TaxTMI 
TaxTMI 
2018 (12) TMI 1063
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....or furnishing of returns of income. The assessee submitted that he has filed return on 30.9.2009 under section 139(1) of the I.T. Act, 1961, in which income was declared in a sum of Rs. 1.78 crores. The A.O. issued statutory notice for completion of the assessment. It is noted that during the course of search on 30.06.2009 and 01.07.2009 at 15 different places connected with Mahesh Mehta and his associates at different places, large number of incriminating documents/ hard disk etc., were found and seized. Among these documents hand written 'BAHI's' were found and seized from a premises at the backside of the residence of Mahesh Mehta at BA-17A, DDA Flats, Ashok Vihar, Phase-1, Delhi. These four BAHIs were for the period from 01.04.2008 to 30.06.2009 i.e., the date of the search, were cash book, ledger, sale book of Mahesh Mehta group for recording few accounted as well as all unaccounted transactions from all business activities of the group regarding Kattha Manufacturing in M/s. Mahesh Wood Products Pvt. Ltd., and in M/s. Raj Kattha Products Pvt. Ltd., or dealing in real estate properties by the group concerns. These Bahis were written by one Sushil Sharma employee of Mahesh Mehta....
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....on the issue of cash transactions involved in purchase of the above property. During cross-examination of Mahesh Mehta, he admitted of receiving cash from the owner of assessee, but the receipts of the cash amount along with cheques were made by the Agent. Mahesh Mehta has given statement on oath that he did not remember the name and particulars of the Agent who has received cash on his behalf. The assessee later on explained that Mahesh Mehta is neither the Director nor a shareholder in M/s. Honest Estates (P) Ltd., the seller company. None of his family members are shareholders or Directors of the said company. This shows that he has no connection with the seller company. Therefore, no transaction should be linked between them. Mahesh Mehta has denied meeting any of the Directors of the assessee company and even cannot recognize them. He has also stated that at no point of time, he took any cash from the Directors of the assessee company or their representative. Mahesh Mehta has stated that he had received cash for the above property from a local Agent whose name and address he does not remember. Mahesh Mehta also stated that he has retracted from his statement given by him to th....
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....e claim of assessee that the material on the basis of which addition was made did not belong to the assessee because the seized paper referred to the property transaction between the assessee and M/s. Honest Estate Pvt. Ltd., and also mentioned the value of transaction in cheque and cash for which the facts of transaction and payment of cheque by the assessee stands corroborated by the assessee's own books of account. The Ld. CIT(A), accordingly, dismissed the appeal of assessee. 5. The assessee in the present appeal has challenged the Orders of the authorities below in upholding the assumption of jurisdiction under section 153C of the I.T. Act because no document belongs to the assessee were found and seized during the course of search and that no valid satisfaction have been recorded under section 153C of the I.T. Act in the case of the person searched. The additions on merit are also challenged because no evidence was found to make such addition against the assessee. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has referred to satisfaction note under section 153C of the I.T. Act, copy of which is filed at pages 64 to 66 of ....
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....aterial belongs to the assessee. Therefore, the plea of the assessee that satisfaction was not recorded by the A.O. of the searched person is factually incorrect. The Ld. D.R. relied upon decision of the Hon'ble Delhi High Court in the case of PCIT vs. Super Malls Pvt. Ltd., (2017) 393 ITR 557 (Del.) on the proposition that the Tribunal could not declare the satisfaction note invalid on hyper technical ground of incorrect terminology used in the said note. The Ld. D.R. also relied upon the decision of Hon'ble Delhi High Court in the case of PCIT vs. Sheetal International Pvt. Ltd., 2017-TIOL-1355-HC-DEL in which it was held that the proceedings under section 153C cannot be invalidated merely because the A.O. of the searched who is also that of the assessee did not record a separate satisfaction note. The Ld. D.R. filed written submissions in which other similar case Laws have also been relied upon. 7. We have considered the rival submissions and perused the material available on record. An identical issue was considered by ITAT, Delhi 'D' Bench in the case of ACIT vs. M/s. Victory Accommodations Pvt. Ltd., in ITA.No.6238/Del./2014, Dated 27.06.2018 which is reproduced as under :....
