TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 256
X X X X Extracts X X X X
X X X X Extracts X X X X
....ement 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 153C of the I.T. Act and the additions on meri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 seized material is deleted. 3. That Ld. CITA erred in not deleting all the additions which are unconnected t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee 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 deciding the above objections of the assessee in proper perspective has held that provisions of Section 153C are ipso facto attracted and it is automatic that the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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 Accommodations Pvt. Ltd., Delhi in ITA.No.6238/Del./2014 for the A.Y. 2008-2009, Dated 27.06.2018, in which in paras 6 to 7 it was held as under : "6. We have considered the rival subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 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 allowed. However, in the facts and circumstances of the case, there shall be no order as to costs." 6.3. The CBDT vide Circular No.24/2015 dated 31st December, 2015 issued the following directions : "Subject : R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 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, dismissing the appeals, that the reasons assigned by the Assessing Officer in the satisfaction note were silent about the assessment year in which specific incriminating information or unaccounted or undisclosed hidden information was discovered or seized by the Revenue from the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 material while issuing the notice under section 153C. In the light of the fact that the Revenue did not produce any material to show that the materials were available at the hands of the Assessing Officer at the time of issuing notice, the Tribunal rightly came to the conclusion that he assumption of jurisdiction un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 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, the addition was made only on the basis of the copy of balance sheet, profit and loss account and schedule of advances against supplies pertaining to the assessee, those documents were already in the knowledge of the department as the same were furnished alongwith the regular return of income. Therefore, those documents by no stretch of imagination can b....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 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 case of the person searched and no incriminating material was seized pertaining to assessment year under appeal. Even during the course of survey, no incriminating material was found against the assessee-company because the same were regarding purchase of shares of the group companies and ultimately, A.O. made the addition based on books of account that the share....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see. 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, did not decide these objections specifically and on irrelevant reasons rejected the claim of assessee. Therefore, on the basis of which, it is clear that no satisfaction have been recorded in the case of the person searched and the seized document i.e., Faculty Engagement Agreement Dated 07.10.2010 would not be relevant to assessment year under appeal i.e., 201....