2024 (8) TMI 515
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.... & AY 2009-10. 3. At the outset, the Ld. AR brought to our notice that the assessee is challenging the jurisdiction of the Assessing Officer [AO] [Shri. B D Patil DCIT (OSD-II) Central Range-7, Mumbai] to frame the assessment u/s 153C/143(3) of the Act for both AY 2008-09 & AY 2009-10 without first of all forming requisite satisfaction as envisaged u/s 153C of the Act. 4. Assailing the action/jurisdiction of the AO to have framed the assessment u/s 153C/143(3) of the Act, in absence of valid satisfaction recorded by the AO before initiating assessment as per special provision (in cases of assessment to be framed where search took place) as envisaged u/s 153C of the Act, the Ld. AR, submitted that the assessee in this case Shri Dilip B Patel was not searched by the department. In this regard, the Ld AR pointed out that there was search u/s 132 of the Act in the case of Shri Vinod Faria & Shri Milan Dalal on 30.05.2008; and based on allegation of finding certain incriminating materials against the assessee from the premise of the searched persons, the impugned proceedings u/s 153C of the Act has been initiated against the assessee by issue of notice u/s 153C of the Act on 03.12.200....
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....ion as required u/s 153C of the Act to initiate the special provisions of search assessment on the 'other person' (not searched/3rd person). Further, according to the Ld. AR, in this case the AO of the searched person [Shri Vinod K Faria who was searched on 30.05.2008] and the assessee were same [i.e Shri B D Patil (DCIT (OSD-II) Central Range-7, Mumbai] and drew our attention to the page 68 wherein the copy of the assessment order passed u/s 153A of the Act in the case of Shri Vinod Faria is found kept from page No. 56 to 68 and on perusal of which reveals that Shri B D Patil (DCIT (OSD-II) Central Range-7, Mumbai, was his Assessing Officer, i.e. of the searched person. However, according to the Ld. AR, even if the AO of the searched person and the "other person" (Assessee in this case/3rd person) is the same, still AO needs to record his satisfaction i.e. before usurping the jurisdiction u/s 153C of the Act over the assessee (who falls in the category of 'other person') to initiate the special provision for assessment u/s 153C of the Act. According to the Ld. AR, a perusal of the report filed by AO (supra) would reveal that the AO on wrong understanding/ignorance of law was of th....
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.... Shri Amarshi Nisar, Velji Faria and Shri Raja Patel. Some of the cash transactions and the investments in immovable properties were done by the assessee on behalf of Shri Vinod Faria and marked as Annexure A-4 reflected cash transactions and unexplained investments made by the assessee and Shri Vinod Faria. iii) Jurisdiction over this case has been assigned to the AO by the Commissioner of Income Tax-24, Mumbai vide letter u/s. 127(2) in file No. CIT 24/Centralisation/15/2008-09/537 dated 23.10.2008. The case was taken up for assessment by issuing statutory notices on 03.12.2009, duly served upon the assessee. iv) Further, the assessment was completed on 29.12.2010 by passing order u/s. 143(3) r.w.s.153C of the Income Tax Act, 1961 with various additions made to the income declared by the assessee therein, after taking approval of the Addl Commissioner u/s. 153D of the Income Tax Act, 1961. Noting by the Assessing Officer on order sheet, page no. 3 dated 08/12/2009 in the case records of A.Y. 2007-08 clearly mentions about invoking of provisions of Section 153C of the Income Tax Act in respect of the Assessee the same is being reproduced hereunder: 8/12/09 The case was recei....
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....come of such other person in accordance with the provisions of section 153A 3. There is no disagreement that the Assessing Officer must be satisfied that the money, bullion, valuables etc "belong to or books of accounts documents "relate to" a person other than the person referred to in section 153A of the Act to invoke section 153C. The Legislature has used different phrases in respect of assets/valuable and books of accounts /document. It has used "belong to for the seized or requisitioned assets and valuables whereas the words used for books of account and document are "relate to It is, therefore, clear that the seized books or documents should be related to the person other than the searched person. There is no requirement that they should belong to the other person. It is clear from the assessment order and the order of the Ld.CIT (A) that various note book and loose papers as per A-1 and A-4 found from the premises of Shri Vinod Faria, the key person of the group, where search was conducted u/s 132(1) of the Act, 1961, were related to the assessee. These facts have been discussed at great length in the assessment order. Hence, the other condition of section 153C is also sat....
