TaxTMI 
TaxTMI 
2016 (8) TMI 1230
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....s document is an 'Agreement to sell' dated 01.03.2008 between M/s U.T. Builders & Promoters Ltd. through Shri P.L.Midha and assessee and one Mr. Jaspal Singh Sidhu in respect of one free hold cinema building called Punjab Palace located at village Madhupur. The total sale consideration is for Rs. 8 Crores and seller acknowledges receipt of sum of Rs. 6.50 Crores. The said document was confronted to Shri P.L.Midha whose statement was recorded under section 132(4) and he has admitted existence of the agreement but insisted that he has not received cash of Rs. 6.5 Crores as earned money and that deal as such did not mature. The Assessing Officer made addition of Rs. 6.50 Crores and computed the assessment under section 153C read with Section 153A read with Section 143(3) of the Income Tax Act in assessment year 2008-09. 3. Similarly, in assessment year 2009-10, certain documents marked pages 27-34 of Annexure A-1 was found in the course of search at the residential premises of Shri P.L.Midha on 17.09.2008 relating to the assessee. This document is a MOU dated 09.07.2008 between M/s U.T. Builders & Promoters Ltd. in which Shri P.L.Midha is Director and assessee is Developer transferri....
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.... and 2008-09 (for assessment years 2008-09 and 2009-10 under appeal) in which the copy of satisfaction note recorded dated 26.08.2010 in the case of the assessee by Assessing Officer of the assessee under section 153C of the Act have been provided. No other information has been provided to the assessee. The ld. counsel for the assessee submitted that even under RTI, no satisfaction note recorded by the Assessing Officer of the person searched i.e. Shri P.L.Midha have been provided if recorded, therefore, assumption of jurisdiction under section 153C of the Act is bad in law and assessments are liable to be quashed. He has, therefore, submitted that issue is covered in favour of the assessee by order of ITAT (DB) Chandigarh in the case of Shri Pawan Mangla Vs DCIT in ITA 445/2015 dated 14.06.2016. Copy of the order is placed on record. 7(i) ld. DR, however, relied on orders of authorities below and placed on record written submissions. 8. After hearing rival contentions, we are of the view the additional grounds are raised in relation to jurisdiction issue in as much as it mentions that no satisfaction was recorded by the A.O. of the person searched i.e. Shri P.L.Midha, therefore,....
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....ng Ld. Counsel of the assessee submitted that the additional ground is purely legal ground which goes to the root of the matter and does not require fresh facts to be investigated and therefore, it should be admitted. On the other hand, Ld CIT DR opposed the prayer so made and submitted that it is an afterthought and it should not be admitted. 5. Having heard the rival submissions relating to the admission of Addl. Ground, we find that the additional ground is in relation to the jurisdictional issue in as much as it mentions that no satisfaction was recorded by the A.O. of the searched person and therefore, the very issue of notice u/s 153C was bad. The additional ground is purely legal ground and goes to the root of the matter and therefore, such legal issue raised in the additional ground is admitted. It goes without saying that the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income Tax (1998) 229 ITR 0383 have held that pure legal question of law which does not require fresh facts to be investigated should be admitted as additional ground. Therefore, Addl. Ground is admitted. Adverting to the merit of the Additional Ground, Ld. ....
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....resh Mittal) and in the case of the assessee is the same and therefore, satisfaction recorded by that very A.O. vide order sheet entry dated 17.08.2012 is in terms of the requirement of law. According to Ld. CIT DR, Hon'ble Supreme Court in the case of CIT vs. Calcutta Knitwears (2014) 362 ITR 673, nowhere stated that the A.O. of the searched person must record satisfaction in the case records of the searched person only and nowhere else. Decision of Kolkatta Bench in the KPC Medical College & Hospital vs. DCIT 59 taxmann.com 393 was relied extensively. Ld. CIT DR in the end submitted that the Addl. Ground may be dismissed on merit also. 8. We have heard the rival submissions and perused the orders passed by the authorities below and have taken ourselves to the material placed before us. Undisputedly A.O. of the searched person and the A.O. of the appellant assessee is one and the same A.O. There is no dispute on this fact also that A.O. of the assessee recorded 'reason' u/s 153C on 17.08.2012 on the order sheet of the case records of the appellant assessee. It is also undisputed fact that no satisfaction for assuming jurisdiction u/s 153C was recorded in the case records of the....