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.... Associates on 14.09.2010. Since one of the Directors of the assessee-company was associated with one of the cases of Jagat Group, his residential premiseswas also searched simultaneously. As a result of this search operation, a survey operation u/s 133A of the I.T.Act, 1961 was also conducted by the Department on the assessee'sbusiness premises on 14.09.2010. The case of the assesseecompanywas centralized and notice under section 153A of the I.T. Act was issued which was objected on the ground that no action under section 132 was initiated against the assessee. The Assessing Officer on finding this contention as correct, withdrew the notice dated 04.11.2011 issued u/s 153A of the I.T. Act, 1961.The Assessing Officer observed that during the course of the assessment proceedings u/s 153A in the case Shri Pramod Goel, it was noticed that a search and seizure operation under section 132 was conducted on 14.09.2010 at the residential premises of Shri Pramod Goel, Smt. Savita Goel and Sh. Ashish Goel at BN-33, East Shalimar Bagh, Delhi, wherefrom the documents belonging to the assesseecompany were found and seized which is "Page No. 102 and 103 of Annexure A-l of Party V-2 is a copy of ....
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.... Assessing Officer 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 belong 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 document, 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 that any money bullion, jewellery or other valuable article or thing or books of account or documents seized belonged to the person other than the person searched is a sine-qua-non for initiating action under section 153C of the I.T. Act, 1961. The Ld. CIT(A) in support of this interpretation of section 153C, relied upon the decision of Hon'ble Apex Court in the case of Manish Maheswari vs. ACIT & another (2007) 289 ITR 341 (SC). He has also noted tha....
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....27.02.2013 and notice under section 153C have been issued on the same date. The A.O. who recorded satisfaction note in the file of assessee company is also the same A.O. who issued notice under section 153C in the case of the assessee-company. The Ld. CIT(A) also called for the assessment record of Shri Pramod Goel who was searched under section 132 on 14.09.2010. The A.O. of the searched person Shri Pramod Goel and A.O. of the other person i.e., assessee-company may be same, but, the above two entities are two different persons, therefore, A.O. is bound to carry-out such exercise and the A.O. of the person searched should have recorded satisfaction note during the course of assessment proceedings under section 153A in the case of Shri Pramod Goel in his file and after recording such satisfaction note in the file of Shri Pramod Goel that is the person searched, the same should be placed in the file of the assessee-company i.e., other person. The Ld. CIT(A) on perusal of the assessment record of Shri Pramod Goel found that such exercise of recording satisfaction note in the case under section 153A was not carried-out and no such satisfaction note was found recorded in the case of th....
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..... has not conducted any enquiry. Ld. CIT(A), accepted the contention of assessee-company that on filing documents on record, A.O. did not make any enquiry. The A.O. has gone through and relied upon report of DDIT, Kolkata, which was in respect of some other cases and not connected with the assessee-company.The Ld. CIT(A) noted that A.O. did not issue notice under section 133(6) and no further enquiry was made. Therefore, addition on merit was also deleted. The appeal of assessee-company was accordingly allowed. 4. The Ld. D.R. relied upon the order of the A.O. He has submitted that Ld. CIT(A) has reproduced satisfaction note at page No.11 of the order. The balancesheet and profit and loss account was seized during the course of search, which led to survey under section 133A in the case of the assessee-company. If the A.O. has used the material/evidence collected under section 133A and during the course of search in the case of Shri Tarun Goel, there is no restriction to use it under sections 153A and 153C regarding the same. Ld. D.R. relied upon decision of Hon'ble Supreme Court in the case of CIT vs. Mukundray K. Shah 290 ITR 433. The Ld. D.R. relied upon Judgment of the Hon'bl....
