TaxTMI 
TaxTMI 
2018 (11) TMI 256
X X X X Extracts X X X X
X X X X Extracts X X X X
....al that it is an agreement for "Faculty Engagement Agreement" entered into by the assessee and M/s Bright Professional Pvt. Ltd. This agreement has been signed by the assessee as a Faculty Member and signed by Shri Sanjeev Kumar Gupta and Syed Rashid Masood, the directors of M/s Bright Professional Pvt. Ltd. This documents was also signed by the witness Shri Sovinder Bhati. Notice u/s. 153C was issued on 09.01.2013 after recording reasons thereof to file return of income by within 15 days of service of this notice. The assessee raised certain objections, however, ultimately filed return of income u/s. 153C under protest. The A.O. after giving opportunity of being heard and considering the material on record, computed the income of assessee at Rs. 1,41,83,140/- by making certain additions in the assessment order under section 143(3) r.w.s. 153C of the I.T. Act, 1961, on dated 22.03.2013. 3. The assessee challenged the additions as well as legality of the jurisdiction assumed under section 153C of the I.T. Act before the Ld. CIT(A). The submissions of the assessee are noted in the impugned order in which the assessee briefly objected to the assumption of jurisdiction under section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....passed by the Ld. CITA are liable to be quashed. 1.1. That on the facts and in the circumstances of the case and in law, the proceedings initiated u/s 153C and consequential orders are liable to be struck down for want of fulfillment of mandatory jurisdictional conditions, stipulated u/s 153C of the act. 1.2. That on the facts and in the circumstances of the case and in law, the document which is edifice of impugned orders passed by Ld. AO and Ld. CITA by no standard of reasoning can be said to be "belonging to appellant herein" within the meaning of section 153C of the act. 1.3. That on the facts and in the circumstances of the case and in law, proceeding initiated u/s 153C and all consequential actions are liable to be declared as nullity because of absence of requisite satisfaction note(s) to be drawn respectively by Assessing Officer of raided person and AO of other person (Assessee). 2. That Ld. CITA erred in not deleting all the additions which are unconnected to, (a). Satisfaction note, (b). Seized Material, once it is found that seized document/material as referred in assessment order has no basis and addition on the basis of stated seize....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T. Act which is disposed of by the A.O. vide Order Dated 14.02.2013, copies of which, is filed at pages 11 and 12 of the paper book. Learned Counsel for the Assessee referring the same submitted that the assessee in the objection to the legality of the assessment under section 153C of the I.T. Act submitted before the A.O. that prima facie it is clear from the tone and tenor of the aforesaid satisfaction note that same has been recorded on the file of the assessee only as the same is not recorded in the file of the searched person. Therefore, condition precedent for invoking jurisdiction under section 153C of the Act are not satisfied. It was also explained that satisfaction note is full of subjectivity and vagueness and it is not clear which documents particularly the A.O. is referring to for assuming jurisdiction under section 153C of the Act out of the stated Faculty Engagement Agreement. It was also explained that jurisdiction under section 153C of the Act is bad in law in the present case. The Faculty Engagement Agreement is Dated 07.10.2010 which is fully explained. Learned Counsel for the Assessee by referring to the same Order of the A.O. submitted that A.O. instead of deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion "belonging to" too literally." 7. We have considered the rival submissions. According to Section 153C of the I.T. Act, the action under section 153C can be taken in respect of any other person, other than the person searched, if the A.O. of the searched person is satisfied that any money, bullion, jewellery, or other valuable article or thing or books of account seized or requisitioned belongs or belonged to a person other than the person searched under section 153A. In such circumstances, the Assessing Officer shall hand over to the Assessing Officer of such other person money, jewellery, bullion or other valuable article or thing or books of account or documents, and thereafter, the Assessing Officer of such other person shall proceed against the said person to assess or re-assess his income in accordance with the provisions of Section 153A of the I.T. Act, 1961. Therefore, recording of satisfaction by the Assessing Officer of the person searched is a condition precedent for initiating action under section 153C of the I.T. Act. An identical issue have been considered and decided by ITAT, Delhi, D-Bench in the case of ACIT, Central Circle-9, New Delhi vs. M/s. Victory Accom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fore the provisions of the said chapter 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 Section 132A of the Act." 6.1. It was further held by the Hon'ble Supreme Court in para-16 in the case of Manish Maheshwari (supra) as under : "Law in this regard is clear and explicit. The only question which arises for our consideration is as to whether the notice dated 06.02.1996 satisfies the requirements of Section 158BD of the Act. The said notice does not record any satisfaction on the part of the Assessing Officer. Documents and other assets recovered during search had not been handed over to the Assessing Officer having jurisdiction in the matter." 