TaxTMI 
TaxTMI 
2019 (7) TMI 1525
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....of the I.T. Act, 1961 when the requisition u/s.132A of the Act was already held illegal as per order dtd. 01/12/2015 passed by the Hon'ble Madhya Pradesh High Court. The learned Commissioner of Income Tax (Appeals) has thereby erred in confirming the order dtd. 25/10/2016 passed by the Assessing officer u/s.153C r.w.s.143(3) of the I.T. Act, 1961 which is null and void ab initio. 2. The learned Commissioner of Income Tax (Appeals) has erred in confirming the passing of order u/s.153C r.w.s. 143(3) of the I.T. Act, 1961 in absence of recording satisfaction as required by law. 3. The learned Commissioner of Income Tax (Appeals) has erred in confirming the order dtd. 25/10/2016 passed by the Assessing Officer which is null and void on the ground that the JCIT had given his approval u/s.153D of the Act without application of mind and willfully disobeying the order dtd. 01/12/2015 passed by the Hon'ble ML High Court. 4. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 2,05,22,600/- made by the Assessing Officer for the alleged unaccounted Silver Bullion of 479.50 Kgs. seized by the department in spite of the fact that t....
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....sides the above, we also note that the issue raised by the assessee in the additional ground of appeal is legal in nature which can be admitted at any stage during the proceedings. In this regard, we find support and guidance from the judgment of the Hon'ble Supreme Court in the case of NTPC Ltd Vs.CIT reported in 229 ITR 383 wherein it was held as under: "Under section 254, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assesseein accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of th....
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....o furnish the statement under section 131 of the Act on oath by the Income Tax authority Ujjain, Indore. The assessee in the statement dated 13/3/2014 admitted that the impugned cash belongs to his family and the jewellery belongs to him. The assessee also submitted in the statement that such jewellery was purchased on credit from Ridhi Sidhi Corporation, Ahmedabad. Subsequently, the AO issued a notice to the assessee under section 153C of the Act dated 4th August 2015. The assessee in response to such notice filed the return of income under section 153C of the Act declaring total income of Rs. 7,54,980/- only. Subsequently, notice under section 143(2)/142(1) served upon the assessee dated 28th September 2015. Now, we first, proceed to adjudicate the additional ground raised by the assessee wherein the validity of the proceedings under section 153C of the Act has been challenged. The Ld. AR for the assessee has challenged the reassessment proceedings by submitting as under: "8. At the outset it is submitted that as has been held by the Hon.M.P. High Court that there is no valid requsitioon which has also been affirmed by the Hon.Supreme Court.....
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....s.153A made in the case of Late Shri Nayan Kothari is invalid, illegal and bad in law both on the ground that that there is no valid requisition u/s.132A of the Act and also the fact that assessment has come to be completed without obtaining approval u/s.153D of the Act. In view of the proceedings u/s.153A itself being illegal the succeeding proceedings u/s.153C of the Act would also fail. 10. Since the assessment in question in the case of the appellant has been conducted u/s.153C proceedings, the provisions of the same are reproduced for easy reference: "Assessment of income of any other person. 37 153C . [(1)] [Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and se ction 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, 41belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, se....
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.... of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.] 11. Therefore, for the applicability of the provisions of section 153C of the Act, the following conditions are required to be satisfied. i. The Assessing Officer is satisfied that any money, bullion, jewellery of other valuation article or things or books of accounts or documents seized or requisitioned belongs or belong to a person other than the person with respect to whom the search is initiated or requisitioned is made. ii. The books of accounts, documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person. iii. ....
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....ection 132A and 153C, of the Income-tax Act, 1961 - Search and seizure - Assessment in case of - Assessmetn years 2002-03and 2003-04 - Whether proceedings under section 153A always precede proceedings under section 153C and without initiating any action under section 153A against person searched, action under section 153C cannot be initiated against same other persons - Held, yes [In favour of assessee]. 14. Further, it is also submitted that there has been non application of mind on the part of the Additional Commissioner fo Income Tax, Panchmahal Range, Godhra while granting approval u/s.153D of the Act. The copy of the letter dated 24.10.2016 written by the AO seeking the approval is enclosed. The perusal of the same would reveal that the same has been received by the office of the Additional Commissioner of Income Tax. Panchmahal Range, Godhra on 25.10.2016. The additional Commissioner of Income Tax, Panchmahal Ranage, Godhra has granted approval on 25.10.2016 itself i.e. the same day when the application has been received. The perusal of the assessment records would reveal that more than 500 pages were submitted during the course of assess....
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....o prepare satisfaction note. The AO has been very categorical that no "satisfaction note" is on record on the scrutiny assessment folder of Nayan Kothari and therefore, copy of satisfaction note is not available. It only goes to indicate that the AO of the requisioned party i.e. Nayan Kothari has nto recorded any satisfaction that assets belonging to the appellant have been requisitioned which necessitate the invoking of 153C proceedings. 16. Even in case of the appellant, the copy of the satisfaction note was sought for vide letter dated 22.09.2015. The Assessing Officer vide letter dated 28.09.2015 placed on page 72 of PAPER-BOOK has clearly indicated that this being not a case of regular search there is no necessity to prepare satisfaction note in his assessment proceedings. Accordingly, "satisfaction note" is not on the record of assessment proceedings of the appellant and therefore, he expressed his inability to supply the saem and has also indicated the non requirement of the same. Attention is also drawn to page 117 of the PAPER-BOOK which is the order sheet in the case of Rupam Gorecha. Perusal of the order sheet would reveal the ....
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....the provisions of section 153C of the Act; "153C. 3[(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person 3a[and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] :]" The above provision reveals that the AO was to record two satisfactions. Firstly, the AO of the searche....
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....nbsp; Date : 11/08/2017 To Shri Rajendrakumar Manekchandji Kothari 32/2, Pipali Bazar Dhar, (M.P.) Sir, Sub : Your RTI application dated 09/07/2017 Ref : Order under section 19(6) of the right to information Act, 2005, Vide letter No.GDH/Addl.CIT/PR/RTI/RK/ 2016-17 dated 31.07.2017. Please refer to the above. 2. Vide your application da....
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....neness of the satisfaction note recorded by the AO having jurisdiction over the assessee. He simply stated that there can be of technical lapse regarding the date mentioned in the satisfaction note viz a viz reply of the RTI. Be that as it may, there was no evidence suggesting that the AO of Nayan Kothari has recorded any satisfaction note before handing over the requisition material to the AO having jurisdiction over the assessee. From the above, it is concluded that the recording of satisfaction note for invoking the provision of section 153C is a mandatory requirement as it reveals that the AO has applied his mind to reach to the conclusion that the materials belong to the other person. If the AO of the person searched not recorded the satisfaction note, then initiation of proceedings u/s 153C of the Act was not held to be valid. We find support and guidance from the judgment of Hon'ble ITAT Delhi in the case of DSL Properties P. Ltd v/s DCIT reported in 33 taxmann.com 420 where the relevant head note reads as under: "For initiating valid jurisdiction under section 153C, even if Assessing Officer of person searched and A....