TaxTMI 
TaxTMI 
2021 (12) TMI 203
X X X X Extracts X X X X
X X X X Extracts X X X X
....Circle-7, New Delhi in case of Karat 87 Inn Pvt. Ltd for Assessment Year 2009-10 against the order of ld CIT(A)-24, New Delhi dated 27.02.2015 raising following grounds of appeal:- "1. The order of Ld. CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law in quashing the order passed by the Assessing Officer by treating the assumption of jurisdiction u/s 153C bad in law by relying on the ratio of judgment of the Hon'ble High Court in the case of M/s Pepsi Foods (P) Ltd. (supra) and M/s PepsiCo India Holdings Pvt. Ltd. (Supra). 3. On the fact and circumstances of the case the Ld. CIT(A) has erred in law in deciding the case without going into merits of the case." 3. The assessee has filed cross objections in CO No. 98/Del/2016 for Assessment Year 2009-10 raising following grounds of cross objections as under:- "1. That in the absence of challenge by the revenue in its appeal before the Hon'ble Appellate Tribunal to the finding of the Id. Commissioner (Appeal), on the basis of remand report furnished by the Assessing Officer during the course of appeal proceedings, that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al), on the basis of remand report furnished by the Assessing Officer during the course of appeal proceedings, that the Assessing Officer of the searched person had not recorded satisfaction note to the effect that the seized documents did not belong to his assessee, i.e., the person searched upon, but belonged to another person, i.e., the instant assessee, and, therefore, the appeal filed by the revenue is liable to be dismissed. 2. That the addition of Rs. 2,03,155/- by estimating Net Profit on ad-hoc basis at 15% of Turnover is illegal and unjustified and, therefore, ought to be deleted. 3. That the addition of Rs. 1,50,000/- is illegal and unjustified because the entries as appearing in Page No. 107 of annexure A-72 forming part of the seized records are duly appearing in the books of accounts of the assess- being in the nature of bank withdrawals and, therefore, ought to be deleted. 4. That, on the facts and circumstances of the case, the addition of Rs. 4,72,90,000/- u/s 69 in respect of unexplained investment on account alleged fair market value of the property situate at 16/21, Padam Sing- Road, Karol Bagh, Delhi is illegal and unjustified because....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tisfaction note to the effect that the seized documents did not belong to his assessee, i.e., the person searched upon, but belonged to another person, i.e., the instant assessee, and, therefore, the appeal filed by the revenue is liable to be dismissed. 2. That, on the facts and circumstances of the case, the addition of Rs. 13,77,23,125/- u/s 69 in respect of unexplained investment, alleged as the difference between alleged fair market value of the property and the purchase consideration declared by the assessee is illegal and unjustified and therefore, ought to be deleted. 3. That, the addition u/s 69 of Rs. 13,77,23,125/- in respect of the property duly recorded by the assessee in its books of accounts is illegal because the mischief created by section 69 is attracted only if an asset is not recorded in the books of accounts. 4. That the addition of Rs. 13,77,23,125/- u/s 69 is illegal because the Assessing Officer made the addition without having any incriminating document in his possession pointing out to the payment by the assessee of any consideration over and above the consideration recorded in books of accounts though the revenue had even search....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of the case, the Ld. CIT(A) has erred in law in quashing the order passed by the Assessing Officer by treating the assumption of jurisdiction u/s 153C bad in law by relying on the ratio of judgment of the Hon'ble High Court in the case of M/s Pepsi Foods (P) Ltd. (supra) and M/s PepsiCo India Holdings Pvt. Ltd. (Supra). 3. On the fact and circumstances of the case the Ld. CIT(A) has erred in law in deciding the case without going into merits of the case." 9. SBP 87 Hotels Pvt. Ltd in CO NO. 100/Del/2016 raising following grounds of appeal:- "1. That in the absence of challenge by the revenue in its appeal before the Hon'ble Appellate Tribunal to the finding of the Id. Commissioner (Appeal), on the basis of remand report furnished by the Assessing Officer during the course of appeal proceedings, that the Assessing Officer of the searched person had not recorded satisfaction note to the effect that the seized documents did not belong to his assessee, i.e., the person searched upon, but belonged to another person, i.e., the instant assessee, and, therefore, the appeal filed by the revenue is liable to be dismissed. 2. That the addition of Rs. 