TaxTMI 
TaxTMI 
2025 (12) TMI 1818
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.... The Ld. CIT(A) ought to have considered that there is no proper recording of Satisfaction note in the appellants case for invoking the provisions of section 153C of the Act. 4. The Ld. CIT(A) ought to have appreciated that the AO erred in making addition of Rs. 1,50,00,000/- without there being any incriminating material found at the time of search u/s 132 of the Income Tax Act, 1961. 5. The Ld. CIT(A) ought to have appreciated that the material found in premises of Abdul Sattar i.e searched party cannot depict any nexus as such belonging to assessee and that the proceeding consequently invalid. 6. The Ld. CIT(A) failed to consider the that addition made of Rs. 1,50,00,000/- u/s 69 of the Act by the AO is not sustainable as the alleged Agreement of sale is not signed by the vendors & vendees in every page of the said agreement of sale, which cannot be treated as incriminating material found during the course of search u/s 132 in the premises of searched person. 7 The Ld. CIT(A) failed to consider that the addition of Rs. 1,50,00,000/- u/s 69 of the Act made by the AO is not sustainable as the has not considered that the Agreement of sale was not filled in ....
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....here was no response to the notice issued to the assessee. Hence notices u/s. 142(1) of the Act was issued on 22.02.2023 and 29.12.2023 calling for information. In response to the notice issued u/s. 153C of the Act, the assessee filed his return of income on 09.02.2024 by admitting the income ofRs.4,93,200/-. During the course of assessment proceedings, the Assessing Officer noticed that, during search proceedings an agreement of sale dated 28.08.2018 was found and seized and marked as Annexure No. A/MAS/RES/02. As per this agreement of sale, Shri Mohd. Abdul Sattar had entered into an agreement of sale of land for a total consideration of Rs. 10 Crores, out of which an amount of Rs.3.00 Crores was paid in the form of cash towards advance amount by the assessee and others. Moreover, as per the sale deed dated 28.08.2018, the same land admeasuring 5.12 acres was purchased by the assessee and one Anees Begum. As per the contents of the agreement of sale, seized/search documents, out of the total sale consideration of Rs. 10 Crores, the seller had received Rs.3 Crores in cash from the assessee and his family. In this regard, the assessee was given a show cause notice on 05.03.2024 and....
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....nd during the course of search in the premises of Mohd. Abdul Sattar clearly shows that the agreement of sale for purchase of property by the assessee for a consideration of Rs.10 Crores, out of which the assessee has paid Rs.3 Crores in cash and source for the same has not been explained. Therefore, the Ld. CIT(A) observed that there is no error in the reasons given by the Assessing Officer to make addition of Rs.1.50 Crores being 50% share of the assessee paid as advance in cash as unexplained money u/s.69A of the Act. The relevant observations of the Ld. CIT(A) are as under : 6. Decision: 6.1. Appellant filed original return of income on 30.11.2020 declaring total income of Rs. 4,93,200/-. A search and seizure operation u/s. 132 of the Act was conducted in the case of Md. Abdul Sattar & Others on 22.11.2018 wherein certain incriminating evidences pertaining to the appellant were found and seized. The seized agreement contained an agreement of sale dated 28.08.2018 which was marked as Annexure No. A/MAS/RES/02. As per the said agreement of sale, purchasers paid an amount of Rs. 3,00,00,000/- in the form of cash towards advance amount. Appellant and his wife Anees Begu....
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....essment order, grounds of appeal and written submissions filed by the appellant have been carefully examined. A search and seizure operation u/s. 132 of the Act was conducted in the case of Md. Abdul Sattar and others on 22.11.2018. During the course of search and seizure operation in the preemies of Sri. Md. Abdul Sattar an agreement of sale dated 28.08.2018 was found and seized vide Annexure No. A/MAS/RES/02 (page nos. 124 to 127). As per this agreement of sale, Md. Abdul Sattar & Others entered into an agreement of sale of land for a total consideration of Rs. 10,00,00,000/- out of which an amount of Rs. 3,00,00,000/- was paid in the form of cash towards advance. AO noticed that as per the sale deed vide document no. 17077/2019 dated 21.09.2019, the same land admeasuring to 5 acres was purchased by the appellant and his wife. The payment of advance of Rs. 3,00,00,000/- paid in cash towards advance was not reflected in the sale deed dated 21.09.2019. Even though in the agreement for sale of land four purchases were named which included appellant and his wife the ultimate purchasers of the land were appellant and his wife only. Accordingly, AO required the appellant to explain why....
