AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1536
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.... IT-6232/DEL-2014 19.08.2014 5 Victory Apartments Pvt. Ltd. 2009-10 IT-6210/DEL-2014 IT-6233/DEL-2014 19.08.2014 6 Victory Apartments Pvt. Ltd. 2010-11 IT-6211/DEL-2014 IT-6234/DEL-2014 19.08.2014 7 Victory Structures Pvt. Ltd. 2008-09 - IT-6225/DEL-2014 21.08.2014 8 Victory Structures Pvt. Ltd. 2009-10 IT-6212/DEL-2014 IT-6226/DEL-2014 18.08.2014 9 Victory Structures Pvt. Ltd. 2010-11 IT-6213/DEL-2014 IT-6227/DEL-2014 18.08.2014 10 Victory Township Pvt. Ltd. 2008-09 - IT-6235/DEL-2014 22.08.2014 11 Victory Township Pvt. Ltd. 2009-10 IT-6214/DEL-2014 IT-6236/DEL-2014 18.08.2014 12 Victory Township Pvt. Ltd. 2010-11 IT-6215/DEL-2014 IT-6237/DEL-2014 18.08.2014 2. At the first instance we will deal with the cross appeals in the case of M/s Victory Dwellings Pvt. Ltd. for the assessment year 2009-10. The grounds raised in ITA No. 6208/Del/2014 by the assessee read as under: "1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in....
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....n law and on facts in holding that no fair opportunity of hearing u/s 143(2) of the Act was given to the assessee before completing the assessment u/s 153C of the IT Act. (4) The commissioner of Income Tax (Appeals) erred in law and on facts in deleting the addition of Rs. 70,00,000/- on account of deemed income under section 68 of the Income Tax Act, 1961. (5) (a) The order of the CIT(Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 4. From the above grounds of the assessee's appeal, it would be clear that the main grievance of the assessee relates to the validity of the notice dated 27.02.2012 issued to the assessee and the assessment framed thereafter u/s 143(3) r.w.s. 153C of the Income Tax Act, 1961 (hereinafter referred to as the Act). 5. Facts of the case as appearing in the orders of the authorities below in brief are that the assessee was engaged in the business of a Builder and Developer of Real Estate. A search and seizure operation u/s 132 of the Act was conducted by the Investigation Wing of the department i....
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....3C on 27.02.2013 on the ground that copy of Audited Balance Sheets of Appellant were found in seized Records at Page No 102 & 103 of 'appellant company ' at the premises of one of Director's Residence who was searched in connection to some Jagat group of cases. 4. The Ld AO was again reminded by objections filed that even Section 153C is also not applicable because even Audited Balance Sheets of Appellant Company cannot be regarded as document in term of Section 153C of I.T. Act. As Such Balance Sheet are adopted accounts of Appellant Company and are in public domain & nothing incriminating was found in such documents. 5. The Ld AO was also reminded that spirit of Section 153C of IT. Act must be respected to as Notice u/s 153C read with section 153A should be issued where some undisclosed income are unearthed by examination of certain documents found from Person who is searched which were not part of Regular Assessments. 6. The Ld AO disregarded the all principles of Natural Justice & just brushed aside all objections/case laws and went ahead in making Assessments. 7. Now Comes the most bizarre Part of total disregard of Principles of Natural justice, which was ....
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....assessment folder of Sh. Pramod Goel revealed that the exercise of recording the satisfaction note during the assessment proceedings u/s 153A of the Act was not carried out and there was no satisfaction note found on the record. On the other hand, the AO recorded the satisfaction note in the file of such other person i.e. the assessee company and those facts were contrary to the provision and does not satisfy the condition for assuming the jurisdiction u/s 153C of the Act. The ld. CIT(A) categorically stated that no satisfaction note was found, recorded in the file of Sh. Pramod Goel, the person who was searched u/s 132 and assessed u/s 153A of the Act. Therefore, the satisfaction note which was recorded in the file of the assessee company could not be said to be valid within the meaning of Section 153C of the Act. The ld. CIT(A) held that the AO did not appreciate the legal frame of the condition laid down u/s 153C of the Act and he did not carry out any such exercise as mentioned in Section 153C(1) of the Act with proper application of mind, therefore, initiation of proceedings u/s 153C of the Act was not proper and was bad-in-law. The relevant findings had been given by the ld. ....
