TMI Blog2015 (9) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-2000 to 2004-2005. The only document on the basis of which the notices have been issued is an undated cheque found during the course of search at the premises of Kabhai Chauhan Group on 04.03.2005. An undated cheque found on 04.03.2005 cannot pertain to the previous years 1998-1999 to 2003- 04. It can pertain to previous year 2004-05 and thus, can be relevant only for Assessment Year 2005-06 and not in earlier years. Admittedly, there is no seized material in the years for which notices u/s 153C have been issued. the agreement between the tenant and the petitioner found from ‘S’ was held to be belonging to the assessee because it was not belonging to the person searched. However, cheque issued by the assessee was in the name of Vijay K. Chauhan i.e., the person of the Group which was searched. The cheque was found from the person upon whom the cheque was drawn. Therefore, in our opinion, the cheque “belongs to” the person upon whom it was drawn and cannot be said to be continued to “belonging to” the person who issued the cheque. Therefore, in our opinion, the conditions for issue of notice u/s 153C were not satisfied. - Decided in favour of assessee. - ITA No. 3088 to 3093/A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not applicable on facts and circumstances of the case. 5. The facts of the case are that search and seizure proceedings were carried out on 04.03.2005 at the residential/business premises of Kabhai Chauhan Group of cases. During the course of search, one undated cheque of ₹ 1,15,000/- issued by Smt. Rekhaben Thakkar, proprietor of M/s. Durga Finance in favour of Shri Vijay K. Chauhan was found and seized. On the basis of above cheque, the Assessing Officer i.e. Deputy Commissioner of Income-tax, Central Circle-1, Baroda recorded satisfaction note for issuing notice u/s 153C of the Income-tax Act, dated 08.11.2005 and the notices u/s 153C were issued on the same day, i.e., 08.11.2005 for Assessment Year 1999-2000 to 2004-2005. On appeal, the CIT(A) sustained the validity of the notices issued u/s 153C. Now, the assessee has challenged the validity of the notice issued u/s 153C before the ITAT. 6. At the time of hearing before us, the ld. Counsel for the assessee referred to satisfaction note for issuing notice u/s 153C of the Act, copy of which is placed at page No.50 of the assessee s paper-book. It is submitted by the ld. Counsel that this satisfaction note is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atch hold of undated cheque issued by M/s. Durga Finance, i.e., assessee s proprietorship concern. He submitted that the cheque belongs to the assessee, because, even after the issue of cheque, the assessee can control the transaction. The assessee has a full right of making the stop payment from the bank. Therefore, till the cheque is realized by the payee, the cheque will be belonging to the assessee. In support of this contention, he relied upon the decision of Kamleshbhai Dharamshibhai Patel vs. CIT, 31 Taxman.com 50 (Guj.). The ld. Departmental Representative further submitted that there is no requirement of a formal recording of satisfaction by the Assessing Officer of the person searched. If he is satisfied that some document belonging to the person other than the person searched, he has to simply handover such document to the Assessing Officer of the person to whom such document belong and thereafter, the Assessing Officer of such other person has to issue notice u/s 153C. In these cases, since the Assessing Officer of the person searched as well as the Assessing Officer of the assessee were the same, there was no question of formally handing over and taking over of the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall proceed against the said person to assess or reassess his income in accordance with the provisions of Section 153A. Therefore, recording of satisfaction by the Assessing Officer of the person searched that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized belong to the person other than the person searched is a sine qua non for initiating action under Section 153C. 10. The ld. Departmental Representative has contended that though the Assessing Officer of the person searched should be satisfied that money, bullion, jewellery or any other valuable article or the books of accounts or documents belong to the person other than the person searched, but there is no requirement of recording of a formal satisfaction by him. We are unable to agree with this contention of the ld. Departmental Representative. While taking this view, we derive support from the decision of Hon ble Apex Court in the case of Manish Maheshwari Vs. ACIT and Another, reported in (2007) 289 ITR 341 (SC), wherein their Lordships at page 348 held as under:- The condition precedent for invoking a block assessment is that a search has been conducted un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized. On scrutiny of the documents so seized, it is noticed that certain documents were found to be pertaining to the above assessee, including the following documents: Undated cheque issued by M/s. Durga Finance in favour of Shri Vijay K. Chauhan seized from the premises of Shri Brijesh K. Chauhan. Since, the above documents, pertaining to the above named assessee have been found, I am satisfied that the provisions of Section 153C of the Act apply in this case and, therefore, notice u/s 153C is being issued. BARODA Date : 08.11.2005 (AMAL GARG) Dy. Commissioner of Income Tax Central Circle -1, Baroda 13. From the above, it is evident that the satisfaction is recorded in the case of Smt. Rekhaben K. Thakkar, proprietor of M/s. Durga Finance. Thus, the satisfaction is recorded in the case of the person other than the person searched. As we have already mentioned that as per Section 153C, the Assessing Officer of the person searched should be satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents belong to a person other than the person searched. Admittedly, in this case, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document on the basis of which the notices have been issued is an undated cheque found during the course of search at the premises of Kabhai Chauhan Group on 04.03.2005. An undated cheque found on 04.03.2005 cannot pertain to the previous years 1998-1999 to 2003- 04. It can pertain to previous year 2004-05 and thus, can be relevant only for Assessment Year 2005-06 and not in earlier years. Admittedly, there is no seized material in the years for which notices u/s 153C have been issued. 15. As per Section 153C, as it stood at the relevant time, Section 153C would be applicable if the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized belong to a person other than the person searched. Therefore, the question is whether the cheque which is found during the course of search at Kabhai Chauhan Group can be said to be belonging to the assessee. It is contended by the ld. Counsel that cheque once issued by a person becomes the property of the drawee and therefore, it cannot be said to be belonging to the person who issued the cheque. The cheque cannot belong to two persons at the same time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we may summarize the reasons on the basis of which we form opinion that the condition of issue of notice u/s 153C was not satisfied, as under:- a. No satisfaction is recorded by the Assessing officer of the person searched. On the other hand, satisfaction is recorded by the Assessing Officer of such other person in whose case notice u/s 153C was issued. b. The only document on the basis of which notice u/s 153C was issued for six years was the undated cheque found during the course of search on 04.03.2005. Thus, the cheque was not pertaining to any of the years for which notice was issued u/s 153C. c. The cheque, on the basis of which the notice u/s 153C was issued, cannot be said to be belonging to the assessee. In view of above, we are of the opinion that the conditions for issue of notice u/s 153C were not satisfied. Accordingly, we quash the notices issued for Assessment Years 1999-2000 to 2004-2005. Consequently, the assessment orders passed in pursuance to such notices are also quashed. 18. Since we have already quashed the assessment order, the other grounds raised by the assessee with regard to the additions sustained by the CIT(A) do not survive for adjud ..... 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