TaxTMI 
TaxTMI 
2018 (3) TMI 1174
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.... is bad in law and consequent assessment framed u/s 153C of the Act is illegal and void ab-initio. For this, the assessee has raised following ground Nos.1 & 2 in its cross-objection :- "1. That the order of the learned Assessing Officer is bad in law and wrong on facts and the CIT(A) erred in not setting aside the same. 2. That the notice issued u/s 153C of the Income Tax Act is illegal, invalid and bad in law and the learned CIT(A) has erred in confirming the action of the AO. On the facts and circumstances of the case and in law the action is illegal and the assessment u/s 153C is bad in law." 3. This common issue is raised by the assessee in all other cross- objections filed by assessee i.e., C.O. Nos.19/Nag/2018 to 23/Nag/2017 and 13/Nag/2014. As the facts and circumstances are exactly identical and the issue is emanating from same search conducted at the business premises of Mukesh Gupta group of cases on 29th July, 2009 under Section 132 of the Act, hence, we will take the facts from one of the cases i.e. ITA No.195/Nag/2014 and Cross Objection No.18/Nag/2017 in the case of M/s Gupta Domestic Fuels (Nagpur) Ltd. for assessment year 2004-05 and decide the....
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....ses are disallowed since the assessee is only carrying out paper transaction and not any actual business) Bank charges and commission : Rs. 11,12,214/- (Bank charges are disallowed since the assessee is only carrying out paper transaction and not any actual business)." 5. Aggrieved, assessee preferred appeal before the CIT(A), who deleted the additions on merits. The CIT(A) recorded his decision at pages 10 to 17 and finally observed that the expenses disallowed by the Assessing Officer are directly relatable for the purpose of business/earning of profit on the activities carried out by the assessee and, therefore, disallowance by the Assessing Officer is unjustified and deleted the same. Aggrieved against the deletion, now the Revenue is in appeal. The assessee has challenged the assumption of jurisdiction by its cross-objection. 6. At the outset, learned counsel for the assessee read out the entire assessment order and stated that there is no incriminating material which is used for the purpose of making these additions rather the Assessing Officer has merely disallowed expenses on ad-hoc basis without correlating with any of the incriminating material. He....
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....sion of Hon'ble High Court of Bombay in the case of CIT Vs. Sinhgad Technical Education Society - [2015] 63 taxmann.com 14 (Bombay) for the proposition that if the document pertains to some other assessment year, then the proceedings u/s 153C for some other assessment years cannot be initiated. Learned counsel for the assessee also relied on the proposition that satisfaction can be recorded either at the time of initiating proceedings for completion of assessment of a person against whom search was conducted or during the stage of assessment proceedings but satisfaction note must be prepared by the Assessing Officer in the case of searched person only. This proposition has been settled by Hon'ble Supreme Court in the case of CIT Vs. Calcutta Knitwears - [2014] 362 ITR 673 (SC). The learned counsel also relied on the Circular No.24/2015 in F.No.279/Misc./140/2015/ITJ dated 31st December, 2015 issued by the CBDT to give effect to the judgment of Hon'ble Supreme Court in the case of Calcutta Knitwears (supra). He stated that objection to the notice u/s 153C of the Act are made in assessment proceedings & were objected by the assessee before the Assessing Officer as well as bef....
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....ase of the assessee and not in the case of the searched person. This position has been explained by Hon'ble Supreme Court in the case of Calcutta Knitwears (supra) wherein complete procedure for recording of satisfaction has been set out from paragraph 38 to 45 as under :- "38. Having said that, let us revert to discussion of Section 158BD of the Act. The said provision is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under Sections 132 or 132A of the Act. Under Section 158BD of the Act, if an officer is satisfied that there exists any undisclosed income which may belong to a other person other than the searched person under Sections 132 or 132A of the Act, after recording such satisfaction, may transmit the records/documents/chits/papers etc to the assessing officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of the said other documents relating to such other person, the jurisdictional assessing officer may proceed to issue a notice for the purpose of completion of the assessments under Section 158BD of the Ac....
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....zed documents belong to a person other than the searched person is necessary for initiation of action under Section 158BD. The bare reading of the provision indicates that the satisfaction note could be prepared by the assessing officer either at the time of initiating proceedings for completion of assessment of a searched person under Section 158BC of the Act or during the stage of the assessment proceedings. It does not mean that after completion of the assessment, the assessing officer cannot prepare the satisfaction note to the effect that there exists income tax belonging to any person other than the searched person in respect of whom a search was made under Section 132 or requisition of books of accounts were made under Section 132A of the Act. The language of the provision is clear and unambiguous. The legislature has not imposed any embargo on the assessing officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person. 42. Further, Section 158BE(2)(b) only provides for the period of limitation for completion of block assessment under section 158BD in case of the per....
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....158BC of the Act of the searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of the appeals that the assessing officer had not recorded the satisfaction note as required under Section 158BD of the Act, therefore, the Tribunal and the High Court were justified in setting aside the orders of assessment and the orders passed by the first appellate authority. We do not intend to examine the aforesaid contention canvassed by the learned counsel since we are remanding the matters to the High Court for consideration of the individual cases herein in light of the observations made by us on the scope and possible interpretation of Section 158BD of the Act." 10. Furthermore, we find that this position has been accepted by the CBDT vide its Circular No.24/2015 wherein the guidelines set by Hon'ble Supreme Court that even if the Assessing Officer of the searched person and the other person is the one and the same, then also the Assessing Officer has to record his satisfaction in the case of the other person i.e., other than the searched person. In view of the facts in entirety and the dictum of Hon'ble Supreme Court, which was further adop....