TaxTMI 
TaxTMI 
2022 (9) TMI 154
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.... assessee carried the matter before CIT(A) who vide order dated 27.11.2019 in Appeal No.10126/2019-20 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal before the Tribunal and has raised the following grounds: "1. Because the proceedings initiated under section 147 by notice under section 148 have neither been validly initiated nor concluded in accordance with the provisions of law and the assessment order passed in pursuance thereof is liable to be declared as void ab initio. 2. The CIT(A) has erred in law and on facts in upholding the addition Rs.18,36,145/- under section 68 of the Act. 3. Interest under various sections could not have been charged and included in the computation of tax demand. 4. The order appealed against is contrary to facts, law and principles of natural justice." 5. The case file reveals that there is a delay of 6 days in filing the appeal. Assessee has filed a letter explaining the reasons which lead to the delay in filing the appeal and has sought the condonation of the delay. 6. Learned DR did not seriously object to the request for condonation. Considering the afore....
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....ice was also issued through ITBA portal on 30.03.2018 but there was no compliance by the assessee. AO noted that notice issued u/s 142(1) of the Act also remained uncomplied by the Assessee. AO thereafter by invoking the powers u/s 133(6) of the Act obtained bank statements of the assessee from Corporation and Yes Bank with which the assessee was having the bank accounts. On perusing the bank statements, AO noted that total bank credits in Corporation Bank account was Rs.1,75,58,700/- and the credits in Yes Bank was Rs.5,58,87,000/- and the total aggregate credits in both its bank account to be Rs.7,34,45,790/-. He considered the aforesaid aggregate amount to be the value of accommodation entry provided by the assessee. On such accommodation entry provided, he worked out the commission of Rs.18,36,145/- (2.5% of Rs.7,34,45,790/) and treated the commission as undisclosed income of the assessee. 9. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who upheld the order of AO and thereby dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now before Tribunal. 10. Before me, Ld AR vide Ground No.1 is challenging the reassessmen....
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....on, he relied on the submissions of the assessee made before lower authorities. 12. Ld DR on the other hand supported the order of lower authorities and submitted that despite various notices issued by AO, the same remained uncomplied and therefore AO had no other option but to frame assessment u/s 144 r.w.s 147 of the Act. With respect to the contention of the Ld AR on improper recording of satisfaction, he submitted that Addl. CIT had after application of mind had recommended the proposal for reopening on the basis of reasons recorded by AO that thereafter PCIT after considering the material on record had recorded his satisfaction for reopening of the assessment and thus there was no infirmity in recording the satisfaction and thereby in the reassessment proceedings. He thus supported the order of lower authorities. 13. I have heard the rival submissions and perused the material on record. The first challenge of the assessee is that the assessment should have been framed u/s 153C of the Act and not u/s 147/148 of the Act and since the assessment has been framed u/s 147/148 of the Act, therefore the assessment order passed is bad in law. The power of assessment or reassessme....
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....ents" seized or requisitioned have a bearing on the determination of the total income of such other person. Only then the AO (having jurisdiction) can proceed/s.153C against such other person in the manner provided u/s. 153A. It is apparent from the above that two separate satisfactions ought to be recorded which is: (i). First by the AO of the person on whom search was conducted i.e. "searched person" for any "documents/assets" found pertaining to or belonging to the "such other person". (ii). Secondly by the AO of other person, regarding "assets/documents" seized or requisitioned have a bearing on the determination of the total income of such other person. 15. From the above analysis, it is clear that the provision of Section 153C of the Act can be invoked in case of "Other Person" if the recovery of any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to person other than the searched person, then section 153C of the Act would be justified. However, with regard to the recovery of any books of accounts or documents, seized or requisitioned, then if they pertain to other person, or any information contained therein r....
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....vant to note that there is neither any material on record nor any evidence has been placed on record by the assessee to demonstrate that the seized and impounded material of the searched person was handed over to the AO of the assessee when the AO had initiated proceedings u/s 147 of the Act and the AO had recorded satisfaction as contemplated u/s 153C of the Act. 16. I also find that Hon'ble Madras High Court in the case of Karti P. Chidambaram V. Principal Director of Income- Tax (Investigation) and others [2021] 436 ITR 340 (Mad) has held that there is distinction between the provisions of Section 147, 153A and 153C of the Act and has held that only after handing over of the materials to the Assessing Officer of the other person, he is empowered to issue notice under section 153C of the Act and not otherwise. The relevant observations of the High Court reads as under: "Distinction between sections 147, 153A and 153C 96. Section 147 contemplates "if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment, he can reopen the assessment". The term "has reason to believe" is wider enough to cover various circumstances ....
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....hough the Assessing Officer in the present case instituted reopening proceedings under section 147/148 of the Act. On handing over of the seized or requisitioned materials, the Assessing Officer is bound to issue notice under section 153C of the Act. Reassessment under section 153C of the Act is wider enough to cover six assessment years. At each stage, the Income-tax Act provides various procedures, considering the instances and developments in the matter of gathering informations and during the search operations. Unless such powers are contemplated, it would be difficult for the authorities to deal with cases of tax evasions. 100. Section 153C further contemplates that on receipt of the seized materials, assets etc., shall proceed and issue notice and assess or reassess the income, if the Assessing Officer is satisfied. Thus, handing over of material should happen and thereafter, the Assessing Officer shall proceed, issue notice, and assess or reassess, if the Assessing Officer is satisfied. Thus, satisfaction of the Assessing Officer is mandatory. Such a satisfaction must be recorded in writing and if the satisfaction recorded is sufficient enough, then the Assessing Of....
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....ould arise only if the seized materials are handed over to the Assessing Officer of such other person, having jurisdiction over the other person. In the present case, admittedly, the search was conducted in the premises of M/s. Agni Estates and Foundation Private Limited. The materials of the searched person was handed over to the Assessing Officer of the searched person on November 28, 2019. It was forwarded to the Assessing Officer of the other person (petitioner) on November 28, 2019 and thereafter, the Assessing Officer completed the "satisfaction note" on December 16, 2019 and issued show-cause notice, which is mandatory under section 153C of the Act. Thus, the procedure would be that, the seized materials are to be handed over to the Assessing Officer of the searched person at the first instance for initiation of action under section 153A of the Act and such materials must be handed over to the jurisdictional Assessing Officer of the other persons and on receipt of the materials, the Assessing Officer shall have no option, but to issue notice under section 153C of the Act to the other persons, after recording satisfaction. 104. The cogent understanding of the procedu....
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....which is placed at page 39-40 reveals that the form has in total 13 entries. Entry No. 11 of the aforesaid form refers to the "reasons for the belief that income has escaped assessment" and the reply to which is stated "As per Annexure A". Entry No 12 of the aforesaid form reads "whether the Addl. CIT is satisfied on the reasons recorded by the AO in this case for A.Y. 2011- 12 that it is a fit case for the issue of a notice u/s 148" to which the Addl CIT in his own handwriting has noted "Recommended for approval on the basis of reasons recorded by AO" and it is signed on 23.03.2018. Entry No 13 of the aforesaid form reads "Whether the PCIT is satisfied on the reasons recorded by the AO in this case for A.Y. 2011-12 that it is a fit case for the issue of a notice u/s 148" to which PCIT in her own hand writing has noted "As per the reasons recorded, I am satisfied that it is a fit case". Perusal of the aforesaid form thus reveals that the reasons recorded were placed by the AO before the Addl. CIT alongwith other details in prescribed format. It was only after perusing such details that the Addl. CIT agreed that it was a fit case for issuing notice under Section 148 of the Act and h....