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TMI Blog2018 (3) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... 003 vide order dated 31-08-07 under section 143(3) read with section 158BD of the Income Tax Act, 1961(hereinafter the Act ). 2. At the outset, the learned Counsel for the assessee stated that the assessee has raised issue in its CO as regards to the assumption of jurisdiction for issuing notice and consequently framing block assessment under section 158BD read with section 143(3) of the Act. For this assessee has raised the following ground in its CO: - On the facts and circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) XXVII, Mumbai erred in not holding that the assessment order was illegal, bad in law and void ab initio is as much as conditions to invoke section 158BD did not exist. 3. Brief facts are that a search and seizure operation was carried out under section 132 of the act on the residential and business premises of Keystone Realtors Pvt. Ltd and its group of companies. Credence Properties Developers Pvt. ( CPDPL ) Ltd is one of the group companies of Key Stone Group engaged in the business of real estate. Block assessment was framed in the case of CPDPL under section 143(3) read with section 158BD by DCIT, Central Circle- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the statement of Shri Boman Irani, recorded on Oath Under section 131 on 03.04.2007, who is the director of m/s Credence Property Developers, that his firm had entered into development agreement with the landowners agreeing that 48% of the sale proceed would go to the firm M/s Credence Property developers and the rest to the landowners. The assessing officer has not stated anywhere that Mr. Boman Irani was confronted with the question whether any payment in respect of on money has been made to the appellant in cash but has merely stated the above facts with regard to the development agreement. It is fact that the on money transactions is out of books of accounts. No question was asked to Shri Boman Irani in respect of payment of on money to the appellant at the same percentage as in the Development agreement as the development agreement will never include a clause to refer any transaction like on money sharing which is outside the books of accounts. Further, based on the facts of the above statements as mentioned in the assessment order no addition can be made as there is no confirmation as to the payment of alleged on money and simultaneously there is no evidence that cash was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the jurisdictional issue that the block assessment completed by the AO without any satisfaction recorded by the AO of the search person and hence, block assessment will be invalidated. 5. During the course of hearing the learned Counsel for the assessee Shri Deepak Tralshawala narrated that the Tribunal vide order sheet entry dated 09.03.2017 directed the Revenue to produce the seized material and the satisfaction note recorded in the case of search person. The Tribunal recorded the order as under: -. 09/03/2O17 Present for the Department: Ms. Sunita Bilia, Learned CIT(DR) Present for the Assessee: Shri Deepak Tralashawale We note that this appeal was filed by the department on 17/10/2008, as is evident form order sheet entry dated 29/01/2009. On 28/08/2009, the learned DR was directed to ascertain as to what happened in the cases of other connected parties and thus, the appeal was adjourned to 13/10/2009. On 17/12/2009, again the appeal was adjourned at the request of the teamed DR. Again 'on 01/06/2010, the appeal was adjourned at the request of the learned DR. On 29/09/2010, the learned DR sought time and the appeal was adjourned to 25/11/2010. Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record. The learned CIT(DR) is directed to convey this order sheet to the concern most officer of the department in Mumbai. Adjourned to 04/05/2017. 6. Subsequently, the learned Counsel drew our attention to the letter dated 04.10.2017 No. CIT(DR)/ITAT/C.Bench/2017-18 of CIT DR to the Principal CIT-17, calling for the seized material and the relevant letter reads as under: - 2. The above appeal came up for hearing on 03.10.2017. During the course of hearing the Hon'ble Bench noted that on earlier hearing on 30.03.2016, the Hon'ble Bench directed the department to inform the status of the additions in case of co-owners and also to produce the records and seized materials. Again / oil the Bench has categorically recorded about the several opportunities given to the department to comply with the earlier directions of the Bench and failure of the department to do so. Therefore, a final opportunity was given to the department to make necessary compliance. However, subsequently oil occasions the department has failed to comply with the directions of the Bench. The Hon'ble bench has directed to the CIT in charge to file a comprehensive affidavit ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they have not received any case records or seized documents / materials from the AO of the search person. When this opportunity was provided to the learned CIT DR, today during the course of hearing, he fairly conceded that the department has no seized records as is evident from the correspondence reproduced above. Accordingly, we presume that there is no satisfaction note recorded by the AO of the search person. This fact is further strengthen by the letter dated 06.09.2016 no. ITO -17(2)(5)/Judicial/2016-17 addressed to CIT DR . It means that no satisfaction was recorded in the case of searched person such as Keystone Realtors Pvt. Ltd. 9. We find that Hon ble Supreme Court in the case of CIT vs. Calcutta Knitwears (2014) 362 ITR 673 (SC) has held that it is clear from the provisions of section 153C of the Act that where the AO of the person searched is satisfied that any money, bullion, jewellery, books of account or other documents etc., belong to a person other than the person searched, then, such documents or assets, etc., shall be handed over to the AO of the 'other person' and the later AO shall proceed against such 'other person' to assess or reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfaction 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 Sec/ion 158BC of/he 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the other person in the returns for the relevant period already filed by the other person before him. For the same reason, we must reject the argument of the Department that the discretion of the Assessing Officer having jurisdiction will be impaired in any manner, if he were to hold a different view. Similarly, as there is no provision either express or implied (in the Act) to dispense with the requirement of satisfaction, if the Assessing Officer happens to be the same, as in this case, the argument of the Department must be negatived. 19. After receipt of the materials, the Assessing Officer having jurisdiction is expected to conduct enquiry and due verification of the relevant facts; before forming his prima facie satisfaction. The Assessing Officer having jurisdiction will be well within his rights to form an independent view before issuing notice to the other person (person other than the person referred to in Section 153A) under his jurisdiction on the basis of his own enquiry. In our opinion, the view formed by the Assessing Officer after his own enquiry does not entail in seating in appeal over the satisfaction of the first Assessing Officer, who had handed over ..... X X X X Extracts X X X X X X X X Extracts X X X X
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