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....e assessee during the course of search. Therefore, it was held that the same constitutes incriminating material. The Ld. D.R, therefore, submitted that satisfaction note was validly recorded under section 153C of the I.T. Act. On merits, the Ld. D.R. submitted that the name of the parties tally with the additions. The entries were arranged by Shri Tarun Goel, Entry Operator, in whose case, addition have been confirmed. In case, A.O. has not conducted proper enquiry, the Ld. CIT(A) having co-terminus powers, should have exercised the same power by conducting further investigation into the matter and relied upon the decision of Hon'ble jurisdictional Delhi High Court in the case of CIT-II vs. M/s. Jansampark Advertising And Marketing (P) Ltd., 375 ITR 373 (Del.) (HC) 5. On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has submitted that initially the A.O. initiated the proceedings against the assessee under section 153A of the I.T. Act and when it was found that no search have been conducted in the case of assessee, therefore, action under section 153A was dropped. The A.O, in the case of assessee-company recorded....
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.... 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 document, 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. The Hon'ble Supreme Court in the case of Manish Maheshwari vs. ACIT (2007) 289 ITR 341 (SC) in para-11 held as under: "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. S....
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.... case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No.3958 of 2014 dated 12.3.2014 (available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of Section 158BD of the Act, recording of a satisfaction note is a prerequisite 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 th....
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....parted and institution wise, whether the admissions were granted to the technical courses merit-wise or on the basis of marks obtained in XII standard HSC exam. Whether any fee structure was approved and cash component was, therefore, collected over and above the sanctionedfees were matters which ought to have been gone into and there could, not be a general or vague satisfaction. The Tribunal was justified in setting aside the assessments." 6.5. The Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) held as under : "Held, dismissing the appeals, (i) that the Tribunal permitted the assessee to raise the additional ground on the ground that it was a jurisdictional issue taken up on the basis of facts already on record, that under section 153C of the Act, incriminating material which was seized had to pertain to the assessment years in question, and that the documents which were seized did not establish any co-relation, document-wise, with these four assessment years. The Tribunal found that the material disclosed in the satisfaction note belonged to assessment year 2004-05 or thereafter. The Tribunal rightly per....
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....e for quashing of proceedings under section 153C. No material is produced to prove that the Assessing Officer in the case of person searched was satisfied that any money, bullion, jewellery or other valuable article or things or books of account or documents seized or requisitioned belongs to or belong to a person other than the person referred to in section 153A.  No material is produced before to show if any satisfaction was recorded by the Assessing Officer in that case that the material belongs to any person other than the person with respect to whom search was made under section 132. Department did not produce any material to show if anysuch satisfaction as required under section 153C was recorded by the Assessing Officer in the case of person searched. No material is produced in reference to above requirement. * No material is also produced before to show that books of account or documents or assets seized had been handed over to the Assessing Officer having jurisdiction over such other person. In the absence of any adequate material produced by the department contention of the assessee was justified that in this case, the Assessing Officer had not recorded a....
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....of those documents only. - Decided in favour of assessee." 6.9. The Hon'ble jurisdictional Delhi High Court in the case of Pr. CIT vs. Index Securities Private Limited, Vidya Shankar Investment Private Limited 2017 (9) TMI 585 (Del.) (HC)(supra) observed that "the two seized documents referred to in the satisfaction note in the case of each assessee are the trial balance and balance-sheet for a period of 05 months in 2010. In the first place, they do not relate to the assessment years for which the assessments were reopened in the case of both assessee's. Secondly, they cannot be said to be incriminating". Consequently, it was found that "even the second essential requirement for assumption of jurisdiction under section 153C of the I.T. Act, was not met in the case of the two assessee's". 7. Considering the facts of the case in the light of submissions made by both the parties and finding of fact arrived by the Ld. CIT(A), we do not find any merit in the Departmental Appeal. The Ld. CIT(A) called for the assessment record of the assessee-company and found that A.O. has recorded the satisfaction note in the file of the assessee- company which is reproduced above in....
