TaxTMI 
TaxTMI 
2025 (2) TMI 1991
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....d circumstances and in law, the satisfactions recorded by the Assessing Officer of the searched person qualifies the test of sufficiency to set in motion the provision of section 153C of the Act against the assessee being the person other than searched person/party? 3. Whether, in the facts, circumstances and in law, the satisfaction recorded by the Assessing Officer of assessee (being person other than searched person/party) qualifies the test of sufficiency to invoke jurisdiction and assess the income u/s. 153C of the Act? 2. Facts of the case, in brief, are that the assessee is an individual carrying on transport business under the name and style of Premchand Road Lines. He filed his return of income u/s 139(1) of the Act on 28.10.2017 disclosing total income of Rs.1,24,27,600/-. The said return was processed u/s 143(1) of the Act on 13.06.2018. A search and seizure action u/s 132 of the Act was carried out in the case of Ashok Bhosale & others group on 01.08.2017. During the course of search, residential premises of Shri Sachin Madanlal Nahar, Flat No.7, Awiskar Apartment, Sr. No.568/19, Bibwewadi, Kondhwa Road, Pune was also covered. Shri Sachin Nahar is engaged in....
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....n seized documents are short form for Prashant Premchand Bafana. He has given cash to Sachin Nahar which was further advanced by him to different parties." 3. Thereafter, the Assessing Officer of the assessee i.e. the "Other person" who is also the Assessing Officer of the searched person recorded the following satisfaction note and issued notice u/s 153C of the Act: "Shri Prashant Premchand Bafana SATISFACTION NOTE (AO of "Other Person") A search action u/s 132 of the Income Tax Act, 1961 was conducted on Ashok Bhosale & Others Group on 01-08-2017. Shri Sachin Nahar is one of the party of searched group and the residence premise at Flat No. 07, Awiskar Apartment, Sr. No. 568/19, Bibwewadi Kondhwa Road, Pune 411037, of Shri Sachin Nahar was covered under section 132 of the Act. Shri Sachin Nahar is a financial consultant cum broker. He is a middleman between the borrower and lenders. He provides platform for investors having surplus fund and borrowers who are in need of funds. For this work, he gets brokerage on the interest paid by the borrower on loan taken. During the course of search proceedings, it was seen that the following documents/Bundles belongs to Shri....
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....erred to in Section 153A and will have a bearing on the determination of the total income of such other person. Accordingly he has recorded his satisfaction u/s 153C of the Act. I have received the said satisfaction drawn in the case of Shri Prashant Premchand Bafana along with the seized material mentioned in table above. I am also the jurisdictional Assessing Officer of Shri Prashant Premchand Bafana as the case has been centralized to this charge by the Pr. CIT-2, Pune's order u/s 127(2) No. PN/PCIT-2/Tech/Centr/Ashok Bhosale Grp/127/2017-18/3776 dt. 26/02/2018. On perusal of seized material under reference and the satisfaction drawn by the ACIT Central Circle 1(1), Pune, I am satisfied that said documents have bearing on the determination of the total income of Shri Prashant Premchand Bafana for the A Ys 2012-13 to 2018-19. Hence, in view of provisions of S. 153C of the Income Tax Act, 1961 it is necessary to initiate proceedings u/s 153C of the Act for A. Ys 2012-13 to 201819- in the case of such other person namely Shrt Prashant Premchand Bafana. Date: 22/03/2021 Place: Pune Sd/- (Dinesh R. Pardeshi) Asstt. Co....
