TaxTMI 
TaxTMI 
2019 (4) TMI 700
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..../s 153A/153C of the Act was issued on 3.10.2013. Assessee filed a copy of their return which was already filed on 6.10.2010 with a returned income of nil. During the course of assessment, learned AO observed that at the time of search on 9.11.2011, various incriminating papers were found and seized from the office as well as residential premises of the directors of the assessee and various documents were found and seized during the search/survey proceedings on Krrish Group at various premises and also from the premises of the assessee company and such documents were perused. By order dated 26.2.2014 passed u'/s 153A(1)(b) of the Act, learned AO made an addition of Rs. 50 lacs and concluded the assessment at the assessed income of the assessee at Rs. 50 lacs. 3. Challenging the same, assessee preferred an appeal before the learned CIT(A). By way of impugned order ld. CIT(A) dismissed the appeal and upheld the addition. Hence, the assessee is in this appeal before us stating that the assumption of jurisdiction by the ld. AO to initiate the assessment proceedings u/s 153C read with Section 153A(1)(b) of the Act was bad under law for want of recording mandatory satisfaction as contem....
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....ed by the ld. AO of the searched person saying that the alleged documents do not belong to the searched person but belong to the assessee, assumption of jurisdiction to issue notice u/s 153C of the Act is bad in law. He further submitted that in the case of Ganpati Fincap Services P. Ltd. (2017) 395 ITR 692, the Hon'ble jurisdictional High Court categorically stated that the recording of satisfaction note qua the other person by the AO of the searched person is a sine qua non for triggering the proceedings against the other person u/s 153 of the Act. 6. Per contra, it is the submission of the learned DR that there is no merit in the contention of the assessee in respect of the satisfaction by the AO of the searched person because the AO of the searched person and the other person were the one and the same person. Further argument of the learned DR is that the amendment to Section 124(3) by Finance Act, 2016 by insertion of clause (c) w.e.f. 1.6.2016 prohibits the assessee from raising any jurisdictional issue after the expiry of one month from the date on which he was served with a notice u/s 153A(1) or 153(2) in case of no action taken under consideration u/s 132 or 132A of the A....
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....rson. Now coming to the law applicable to these facts, both the assessee and the revenue are relying on the decision of the Hon'ble jurisdictional High Court in the case of Ganpati Fincap Services P. Ltd. (supra). This case is relied on by the Hon'ble jurisdictional High Court in a subsequent decision in the case of PCIT vs. Sheetal International P. Ltd. (supra) on which learned DR has placed reliance. 8. In the case Ganpati Fincap (supra), Hon'ble jurisdictional High Court, at para 41, summarized the law on this aspect as under: "41. To summarise the legal position: (i) No search under Section 132(1) of the Act can be initiated without a satisfaction note being recorded by the AO of such searched person. This is followed by issuance of a notice to such searched person under Section 153A of the Act. At that stage the AO does not have to record another satisfaction note qua the searched person. (ii) Where proceedings are proposed to be initiated under Section 153C of the Act against the 'other person', it has to be preceded by a satisfaction note by the AO of the searched person. He will record in this satisfaction note that the seized document belongs to the other pe....
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....qua the other person prior to the initiation of proceedings against the other person is a sine qua non for triggering the proceedings against the other person u/s 153C of the Act. No decision contrary to this proposition is brought to our notice and on the other hand, in the case of Sheetal International (supra), Hon'ble jurisdictional High Court followed the same. However, in that case as could be seen from the judgment, theTribunal invalidated the proceedings u/s 153C of the Act only for the reason that the AO of the searched person who was also that of the assessee, did not record a separate satisfaction note. Such an approach of the Tribunal was reversed by the Hon'ble jurisdictional High Court in view of the fact that in Ganpati Fincap (supra) vide para 41(v), and it was held that there do not have to be two separate satisfaction notes prepared by the AO of the searched person even where he is also the AO of the other person. 10. In the case in hand, it is not the question of recording a separate note or a composite note. This is a case where altogether there is no satisfaction recorded by the AO of the searched person qua the other person prior to the initiation of the proce....