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TMI Blog2017 (3) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... law and on the facts & in the circumstances of the case in upholding the estimate on of unaccounted sale partly of Rs. 43,06,287/- out of Rs. 1,09,37,871/- estimated by AO. 3. Learned CIT (Appeals) has erred in law and on the facts & in the circumstances of the case in upholding the estimated addition of Rs. 6,54,030/- towards Gross profit on the unaccounted sales. 4. The learned CIT (Appeals) has erred in confirming the levy of interest under section 234A, 234B, 234C and 234D of the Act." 2.2 for A.Y. 2006-07 "1. The learned CIT (Appeals) has erred in law and on the facts & in the circumstances of the case in holding notice issued under Sc. 153C of the act as valid and consequential erred in law in holding the assessment made under Sec.153C of the Act as valid. Without prejudice to the above, 2. Learned CIT (Appeals) has erred in law and on the facts & in the circumstances of the case in adopting gross profit rate 15.74% on unaccounted sales of Rs. 1,72,23,006/- and making addition of Rs. 27,10,901/- instead of gross profit at 60% on such sales. 3. The learned CIT (Appeals) has erred in confirming the levy of interest under section 234A, 234B, 234C and 234D of the Act." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the AO had recorded his satisfaction for initiating proceedings under section 153C of the Act in the case on hand. The learned A.R. of the assessee then drew the attention of the Bench to the AO's letter dated 24.11.2016; wherein at para 2(ii) on page 1 thereof the AO acknowledges that only action under section 133A of the Act was conducted at the assessee's premises where cash of Rs. 3,14,000/- was found; at para 2(4) on page 2 thereof it is mentioned that details of unaccounted sales expenses listed in Annexure A-1 to A-5 were found at the assessee's premises in the course of survey under section 133A and finally to para 3(b) on page 3 where it is mentioned that after verification of the assessee's case records for, inter alia, the assessment years in question, there is no record available that can be referred to as 'satisfaction/reasons recorded by the transferor/ transferee AO for initiating proceedings under section 153C of the Act. In support of the proposition canvassed by the assessee that when there is nothing on record, in the order of assessment or case records, to show that the AO, even if he is the same one for the person searched, recorded his satisfaction that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 and 2006-07. On an appreciation of the facts on record, it is seen that this legal issue was raised by the assessee before the concerned CIT(A) as a ground of appeal in A.Y. 2006-07 and as an additional ground of appeal in the A.Y. 2005-06. In both these assessment years the arguments, facts put forward by the assessee were rejected by the concerned CIT(A) and the notices issued under section 153C of the Act were held to be valid and consequently the assessments passed under section 143(3) r.w.s. 153C of the Act for both these years were also held to be valid. 3.3.2 Briefly stated, the facts of the case as emanate from the record are that there was a search and seizure action under section 132 of the Act conducted in the Mali group on 28.06.2006. It is not in dispute that there was no search under section 132 of the Act on the assessee in the case on hand, but a survey under section 133A of the Act was conducted at his business premises at Junction, 33. Ashish Industrial Estate, Gokhale Road, Dadar (W), Mumbai on the same day. On a perusal of the orders of assessment for both assessment years 2005-06 and 2006-07 dated 29.12.2008, at para 5 thereof, it is stated that notices und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption of jurisdiction for issue of notices under section 153C of the Act for the concerned assessment years. In this factual matrix of the case before us, we are of the considered opinion and are constrained to draw the conclusion that the AOs concerned have not recorded any satisfaction, which is prerequisite for assumption of proper jurisdiction under section 153C of the Act. In the case of Narsi Creations (2016) 70 taxmann.com 156 (Delhi-Trib) the ITAT, Delhi Bench has held that while recording of satisfaction by the AO of the assessee is a requisite for assumption of jurisdiction to issue notice under section 153C of the Act, even if the AO of person searched and such other person is same, then also, first while making the assessment in the case of the person searched, the AO has to record such satisfaction note and then a copy of this satisfaction note and relevant incriminating documents seized are to be placed in the file of such other persons. It is only after this, in the capacity of the AO of such other person, can the AO properly assume jurisdiction to issue notice under section 153C of the Act. 3.3.4 In the case of DIT vs. Ingram Micro (India) Exports (P) Ltd. (2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he record to the other AO who has jurisdiction over such other person u/s 158131). The Hon'ble Court held that it satisfaction note could be prepared at any 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; or (b) in the course of the assessment proceedings under section 158BC of the Act,. (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person." 3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/pari-materia to the provisions of section 158131) of the Act and therefore, the above guidelines of the Hon'ble SC, apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT. 4, The guidelines of the Hon'ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the "other person" is one and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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