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....nd notices were issued as per provisions of law. The appellant's argument that the notice u/s. 153C was issued beyond reasonable period of time is not backed by any provision of law and therefore, falls in the realm of conjecture and surmise, the grounds of appeal no. 2 and 3 are dismissed. 6.4. The AO of the searched party recorded satisfaction on 12.10.2022. From the satisfaction note in column no. 5(b), it is noticed that AO took the cognizance of agreement of sale dated 28.08.2018 entered between Md. Abdul Sattar and Others & Md. Basheer Khan and others (vendors) with the appellant, his wife and two others as vendees. From the contents of the agreement of sale, AO noticed that vendors have received Rs. 3,00,00,000/- in cash towards advance from vendees (including the appellant) for sale of agricultural land admeasuring Acres 5.121/2 guntas against a total sale consideration of Rs. 10,00,00,000/-. Subsequently, satisfaction was also derived by the jurisdictional AO at that point of time, by recording a detailed note on 17.11.2022. The satisfaction note by the AO of the searched party as well satisfaction note of the jurisdictional AO of the appellant are reproduced ....
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....d A.Y is out of the purview of completed/unabated assessment, the grounds of appeal no. 6, 7 and 8 are dismissed hereby. 6.6. Appellant contended that the notice u/s. 153C was issued prior to centralization of cases and therefore proceeding u/s. 153C needs to be quashed. The heading of section 153C reads as 'Assessment of income of any other person' as per section 153C(1), the AO of the searched party on satisfaction that any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs or any books of account or documents, seized or requisitioned pertains or pertain to or any information contained therein relates to a person other than the person referred to in section 153A has to handover books of accounts or documents or assets, seized or requisitioned to the assessing officer having jurisdiction over such other person. After receipt of such material the AO of the such other person on satisfaction that the books of account or documents or assets seized or requisitioned have a bearing on the determination of total income of such other person would initiate proceedings u/s. 153C. In the present case, the AO of the searched party reco....
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.... of the vendee. As mentioned above, the agreement of sale was entered on non-judicial stamp paper. In page no.3, para 2 it is clearly recorded that Rs. 3,00,00,000/- was paid by way of cash towards advance amount in respect of the sale of agricultural land. A non-judicial stamp paper is used to validate and authenticate non-judicial documents like agreements, affidavits, and powers of attorney, serving as proof of paid stamp duty. In the present case, the agreement was recorded on a non-judicial paper of Rs. 100/-. Each page of the agreement of sale has been signed by the parties. The agreement of sale is conveying the essence of the transaction entered into by the parties. In such facts of the case, the argument of the appellant that the agreement of sale is an unsigned/undated and a dumb document has no basis and totally devoid of merit. The document was entered on non-judicial stamp paper signed by both the parties and executed on 28.08.2018 at Hyderabad. In view of the above facts and nature and content of the agreement of sale, the argument of the appellant that the agreement of sale found and seized is a dumb document is rejected and grounds of appeal no. 12 to 16 are dismiss....
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....00/- as mentioned in the sale deed. In such facts and circumstances of the case, the decision of the AO to treat Rs. 1,50,00,000/- as unexplained investment is upheld. Accordingly, grounds of appeal no. 17 to 20 are dismissed. 6. Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal. The learned counsel for the assessee Shri P Murali Mohan Rao, C.A. referring to the date of search, the order passed by the Assessing Officer in the case of searched person, the date of recording satisfaction as required u/s. 153C of the Act and subsequent notice issued u/s. 153C of the Act dated 16.12.2022, submitted that the Assessing Officer issued notice after a gap of 20 months from the date of order passed in the case of searched person on 23.04.2021 which is beyond the limitation period provided under the Act. In support of his contention, he relied on the decision of the Hon'ble Supreme Court in the case of CIT-III Vs. Calcutta Knitwears (2014) 362 ITR 673 (SC) and also the decision of Hon'ble Delhi High Court in the case of CIT Vs. Bharat Bhushan Jain (2015) 370 ITR 695 (Del). The learned counsel for the assessee referring to the decision of Hon'ble....
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....n'ble Delhi High Court in the case of Indian National Congress Vs. DCIT (2024) 463 ITR 431 (Del). 8. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. We have also carefully considered the case laws referred by the learned counsel for the assessee in support of his arguments and also the counter argument advanced by the learned DR in light of the decision of Hon'ble Delhi High Court in the case of Indian National Congress Vs. DCIT (supra). There is no dispute with regard to the fact that the search was conducted in the case of Shri Mohd. Abdul Sattar & Others on 22.11.2018 and the assessment of the searched person was completed u/s.153A of the Act on 23.04.2021 for the A.Y. 2019-20. It is also an admitted fact that the Assessing Officer of the assessee has recorded satisfaction as required u/s. 153C of the Act on 17.11.2022 and issued notice u/s. 153C of the Act on 16.12.2022. Thus there is a gap of 20 months from the date of assessment by the Assessing Officer of searched person and the date of issue of notice u/s. 153C of the Act to the assessee. The assessee contends that the satisfaction note co....
