TMI Blog2018 (11) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... T, Central Circle-9, New Delhi vs. M/s. Victory Accommodations Pvt. Ltd., Delhi (2018 (7) TMI 57 - ITAT DELHI). Set aside the Orders of the authorities below and quash the initiation of re-assessment proceedings under section 153C - Decided against assessee. - ITA.No.4809/Del/2014 And C.O.No.177/Del./2017 - - - Dated:- 1-11-2018 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Revenue : Shri S.S. Rana, CIT-D.R. For The Assessee : Shri Kapil Goel, C.A. ORDER PER BHAVNESH SAINI, JM The Departmental Appeal as well as Cross-Objection by Assessee are directed against the Order of the Ld. CIT(A)-1, New Delhi, Dated 03.06.2014, for the A.Y. 2010-2011. 2. Briefly the facts of the case are that search and seizure operation under section 132 of the I.T. Act, 1961, were carried-out in the cases of M/s. Bright Professional Pvt. Ltd. and M/s. Bright Star Air Travels Pvt. Ltd. on 25.11.2010. The search was concluded on 26.11.2010. M/s Bright Professional Pvt. Ltd. have made certain payments to the assessee in cash. Therefore, the Investigation Wing suggested that this case needs to be centralized along with the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under section 153C of the I.T. Act are in accordance with Law. As regards the addition on merit, the Ld. CIT(A) deleted some of the additions on merit and allowed the appeal of assessee partly. 4. The Revenue is in appeal on the following grounds: 1. The order of the CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 24,618/- made by Assessing Officer on account of 'car expenses and depreciation'. 3. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 1,15,914/- made by Assessing Officer on account of office expenses and salary. 4. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 86,67,300/- made by Assessing Officer on account of unaccounted receipt of professional/ faculty free from M/s Bright Professional Pvt. Ltd. 5. The assessee in the Cross-Objections has raised the following grounds : 1. That on the facts and in the circumstances of the case and in law, the notice issued u/s 153C, is bad in law, without jurisdiction and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on the above premises, some papers/documents/faculty engagement agreement between Smt. Surbhi Sen Jindal (Surbhi Bansal), r/o B-10, Sector-36, Noida, Gautam Budh Nagar 201301 with M/s Bright Professional Pvt. Ltd. were seized and marked as Annexure-A-22. Further it has been noticed that during the course of examination of seized material contained in Annexure A-29 and A-30, it was noted that huge payments have been made to Smt. Surbhi Sen Jindal (Surbhi Bansal) Thus, action u/s 153C is called for in the case of Smt. Surbhi Sen Jindal (Surbhi Bansal). In view of the above report and seized material mentioned above, I am satisfied that the above documents belong to Smt. Surbhi Sen Jindal (Surbhi Bansal) and thus, the case of the assessee is being taken up for assessment u/s 153C of the Income Tax Act, 1961. Notice u/s 153C r.w. section 153A of the I. T. Act, 1961 are, therefore, issued to the assessee for the Asst, years 2005-06, 2006-07, 2007-08, 2008-09, 2009-10 and 2010-11. Sd/-B.S. Rawat DCIT, CC-25, New Delhi. Date 09.01.2013. 5.2. Learned Counsel for the Assessee also referred to the objection filed before the A.O. challenging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Delhi vs. M/s. Victory Accommodations Pvt. Ltd., Delhi in ITA.No.6238/Del./2014 for the A.Y. 2008-2009, Dated 27.06.2018. He has, therefore, submitted that assessment order is void abinitio and is liable to be quashed. 6. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and relied upon the decision of Hon ble Delhi High Court in the case of PCIT vs. Sheetal International Pvt Ltd 2017-TIQL-1355-DEL, in which it was held as under : Proceedings u/s 153C cannot be invalidated, merely because the AO of the searched who was also that of the Assessee, did not record a separate satisfaction note. 6.1. The Ld. D.R. further relied upon the decision of Hon ble Delhi High Court in the case of PCIT vs. Super Malls Pvt. Ltd., (2017) 393 ITR 557 (Del.), in which it was held as under : Where Assessing Officer had issued satisfaction note under section 153C after satisfying himself with contents of documents seized, Tribunal could not declare it as invalid on hyper technical ground of incorrect terminology used in said note. Satisfaction note recorded u/s 153C in respect of the assessee, being the third party, could not be said to be invalid on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The Hon ble Supreme Court in the case of Manish Maheshwari vs. ACIT (2007) 289 ITR 341 (SC) in para-11 held as under: Condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132A or documents or assets have been requisitioned under Section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of Section 158BC in respect of any other person, the conditions precedents where for are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) The Assessing Officer has proceeded under Section 158BC against such other person. The conditions precedent for invoking the provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/parimateria 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 also be decided in the light of the above judgment. Accordingly, the Board hereby directs that pending litigation with regard to recording of sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that it was a jurisdictional issue taken up on the basis of facts already on record, that under section 153C of the Act, incriminating material which was seized had to pertain to the assessment years in question, and that the documents which were seized did not establish any corelation, document-wise, with these four assessment years. The Tribunal found that the material disclosed in the satisfaction note belonged to assessment year 2004-05 or thereafter. The Tribunal rightly permitted this additional ground to be raised and correctly dealt with the groundon the merits as well. The High Court was right in affirming this view of the Tribunal. Decision of the Bombay High Court inCIT v.Sinhgad Technical Education Society [2015] 378 ITR 84 (Bom) affirmed. 