TMI Blog2012 (5) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the ld. CIT(A) dated 13.12.2010 pertaining to assessment years 2002-03 and 2003-04 on various common grounds. 2. The main ground raised in these appeals relates to the validity of assessment framed consequent to the notice issued under section 153A of the Income-tax Act, 1961 (hereinafter referred in short the Act ) read with section 153C of the Act without requisite satisfaction of the concerned Assessing Officer who has initiated action under section 153A of the Act before handing over the relevant materials to the Assessing Officer having jurisdiction over the assessee. 3. Briefly the facts borne out from the record are that the Officers of the Central Excise Department searched the residential premises of the Managing Director on 8.6.2002 and seized certain documents, computer and cash. Consequently a Warrant of authorization under section 132A of the Act was issued on 7.8.2003 to require the Joint Commissioner of Central Excise, Allahabad in the case of M/s Chandra Kamal Corporation, M/s Virat Overseas Pvt. Ltd., Banda and others to deliver the seized assets, books of account and other documents relating thereto to the requisitioning authority. During the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Kamal Corporation and M/s Virat Overseas Pvt. Ltd. after valid satisfaction recorded by him. Therefore, initiation of proceedings under section 153C read with section 153A of the Act is not valid, and the assessment framed consequent thereto is not sustainable in the eyes of law. The contentions of the assessee were examined by the ld. CIT(A), but the assessee did not find favour with him. The claim of the assessee on merit was also rejected by the ld. CIT(A). 5. Aggrieved, the assessee preferred appeals before the Tribunal with the submission that no incriminating document or material was received by the Assessing Officer having jurisdiction over the assessee from the Assessing Officer of the searched or requisitioned parties i.e. M/s Chandra Kamal Corporation and M/s Virat Overseas Pvt. Ltd. upon whom search was conducted by the Central Excise Department and certain documents, computer and cash were seized. Moreover, nothing is available on record that satisfaction was ever recorded by the Assessing Officer having jurisdiction over the searched or requisitioned parties that a particular document or material pertains to the assessee. In the absence of valid satisfaction and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act in the case of M/s Chandra Kamal Corporation and M/s Virat Overseas Pvt. Ltd. The documents thus seized by the Central Excise Department and also requisitioned by the Income-tax Department do not relate to the business activities of the petitioner i.e. the assessee. As a matter of fact enquiries on the basis of these documents are directed by the Department against certain persons other than the petitioner i.e. the assessee. 7. The ld. counsel for the assessee further invited our attention to the assessment order passed in the cases of M/s Chandra Kamal Corporation and M/s Virat Overseas Pvt. Ltd. with the submission that in these cases notice under section 153A read with section 142 of the Act was issued on 24.2.2006 on the basis of materials collected from the Central Excise Department and the assessee has been requested to file return on 13.3.2006 and in response thereto the assessees filed their returns on 13.3.2006 declaring Nil income. Meaning thereby before 24.2.2006 there is no formation of belief or satisfaction by the Assessing Officer having jurisdiction over M/s Chandra Kamal Corporation and M/s Virat Overseas Pvt. Ltd. that the materials collected from the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT v. M.N. Rajaram [2010] 5 ITR (Trib) 261 (Chennai) 2. Meghmani Organics Ltd. v. DCIT [2010] 6 ITR (Trib) 360 (Ahmedabad). 3. Jindal Stainless Ltd. v. ACIT [2009] 122 TTJ (Del) 902. 4. Anil Kumar Bhatia Ors. V. ACIT [2010] 1 ITR (Trib) 484. 5. DCIT v. Shri. Raj Kumar Arora (ITA No. 290/LUC/2009 for assessment year 2000-01). 6. CIT v. Lovely Exports (P) Ltd [2008] 216 CTR (SC) 195 . 7. Jaya Securities Ltd. v. CIT [2008] 166 TAXMAN 7 (All.) 8. Vijaybhai N. Chandrani v. ACIT [2011] 333 ITR 436 (Guj.) 9. On merit, the ld. counsel for the assessee has placed heavy reliance upon the judgment of the Hon'ble Apex Court in the case of CIT v. Lovely Exports Pvt. Ltd., 319 ITR 5 (SC) with the submission that no addition can be made in the hands of the assessee even if the share application money was doubted. It can at the most be added in the hands of the share applicants. 10. The ld. CIT (DR), Mr. Praveen Kumar, on the other hand, has submitted that on receipt of information from the Central Excise Department and the Additional CIT, Range VI, action was initiated under section 153C read with section 153A of the Act. Shri. Praveen Kumar, ld. CIT (D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization under section 132A of the Act was issued on 7.8.2003 to require the Joint Commissioner, Central Excise Department in the case of M/s Chandra Kamal Corporation, M/s Virat Overseas Pvt. Ltd. and others to deliver the seized assets, books of account and other documents relating thereto. On the basis of materials collected from the Central Excise Department, notice under section 153A read with section 142 of the Act dated 24.2.2006 was issued to M/s Chandra Kamal Corporation and M/s Virat Overseas Pvt. Ltd. requesting them to file their return of income on 13.3.2006. In the hands of the assessee action was taken under section 153C read with section 153A of the Act by issuing notice under the said section on 24.12.2004 and the same was served upon the assessee on 13.1.2005. In response thereto, return was filed on 27.1.2005. 