TMI Blog2017 (4) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the orders of learned CIT(Appeals) on this aspect of jurisdiction and quash the assessments by holding that requisite satisfaction was not recorded before the issue of notice u/s 153C. - Decided in favour of assessee - I.T.A. No. 426, 427/Nag/2013, 184/Nag/2014 - - - Dated:- 30-3-2017 - Shri Shamim Yahya, Accountant Member And Shri Ram Lal Negi, Judicial Member Appellant by : Shri R. V. Loya Respondent by : Shri A.R. Ninawe ORDER Per Shamim Yahya, A. M. These appeals filed by assesee are directed against the separate orders of learned CIT(Appeals) dated 05-08-2013 and 29-11-2013 for respective assessment years. Since the issues are common and connected, the appeals were heard together and are being disposed by this common order. The common grounds of appeal read as under : (1) That the order of the Asstt. Commissioner of Income Tax, Central Circle 2(3), Nagpur is bad in law and wrong on facts and the learned C.I.T.(A) has erred in confirming the same. That the notice issued u/s.153C and the proceedings thereafter is bad in law. On the facts and circumstances of the case action of both the authorities is unjustified. (2) That the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e absence of any substantial reason the plea taken by the assessee was held to be not tenable, more so when there is search and seizure action on the assessee u/s 132 of the Act. 2.2 In appeal proceedings it was submitted for the appellant that a search and seizure operation was conducted in the business premises of Shri Mukesh Gupta on 29/07/2009 and other premises belonging to Shri Mukesh Gupta. There was no seizure of cash and valuables belonging to the assessee. As per the AO, during the course of search, several items of books of accounts and incriminating documents were found and seized. However, no incriminating documents were found. Throughout the post search proceedings, the assessee made repeated requests to the investigation wing AO to provide the copy of the statements recorded in case of the assessee. However, neither was the request for inspection and procurement of copy of seized material favourably considered within a reasonable time not was the same provided to the assessee. Also the assessee was not provided any evidence on the basis of which the order was passed by the AO. The order is based on conjectures and surmises of the AO. No evidence was brought on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framed is bad in law and liable to be quashed. Learned counsel submitted that this proposition is duly supported by following case laws : 1 (2015) 155 ITD 0501 (Delhi) DCIT vs. Satkar Roadlins Pvt. Td. 2 (2015) 232 Taxman 0268 (AP) CIT vs Sheettys Pharmaceuticals Biological Ltd. 3 Hon'ble Madhya Pradesh High Court order in ITA No. 44/2011 in the case of M/s. Mechmen vide order dated 10/07/2015 4 (2014) 365 ITR 0411 (All) CIT vs. Gopi Apartment . 5 ITAT order in ITA NO.1344/Del/2012 in the case of M/s. DSL Properties (P) Ltd. vide order dated 22/03/2013 6 ITAT order in ITA NO.5460 to 5465/Del/2012 in the case of V.K. Fiscal Services Pvt. Ltd. vide order dated27/11/2013 7 Hon'ble Bombay High Court in ITA No.1337 of 2013 in the case of M/s. Ingram Micro (India) Exports Pte. Ltd. vide order dated 29/04/2015 8 Hon'ble Delhi High Court in ITA No.422/2015 in the case of Nikki Drugs Chemicals Pvt. Ltd. vide order dated 03/12/2015 9 ITTA NO.254 of 2014 Judgement (per Hon'ble the Chief Justice Shri Kalyan Jyoti Sengupta) 10 ITAT order in ITA Nos.4228/DeI/20 11 in the case of M/s. Shield Home Pvt. Ltd. vide order dated 24/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Bombay High Court order in ITA NO.923 of 201 in the case of Bharati Vidyapeeth vide order dated 11/09/2014 6. ITAT order in ITA NO.917/PN/2010 in the case of Bharati Vi?yapeeth vide order dated 28/04/2011 7. Hon'ble Delhi High Court order in ITA NO.171/2015 in the case of M/s. Refam Management Services (P) L1 vide order dated 05/11/2015 8. Hon'ble Delhi High Court order in ITA NO.164/2015 in the case of RRJ Securities Ltd. vide order dated 30/10/2015 9. ITAT order in ITA Nos.1541 1543/Mum/2015 in the case of M/s. Empire Mall Pvt. Ltd. vide order dated 12/10/2015 10. ITAT order in IT(SS)A Nos.84-86/KoIl2011 in the case of Trishul Hi-Tech Industries vide order dated 24/09/20 11. ITAT order in ITA No.472/Coch/2013 in the case of M/s. Royal Cartons P. Ltd. vide order dated 16/09/2011. 9. Per contra learned D.R. relied upon the orders of the authorities below. 