6.6. The Hon ble Madras High Court in the case of CIT (ii) That the assessment order passed by the Assessing Officer covered eight assessment years. For six assessment years the assessment was under section 153C of the Act. The assessment order was set aside only in respect of four of those assessment years and on a technical ground. The objection pertaining to the four assessment years in question did not relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required under section 153C was recorded by the Assessing Officer in the case of person searched. No material is produced in reference to above requirement. No material is also produced before to show that books of account or documents or assets seized had been handed over to the Assessing Officer having jurisdiction over such other person. In the absence of any adequate material produced by the department contention of the assessee was justified that in this case, the Assessing Officer had not recorded any satisfaction that any seized document or material belongs to any person other person searched. * Since the revenue is in appeal, therefore, burden was upon them to prove that necessary ingredients of section 153C have been complied with in this case before invoking jurisdiction under section 153C. * It is added further here that the Assessing Officer has not referred to any seized document or material in the assessment orders on the basis of which, additions on merit have been made. Therefore, the conditions of section 153Cas noted above are also not satisfied in this case. Therefore, there is no infirmity in the order of the Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for assumption of jurisdiction under section 153C of the I.T. Act, was not met in the case of the two assessee s . 7. Considering the facts of the case in the light of submissions made by both the parties and finding of fact arrived by the Ld. CIT(A), we do not find any merit in the Departmental Appeal. The Ld. CIT(A) called for the assessment record of the assessee-company and found that A.O. has recorded the satisfaction note in the file of the assessee- company which is reproduced above in which the A.O. has referred to the seized paper i.e., balance sheet and P L A/c of the assessee-company ending 31.03.2010. The notice was issued on the same day when satisfaction note was recorded by the A.O. of the assessee i.e., other person. The same A.O. who recorded satisfaction in the case of assessee passed assessment order under section 143(3)/153C of the I.T. Act. The Ld. CIT(A) also called for the assessment record of the person searched Shri Pramod Goel and it was found that no such satisfaction have been recorded in the case of the person searched relating to the assessee-company. It is, therefore, clear that no satisfaction note as required by Law have been recorded in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case. The issue is covered against the Revenue by Judgment of the Hon ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (supra) and Order of the Tribunal in the case of assessee-company for A.Ys. 2009-2010 and 2010-2011 (supra). The decisions relied upon by the Ld. D.R. are, therefore, not applicable to the facts and circumstances of the case as the same are clearly distinguishable. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) in holding that initiation of proceedings under section 153C of the I.T. Act are improper and bad in law. No interference is called for. Ground Nos. 1 and 2 of the appeal of the Revenue are accordingly dismissed. 8. It is an admitted fact that search under section 132 of the I.T. Act was conducted in the cases of Bright Professional Pvt. Ltd. and Bright Star Air Travels Pvt. Ltd. M/s Bright Professional Pvt. Ltd. have made certain payments to the assessee and a Faculty Engagement Agreement was found to have been entered into between the Assessee and the person searched i.e., M/s Bright Professional Pvt. Ltd., on the basis of which, proceedings under section 153C were initiated on 09.01.2013. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause no satisfaction have been recorded under section 153C in the case of the person searched and no incriminating material was seized pertaining to assessment year under appeal. Since the conditions of Section 153C of the I.T. Act are not satisfied in the present case, therefore, assumption of jurisdiction by the A.O. to issue notice under section 153C is void abinitio and bad in law and vitiate the entire assessment proceedings under section 153C of the I.T. Act. The decisions relied upon by the Ld. D.R. would not apply to the facts and circumstances of the case. The issue is covered in favour of the assessee by Order of ITAT, Delhi Bench in the case of ACIT, Central Circle-9, New Delhi vs. M/s. Victory Accommodations Pvt. Ltd., Delhi (supra). In this view of the matter, we set aside the Orders of the authorities below and quash the initiation of re-assessment proceedings under section 153C of the I.T. Act. Resultantly, all additions stands deleted. 9. In the result, cross objection of the Assessee is allowed. 10. Since the assessment order have been quashed, therefore, the grounds raised in the Departmental Appeal are left with academic discussion and need no adjudication ..... 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