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....ugned sec. 153C satisfaction dated 22.03.2021 fail to evolve our concurrence. This is for the precise reason that assessment year 2008-2009 before their lordships' involved the old scheme of sec. 153C(1); inserted in the Act by the Finance Act, 2005 w.e.f. 01.06.2003, stipulated that "where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in sec. 153A". Meaning thereby, that the legislature had incorporated the single statutory expression of "belongs" or "belong to" in sec. 153C(1) before substituting the same with further twin connotations of "pertains or pertains to" and "relates to" vide Finance Act, 2015 w.e.f. 01.06.2015. 6. As per the above amendment w.e.f. 01.06.2015, the legislature has incorporated the three expressions that "any money, bullion, jewellery or other valuable article or thing, seized or requisitioned belong to" in clause-(a) to sec. 1530, or, any books of account or documents, seized or requisitioned, pertain or pertains to, or any information contained therein, relates in....
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....'SP' stands flawless to set in motion the proceedings of section 153C(1) of the Act against the present appellant i.e. 'OP'. 6.2 However, it also remained undisputed fact that, upon a reference of seized material, the Ld. AO of 'OP' in the course of recording his satisfaction u/s 153C(1) of the Act has elaborated his observations in two paragraphs (placed one before and one after the table) which reads as; (i) First para before the table (Page 1/2); "A search action u/s 132.......During the course of search proceedings, it was seen that the following documents/Bundles belongs to Shri Prashant Premchand Bafana, which are having substantial financial implications:-" (Emphasis supplied) (ii) From para immediately after the table (Page 2/2); "During the course of assessment proceedings before the AO of the searched person, the said AO has satisfied that the documents mentioned in the table above belong to Shri Prashant Premchand Bafana, a person other than the person referred to in Section 1534 and will have a bearing on the determination of the total income of such other person. Accordingly he has recorded h....
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.... the satisfaction of Ld. AO of 'OP', [i.e. 6.2(iii) above] the Ld. DR submitted that, upon the receipt of seized incriminating material with satisfaction, the Ld. AO of 'OP' has recorded his satisfaction exactly in line with requirement of section 153C(1) of the Act, thus sufficient compliance before invoking the jurisdiction stands established. Further, the Ld. DR's vehement arguments pressing into service the judgement of Hon'ble Supreme Court in 'Super Malls Pvt. Ltd. Vs PCIT' reported in 432 ITR 281 evoked my concurrence to the fact that, the use of words 'belong to' by the Ld. AO of 'OP' in the present case was in context of making his observation which de-facto fails to exert any impact over assuming the jurisdiction u/s 153C of the Act for assessing/re-assessing the undisclosed income of the appellant assessee for reasons that; (i) the Act nowhere subscribed any restriction on choosing such words in noting down the observations before recording satisfaction by the Ld. AO of 'OP' (ii) the satisfaction recorded by the Ld. AO of 'OP' is indeed as verbatim as prescribed by section 153C(1) of the Ac....
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....d in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) 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, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against 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 y....
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.... 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. He accordingly submitted that as per the amended provisions of Section 153C, both the Assessing Officers have to record their satisfaction separately in the manner and method specifically prescribed and keeping in view the separate scope clearly defined, such satisfaction is to be recorded separately even if the Assessing Officer of a searched person and the Assessing Officer of other person is one and the same. 11. He submitted that in the present case, the dispute is relating to the satisfaction recorded by the Assessing Officer of searched person. Referring to the satisfaction recorded by the Assessing Officer dated 05.03.2021, he submitted that a perusal of the same would show that no money, bullion, jewellery or other valuable article was seized but what was seized are some books of account or documents during the course of search. Therefore, the provisions of section 153C(1)(b) are applicable to the facts of the present case. He submitted that it was mandatory on the part of the Assessing Officer of the searche....
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....st be preceded by a satisfaction note by the Assessing Officer of the "searched person". Further the Assessing Officer of "searched person" will record satisfaction that the seized documents belong/relates to "other person". Thereafter, on being satisfied the books of account or documents or assets so seized or requisitioned shall be handed over by the Assessing Officer of "searched person", to the Assessing Officer having jurisdiction over such "other person". He submitted that the aforesaid requirements before issuing notice under section 153C of the Act are mandatory as held by various courts. He submitted that 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, the same is for administrative convenience and the failure by the Assessing Officer of the searched person to make a note in the file of the searched person, will not vitiate the proceedings u/s 153C. He submitted that the Assessing Officer (having jurisdiction) will again record a separate satisfaction ....