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....ari vs. ACIT & another (2007) 289 ITR 341 (SC) where the 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 taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions precedent wherefor are; (i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) the Assessing Officer has proceeded under section 158BC against such other person. The conditions precedent for invoking the provisions of section 158BD, thus, are required to be sati....
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....ition for recording satisfaction by the Assessing Officer of the person searched is present in both the sections. In section 158BD, the Assessing Officer of the person searched is to be satisfied that any undisclosed income belong to any other person other than the person searched, while in the section 153C, the AO of the person searched is to be satisfied that any money bullion, jewellery or other valuable article or thing or books of account or documents belong to a person other than the person of searched. The subsequent procedure in section 158BD and section 153C is same wherein the Assessing Officer of the person searched has to handover the documents or assets seized to the AO having jurisdiction over the such other person and thereafter, the AO of such other person would assess or re-assess such other person. Thus the basic condition of recording the satisfaction by the AO of the person searched as well as handing over the books of account or other documents or assets seized to the AO of such other person is present in both the sections. To this extent the decision of the Hon'ble Apex court in the case of Manish Maheswari is applicable while interpreting the provisions o....
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....any and also the Assessing Officer who issued the notice u/s 153C is same i.e. Assessing Officer Central Circle-9, New Delhi. This could be due to the fact that the said case was centralized with the office of Central Circle-9 New Delhi vide file no. CIT-D-VI/centralization/2011-12/648 dated 22.06.2011 issued by the CIT Delhi-VI New Delhi. 8.1.7 In the course of the appeal proceedings I have also called for the assessment record of Sh. Pramod Goel who was searched u/s 132 on 14.09.2010. Sh. Pramod Goel is the director of the appellant company i.e. M/s Victory Dwellings Pvt. Ltd. 8.1.8 The Assessing Officer of the searched person i.e. Sh. Pramod Goel and the Assessing Officer of such other person i.e. the appellant company i.e. M/s Victory Dwellings Pvt. Ltd. maybe same, but the above two entities are two different persons and the Assessing Officer is duty bound to carry out the exercise, as under: "a. As an Assessing Officer of the person searched he should have recorded a satisfaction note during the course of assessment proceedings u/s 153A in the case of Sh. Pramod Goel in his file. b. After recording such satisfaction note in the file of Sh. Pramod Goel i.e. (the person....
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....of annexure A-5 found and impounded, in the course of the survey proceedings u/s 133A on 14.09.2010 were taken into account for framing the assessment order u/s 143(3) read with section 153C of the I T Act, 1961. 8.1.11 It is also pertinently mentioned here that the document which was found and seized from the residential premises of Sh. Pramod Goel, searched u/s 132 of the I T Act was used by the Assessing Officer of the appellant company to invoke proceedings u/s 153C without recording the satisfaction note in the case of Sh. Goel in the course of the assessment proceedings u/s 153A of the I T Act, 1961, contrary to the provisions of section 153C. In the course of the assessment proceedings u/s 153C, the Assessing Officer did not raise any query pertaining to any of the transactions found recorded in the balance sheet, profit and loss account or schedule A for the year ended 31.03.2010 and no income was detected as undisclosed/unaccounted for the year under consideration from this document. Therefore, this document cannot be said to be incriminating on the basis of which action u/s 153C was taken by the Assessing Officer. In support of this inference, I rely upon the decision o....
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....ng Officer can issue a notice for the assessment or reassessment of total six years immediately preceding the assessment years relevant to the previous year in which the search is conducted. As per the Proviso to section 153C, the date of search is to be substituted by the date of receiving the books of account or documents or assets seized by the Assessing Officer having jurisdiction over such other person. For legal appreciation of section 153C(1) and its Proviso, have to be read together in the harmonious manner. For proper interpretation of section 153C for initiating valid jurisdiction under section 153C, even if the Assessing Officer of the searched person and the Assessing Officer of such other person is same, it is mandatory that he has to first record the satisfaction note in the file of the person searched and thereafter such satisfaction note along with the seized document or books of account is to be placed in the file of such other person. The date on which this exercise is completed would be considered as the date of receiving books/documents by the Assessing Officer having jurisdiction over such other person. After considering and examining the facts of the instant c....