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....was also held that the CIT need not give opportunity of hearing to assessee before approval u/s158BG i. Rishab Chand Bhansali vs DCIT [267 ITR 577(Kar)). ii. Shaktavail Bankers vs DCIT (255ITR144(Mad] iii. Kailash Mandgil vs DCIT (72 ITD 97 (ITAT Del.)(SB)]. 6.1 The appellant has also argued that there is no satisfaction/application of mind of Addl. CIT before granting approval. Reliance is placed by him on the decision in case of Sahara India vs CIT, 169 Taxmann 328(SC). The facts and issue in case of Sahara India (supra) are totally different. In the case of Sahara India, it pertained to exercise of power u/s 142(2A) and opportunity of hearing before it ie. pre-decisional hearing. On the other hand, in the present case, the approval u/s 153D is almost at the end of the assessment proceedings. The assessee has been given ample opportunity by ADIT(Inv.) and the DCIT(OSD-II) during the search and post search investigation and assessment proceedings. Since, the facts and issues in case of Sahara India are totally different from the facts and issues in the present appeal, the ratio is not applicable. The Hon'ble Supreme Court in the case of Padmasundara Rao vs State of TN,....
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....ions, the AO has relied on various incriminating materials found during the course of search and subsequent investigation conducted during the post search period and during the assessment proceedings. The finding of the AO has been approved by the Ld. CIT (A). Hence, the addition made by the AO and sustained by the CIT (A) may be confirmed. 9 Further the counter comments of A.O. dated 12.03.2018 and 24.11.2016 are enclosed herewith as Annexure A and Annexure B respectively." 8. We have heard both parties and perused the records. We note that a search and seizure action u/s 132(1) of the Act and survey u/s 133 A of the Act was carried out in the case of Millan Dalal Group on 30.05.2008; and AO notes that the key persons in this group were Shri Vinod Faria and Millan Dalal. According to the AO, the assessee (Shri. Dilip B Patel) was close associate of Shri. Vinod Faria and he had authority/signatory of bank account of M/s Jenelac Ltd. And there were several transactions made by the assessee on behalf of Shri Vinod Faria. According to the AO, the major source of generation of cash was from the "on-money" received on booking of the galas of High-speed project of M/s Genelcc Ltd. And....
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....09 recorded the fact of transfer of this case of assessee from ITO-24(1)(1) and notes that the case records of assessee was received on 08.12.2009, and AO takes note that verification of case records of searched person Shri. Vinod Faria/Milan Dalal group (date of search 30.05.2009) would reveal that assessee's case would fall under the provision of section 153C of the Act and hence the assessment proceedings pending before him got abated and issued notice accordingly. This noting (in the order-sheet) made by AO dated 08.12.2009 cannot be termed as 'valid satisfaction' as envisaged u/s 153C of the Act, even though AO of the searched person as well as of the 'other person/assessee in this case' is the same [ i.e, AO is same for both]. In such a scenario also, the AO of the other person, before usurping the jurisdiction u/s 153C of the Act, has to mandatorily record satisfaction that the material seized from searched person belongs/pertains/relates to assessee. In this case, as noted (supra), no such findings of fact which was the jurisdictional fact has been recorded by AO in his satisfaction/order-sheet noting produced before us (supra). Since the requirement of law is not satisfied....
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....ing Officer of the other person, there shall be a satisfaction note by the Assessing Officer of the searched person and as observed hereinabove that thereafter the Assessing Officer of the searched person is required to transmit the documents so seized to the Assessing Officer of the other person. The Assessing Officer of the searched person simultaneously while transmitting the documents shall forward his satisfaction note to the Assessing Officer of the other person and is also required to make a note in the file of a searched person that he has done so. However, as rightly observed and held by the Delhi High Court in the case of Ganpati Fincap Services (P.) Ltd. (supra), the same is for the administrative convenience and the failure by the Assessing Officer of the searched person, after preparing and dispatching the satisfaction note and the documents to the Assessing Officer of the other person, to make a note in the file of a searched person, will not vitiate the entire proceedings under section 153C of the Act against the other person. At the same time, the satisfaction note by the Assessing Officer of the searched person that the documents etc. so seized during the search an....
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....a) at the time of or along with the initiation of proceedings against the searched person under section 1588C of the Act: or (b) in the course of the assessment proceedings under section 1588C of the Act; or (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person." 3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/pari-materia to the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon'ble SC, apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT. 4. The guidelines of the Hon'ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the "other person" is one and the same, then also he is required to record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should ....
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....case we note after perusal of satisfaction note as extracted (supra) the AO in first paragraph merely states about receiving the case related to the assessee and notes in this regard that assessee's case has been transferred to him from ITO 24(1)(1) by order passed by CIT u/s 127 of the Act dated 23.10.2008. In para 2, the AO further records that after verification of the file of Milan Dalal/Vinod Faria Group after the search & seizure on 30.05.2008, it was noticed by him that the case of assessee falls under the provision of section 153C of the Act, hence, according to him, the assessment proceedings pending u/s 143(3) are abated and that "notice u/s 153C of the Act are being issued for AY 2003-04 to 2008-09 accordingly". From the perusal of the contents of para 2, it reveals that AO has simply stated that he has verified the records of the group of Milan Dalal/ Vinod Faria, after search action, and according to him, the case of the assessee falls u/s 153C of the Act. And therefore, he issued notice u/s 153C of the Act. This assertion of the AO in no way can be termed as valid satisfaction because the AO has not referred to any incriminating material belonging/pertaining/relating ....