TMI Blog2015 (2) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri P K Kapoor, CA For the Respondent : Shri Vivek Mishra, CIT (DR) ORDER Per: Bench: These appeals are preferred by the assessee against the order of the ld. CIT(A) pertaining to assessment years 2003-04 to 2009-10 on common grounds. 2. Since common grounds are involved in these appeals, these were heard together and are being disposed of through this consolidated order. The grounds are almost common, therefore, we extract the grounds of appeal raised in I.T.A. No. 245/LKW/2012 as under:- 1. BECAUSE the CIT(A) has erred in holding that; (a) Provisions of section 153C are distinct from the provisions of section 158BD; (b) The proceedings under section 153C can be validly initiated, even without there being recorded any satisfaction by the Assessing Officer in the case of person subjected to search and in upholding the validity of assessment order dated 31.12.2010 as had been passed by the ACIT, Central Circle-l, Lucknow under section 153C read with section 143(3) of the Act. 2. BECAUSE the view taken by the CIT(A) is based on nonappreciation of ratio of various case laws (as have been referred to by him in the appellate order) and erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, but the Department has not placed anything on record. The ld. counsel for the assessee, Shri. Pradeep Kumar Kapoor, C.A. has further contended that it is a settled position of law that if the proceedings under section 153C of the Act are initiated without recording satisfaction by the Assessing Officer of the searched person that the incriminating documents found during the course of search in fact relate to other person, the assessment framed under section 153C of the Act is invalid and illegal and deserves to be quashed. The reliance was also placed upon the judgment of the jurisdictional High Court in the case of CIT (Central) vs. M/s Gopi Apartment in Income Tax Appeal No.60 of 2014 with the submission that it has been held by the jurisdictional High Court that recording of satisfaction by the Assessing Officer of the searched person before initiating proceedings under section 153C of the Act is mandatory and if not recorded, the assessment framed under section 153C of the Act is bad in law. Copy of this judgment is placed on record. 4. The ld. D.R., on the other hand, has placed reliance upon the order of the ld. CIT(A) with the submission that satisfaction was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds. The contention of Sri Agrawal is two fold. Firstly, he contends that in the instant case, the Assessing Officer of the 'searched person' and the 'other person' being the same, there was no requirement of handing over of the books of account or documents or assets seized or requisitioned, as is mentioned in Section 153C nor there was any necessity of recording a prior satisfaction before proceeding to assess the 'other person'. The satisfaction subsequently recorded in the assessment order in respect of the 'other person' was sufficient compliance of provisions of Section 153C, which, in any case, was procedural in nature. The A.O. of both the proceedings, being the same, he was neither required to handover the documents to another Assessing Officer nor he had to record any satisfaction for the purpose of any other Assessing Officer since same Assessing Officer of the same designation is having jurisdiction over both the persons, i.e. 'searched person' and the 'other person' (not searched). Sri Agrawal relied upon a Division Bench judgment of this Court rendered in the case of Commissioner of Income Tax Vs. Classic Enterprises, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing 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 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. The aforesaid provision is contained in Chapter- XIV of the Income Tax Act, which contains the procedure for assessment. A somewhat similar provision exists in Section 158BD under Chapter XIV-B, which contains the procedure for assessment of searched cases, which reads as under: 158BD. Where 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 any assets were requisitioned under section 132A, then, the books of account, ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than the searched person in respect of whom a search was made under Section 132 or requisition of books of accounts were made under Section 132A of the Act. The language of the provision is clear and unambiguous. The legislature has not imposed any embargo on the assessing officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person. 44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of the appeals that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arched person' or during the assessment proceedings against him or even after the completion of the assessment proceedings against him, the Assessing Officer of such a 'searched person', may, if he is satisfied, that any money, document etc. belongs to a person other than the searched person, then such money, documents etc. are to be handed over to the Assessing Officer having jurisdiction over 'such other person'. (2) The second stage commences from the recording of such satisfaction by the Assessing Officer of the 'searched person' followed by handing over of all the requisite documents etc. to the Assessing Officer of such 'other person', thereafter followed by issuance of the notice of the proceedings under Section 153C read with section 153A against such 'other person'. The initiation of proceedings against 'such other person' are dependant upon a satisfaction being recorded. Such satisfaction may be during the search or at the time of initiation of assessment proceedings against the 'searched person', or even during the assessment proceedings against him or even after completion of the same, but before issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st such other person. 11.The conditions precedent for invoking the provisions of Section 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under Section 132A of the Act. The ratio of the judgment in Manish Maheshwari's case also applies to the provisions of Section 153C and to the facts of this case. In the instant case, a categorical finding has been recorded by the C.I.T. (Appeals) and the I.T.A.T. that there is no material showing the recording of satisfaction by the Assessing Officer of the 'searched person' prior to issuance of notice under Section 153C to the respondent assessee, i.e. 'the other person'. It was the admitted case of the Revenue before the C.I.T. (Appeals) and the I.T.A.T. that though the Assessing Officer (of the other person) in the assessment order had stated that satisfaction for issuing notice under Section 153C was recorded, however, on examination, recording of such satisfaction alleged to be recorded by the Assessing Officer was not availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded over the books of account and seized material, thus, the issue, which falls for consideration in this appeal, in fact, did not arise for consideration in the said appeal. In any case, the case at hand being squarely covered by the pronouncements of the Supreme Court, as already referred, the reliance placed by Sri Agrawal on the aforesaid judgment does not cut much ice. 6. Now it is clear from the record that satisfaction by the Assessing Officer of the searched person was not recorded before initiating proceedings under section 153C of the Act against the assessee and the impugned issue is squarely covered by the aforesaid judgment of the jurisdictional High Court. We, therefore, have no hesitation in holding that since the assessment was framed consequent to the proceedings initiated under section 153C of the Act, without recording satisfaction by the Assessing Officer of the searched person, the assessment is bad in law and deserves to be quashed. We accordingly set aside the order of the ld. CIT(A) and quash the assessment framed under section 153C read with 143(3) of the Act. 7. In the result, appeals of the assessee are allowed. Order was pronounced in the open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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