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2015 (3) TMI 1012 - ITAT DELHI

2015 (3) TMI 1012 - ITAT DELHI - TMI - Assessment u/s 153C - lack of satisfaction note - Held that:- we set aside the assessment and the impugned orders for the reason that the AO of the persons searched, namely, Sh. B.K. Dhingra, Smt. Poonam Dhingra & M/s Madhusudan Buildcon Pvt. Ltd. did not record any satisfaction that some money, bullion, jewellery or books of account or other documents found from these persons belonged to the assessee. The absence of such satisfaction, in our considered opi .....

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erson prior to initiation of proceedings u/s 153C of the Act, the assessments concluded on the assessee u/s 153C of the Act r.w.s 153A of the Act lack jurisdiction and the same are hereby quashed. - Decided in favour of assessee. - ITA Nos. 5986 to 5991/Del/2013, C.O. Nos. 329 to 334/DEL/2014 - Dated:- 18-3-2015 - IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI Shri N.K. Saini And Shri George George K.JJ. 18.03.2015 ITA Nos. 5986 to 5991/Del/2013, C.O. Nos. 329 to 334/DEL/2014 Appel .....

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e CIT (A) was justified in deleting the disallowances of expenditure made by the AO; &. ii) Whether the CIT (A) was justified in deleting the additions made on account of unexplained purchases u/s 69C of the Act. 3. In the assessee s cross objections, several grounds are raised. The majority of the grounds relate to the issue of challenging the initiation of proceedings u/s 153C of the Act. It was submitted by the Ld. DR that the assessee s cross objections are belated and assessee has not f .....

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Revenue s appeals were furnished to the assessee on 19.11.2014 for the respective assessment years and cross objections were filed on 24.11.2014 within the prescribed time limit. The Director of the assessee s company has also filed an affidavit to this effect. The relevant portion of the affidavit filed by the Director of the assessee s company reads as follows:- 1. That, on 18.11.2014 PVK Marketing Private Limited (formerly known as : Extra Marketing Private Limited) has filed an application .....

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ue s appeals (Form 36 with Grounds of Appeals) on 19.11.2014 for the AY. 2003-04 to AY.2008-09. 4. That the assessee company filed cross objections on 24.11.2014 vide CO. Nos. 329/Del-2014 for the AY. 2003-04; 330/Del-2014 for the AY. 2004-05; 331/Del- 2014 for the AY. 2005-06; 332/Del-2014 for the AY. 2006-07; 333/Del-2014 for the AY. 2007-08; and 334/Del-2014 for the AY. 2008-09. 5. That, the assessee company did not receive any other copies of Revenue s Appeals (Form 36 with Grounds of Appeal .....

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ceedings u/s 153C of the Act. The said issue, it was submitted, was covered in favour of the assessee by the orders of the Coordinate Benches of this Tribunal which, in turn, had placed reliance on the judgment of the Hon ble jurisdictional High Court in the case of M/s. Pepsico India Holding Pvt. Ltd v. ACIT reported in 367 ITR (673)/122 (Del) . 6. The ld. DR present was duly heard. The ld. DR has given a written submission with reference to the issues raised by the ld. AR. 7. In rejoinder, the .....

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as unable to controvert the above contention of the Ld. AR. 8. We have heard the rival submissions and perused the materials on record. The search and seizure operations u/s 132 of the Act was carried out in the cases of Sri B.K.Dhingra, Poonam Dhingra and M/s. Madhusudan Buildcon (P) Limited on 20.10.2008. The AO recorded satisfaction Note for issuing Notice u/s 153C of the Act to the assessee on 5.7.2010 and the Notice u/s 153C of the Act was issued to the assessee on 8.7.2010. In response, th .....

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04 to 2008-09. 05/07/2010 Documents at pages 46-90 of Annexure A - 35 seized by the Party R-2 from the premises at F-6/5, Vasant Vihar, New Delhi, during the course of search conducted u/s 132 of the IT Act, 1961, on 20.10.2008 in the case of Sh. B.K. Dhingra, Smt. Poonam Dhingra, M/s. Madhusudan Buildcon Pvt. Ltd have been found to belong to M/s. Extra Marketing Pvt. Ltd 34/7, Village Dera Mandi, Tehsil Meharauli, New Delhi, which has not been covered u/s 132 of the IT Act, 1961. Accordingly, i .....

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searched person for initiation of proceedings u/s 153C of the Act in the case of the assessee. The letter of the AO reads as follows: Sub: Application for seeking information under RTI Act, 2005 - reg - Please refer to your application on the above mentioned subject. 2. From the assessment records of Sh. Bhupesh Kumar Dhingra which is covered under section 153A, for the asst. years from 2003-04 to 2008-09 (block period), it is noticed that there is no satisfaction note available/recorded in resp .....

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ion Note under section 153C of the Act was not recorded by the assessing officer of the searched persons/entities. 11. This issue raised by the Ld. counsel for the assessee is no longer res integra. The Co-ordinate Benches of this Tribunal have considered an identical issue to that of the present matter under dispute in their orders. The details of the orders of the earlier Benches of this Tribunal are as under: (i) Tanvir Collections Pvt. Ltd v. ACIT [ITA No.2421/Del/2014 dated: 16.1.2015]; (ii .....