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....ring the course of search in the case of the person searched because the balance-sheet does not belong to assessment year under appeal. Therefore, there is no incriminating material found during the course of search against the assessee-company so as to record any satisfaction note against the assessee-company. Thus, there is no reason to believe that A.O. of the searched person would have recorded any satisfaction note 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. Therefore, conditions of Section 153C of the I.T. Act are not satisfied in this case. The issue is covered against the Revenue by Judgment of the Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (supra) and Order of the Tribunal in the case of assessee-company for A.Ys. 2009- 2010 and 2010-2011 (supra). The decisions relied upon by the Ld. D.R. are, therefore, not applicable to the facts and circumstances of the case as the same are clearly distinguishable. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) in holding t....
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.... Mahesh Mehta . The detail of such paper is as under Annexure No. Page No. of Annexure Brief description of documents Person to whom the documents belongs. Ann A-4 Party S-2 93 The document is details of accounted as well as unaccounted receipts of Rs. 5.50 crores from M/s. Magic Leasing & Finance Pvt. Ltd, Shri Udai Kumar Vaish and Smt Maya Gupta w/o Shri Udai Kumar Vaish. For sale of property no 56/7- Karol Bagh, New Delhi. M/s. Magic Leasing & Finance Pvt. Ltd., Ann A-5 Party S-2 1 to 179 These pages are in respect of M/s Honest Estate Pvt. Ltd. This company sold property 56/7 Karol Bagh, New Delhi to M/s Magic Leasing & Finance Pvt. Ltd , Shri Udai Kumar Vaish and Smt Maya Gupta w/o Shri Udai KumarVaish. M/s. Magic Leasing & Finance Pvt. Ltd., 2. During the year 2008-09, Mahesh Mehta sold a property bearing Number 56/7 Karol Bagh, Delhi through his company M/s Honest Estate Pvt. Ltd. The basement and ground floor was sold to a company M/s Magic Leasing & ; Finance Pvt. Ltd. (Maruti car dealer by the name Magic Auto). The first and second floors were sold to one Udai Kumar Vaish,.who run a coaching-class at the premises now. He has ad....
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....D.B. Gupta Road Karol Bagh on which cheque & cash consideration are . mentioned. In view of the fact that cheque admitted to have been paid by the assessee company is found to be entered in the seized documents along with other payment admitted to have been received by the seller, there is no merits in the submission of the assessee company, that no cash was paid for purchase of the said property". 3. In view of the facts stated above it is evident that documents belonging to the assessee have been seized from a person covered under search u/s 132 of the I.T. Act, 1961, Hence proceedings u/s. 153C are being initiated for AY ; 2004- 05 to 2009-10. Sd/- xxxx ACIT, Central Circle-3, New Delhi". 16.06.2011 : Issue Notice under section 153C of the I.T.Act. Photo copy of the satisfaction note placed in cover for the A.Ys. 2005-2006 to 2009-2010. Sd/-xxx ACIT," 8.1. It is well settled law that recording of the satisfaction by the A.O. of the person searched is a condition precedent for initiating action under section 153C of the I.T. Act. However, in the present case, no satisfaction under section 153C of the I.T. Act have ....
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..... ACIT (supra). Learned Counsel for the Assessee pointed out that search in the present case is conducted on 30.06.2009 i.e., prior to the amendment in Section 153C of the I.T. Act w.e.f. 01.06.2015, therefore, it is not open to the Revenue to seek to point-out that the documents in question pertain to or relates to the assessee and relied upon decision of Hon'ble Delhi High Court in the case of Mr. Vineet Chourasia (supra) which is confirmed by the Hon'ble Supreme Court. The Hon'ble Supreme Court in the case of ITO vs. Canyon Financial Services Ltd., (supra) held as under : "SLP dismissed against High Court's ruling that where Assessing Officer of assessee had not proved that seized documents belonged to assessee and not to searched person and no reason was recorded how satisfaction notes recorded by Assessing Officer of assessee and Assessing Officer of searched person were identically worded carbon copy, proceedings could not be initiated against assessee under section 153C." 8.3. Considering the above discussion in the light of the Order of the tribunal in the case of M/s. Victory Accommodations Pvt. Ltd., (supra), it is proved on record that A.O. of the person ....