TMI Blog2016 (12) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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in the case of the searched person qua incriminating material relating to assessee having been found, the Revenue had withdrawn this appeal before the Hon’ble Delhi High Court in the light of Circular No. 24/2015 as referred above, CIT vs. Satkar Roadlines [2015 (8) TMI 710 - ITAT DELHI] - Decided in favour of assessee - I.T.A. Nos. 146, 147 & 148/Nag/2014, I.T.A. Nos. 149, 150 & 151/Nag/2014 - - - Dated:- 19-12-2016 - Shamim Yahya (Accountant Member) And Ram Lal Negi (Judicial Member) For the Appellant : R. V. Loya For the Respondent : A. R. Ninawe ORDER These appeals filed by two separate assesees are directed against the separate orders of learned CIT(Appeals) dated 28-11-2013 for respective assessment years. Since the issues are common and connected, the appeals were heard together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C is bad in law, without substantiating its claim. In the 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 no incriminating document for the year under consideration was found during the course of search. In such circumstances the notice issued u/s 153C is bad in law. Further, the assessee is not aware as to on what basis the proceedings u/s 153C has been initiated as such information was not provided. That the assessee submitted all the details that were required for the purpose of assessment from time to time. The books of accounts and other records produced before him were duly accepted after verification. The addition is made without considering the facts available on record. 2.3 In addition to the fact that as noted in the assessment order, the appellant raised no substantial reason for its objection to notice u/s 153C and the fact that the AO has noted that during the course of search several items of books of accounts and incriminating documents were found and seized, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(Appeals), assessees are in appeals before us. As emanating from the grounds of appeal referred above, the assessee at the threshold has raised the issue that learned CIT(Appeals) has erred in holding that the notice issued u/s 153C is valid. 7. We have heard both the counsel and perused the records. Learned counsel of the assessee submitted that the satisfaction of the AO of the searched persons as envisaged u/s 153C of the I.T. Act has not been recorded before initiating the proceedings against the assessee u/s 153C of the Act which vitiates the entire impugned assessments. For this proposition, learned counsel referred to the CBDT Circular No. 24/2015 dated 31st December, 2015 which has been issued on this very subject. Learned counsel submitted that from the above said CBDT Notification it is clear that in absence of appropriate satisfaction recorded by the AO of the raided party even if he is the same AO as that of assessee, the assessment will be devoid of jurisdiction. Learned counsel submitted that a perusal of the satisfaction note as emanating from the assessment records of the searched party makes it very clear that the appropriate satisfaction has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly found recorded. On perusal of the assessment order, it will be revealed that addition is not made on the basis of these documents. This itself establishes that the documents are not incriminating in nature. For the proposition that dehorse seized material, no addition is sustainable where assessments have already been completed earlier, learned counsel relied upon the following case laws : 1 Hon'ble Bombay High Court order in ITA NO.941 of 201 in the case of Sinhgad Technical Education Society vid order dated 25/03/2015 ' 2 (2011) 51'oTR 0241 (Pune) Sinhgad Technical Education Society vs. ACIT 3. ITAT order in ITA Nos.8628 - 8633/M/2010 in the case of M/s. Dhananjay lnternationa] Ltd. vide order dated .12/10/2015 4. ITAT order in ITA NO.959/PN/2010 in the case of Bharati Vidyapeeth Medical Foundation vide order dated 28/04/2011 5. Hon'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. Refa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no discrepancy. Regarding payment of salary in cash the information has been passed on to the respective A.O. having jurisdiction over the individual. The assessee has accounted for the entire expenditure in the books. Regarding receipt of ₹ 5 lakhs in the cash book of Chandrapur branch the amount is duly reflected in the cash book of Chandrapur Branch. 11. There is no other satisfaction note whatsoever in the concerned assessment files of the persons in whose case search action has been conducted and based upon which notices have been issued u/s 153C to the assessee. 12. In this regard we can gainfully refer to the provisions of section 153(1) as under : Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing 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 juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reassessment of the 'other person.' It is, therefore, clear that the AO of the 'other person' can acquire jurisdiction to assess or reassess income of the 'other person' only when the AO of the persons searched records satisfaction in his case (searched person) before handing over money, bullion, jewellery, etc. to him. So, what emerges is that the recording of satisfaction by the AO of the person searched is a condition precedent for the AO of the 'other person' to acquire jurisdiction. Unless such jurisdictional fact is satisfied, there can be no question of making assessment or reassessment of the 'other person.' In the case of Anil Kumar Ors. vs. UOI Ors. Reported in 155 Taxman 659 (5C),the Hon'ble Apex Court observed that A jurisdictional fact is a fact which must exist before a court, a tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional 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, author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O who has jurisdiction over such other person uls 15880. The Hon'ble Court held that the 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; or (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 158BO 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 CBOT. 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 the same, then also he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be decided. Conclusion: Recording of satisfaction of AO(s) is pre-condition for invoking jurisdiction and it is not a mere formality because recording of satisfaction postulates application of mind dconsciously as documents seized must be belonging to any other person other than person referred to in S. 153-A. ii) Hon ble High Court of Madhya Pradesh High Court decision in the case of CIT vs. Mechmen in ITA No. 44/2011, ITA No. 45/2011 others vide order dated 10-07-2015. In this case the relevant exposition from the Hon ble High Court is as under : Even for the purpose of Section 153C, the Assessing Officer before handing over the items to the Assessing Officer having jurisdiction must be satisfied that the items belongs or belong to the person other that the person referred to in Section 153A. That satisfaction of the concerned Assessing Officer is a sine qua non . The consequences flowing from the action to be taken 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 reassessment of his income falling withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not pressed These appeals are, accordingly, dismissed as not pressed. 16. From the above case laws and CBDT Circular, it is evident that recording of requisite satisfaction in the case of a searched party is a sine qua non for assuming jurisdiction for the issue of notice u/s 153C even if the AO of the searched person and the assessee are same. It is abundantly clear from the satisfaction note recorded in the case of the searched person that there is no requisite satisfaction granting the AO jurisdiction for issuing notice to the assessee u/s 153C of the I.T. Act. The satisfaction note as emanated from files of searched persons, namely, M/s Mukesh Gupta and Gupta Industries Ltd. does not show at all that that the AO in their case has recorded a satisfaction that any of the seized material is belonging to the assessee has been found, and is incriminating in nature which is to be handed over to the AO of the 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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