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TMI Blog2012 (5) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... in 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 course of requisition proceedings under section 132A of the Act, it was informed by the Joint Commissioner of Central Excise, Allahabad telephonically that an amount of Rs.50,80,905 was deposited in the account of M/s Shri Raghu Ram Grih Pvt. Ltd. And Shri Chandra Mohan Sahu, who was the Managing Director of the Company. The operation of bank account of the assessee maintained with Union Bank of India, Station Road, Banda was prohibited under section 281B of the Act after taking approval of the Commissioner of Income-tax-II, Kanpur. Before making attachment under section 281B of the Act, necessary action under section 153A read with section 153C of the Act was taken. Accordingly notices under section 143(2) and 142(1) of the Act and questionnaires were issued. In response to noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 handing over of relevant materials to the Assessing Officer having jurisdiction over the assessee, direction to initiate proceedings under section 153C read with section 153A of the Act deserves to be knocked down as it is not sustainable in the eyes of law. 6. The ld. counsel for the assessee has invited our attention to the Office Note (confidential) of the Assistant Commissioner of Income-tax-4, Kanpur i.e. the Assessing Officer with the submission that the Additional CIT, Range VI, Kanpur has received a letter in which it is mentioned that a search was conducted by the Preventive Department of Central Excise and various books of account, documents and loose papers were seized. Thereafter Warrant of authorization under section 132A of the Act was issued by the Director Genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise 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 Central Excise Department under section 153A of the Act pertains to the assessee. Yet notice under section 153A read with section 153C of the Act was issued to the assessee on 22.12.2004. The ld. counsel for the assessee further contended that at the time of issuance of notice under section 153C of the Act there was no satisfaction by any of the Assessing Officer who has requisitioned the material during proceedings under section 153A of the Act that the materials sought in fact pertains to the assessee. Therefore, the action initiated under section 153C of the Act is not in accordance with law and deserves to be set aside. 8. The ld. counsel for the assessee, Shri Amit Shukla further invited our attention to the provisions of section 153A and 153C of the Act with the submission that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication 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 (DR) further placed heavy reliance upon the Office Note of the Assessing Officer in which he has mentioned the full details of the information received by him. Therefore, it cannot be said that action under section 153C of the Act was initiated without application of proper mind. He has also placed heavy reliance upon the judgment of the Hon'ble Kerala High Court in the case of CIT v. Panchajanyam Management Agencies & Services [2011] 239 CTR (Keral) 424 in which their Lordships have observed that while initiating proceedings under section 158BD of the Act, there is no necessity for transferring the file from one Officer to another where the Assessing Officer, who had jurisdiction to assess searched assessee, is the very same Officer who has jurisdiction to assess the firm because the person searched is the managin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 the assessee. The Revenue has issued a notice first time upon the assessee under section 153A read with section 153C of the Act on 22.12.2004 which was served upon the assessee on 13.1.2005 on the basis of letter received by the Additional CIT Range VI, Kanpur on 22.12.2004. Now question arises whether the notice under section 153A read with section 153C of the Act can be issued on the basis of a letter received by the Additional CIT on 22.12.2004. In order to understand the scheme of framing assessment in case of search conducted under section 132 of the Act and documents requisitioned under section 132A of the Act, we have to examine the provisions of sections 153A to 153D of the Act brought on the statute by the Finance Act, 2003 w.e.f. 1.6.2003. These provisions have replaced the earlier provisions relating to spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, 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 person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A :] [Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to 97[sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person.]" 14. From the plain reading of these sections, we find that section 153A is a procedural section which deals with the mode of assessment. A notice under section 153A of the Act can only be issued to such person where a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 belonging to any person other than the person searched whereas satisfaction under section 153C of the Act is with regard to money, bullion, jewellery, or other valuable article or thing or books of account or documents seized belonging to any person other than the person searched. The Tribunal however held that satisfaction of the Assessing Officer need not be specifically stated in so many terms but it should be discernible from the recording made by the Assessing Officer. 9. In the case of Meghmani Organics Ltd. v. DCIT [2010] 6 ITR (Trib) 360 (Ahmedabad), the Tribunal has again reiterated the same legal proposition. 10. In the case of Jindal Stainless Ltd. v. ACIT [2009] 122 TTJ (Del) 902, the Tribunal has held that the Assessing Officer of the person on whom the search is conducted has to satisfy himself that the valuable articles or books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 requirement is not satisfied, recourse cannot be had to the provisions of section 153C of the Act." 16. We have carefully examined the judgment of the Hon'ble Apex Court in the case of Manish Maheshwari v. ACIT, 289 ITR 341 rendered with respect to the proceedings under section 158BD of the Act and has categorically held as under:- "where the premises of a director of a company and his wife were searched under section 132 of the Income-tax Act, 1961, and a block assessment had to be done in relation to the company, the Assessing Officer had to (i) record his satisfaction that any undisclosed income belonged to the company, and (ii) hand over the books of account and other documents and assets seized to the Assessing Officer having jurisdiction against the company." 17. We have carefully examined the language used in sections 153C and 158BD of the Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 worthwhile to mention here that notice under section 153C read with 153A of the Act was issued on 22.12.2004 on receipt of letter by the Additional CIT, Kanpur on 22.12.2004. Therefore, at the time when action was initiated under section 153C of the Act nowhere assessment was pending in the cases of M/s Chandra Kamal Corporation and M/s Virat Overseas Pvt. Ltd. inasmuch as assessment was initiated in the case of M/s Chandra Kamal Corporation and M/s Virat Overseas Pvt. Ltd. by issuing notice under section 153A read with section 142 of the Act on 24.2.2006. 20. Provisions contained under section 153C of the Act can only be invoked where there was satisfaction by the Assessing Officer having jurisdiction over the person searched or requisitioned under section 132A during the course of assessment proceedings. Therefore proceedings under section 153A of the Act always precede ..... X X X X Extracts X X X X X X X X Extracts X X X X
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