TaxTMI 
TaxTMI 
2017 (9) TMI 1898
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.... 2. The brief facts relating to the matter under consideration are that a search & seizure action under section 132 of Income Tax Act was carried out at the premises of one M/s S.L Arora Group on 10.08.2006 During the course of search, certain documents were found and seized. It was noticed that some of the documents which were seized from the premises of M/s S.L Arora Group of cases were also related to the assessee M/s Vision Promoters & Builders Pvt. Ltd. relating to certain sale and purchase of property by the assessee. Thereafter, assessee' s case was covered under section 153C of the Act and accordingly, assessment was completed in the case of the assessee by the Assessing Officer (in short AO) vide order dated 13.12.2009 under section 143(3) read with Section 153C of Income Tax Act. It is pertinent to mention here that in the said assessment proceedings under section 153C of the Act, no addition on capital gains was made by the Assessing Officer in relation to the sale and purchase of properties. However, certain other additions were made on account of disallowance of certain expenditure. Thereafter, the ld. CIT (Central) exercising his revision jurisdiction under section 26....
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....proceed to decide the legal issue regarding the validity of the invocation of jurisdiction by ld. CIT under section 263 of the Act. 6. The ld. counsel for the assessee in this respect has stated that the ld. CIT has invoked the jurisdiction under section 263 of the Act in respect of order passed by the Assessing Officer under section 153 C of the Act pursuance to the search action in the case of certain other persons namely M/s S.L Arora group of cases, Ld. Counsel has contended that as required under the provisions of Section 153C of the Act, the Assessing Officer of the assessee could not have assumed the jurisdiction under section 153C of the Act without recording a satisfaction in the case of searched person. He, in this respect has relied upon the letter dated 28.07.2016 of the Dy. CIT which is a reply to the application dated 29.06.2016 moved by the assessee under Right to Information Act, 2005. In his application dated 29.06.2016, the assessee had requested to provide the information as to whether a satisfaction note was recorded in the case of the searched person i.e M/s S.L Arora Group before initiating proceedings under section 153C of the Act in the case of the assessee....
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....ct or the books of account were requisitioned under section 132A of the Act with Section 158BD, existence of cogent and demonstrative material is germane to the Assessing Officer's satisfaction in concluding that the seized documents belonged to a person other than the searched person is necessary for initiation of action under section 158BD of the Act. 8. The ld. Counsel has further relied upon the following decisions wherein it has been held by various High Courts that the provisions of Section 153C of the Act are substantially similar/pari-materia to the provisions of Section 158BD and therefore the proposition of law laid down by the Hon'ble Supreme Court in relation to the provisions of Section 158BD read with Section 158BC shall also apply to the proceedings under section 153C of the Act for the purpose of assessment of income of a person other than the searched person: 1. CIT v. Mechmen 11-C (2016) 380 ITR 591 (MP HC) 2. CIT v. RRJ Securities Ltd. (2016) 380 ITR 612 (Del HC) 3. P.R CIT-Central II v. Aakash Arogya Mandir P. Ltd. ITA 509/2015 dated 28.07.2015 (Del HC) 9. The ld. Counsel has further relied upon Circular No. 24 of 2015 dated 31.12.2015 of CBDT wh....
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....meet the guidelines laid down by the Apex Court. (Ramanjit Kaur Sethi) DCIT (OSD) (ITJ), CBDT, New Delhi." 10. The ld. Counsel, thereafter has stressed that the circulars issued by CBDT are binding on the Assessing Officer. That since no satisfaction note was recorded in the case of searched person, therefore, in the light of the proposition of law laid down by Hon'ble Supreme Court in the case of Calcutta Knitwears (supra) and as laid down by various High Courts and also as per the CBDT Circular (supra), the very initiation of assessment proceedings under section 153C of the Act in the case of the assessee were invalid and the assessment order passed under section 153 C of the Act in the case of the assessee was illegal and nullity in the eyes of law. He thereafter, has contended that any subsequent order passed in context or in relation to or modifying the said null and void order would also be illegal and void and further that the jurisdiction or the legality of the primary/base proceedings can also be challenged in the subsequent/collateral proceedings also. He, accordingly, has contended that the subsequent order passed under section 263 of the Act by the ld. CIT modify....
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....rched person is (T) necessary for initiation of action under Section 158BD." 13. Further, various High Courts, as discussed above, have held that the provisions of Section 153 C are identical and are in pari-materia to that of Section 158BD of the Act and that the proposition of law laid down by Hon'ble Supreme Court regarding satisfaction note as per the provisions of Section 158BD would also apply to the provisions of Section 153C of the Act. Reliance in this respect can also be placed on the decision of the Madhya Pradesh High Court in the case of CIT v. Mechmen (supra). Further, it is also now settled proposition of law that in a case where the Assessing Officer of the searched person as well as that other person, in case of whom the assessment u/s 153C is contemplated, is one and the same the satisfaction would have to be recorded separately qua the searched person. Even assuming that no handing over of documents is required, recording of satisfaction is a must, as, that is the foundation, upon which subsequent proceedings against other person are initiated. The handing over of documents etc. in such a case may or may not be of much relevance but the recording of satisfac....