10. We find that at the outset we need to adjudicate the jurisdiction aspect. The first limb of argument in this regard is that there is no valid satisfaction in the case of the persons searched that incriminating material found may relate to the assessees in whose case action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 3a[and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] :] 4[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 5[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 jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al fact is one on existence or non-existence of which depends jurisdiction of a court, a tribunal or an authority .. It is the fact upon which an administrative agency's power to act depends. If the jurisdictional fact does not exist, the court, authority or officer cannot act. If a Court or authority wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess. The existence of 'jurisdictional fact' is sine qua non for the exercise of power by a court of limited jurisdiction. As noted earlier section 153C provides for taking recourse to assessment in respect of any other person, the conditions precedent wherefore are: (i) satisfaction must be recorded by the AO that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the AO having jurisdiction over such other person; and (iii) the AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the same, then also he is required to record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgement. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BO /153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. 15. From the above CBDT notification it is clear that even if the AO of the searched persons and the assessee are same still proper satisfaction qua the documents etc. found relating to the assessee has to be recorded in the case of the searched persons. From the perusal of the satisfaction note of the AO in the case of the searched persons as reproduced above it is evident that there is no such satisfaction that any bullion, jewellery, books of accounts, other documents etc. belonging to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken on the basis of such information handed over to the Assessing Officer having jurisdiction, for the assessee, who is a person other than the person referred to in Section 153A, is drastic of assessment or re- assessment of his income falling within six assessment years. The fact that incidentally the Assessing Officer is common at both the stages would not extricate him from recording satisfaction at the respective stages. In that, the Assessing Officer is satisfied that the items referred to in Section 153C belongs or belong to a person (other than the person referred to in Section 153A), being sine qua non. He cannot assume jurisdiction to transmit those items to another file which incidentally is pending before him concerning other person (person other than the person referred to in Section 153A). Similarly, as there is no provision either express or implied (in the Act) to dispense with the requirement of satisfaction, if the Assessing Officer happens to be the same, as in this case, the arguments of the Department must be negative. We conclude that the condition precedent for resorting to action under Section 158BD delineated by the Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. In such circumstances, in our considered opinion, the assessee deserves to succeed on this account and the assessments are liable to be quashed on account of lack of validity of jurisdiction. Accordingly we set aside the orders of learned CIT(Appeals) on this aspect of jurisdiction and quash the assessments by holding that requisite satisfaction was not recorded before the issue of notice u/s 153C. 17. In this regard we further note that in similar situation when the finding was that requisite satisfaction was not there in the case of the searched person qua incriminating material relating to assessee having been found, the Revenue had withdrawn this appeal before the Hon ble Delhi High Court in the light of Circular No. 24/2015 as referred above, CIT vs. Satkar Roadlines (supra). 18. We further note that an identical view as above has been taken by this Bench in similar case of group concern in the case of M/s Grace Industries Ltd. in ITA Nos. 296 to 300/Nag/2014 and 348 to 352/Nag/2014 vide order dated 25th November, 2016 and in the case of Mansi Commodities Pvt. Ltd. in ITA Nos. 146,147 148/Nag/2014 Tasmseem Commercial Pvt. Ltd. in ITA Nos. 149, 150 151/Na ..... X X X X Extracts X X X X X X X X Extracts X X X X
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