TaxTMI 
TaxTMI 
2019 (10) TMI 350
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....bad in law and facts of the case in so far as it upholds the assessment order passed by the Assessing Officer. (2) That the Learned CIT (A) has grossly erred in summarily brushing aside the contention and the submission of the appellant while upholding the assessment order. (3) That the Learned CIT (A) has grossly erred in confirming the action of the learned assessing officer in assuming jurisdiction under section 153C read with section 153A of the Act which is bad in law. (4) That the Learned CIT (A) has grossly erred in not annulling the assessment order passed by the assessing officer under section 153C which is bad in law and void ab-initio. (5) That the Learned CIT (A) has grossly erred in confirming the addition deposited in cash as unexplained cash credit in bank accounts." Apart from the aforesaid grounds, following ground nos.(3) & (4) have been separately raised in AY 2012-13 :- "(3) That the Learned CIT (A) has grossly erred in confirming the action of the learned assessing officer in assuming jurisdiction under section 153C read with section 153A of the Act which is bad in law. (4) That the Learned CIT (A) has grossly erred in not annulling the assessment ....
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....orities below in the light of the facts and circumstances of the case. 7. Ld. AR for the assessee challenging the impugned order raised jurisdictional issue inter alia that AO has no jurisdiction to frame assessment u/s 153C r/w section 153A and as such, the assessment record is bad in law and void ab initio; that no incriminating material has been unearthed pertaining to assessee having reflection on the income of the assessee and relied upon the judgments of Hon'ble Delhi High Court in CIT vs. RRJ Securities Ltd. 380 ITR 61 (Delhi), ARN Infrastructure India Ltd. vs. ACIT 394 ITR 569 (Delhi) & PCIT vs. Sarwar Agency (P) Ltd. 397 ITR 400 (Delhi). 8. However, on the other hand, ld. DR for the Revenue in order to repel the arguments addressed by the ld. AR for the assessee filed written submissions which are extracted for ready perusal as under :- "2. In this case, search was conducted in the ABW Infrastructure Ltd. and Sh. Atul Bansal, Director of the said company and other related group concerns on 09.11.2011. The SMS transcriptions were seized as per Annexure-7. On page 2 and 3 of the assessment order for AY 2011- 12 the details of transcription pertaining to the assessee are ....
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....pter XIV-B." 6. In this case also, there was identification of SMS transcripts between the assessee and Sh. Atul Bansal. That identification was the starting point of connected enquiries resulting in the detection of undisclosed income. The nature of transaction recorded in SMS exchanges was exchange of funds and connected enquiries were made as regards source/receipt of funds in bank accounts and otherwise. Therefore, the AO was justified in making additions. 7. As regards proceedings u/s 153C, reliance is placed on the following decisions- (i) PCIT Vs. Super Malls Pvt. Ltd. [2016] 393 ITR 557 (Delhi) (ii) Ganpati Fincap Services Pvt. Ltd. Vs. CIT [2017] 395 ITR 692 (Delhi) (iii) SSP Aviation Ltd. Vs. DCIT [2012] 346 ITR 177 (Delhi)" (iv) PCIT Vs. Nau Nidh Overseas Pvt. Ltd. [2017] 394 ITR 753 (Delhi)" 9. Ld. AR for the assessee further contended that the satisfaction note dated 20.01.2014 prepared by AO of M/s. ABW Infrastructure (P) Ltd. and satisfaction note dated 23.01.2014 prepared by the AO of the assessee, available at pages 3 & 4 of the paper book, are verbatim same and as such, satisfaction note recorded in the case of the assessee fails to reflect the basi....
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....ructure Ltd. and at the residential premises of the Atul Bansal, Director of this company. During the course of search action various books of account and documents etc were found and seized. Satisfaction note of Jagjit Singh While examining the seized material of ABW Infrastructure Pvt. Ltd. and Shri Atul Bansal where action u/s 132 of the Income Tax Act, 1961 was taken on 09.11.2011, it was found that following documents belonging to Sh. Jajit Singh were found : 1. Transcript and digital copy of SMS seized as per Annexure A-7 of the panchnama prepared. 2. Transaction with M/s ABW Infrastructure limited as per the Seized computerized data as per Annexure A-16 A satisfaction to this effect was recorded by the AO assessing the person(s) searched and kept in the file of said person searched viz. ABW Infrastructure Pvt. Ltd. and Shri Atul Bansal. I have examined the above noted seized documents and I find that those documents belong to Sh Jajit Singh - PAN: AFTPS0204A. After examining the contents of these documents I am satisfied that proceedings u/s 153C read with Section 153A of the Act are required to be initiated in this case. Accordingly, notices u/s 153C read with s....
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.... 2011-12. 15. When we examine the satisfaction note dated 20.01.2014 prepared by the AO in case of searched person, AO of searched person recorded the fact that, "transcript and digital copy of SMS as per Annexure A-7 of Panchnama and transaction with M/s. ABW Infrastructure (P) Ltd. as per seized computerized data referred in Annexure A-16 belongs to Mr. Jagjit Singh, assessee in this case." 16. Now, bare perusal of the satisfaction note does not indicate as to how and under what circumstances AO of the assessee made himself satisfied that the aforesaid alleged documents belong to assessee and how they are incriminating in nature. Furthermore, AO has nowhere recorded the fact that as to how the aforesaid documents do not belong to M/s. ABW Infrastructure (P) Ltd. and how and under what circumstances, the same do not belong to searched person rather mechanically recorded in the satisfaction note that these aforesaid documents belong to assessee. 17. Hon'ble Delhi High Court in the case of Pepsico India Holdings Private Ltd. vs. ACIT 370 ITR 295 discussed the issue as to how the liability of such other person, the assessee in this case, can be fastened on the basis of seized docu....
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.... Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction". Xxxxxxxxxxxxxxxxxxxx "11. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word "satisfaction" or the words "I am satisfied" in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the said Act. The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person is satisfied that the seized documents belong to....
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.... on the record and, therefore, could be raised. In this behalf, It was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years In question and It Is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years, Since this requirement under Section 153C of the Act is essential for assessment under that provision, It becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 1S3C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and It showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material In para 9 of the order, the position that emerges therefrom Is discussed In para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It Is for this reason the High Court has also given Its Imprimatur to the aforesaid approach of the Tribunal. Tha....
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....een made u/s 153C, the necessary requirements to proceed with such initiation of assessment proceedings must be fulfilled. But, in the instant case, as discussed in the preceding paras, the AO has failed to record the satisfaction note as required u/s 153C rather mechanically recorded the satisfaction and made the assessment. The contention raised by the ld. DR and case laws relied upon are not applicable to the facts and circumstances of the case. 24. At the same time, SMS mentioned by the AO at page 2 of the assessment order found on the mobile phone of Atul Bansal, searched person, are relevant only for AY 2012-13 and not AY 2011-12 as the date of search on the basis of which assessment u/s 153C was initiated on 09.11.2011. Moreover, CIT (A) in para 5.2 of AY 2011-12 failed to clarify if any incriminating material was seized for this year. 25. In view of what has been discussed above, we are of the considered view that assessment framed by the assessee u/s 153A r/w section 153C for AYs 2009-10, 2010-11 and 2011-12 is bad in law for want of jurisdictional error with the AO. At the same time, assessment framed u/s 143 (3) for AY 2012-13 is also bad in law because date of handin....