13. Undisputedly neither search was conducted by the Central Excise Department upon the assessee nor any action was initiated under section 132A of the Act by the Revenue authorities requesting the Central Excise Department for handing over any materials relevant to the assessee. Thus, no action was initiated under section 153A of the Act in the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. Assessment of income of any other person. 153C. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, 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 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 pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f account or documents seized or requisitioned belong to some other person, he after forming a belief to this extent shall handover the relevant material to the concerned Assessing Officer having jurisdiction over such other persons. Therefore, without initiating action under section 153A of the Act upon a person, action under section 153C of the Act cannot be initiated upon some other person. 15. The scope of sections 153A and 153C of the Act was examined by different Benches of the Tribunal and various High Courts. In the case of ACIT v. M.N. Rajaram [2010] 5 ITR (Trib) 261 (Chennai) , it was held that search assessment proceedings as contemplated under Chapter XIV-B cannot be equated with search assessment proceedings under sections 153A to 153D of the Act. Block assessment proceedings refer to search materials for making an assessment pursuant to search, whereas section 153C along with section 153A of the Act do not require that the assessments have to be made only with reference to the materials seized at the time of search. Both the sections specify that the Assessing Officer has to be satisfied. The satisfaction under section 158BD of the Act refers to undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A he shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person. However, there is a distinction between the two provisions inasmuch as under section 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he shall proceed against such other person under section 158BC. Thus a condition precedent for issuing notice under section 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned should belong to such person. If the said req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials to other Officer having jurisdiction over such other person. But in the case of Manish Maheshwari v. ACIT (supra), it has been categorically held by the Hon'ble Apex Court that before handing over the material relevant to such other person to other Assessing Officer having jurisdiction over such other person, the Assessing Officer having jurisdiction over the searched person is required to record a satisfaction to this effect. 19. From a careful perusal of the order of the ld. CIT(A), we find that order under section 127 of the Act centralizing all these cases were passed on 3.1.2006 by the Commissioner of Income-tax-II, Kanpur conferring jurisdiction over all the assessees i.e. the persons searched or requisitioned under section 132A of the Act was sought and the assessee. Meaning thereby, before this order dated 3.1.2006 centralizing all cases and conferring power to the ACIT, Circle IV, Kanpur, the Assessing Officers were different having jurisdiction over the persons searched or requisitioned and the assessee. Therefore, satisfaction of the Assessing Officer having jurisdiction over the persons searched or requisitioned under section 132A of the Act is necessary. It is w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the Assessing Officer, the Department is free to reopen their individual assessment in accordance with law. The similar view was taken by the jurisdictional High Court in the case of Jaya Securities Ltd. v. CIT [2008] Taxman 7 (All.) . 23. The ld. CIT (DR) however commented on the judgment of the Hon'ble Apex Court in the case of CIT v. Lovely Exports (P) Ltd [2008] 216 CTR (SC) 195 ) and placed reliance upon the judgment of the Hon'ble Delhi High Court in the case of CIT v. Oasis Hospitalities (P) Ltd. but no citation of the judgment have been mentioned in the written submission filed by the ld. CIT (DR). We however carefully examined other judgments cited by the Revenue and we find that the impugned issue is squarely covered by the judgment of the Hon'ble Apex Court in the case of CIT v. Lovely Exports (P) Ltd [2008] 216 CTR (SC) 195 ) . We, therefore, decide the appeal on merit in favour of the assessee and delete the additions made by the Assessing Officer and confirmed by the ld. CIT(A) on account of share application. 24. Similar issues were raised in ITA No.93/LKW/2011 and we accordingly decide them in favour of the assessee. 25. One more ground in ITA ..... 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