TaxTMI 
TaxTMI 
2016 (12) TMI 1574
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....tion is unjustified. 3. That the Assessing Officer erred in law and on facts in making additions as undisclosed income holding that the increase in hare Capital and Share Premium and its source is not explained and the learned CIT(A) erred in upholding the action of the AO. On the facts and circumstances of the case, the explanation with evidence is duly submitted and the action of Authorities below in rejecting such explanation is highly unjustified. 4. That the learned CIT(A) erred in law and on facts in holding that the Share Capital and Share Premium received during the year is not genuine and confirming the addition u/s 68 of the Income Tax Act. On the facts and circumstances of the case, the amount of Share Capital and Share Premium received during the year are genuine and fully explained. 5. That the Assessing Officer erred in law and on facts in charging interest u/s 234A and 234B of the Act and the learned CIT(A) erred in confirming the action of the AO. On the facts and circumstances of the case, the interest charged is improper. 2. In all these cases there was a search action carried out in the business premises of Gupta Industries Ltd. and ....
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....as under : "As has been pointed out by the Hon'ble Supreme Court, though an apparent statement must be considered real until it is shown that there are reasons to believe that the apparent is not the real, the taxing authorities are entitled to look in to the surrounding circumstances to find out the reality of such recitals. In view of the facts and circumstances narrated above it is clear that what the appellant has shown in its account is not the real transaction but merely a facade. The function of the subscribing companies is merely to act as intermediates to channelize investment, the shares subscribed to by them at such high premiums are not held for long but sold back to the Gupta group at a fraction of the purchase/subscription value i.e. subscribed to @ Rs. 100/- per share (including share premium) and sold @ Rs. 2/- to Rs. 5/- per share or a similar petty amount. No prudent company would sell its acquired shares at such heavy loss merely a year or two later for no discernible or apparent reason, which only indicates that the transaction itself was not real but a mere facade for concealing the true situation of affairs. After considering surrounding circumstances....
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....hi) DCIT vs. Satkar Roadlins Pvt. Td. 2 (2015) 232 Taxman 0268 (AP) CIT vs Sheettys Pharmaceuticals & Biological Ltd. 3 Hon'ble Madhya Pradesh High Court order in ITA No. 44/2011 in the case of M/s. Mechmen vide order dated 10/07/2015 4 (2014) 365 ITR 0411 (All) CIT vs. Gopi Apartment . 5 ITAT order in ITA NO.1344/Del/2012 in the case of M/s. DSL Properties (P) Ltd. vide order dated 22/03/2013 6 ITAT order in ITA NO.5460 to 5465/Del/2012 in the case of V.K. Fiscal Services Pvt. Ltd. vide order dated27/11/2013 7 Hon'ble Bombay High Court in ITA No.1337 of 2013 in the case of M/s. Ingram Micro (India) Exports Pte. Ltd. vide order dated 29/04/2015 8 Hon'ble Delhi High Court in ITA No.422/2015 in the case of Nikki Drugs & Chemicals Pvt. Ltd. vide order dated 03/12/2015 9 ITTA NO.254 of 2014 Judgement (per Hon'ble the Chief Justice Shri Kalyan Jyoti Sengupta) 10 ITAT order in ITA Nos.4228/DeI/20 11 in the case of M/s. Shield Home Pvt. Ltd. vide order dated 24/02/2016 8. Further more learned counsel submitted that the addition has not been made on the basis of seized material. In this rega....
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....)A Nos.84-86/KoIl2011 in the case of Trishul Hi-Tech Industries vide order dated 24/09/20 11. ITAT order in ITA No.472/Coch/2013 in the case of M/s. Royal Cartons P. Ltd. vide order dated 16/09/2011. 9. Per contra learned D.R. relied upon the orders of the authorities below. 10. We find that at the outset we need to adjudicate the jurisdiction aspect. The first limb of argument in this regard is that there is no valid satisfaction in the case of the persons searched that incriminating material found may relate to the assessees in whose case action has been taken u/s 153C. At the outset in this case we may gainfully refer to the satisfaction recorded in the case of persons in whose cases search and seizure activities were conducted. The satisfaction note 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....
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....d or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] :] 4[Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to 5[sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person :] 6[Provided further that the Central Government may by rules7 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer 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....
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....risdictional fact' is sine qua non for the exercise of power by a court of limited jurisdiction. As noted earlier section 153C provides for taking recourse to assessment in respect of any other person, the conditions precedent wherefore are: (i) satisfaction must be recorded by the AO that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the AO having jurisdiction over such other person; and (iii) the AO has proceeded under s. 153C against such other person. The conditions precedent for invoking the provisions of s. 153C, thus, are required to be satisfied before the provisions of said section 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 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 notifica....
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....rding of satisfaction note under section 158BO/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. " 15. From the above CBDT notification it is clear that even if the AO of the searched persons and the assessee are same still proper satisfaction qua the documents etc. found relating to the assessee has to be recorded in the case of the searched persons. From the perusal of the satisfaction note of the AO in the case of the searched persons as reproduced above it is evident that there is no such satisfaction that any bullion, jewellery, books of accounts, other documents etc. belonging to the assessee has been found and the same is being handed over to the AO of the assessee. Thus the absence of requisite satisfaction denudes the legality of jurisdiction in this case. Hence it has to be held that since proper satisfaction as envisaged u/s 153C has not been recorded, the assessments 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. Sh....
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....on 153C belongs or belong to a person (other than the person referred to in Section 153A), being sine qua non. He cannot assume jurisdiction to transmit those items to another file which incidentally is pending before him concerning other person (person other than the person referred to in Section 153A). Similarly, as there is no provision either express or implied (in the Act) to dispense with the requirement of satisfaction, if the Assessing Officer happens to be the same, as in this case, the arguments of the Department must be negative. We conclude that the condition precedent for resorting to action under Section 158BD delineated by the Supreme Court in the case of Manish Maheshwari (supra) and in the recent case of Commissioner of Income-tax-III vs. Calcutta Knitwears (suspra), would apply on all fours mandating satisfaction of the Assessing Officer(s) dealing with the case at the respective stages referred to in Section 153C. iii) Hon'ble Bombay High Court decision in 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 t....