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ue in favour of the assessee. Since the facts and the contentions considered by the Revenue in the case of Tanvir Finance & Leasing Ltd. (supra) is identical to the present case, the finding of the Tribunal in the case of Tanvir Finance & Leasing Ltd. (Supra) is reproduced below:- 4. We have heard the rival submissions and perused the relevant material on record. We have also taken into consideration the written submissions filed by the ld. DR on 27.02.2012. It is manifest from the asses .....

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by the AO. There is no dispute that the satisfaction has been recorded for all the years under consideration in mutatis mutandis similar manner. For the sake of reference and on a representative basis, we are reproducing the satisfaction recorded for the A.Y. 2003-04, as under: Satisfaction Note for Issuing Notice u/s 153C of the I.T. Act, 1961 in the case of M/s Tanveer Finance & Leasing Ltd., WZ 13, Street No. 18, Krishna Park, Tilak Nagar, New Delhi, PAN No. for A.Y. 2003-04 to 2008-09. .....

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/s 132 of the I.T. Act, 1961. Accordingly, in terms of provisions of sec. 153C of the Act, notices u/s 153C are hereby issued for the A.Y. 2003-04 to 2008-09 in the case of M/s Tanveer Finance & Leasing Ltd. The case was centralized in the Central Circle - 17, New Delhi vide orders dated 03.11.2009 of CIT-VI, New Delhi. Sd/- DCIT, Central Circle-17, New Delhi 5. The view canvassed by the ld. AR is that no satisfaction was recorded by the AO of the three persons searched and the above satisfa .....

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is similar to that given to the other two persons also, is reproduced as under: 2. From the assessment records of Sh. Bhupesh Kumar Dhingra, which is covered u/s 153A, for the assessment years from 2003-04 to 2008-09 (Block period) it is noticed that there is no satisfaction note available/recorded in respect of other entities. 3. In case you intend to file the appeal, you may file the same before the Addl. CIT, Central Range-2, 3rd Floor, ARA Centre, E-2, Jhandewalan, New Delhi within 30 days .....

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gra, Smt. Poonam Dhingra & M/s Madhusudan Buildcon Pvt. Ltd. in identical circumstances, came up for consideration before the Tribunal. In all these cases similar objections were raised by the assessee to the effect that no proper satisfaction was recorded by the AO of such assessees. The Tribunal has disposed of such cases including Tanvir Collections Pvt. Ltd. vs. ACIT (ITA No. 2421/Del/2014), DCIT vs. Inlay Marketing Pvt. Ltd. (ITA No. 4197/D/2012) and more recently DCIT vs. G.S. Findings .....

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persons searched and the other person is same, it is only the AO of the persons searched who is obliged to record satisfaction in his capacity as the AO of the person searched. 8. After considering the arguments made by both the sides, on the lines similar to those which have been made before us also, the Tribunal in the above orders has quashed the assessments so made by declaring them void ab initio for lack of proper jurisdiction. 9. It is pertinent to mention that the same three persons, vi .....

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ered and decided by the Tribunal, respectfully following the precedents, we set aside the assessment and the consequential impugned orders on the ground of lack of proper jurisdiction of the AO. 10. Before parting with these appeals, we would like to record some further arguments made by the ld. DR. She vehemently argued that the Appraisal report clearly mentions that the assessee was to be taxed u/s 153C along with other several persons and the persons searched were liable to tax u/s 153A. In t .....

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essment. Appraisal report is no substitute of satisfaction of the AO of the person searched. 12. The ld. DR further submitted that the Tribunal should not take a hyper technical view on the question of recording satisfaction and hence the proceedings should be allowed to continue since huge amounts are involved in the racket, which was unearthed by the search party. 13. We duly appreciate the concern of the ld. DR for the exchequer. But we are reminded of the basic principle enshrined in Article .....

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aring of the instant appeals be blocked because the request for the constitution of special bench in Konnar Enterprises Pvt. Ltd. (ITA no. 4141/Del/2012 etc.) is pending consideration, is not acceptable. It can be noticed that the tribunal has uniformally decided the issue in the manner as stated above and there is no conflicting decision on the set of facts which are under consideration. Further, the ld. AR has submitted that the issue in the case of Konnar Enterprises Ltd. is entirely differen .....

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etc., in which such contention has not found favour with the tribunal, we prefer to go with a view taken by the Tribunal in these decisions. 16. As regards the proposal of the Revenue to file Miscellaneous application in the case of Tanvir Collection, we find that no such Miscellaneous application has so far been filed. Further, the contention that the order in the case of Inlay Marketing is per incurium, has been dealt with by the tribunal in the case of Tanvir Collection, by holding that ther .....

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Buildcon Pvt. Ltd. did not record any satisfaction that some money, bullion, jewellery or books of account or other documents found from these persons belonged to the assessee. The absence of such satisfaction, in our considered opinion, did not translate into conferring a valid and lawful jurisdiction to the AO of the assessee to proceed with the matter of assessment u/s 153C of the Act for all the years under consideration. 19. In view of our decision on the above preliminary legal issue, the .....

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