TaxTMI 
TaxTMI 
2018 (12) TMI 1074
X X X X Extracts X X X X
X X X X Extracts X X X X
....being illegal and bad in law, the assessment proceedings is liable to be quashed. 2. That the learned CIUT(A) erred in maintaining the addition of Rs. 12,50,000/- made u/s 69D of IT Act by totally ignoring the facts of the case and case laws cited on this issue. The addition so maintained being illegal and wrong, the same, therefore, requires to be deleted." Assessment Year 2009-10 "1. That the learned CIT(A) erred in dismissing the ground raised by the appellant regarding validity of initiation of proceedings u/s 153 THAT the initiation u/s 153C is invalid: (a) Because it is belted as the initiation was after 3 years and 3 months from the date of search. (b) Initiation is much late by about 14 months from the date of assessment of searched person. (c ) Satisfaction note recorded by Ld.AO is merely based on the statement of accountant recorded much after the date of search. (d) Initiation is based on material, which did not belong to the appellant. (e) Ld.A.O is not clear as to on the basis of which material the proceedings were being initiated that is material seized from Nilesh Ajmera from Phoenix Devcon (P) Ltd. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e accepting that there is no satisfaction note of the Ld.A.O of searched person on record. 7. We have heard rival contentions and perused the records placed before us and carefully gone through various judgments referred and relied by the Ld. Counsel for the assessee. Sole legal issue for both the years under appeal raised by the assessee is against the validity of the proceedings initiated u/s 153C of the Act. 8. Brief facts as culled out from the records are that a search and seizure operations were carried out at various premises of Satellite Group and other associate concerns on 19.11.2009. Various documents were seized which allegedly also included documents belonging to the assessee. After recording necessary satisfaction by the Ld. A.O the assessment proceedings u/s 153 C of the Act were initiated. Return of income for respective Assessment Years were filed and the assessments u/s 143(3) r.w.s. 153C of the Act were completed on 14.3.14 after making various additions. 9. Issues raised before us by the assessee is that the pre condition for initiating the proceedings u/s 153 C of the Act is that proper satisfaction has to be made by the Assessing Officer of the search....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of records no such satisfaction note was found to be recorded by the Assessing Officer of the searched person i.e. Nilesh Ajmera wherein information relating to the alleged incriminating material relating to the assessee i.e. "other person" has been found. In this situation where the basic condition before initiating the proceedings u/s 153C of the Act are initiated in the case of other person has not been complied to by way of not recording a proper satisfaction note by the Assessing Officer of the searched person then whether such proceedings initiated u/s 153C of the Act are valid or not needs to be examined in the light of judicial pronouncements. 11. We find that Hon'ble High Court of Delhi in the case of Pepsico India Holding P. Ltd V. ACIT(supra) dealing with the similar issue set out the following principles which needs to be followed so as to comply the provision of Section 153C of the Act:- "13. Having set out the position in law in the decision of this Court in the case of Pepsi Foods Pvt. Ltd. (supra), it must be seen as to whether the Assessing Officer of the searched person (the Jaipuria Group) could be said to have arrived at a satisfaction that the docum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he registered sale deed is seized, it cannot be said that it "belongs to"" the vendor just because his name is mentioned in the document. In the converse case if the vendor"s premises are searched and a copy of the sale deed is seized, it cannot be said that the said copy "belongs to" the purchaser just because it refers to him and he (the purchaser) holds the original sale deed. In this light, it is obvious that none of the three sets of documents _ copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement - can be said to "belong to" the petitioner. 17. In view of the foregoing discussion, we do not find that the ingredients of Section 153C of the said Act have been satisfied in this case. Consequently the notices dated 02.08.2013 issued under Section l53C of the said Act are quashed. Accordingly all proceedings pursuant thereto stand quashed. 18. The writ petitions are allowed as above. There shall be no orders as to costs. 19. All pending applications also stand disposed of". 12. Subsequently on 31.12.2015 Central Board of Direct Taxes (CBDT) issued a Circular No.24/2015, in view of the judgment of H....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ereby directs that pending litigation with regard to recording of satisfaction note under section 158BD /153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. Sd/- (Ramanjit Kaur Sethi) DCIT (OSD) (ITJ), CBDT, New Delhi. 13. The above CBDT circular issued, following the guidelines of Hon'ble Apex Court in the case of CIT Vs Calcutta Knitwears makes amply clear that satisfaction note has to be prepared by the Assessing Officer of the searched person setting out properly the details of various incriminating material/document belonging to the "other person" at the time of handing over such incriminating material /documents related to the other person to the Assessing Officer having the jurisdiction of such "other person". If this precondition of issuing proper satisfaction note by the Assessing Officer of the searched person in favour of the Assessing Officer having jurisdiction of such other person is not complied then the proceedings initiated u/s 153C of the Act are void ab initio. We therefore in the given facts and circumstances of the case and respectfully following the judgments of the Hon'ble courts referred above are ....