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....t the AO recorded the satisfaction in the case of the assessee and not in the case of the searched person. Therefore, the assumption of jurisdiction u/s 153C of the Act by the AO was not valid. It was also submitted that the aforesaid referred to page nos. 96 & 98 by the AO were the copies of "Balance Sheet, Profit and Loss Account and Schedule of Advances against supplies" pertaining to the assessee. Therefore, the said documents by no stretch of imagination can be said to be incriminating as those were the documents which were made out of the regular books of accounts of the assessee and the return of income was filed on the basis of those documents only. It was contended that during the course of entire assessment proceedings no query with regards to those documents was raised by the AO. Therefore, in the absence of any incriminating material found during the course of search no addition could have been made in the assessment completed u/s 153C of the Act. The reliance was placed on the following case laws: * CIT Vs RRJ Securities Ltd. (2016) 380 ITR 612 (Del.) * CIT Vs Kabul Chawla in ITA No. 709 & 713/2014 order dated 28.08.2015 (Del. H.C.) * DCIT Vs Smt. Geeta Devi Agga....
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....uiltech P. Ltd.366 ITR 110 (Del.) * CIT Vs MAF Academy P. Ltd. 361 ITR 258 (Del.) * CIT Vs Focus Exports (P.) Ltd. 228 Taxman 88 (Del.) It was further submitted that the ld. CIT(A) was not justified in deleting the addition made by the AO. 14. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the search did not take place at the business premises of the assessee rather it took place at the premises of Sh. Pramod Goel, Smt. Savit Goel and Sh. Ashish Goel u/s 132 of the Act on 14.09.2010 and the notices were issued to those parties u/s 153A of the Act. The AO also issued notice u/s 153A of the Act to the assessee but later on being satisfied that no search and seizure operation u/s 132 of the Act was initiated against the assessee, he withdrew the notice issued u/s 153A of the Act. Thereafter, the AO issued the notice u/s 153C of the Act on the basis that the documents pertaining to the assessee were fund from the premises of the searched person. The said documents were the copies of balance sheet, profit and loss account and schedule A (advances against suppli....
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.... former part of this order) that the AO did not record any satisfaction during the assessment proceedings u/s 153A of the Act in the case of the searched person i.e. Sh. Pramod Goel. On the contrary, the AO recorded the satisfaction note in the file of the other person i.e. the assessee company. We have also perused the copy of satisfaction note recorded by the AO which is placed at page no. 21 of the assessee's paper book and read as under: "During the course of assessment proceedings u/s 153A in the case of Sh. Pramod Goel, it is noticed that search and seizure operation u/s 132 was undertaken on 14.09.2010 in the case of Sh. Pramod Goel, Smt. Savita Goel, and Sh. Ashish Goel at BN-33, East Shalimar Bagh, Delhi. Under mentioned documents belonging to M/s Victory Dwellings Pvt. Ltd. were found and seized from the above premises. Page No. 96 to 98 of Annexure A-1 of Party V-2 is a copy of the Balance sheet, Profile loss account, Schedule-A (Advance against suppliers) pertaining to M/s Victory Dwellings Pvt. Ltd, for the financial year ending 31.3.2010. The case of M/s Victory Dwellings Pvt. Ltd. was centralized with this office vide F. No. CIT-Delhi-VI/Centralization/2011-12/....
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.... strict compliance. It is further clarified that even if the AO of the searched person and the "other person" is one and the same, then also he is required to record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgment. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court." 17. From the plain reading of the aforesaid Circular No. 24/2015 dated 31.12.2015 issued by the Central Board of Direct Taxes, it is crystal clear that even if the AO of the searched person and of the other person is one and the same then he is required to record his satisfaction in the case of searched person. In the present case, it is an admitted fact that the AO of the searched person has not recorded any satisfaction rather the satisfaction is recorded by the AO of the other person i.e. the assessee which is evident from the satisfaction note, copy of which is placed at page no. 21 of the as....
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....thout any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material (v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word "assess" in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word "reassess " to completed assessment proceedings, (vi) In so far as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer, (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known....