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....s Hon'ble Allahabad High Court in the case of CIT vs. Gopi Apartments 365 ITR 411(All) and Hon'ble Madhya Pradesh High Court in the case of CIT vs. Mechmen 380 ITR 591(MP) have similarly held. The Hon'ble Allahabad High Court in the case of CIT Vs. Gopi Apartments (supra) held as follows: 25. A bare perusal of the provision contained in Section 153C of the I.T. Act leaves no doubt that, as is provided under Section 158BD, where the Assessing Officer, while proceeding under Section 153A against a person who has been subjected to search and seizure under Section 132(1) or has been proceeded under Section 132A, is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books 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 againsteach such other person and issue such other person notice and assessor reassess income of such other person in accordance with theprovisions of sec....
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....30. The 'satisfaction' has to be in writing and can be gathered from the assessment order passed in respect of the 'searched person', if it is so mentioned/ recorded or from any other order, note or record maintained by the Assessing Officer of the 'searched person'. The word 'satisfaction' refers to the state of mind of the Assessing Officer of the person searched, which gets reflected in a tangible shape/ form, when it is reduced into writing. It is the conclusion drawn or the finding recorded on the foundation of the material available. In this regard, reference may be made to the pronouncements in the case of C.I.T. Vs. Radhey Shyam Bansal, (2011) 337 ITR 217 (Delhi) and the Division Bench judgment of this Court in the case of C.I.T. Vs. Classic Enterprises reported in (2013) 358 ITR 465 (Allahabad). 31. In the case of Manish Maheshwari Vs. Assistant Commissioner ofIncome Tax and another, (2007) 289 ITR 341 (SC), their Lordships had the occasion to consider the provisions of Sections 158BC and 158BD and held that the conditions precedent for taking recourse to a block assessment interms of Secton 158BC and 158BD (i) were as under: "(i) Sati....
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....other person in the returns for the relevant period already filed by the other person in the returns for the relevant period already filed by the other person before him. For the same reason, we must reject the argument of the Department that the discretion of the Assessing Officer having jurisdiction will be impaired in any manner, if he were to hold a different view. 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 argument of the Department must be negatived. 19. After receipt of the materials, the Assessing Officer having jurisdiction is expected to conduct enquiry and due verification of the relevant facts; before forming his prima facie satisfaction. The Assessing Officer having jurisdiction will be well within his rights to form an independent view before issuing notice to the other person (person other than the person referred to in section 153A) under his jurisdiction on the basis of his own enquiry. In our opinion, the view formed by the Assessing Officer after his own enquiry does not entail in seating in appeal over the sat....
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....there that documents etc. found during search belonged to the third person which is not the case made out by AO in the present case. Therefore, after considering the totality of facts and circumstances and the position of law as explained above, we hold that the jurisdiction assumed u/s 153C was lacking in the instant case and therefore the notice issued u/s 153C is held not in accordance with law and the assessment made is quashed. Since we have held that assumption of jurisdiction u/s 153C itself is bad, we do not propose to dispose the other grounds of appeal. In the result, appeal is allowed in above terms. 12. In the result appeal of the assessee is allowed." 10. Considering the facts of the case in the light of order in the case of Shri Pawan Mangla (supra), it is clear that the search was conducted in the case of Shri P.L.Midha in which certain documents i.e. 'agreement to sell' dated 01.03.2008 and MOU dated 09.07.2008 were recovered. This 'agreement to sell' and MOU are alleged to have belong to the assessee. Therefore, Assessing Officer of the person searched i.e. Shri P.L.Midha shall have to record satisfaction that the documents found during the course of search be....