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....nt case. However, certain note books and note pads inventorized as bundled No. 1 to 11 containing the details of money lending business in cash were found and seized. Further, the notings therein are related to principal amount lent by lenders and borrowed by borrowers and contain the names of lenders and borrowers, interest component etc. It also contains the name of depositors, due date of interest and amount of cash loan. All these note books and note pads were recovered from the premises of Shri Sachin Nahar and nowhere it is mentioned that they belong to the present assessee in question. Similarly, the Assessing Officer in the satisfaction note dated 05.03.2021 has also nowhere mentioned that any books of account or documents seized or requisitioned pertains or pertain to or any information contained therein, relates to the present assessee. 17. It is also an admitted fact that the Assessing Officer while initiating proceedings u/s 153C of the Act in the case of the assessee vide satisfaction note dated 22.03.2021 has noted that the documents mentioned in table above belongs to Shri Prashant Premchand Bafna, a person other than referred to in section 153A of the Act and wil....
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....her person. Until and unless he records such satisfaction, he cannot assume the jurisdiction to initiate proceedings under section 153C in the case of other person. The condition of recording satisfaction note by the Assessing Officer of the searched person was therefore, required to be mandatorily complied in this case as well. However, in the present case, the satisfaction note of the searched person is an absolute bald one without any reference to the assessee. In other words, though he has discussed about the nature of documents found in the premises of Shri Sachin Nahar, the searched party but however, no endeavour was made by him in the satisfaction note of the searched party to the extent that those related to the assessee. I am, therefore, of the opinion that the satisfaction note of the Assessing Officer is not in accordance with law. 20. I find the Hon'ble Supreme Court in the case of Super Malls P. Ltd. Vs. PCIT (2020) 423 ITR 281 (SC) has observed as under: "5. We have heard the learned counsel for the respective parties at length. 5.1 As observed hereinabove, the short question which is posed for the consideration of this Court is, whether ther....
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....elhi High Court in the case of Ganpati Fincap (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 and seizure from the searched person belonged to the other person and transmitting such material to the Assessing Officer of the other person is mandatory. However, in the case where the Assessing Officer of the searched person and the other person is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, then the requirement of Section 153C of the Act is fulfilled. In case, where the Assessing Officer of the searched person and the other person is the same, there can be one satisfaction not....
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....sessing Officer in my opinion cannot assume jurisdiction u/s 153C of the Act. 22. Now moving onto the second question of the Hon'ble Accountant Member as to the satisfaction recorded by the Assessing Officer of the other person, it is essential to consider the alleged documents which the Assessing Officer has assumed to be belonging to the assessee. A perusal of the satisfaction note of the Assessing Officer of Shri Sachin Nahar records that "I am satisfied that the Bundle No. 1 to 11 (various notebooks/notepad), seized at the residence premise of Shri Sachin Nahar at Flat No. 07, Awiskar Apartment, Sr. No. 568/19, Bibwewadi Kondhwa Road, Pune-411037, containing details of his money lending business...... ". However, a perusal of satisfaction note recorded by the Assessing Officer in case of the assessee shows that "During the course of assessment proceedings before the Assessing Officer of the searched person, the said Assessing Officer has satisfied that the documents mentioned in the table above belong to Shri Prashant Premchand Bafana, a person other than the person referred to in Section 153A and will have a bearing on the determination of the total income of such other....
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....n as has been held by the Courts. 24. I find the Hon'ble Supreme Court in the case of Commissioner of Customs (Import) vs. M/s. Dilip Kumar and Company and Ors. (AIR 2018 SC 3606) while explaining the interpretation of statue has observed as under: "19. The well-settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the Legislature. In Kanai Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907, it was held that if the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. 20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal st....