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....ransmits the record to the other AO who has jurisdiction over such other person u/s 158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act; or (b) in the course of the assessment proceedings under section 158BC 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 ....
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....rded satisfaction earlier, cannot be stated to be an immediate action. Delhi High Court in the case of CIT v. Bharat Bhushan Jain [2015] 61 taxmann.com 89/370 ITR 695 had an occasion to examine similar issue. After referring to the judgment of the Supreme Court in the case of Calcutta Knitwears (supra), it was observed as under :- "Having regard to the intent of the Supreme Court in paragraph 44 of the Calcutta Knitwears (supra), where it was indicated that the Revenue has to be vigilant in issuing notice to the third party under section 158BD, immediately after the completion of assessment of the searched person, this court is of the opinion that a delay ranging between 10 months of one-and-half years cannot be considered contemporaneous to assessment proceedings. We are of the opinion that notices were not issued in conformity with the requirements of section 158BD, and were unduly delayed. The appeals of the Revenue, accordingly, fail and are dismissed." In the result, Tax Appeal is dismissed. 11. The ITAT, Pune Bench in the case of Kewal Kumar Jain Vs. ACIT (supra) also considered an identical issue of recording satisfaction and issue of notice u/s. 153C of....
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....he initiation of proceedings against the searched person under section 158BC of the Act; or (b) in the course of the assessment proceedings under section 158BC of the Act; or (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. 12. The Hon'ble High Courts have also held that provisions of section 153C of the Act are substantially similar / para-materia to the provisions of section 158BD of the Act. The CBDT recognizing the above said position has issued circular No.24/2015, dated 31.12.2015 in respect of proceedings under section 153C of the Act i.e. for the purpose of assessment of income of 'other person' other than searched person. The CBDT has issued circular to the effect that guidelines of the Hon'ble Supreme Court with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified by the CBDT that even if the Assessing Officer of searched person and the other person are one and the same, then also he was required to record his satisfaction as has been held by the Courts. 13. Applying the ratio laid ....
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.... Act. Accordingly, we hold so. Even the Circular issued by CBDT dated 31.12.2015 lays down such proposition, in turn, applying the ratio laid down by the Hon'ble Supreme Court in the case of M/s. Calcutta Knitwears (supra). Accordingly, we hold that proceedings initiated under section 153C of the Act are beyond the time prescribed and hence, are invalid and consequently, assessment order passed under section 143(3) r.w.s. 153C of the Act stands annulled. The grounds of appeal No.4 and 5 raised by assessee are thus, allowed and all other grounds of appeal raised by assessee become academic in nature." 12. The sum and substance of ratio laid down by Hon'ble Supreme Court in the case of CIT-III Vs. Calcutta Knitwears (supra) and Hon'ble Delhi High Court in the case of CIT Vs. Bharat Bhushan Jain (supra) and also the Hon'ble Gujarat High Court in the case of Pr. CIT Vs. Jitendra H Modi HUF (supra) is that the Assessing Officer must record satisfaction as required u/s.153C of the Act, either at the time or along with the initiation of proceedings against searched person u/s.153A of the Act or in the course of assessment proceedings u/s. 158BC/153A of the Act or immedi....
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....chase of property as per the agreement of sale and documents seized at the time of search and claimed that the additions made by the Assessing Officer is not made on any material found during the course of search but on the basis of dumb documents which cannot be upheld. The learned Department Representative also argued that the additions made by the Assessing Officer is based on incriminating material found in the search. Although both the parties have argued that the additions made by the Assessing Officer based on the incriminating material found during search and consideration paid in cash as unexplained investment u/s. 69A of the Act, but in our considered opinion, the issue becomes academic in nature because the assessee has got relief on legal grounds where we held that the assessment order passed by the Assessing Officer u/s. 153C of the Act is bad in law and accordingly quashed. Since the assessee got relief on legal grounds, in our considered view, the other grounds taken on merit in respect of the additions made towards cash consideration as unexplained investment u/s. 69 of the Act become infructuous. Thus the other grounds taken by the assessee are dismissed as infruct....