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s bad in law. The assessee requested to treat the return of income filed on 16.03.2010 as the return in response to the above notice. The assessee objected to that notice u/s 153C. The ld AO rejected the contention of the assessee stating that warrant was issued in the name of the assessee also. Thereafter, he proceeded to make an assessment and assessed the total income of the assessee at Rs. 6,46,79,849/- . Several additions were made. The assessee challenged the order before the LD CIT(A) on the issue of validity of issue of notice u/s 153C of the Act as well as on the merits of the case. The ld CIT(A) held that the satisfaction note recorded by the ld AO does not have any mention of any details, annexure page numbers of the documents or money, bullion, asset belonging to the appellant which has been found and seized during the course of search. Therefore, he relied on the decision of Pepsico Food Pvt. Ltd Vs. ACIT 52 Taxmann.com 220 and Pepsico Holding India Pvt. Ltd Vs. ACIT 270 CTR 467 (Del) held that the jurisdiction has been assumed by the ld AO only on the ground that the appellant is closely related/ associated to the impugned assessee who has been searched and not becaus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tly urged that the matter should be decided not on technicalities of satisfaction note but on the merits of the case. She further submitted that looking to the quantum of the addition and the nature of the addition made by the learned assessing officer merely because the satisfaction note does not contain the reference of the incriminating material and despite no satisfaction note recorded by the AO of the searched person, the addition deserves to be upheld. 15. The LD AR extensively referred the order of the LD CIT(A). He further reiterated all the arguments raised before the ld CIT(A) once again before us and submitted that a. there is no satisfaction recorded by the ld AO of searched persons and b. Satisfaction recorded by the LD AO of the assessee does not refer to any of the impounded material pertaining to the assessee. He further submitted that the issue in the case of the assessee is squarely covered in favour of the assessee by the judgment mentioned in the order of the LD CIT(A). He further submitted that revenue in the ground of appeal has not at contested the finding of the learned CIT - A that when there is no satisfaction recorded in the case o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of roads worth Rs. 159.05 crores. During the search, operation a large number of documents were seized which clearly indicated that the group including the assessee is earning huge profits which are reduced by introducing bogus expenses. The case of assessee namely M/s Karat 87 Inn Pvt. Ltd. is closely related/associated entity to the main assessee i.e. M/s Satya Parkash & Brothers Pvt. Ltd. In view of facts narrated above, I am satisfied that the case of M/s Karat 87 Inn Pvt. Ltd. is a fit case for issue of notice u/s 153C of the I.T. Act, 1961. Notice u/s 153C date 24.04.2012 is issued requiring the assessee to file return of income for the A.Y. 2005-06 to 2010-11. 4.3 From the above satisfaction note, it is evident that there is no mention of any details/Annexure/Page nos. of the documents or money, bullion or assets belonging to the appellant that have been found and seized. The AO only writes that appellant is a closely related/associated entity to the main assessee i.e. M/s Satya Parkash & Brothers Pvt. Ltd. and that he was satisfied that the case of appellant is a fit case for issue of notice u/s 153. Such satisfaction is highly inadequate for assumption of juri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "relates to" or "refers to". A registered sale deed for example "belongs to", the purchaser of the property but obviously "relates to" or "refers to" a vendor. 4.6 On considering the ratio of the two cases namely M/s Pepsi Food (P) Ltd.(supra), and M/s Pepsico India Holding Pvt. Ltd. (supra), it is seen that the assumption of jurisdiction by the A.O. u/s. 153C of the Act is bad in law. The satisfaction nowhere mentions about any seized documents as belonging to the appellant. The jurisdiction has been assumed only on the ground that the appellant is closely related/associated to the main assessee who has been searched and not because any seized documents or assets belonged to the appellant. Presence of seized documents or assets belonging to the appellant is an essential and indispensable requirement of law. Further, the Hon'ble High Court of Delhi has held that the said satisfaction should be very much emanating from the note made before issuing notice u/s 153C. The relevant para 11 & 12 of the order of Hon'ble High Court of Delhi in the case of Pepsi Foods Pvt Ltd vs ACIT (Supra) is reproduced below for ready reference: "11. It is evident from the above satisfa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ya Prakash group have been forwarded as required by this office letter of 18.12.2014. It may be clarified if the AO of the person who has been searched has also recorded a satisfaction note u/s 153C (to the effect that he was satisfied that the seized documents etc. do not belong to the searched person and that they belong to some other person in whose case proceedings u/s 153C have been initiated). Further, if such a satisfaction has been recorded in the file of the searched person, a copy of the same in respect of the appeals as per list enclosed may be made available by 23/01/2015. Reply of AO On Perusal of assessment record of the searched person, it is observed that the AO had not recorded any satisfaction note in the file of the searched person, where he had mentioned that the seized documents etc. do not belongs to the searched person and the same documents belongs to some other person in whose case proceedings u/s 153C have been initiated. 4.9 From the above it is clear that the jurisdiction u/s 153C has also been assumed without fulfilling the requirements of S. 153C as interpreted in the case of DSL Properties Pvt. Ltd. Vs DCIT Central ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A : Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to 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 : Provided further that the Central Government may by rules13 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which ....