TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 203
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....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 Assessing Officer of the searched person had not recorded satisfaction ....
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....icer 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 the said property does not belong to the assessee but belongs to other persons and therefore ought to be deleted. 5. That the addition of Rs. 4,72,9....
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....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 searched all the premises of the assessee and in the absence of any direct incriminating material, any addition merely on the basis of fair market value hypothetically calculated by the assessing officer is illegal, unjustifi....
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....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. 26,509 /- by estimating Net Profit on ad-hoc basis at 15% of Turnover is illegal and unjustified and, therefore, ought to be deleted. 3. That, on the facts and circumstances of the case, that the addition of Rs. 4,72,90,000/- u/s 69 in respect of unexplained investment on account of a....
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....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 because of any seized documents or assets belonged to the assessee. He held that presence of seized documents or asset belonging to the appellant is an essential and undisputed requirement of the law. He held that since such satisfaction is not given in satisfaction note recorded by the ld AO before issuing notice u/....
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....ence 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 of searched person by the assessing officer of the searched person whole assessment order needs to be quashed in case of third party in whose case action is taken u/s 153C of the act. He therefore, submitted that this issue is reached the finality. 16. We have carefully considered the rival contentions and perused the orders of the ....
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....others 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 jurisdiction u/s 153C. What is essential for assuming jurisdiction is the presence of seized material belonging to the appellant and a proper reason/basis to say that those seized material belong to the appellant and not to the person searched. 4.4 In the case of Pepsi Food (P) Ltd. Vs ACIT (2014) 52 taxmann.com 220 (Delhi), the Hon'ble High Court of Delhi has held that mere use or ment....
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....sfaction 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 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 ....
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....orded 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 Circle-08 (2013) 33 Taxmann.com 420 (Delhi-Trib). In that case Hon'ble ITAT Delhi Bench has held that recording of satisfaction by the AO of the searched person is sine qua non for initiating action u/s 153C. Even on this count the assumption of jurisdiction in the present case fails. 4.10 Therefore, respectfully following the said ratio of the Hon'ble High Court Delhi in the case of M/s Pepsi Foods (P) Ltd. (supra) and Pepsico India Holdings Pvt. Ltd. (Supra), and th....
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.... 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 the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income 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 as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) ha....