction of the Assessing Officer(s) is a pre- condition for invoking jurisdiction and it is not a mere formality because recording of satisfaction postulates application of mind consciously as the documents seized must be belonging to the any other person other than the person referred to in Section 153-A of the Act. It is contended that the same Assessing Officer is involved in the matter. This fact does not dispense with above requirement. It is settled position of law that when a thing is to be done in one particular manner under law this has to be done in that manner alone and not other way (See Nazir Ahmed v. King Emperor). We think the learned Tribunal has correctly followed the principle. We do not find any element of law to be decided. Conclusion: Recording of satisfact....
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....the case of Director of Income Tax vs. M/s Ingram Micro (India) Exports Pte Ltd. in ITA No. 1337 of 2013 & Others vide order dated 29-04-2015. In this case it was expounded that as per provisions of section 153A and section 153C of the I.T. Act, proceedings can only be initiated after the AO arise at the satisfaction that the seized material pertains to other persons, namely, persons other than searched persons. It is only then the persons other than the searched party can be proceeded against. If there is a satisfaction required and to be recorded as a pre- condition and which is mandatory then in the absence thereof all further steps stand vitiated. iv) In a batch of appeals in ITA No. 60/2016 & Others in the Principal CIT vs. Satkar Roadlines Pvt. Ltd. vide order dated January 12, 2016, the Hon'ble Delhi High Court noted as under : It is stated by Ms. Suruchi Aggarwal, Senior Counsel for the Revenue, that in light of the Circular No. 24/2015 dated 31st December, 2015 issued by the Central Board of Direct Taxes on the subject "Recording of satisfaction note under Section 158BD/153C of the Act", these appeals are not pressed These appeals are, accordingly, dismissed as n....