TaxTMI 
TaxTMI 
2017 (3) TMI 1536
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....DEL-2014 IT-6231/DEL-2014 20.08.2014 4 Victory Apartments Pvt. Ltd. 2007-08 - 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 p....
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....at he has to first record satisfaction note in the file of the person searched and thereafter such satisfaction note along with the seized documents or books of account to be placed in the file of such other person. (3) The commissioner of Income Tax (Appeals) erred in 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 t....
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....s taken place on Appellant and accordingly issued notice U/s 153A of IT. Act. 2. Thereafter Notice U/s 153A of IT Act was withdrawn on appellant's objection on 26.2.2013. 3. On Realizing that no search took place on the Appellant Company then he took refuge U/s 153C of I.T. Act and issued notice u/s 153C 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 certai....
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..... Dy CIT • Suncity Alloys P Ltd vs ACIT • Anil Kumar Bhatia Vs ACIT • ACIT Vs Mrs Ultara S Shorewala • ACIT Vs Asha kataria • Shri Vikram Khandelwal Vs DCIT • ACIT Vs Gambhir Silk mills • Vijaybhai N. Chandrani v. Asstt CIT • Meghmani Organics Ltd. v. Dy. CIT • P. Srinivas Naik v. Asstt. CIT 8. The ld. CIT(A) after considering the submissions of the assessee observed that the 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 ....
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....ess or re-assess his income in accordance with the provisions of section 153A. 8.1 Therefore, recording of satisfaction by the Assessing Officer of the person searched that any money bullion, jewellery or other valuable article or thing or books of account or documents seized belong to the person other than the person searched is a sine qua non for initiating action u/s 153C of the IT Act, 1961. This interpretation of section 153C is supported by the decision of Hon'ble Apex Court in the case of Manish Maheswari 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 reco....
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.... or books of account or documents seized or requisitioned belong to such other person, whereas under Section 158BD if 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 assets were requisitioned under section 132A, he shall proceed against such other person under section 158BC." 8.1.3 From the above citations and also from the comparison of language of sections 153C and 158BD, it is evident that the condition 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 perso....
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.....1.5 The last line of satisfaction note read as under: "I am therefore satisfied that the documents seized as referred to above belong to M/s Victory Dwellings Pvt. Ltd. warranting action u/s 153Cin this case." 8.1.6 A plain reading above indicated that the satisfaction note was recorded by the Assessing Officer who was taking action u/s 153C of the I T Act 1961, i.e. the Assessing Officer of the appellant company. This inference is drawn and strengthened from the fact that such satisfaction note was recorded on 27.02.2013 and also the notice u/s 153C was issued on the same date, The Assessing Officer who recorded the satisfaction note in the file of the appellant company 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. ....
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.... statements (balance sheet, profit & loss account and schedule A) are the documents in public domain and hence are not incriminating in nature. The contents of page nos. 96 to 98 of annexure A-1 found and seized by the searched party V-2 from the residential premises of Sh. Pramod Goel was subjected only as a tool in invoking the provisions u/s 153C of the IT Act, 1961 but the same was never examined in the course of assessment proceedings of the appellant company nor any transaction incriminating in nature was detected by the Assessing Officer. In the course of the entire assessment proceedings no queries were asked by the Assessing Officer pertaining the any item from the financial statements. However, only that material i.e. 51-55 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 ....
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....rnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate;." As per clause (b), sub section (1) of section 153A and second Proviso, the Assessing 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 jurisdictio....
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....sessee on merit and the ld. CIT(A) allowed all the grounds relating to legal issue in favour of the assessee while on merits, she preferred to confirm the addition. It was stated that the first issue on which the ld. CIT(A) had given relief to the assessee was that in the absence of any incriminating material being found during the course of search, no addition was called for. A reference was made to page no. 21 of the assessee's paper book which is the copy of the satisfaction note and it was submitted that in the said satisfaction note the AO referred to the seized material as under: "Page No. 96 and 98 of Annexure A-1 of Party V-2 is a copy of the Balance sheet, Profit loss account, pertaining to M/s Victory Dwellings Pvt. Ltd. for the Financial Year ending 31.3.3010." 11. It was further submitted that 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 suppli....
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....ur of the assessee, the addition sustained was not justified. 13. In his rival submissions the ld. DR strongly supported the assessment order passed by the AO and further submitted that even if the AO/Assessing Authority receiving satisfaction note had not found anything adverse against assessee on examination of accounts books, the notice u/s 153C of the Act still could have been issued to the assessee to file the return of income. The reliance was placed on the following case laws: • SSP Aviation Ltd. Vs DCIT 20 Taxman.com 214 (Del.) • CIT Vs Classic Enterprises 358 ITR 465 (All.) • Savesh Kumar Aggarwal Vs U.O.I 353 ITR 26 (All.) • CIT Vs Nipun Builders & Developers (P.) Ltd. 350 ITR 407 (Del.) CIT Vs Nova Promoters & Finlease P. Ltd. 342 ITR 169 (Del.) • CIT Vs Ultra Modern Exports P. Ltd. 40 Taxmann.com 458 (Del.) • CIT Vs Frostair P. Ltd. 210 Taxman 221 (Del.) • CIT Vs N R Portfolio Pvt. Ltd. 29 Taxmann.com 291 (Del.) • CIT Vs Empire Builtech P. Ltd.366 ITR 110 (Del.) • CIT Vs MAF Academy P. Ltd. 361 ITR 258 (Del.) • CIT Vs Focus Exports (P.) Lt....
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....on:] -[Provided further that the Central Government may by rules 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.]" 15. On perusal of the aforesaid provisions, it would be clear that those provisions start with the non-obstante clause, so these provisions over ride the provisions contained in Sections 139, 147, 148, 149, 151 and 153 of the Act. It is also clear from the said provisions that the satisfaction of the AO of the searched person is must for assuming the jurisdiction u/s 153C of the Act in case of a person other than the searched person. In the present case, the ld. CIT(A) categorically stated in the impugned order (a relevant portion of the said order has been reproduced in the former part of this order) that the AO did not record any satisfaction during the assessm....
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....isite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person u/s 158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any 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; or (b) in the course of the assessment proceedings under section 158BC of the Act; or (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. " 3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/pari-materia to the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon'ble SC, apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT. 4. The guidelines of the Hon'ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict c....
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....search was conducted requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place, (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as afresh exercise. (Hi) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the "total income" of the six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years in which both the disclosed and the undisclosed income would be brought to tax. (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment can be arbitrary o....