6.2. It was further held in para-22 by the Apex Court in the case of Manish Maheshwari (supra) as under: "As the Assessing Officer has not recorded his satisfaction, which is mandatory; nor has he transferred the case to the Assessing Officer having jurisdiction over the matter, we are of the opinion that the impugned judgments of the High Court cannot be sustained, which are set aside accordingly. The appeals are allow....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court." 6.4. The Hon'ble Bombay High Court in the case of CIT vs. Singhad Technical Education Society (2015) 378 ITR 84 (Bom.) held as under : "In terms of section 153C of the Income-tax Act, 1961, the Assessing Officer should be satisfied that any money, bullion, jewellery or other valuable articles or thing or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in section 153A of the Act and he can hand over the seized documents to the Assessing Officer having jurisdiction over that person. The assessee was an educational institution since the assessment year 1994-95. A search and seizure operation was carried out and certain loose papers were seized from the president of the assessee. Simultaneously a survey action was conducted on the assessee. On the basis of loose papers found with and seized from the president the Assessing Officer issued a notice under section 153C on the assessee and assessed the income. The Tribunal set aside the assessments. On appeals to the High Court: Held....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessment years, namely, 2004-05 and 2005-06. Nor did this decision have a bearing in respect of assessment for assessment year 1999- 2000 or assessment year 2006-07. The necessary consequence would be that the conclusions of the Assessing Officer in his assessment order regarding the activities of the trust not being genuine and not carried out in accordance with the trust deed or cancellation of registration, denial of benefits of sections 11 and 12 would not be affected by this judgment." 6.6. The Hon'ble Madras High Court in the case of CIT vs. Late J. Chandrasekhar (HUF) (2011) 338 ITR 61 (Mad.) held as under : "On the search conducted in the case of A and group on November 25, 2003, material pertaining to "on-money" payment paid to the assessee in respect of property purchased from the assessee were seized. Based on that, the Assessing Officer issued notice under section 153C of the Income-tax Act, 1961,and reworked the capital gains. The Commissioner (Appeals) and the Tribunal held that the notice under section 153C was not valid. On appeal to the High Court: Held, dismissing the appeals, that the Assessing Officer did not have the benefit of the seized....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the proceedings under section 153C." 6.8. The ITAT, Delhi Bench, in the case of assessee for A.Ys. 2009-2010 and 2010-2011 in the matter of Victory Accommodation Pvt. Ltd., vs. ACIT, Central Circle- 09, New Delhi 2017 (5) TMI 1050-ITAT-Delhi (supra), on identical facts held as under : "Assessment framed u/s 153C - absence of satisfaction note - Held that:- From the plain reading of the 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 assessee's paper book. Therefore, the assessment framed in the hands of the assessee was not valid. Moreover, from the observation of the AO in the satisfaction note also it is crystal clear that no incriminating material was found....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the person searched i.e., Shri Pramod Goel so as to initiate proceedings against the assessee-company under section 153C of the I.T. Act. It may also be noted here that initially the A.O. proceeded against the assessee-company under section 153A of the I.T. Act, on the premise that search was conducted against the assessee-company under section 132 of the I.T. Act, therefore, he has issued notice under section 153A of the I.T. Act against the assessee-company. When it was found later on, that no search have been conducted in the case of assessee-company, therefore, notice under section 153A was withdrawn. The A.O. of the assessee later on recorded satisfaction note under section 153C of the I.T. Act, which is not valid in Law. The A.O. of the assessee referred to balance sheet of the assessee-company for other year, therefore, the same cannot be considered to be incriminating in nature against the assessee-company as it is part of Department record and in public domain. Therefore, it is clear from the above facts that the condition precedent for issuing notice under section 153C are not satisfied in this case because no satisfaction have been recorded under section 153C in the ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er section 153C was also issued on the same day on 09.01.2013. Copy of the satisfaction note recorded in the case of assessee on 09.01.2013 under section 153C is reproduced above. It is clear from the above satisfaction note that it is recorded in the case of the assessee by the A.O. DCIT, CC-25, New Delhi, who have also framed assessment in the case of the assessee. The satisfaction note clearly revealed that satisfaction note have been recorded by the A.O. of the assessee and not by the A.O. of the searched person i.e., M/s Bright Professional Pvt. Ltd. The assessee filed objections to the initiation of proceedings under section 153C of the I.T. Act, in which, assessee specifically raised the point that satisfaction note have not been recorded in the case of the searched person, therefore, conditions of Section 153C are not satisfied in this case. Therefore, assumption of jurisdiction under section 153C is bad in law. The assessee also explained in the objection that the solitary seized document provided to the assessee is Faculty Engagement Agreement Dated 07.10.2010 as is referred to in the assessment order, which according to the assessee is fully explainable. The A.O. however....