TMI Blog2016 (8) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... -8-2016 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SH. PRASHANT MAHARSHI, ACCOUNTANT MEMBER For The Appellant : Shri Ajay Jain For The Respondent : Shri Manjit Singh, DR ORDER PER BHAVNESH SAINI, JM Both the appeals by assessee are directed against different orders of ld. CIT(Appeals) Central, Gurgaon dated 14.12.2012 for assessment years 2008-09 and 2009-10. 2. Briefly the facts of the case are that a search under section 132 of the Income Tax Act was conducted at the residential premises of Shri P.L.Midha, House No. 3049 Sector 21-D, Chandigarh on 17.09.2008 by Investigation Wing. The jurisdiction over the case of the assessee was transferred to DCIT-I Circle-I Chandigarh by CIT-I Chandigarh dated 10.12.2008 under section 127 of the Income Tax Act. It transpired from the impugned orders that certain document marked A-2 was found in the course of search at the residential premises of Shri P.L.Midha on 17.09.2008 belonging to the assessee. This document is an Agreement to sell dated 01.03.2008 between M/s U.T. Builders Promoters Ltd. through Shri P.L.Midha and assessee and one Mr. Jaspal Singh Sidhu in respect of one free hold cinema building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153C before assuming the jurisdiction over the assessee. Further, there is no satisfaction that documents infact belong to the assessee. The assessment orders are, therefore, null and void and deserve to be quashed . 7. The ld. counsel for the assessee submitted that the additional grounds raised above are legal in nature and goes to the root of the matter and does not require any fresh evidence to be investigated. He has referred to notice issued under section 153C of the Act in assessment year under appeals and also filed copy of the application filed before ACIT, Circle 4(1) Chandigarh under RTI Act seeking copy of the satisfaction note recorded by the Assessing Officer of the searched person Shri P.L.Midha before handing over the documents to the Assessing Officer having jurisdiction over the assessee. The assessee also sought intimation as to what action has been taken against Shri Amarjit Singh Sodhi. He has also referred to reply filed by ACIT, Circle 4(1) Chandigarh under RTI Act for financial years 2007-08 and 2008-09 (for assessment years 2008-09 and 2009-10 under appeal) in which the copy of satisfaction note recorded dated 26.08.2010 in the case of the assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciating the fact that no satisfaction has been recorded by the Assessing Officer of searched person regarding any document belonging to the appellant than the person searched. This issue was raised before the Learned Assessing Officer and the Learned Principal CIT (OSD) and the same is discussed by both the officers in their orders. The Hon'ble Bench is requested to accept the aforesaid Additional Grounds of Appeal, which is based on legal issue to be adjudicated by the Hon'ble Bench in this appeal for the sake of justice. Further no new facts are placed before the Hon'ble Bench through this Grounds of Appeal. We may like to rely on the judgment of Hon'ble Supreme Court in the case of NTPC vs. CIT, 229 ITR 0383 and the order of Hon'ble Punjab Haryana High Court in the case of Manoj Ahuja Vs. IAC 150 ITR 696. Your honour is humbly requested to admit this additional ground of appeal, based on law point, which could not be taken before the CIT (A) due to mistake of the counsel. 4. At the time of hearing Ld. Counsel of the assessee submitted that the additional ground is purely legal ground which goes to the root of the matter and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 14.08.2015. According to Ld. Counsel for the assessee, even if the Assessing Officer of the searched person and third person is one and the same officer yet recording of mandatory satisfaction has to be made by the A.O. in the capacity of the A.O. of the searched person and that too in the assessment record of the searched person. According to Ld. Counsel for the assessee, since this jurisdictional requirement was not met, the assumption of jurisdiction u/s 153C was lacking. 7. On the other hand Ld. CIT DR submitted that according to the communication dated 27.04.2016 received from ACIT vs. Central Circle-II, Chd., reason has been recorded vide order sheet dated 17.08.2012 and no other reason was found to have been recorded u/s 153C in the assessment records available with that office. According to Ld. CIT DR, satisfaction has been recorded vide order sheet entry dated 17.08.2012 and that is the sufficient compliance of requirement of section 153C. Ld. CIT DR filed note dated 25.3.2016 27.04.2016 in which it was submitted that A.O. of the searched person (Dr. Naresh Mittal) and in the case of the assessee is the same and therefore, satisfaction recorded by that very A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Rajhans Builders vs. CIT 226 Taxman 415(Gujarat) that provision of section 158BD and those of section 153C are in pari--materia. 8. In the present case A.O. of the searched person did not record any satisfaction that any of the documents found during the course of search belonged to the third person i.e. the appellant assessee as can be seen from the plain reading of the reason recorded. Moreover, such satisfaction has not been recorded in the case records of the searched person by the A.O. of the searched person in that capacity. A.O. of the searched person and A.O. of the appellant assessee i.e. the third person even if is one and the same person but it has been held in various juridical decisions relied upon by the Ld. Counsel for the assessee that A.O. of the searched person is required in law to record satisfaction in the case records of the searched person as an A.O. of the searched person. It is not out of place to mention that the recording of satisfaction by the A.O. even if Assessing Officer is one and the same person is no longer res integra in as much as Hon ble Allahabad High Court in the case of CIT vs. Gopi Apartments 365 ITR 411(All) and Hon ble Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of proceedings against such other person aredependant upon a satisfaction being recorded. Such satisfaction may be during the search or at the time of initiation of assessment proceedings against the 'searched person', or even during the assessment proceedings against him or even after completion of the same, but before issuance ofnotice to the such other person under Section 153C. 28. Even in a case, where the Assessing Officer of both the persons is the same and assuming that no handing over of documents is required, the recording of 'satisfaction' is a must, as, that is the foundation, upon which the subsequent proceedings against the 'other person' are initiated. The handing over of documents etc. in such a case may or may not be of much relevance but the recording of satisfaction is still required and in fact it is mandatory. 29. In this regard, the ratio of the judgment of the Supreme Court in the case of Commissioner of Income Tax-III Vs. M/s Calcutta Knitwears, Ludhiana (supra), as noted above, clearly applies to the proceedings under Section 153C also. 30. The 'satisfaction' has to be in writing and can be gathered fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing jurisdiction; and in the second instance of the Assessing Officer having jurisdiction whilst sending notice to such other person (other than the person referred to in section 153A), must apply proprio vigore. 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 a 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). The question as to whether that may influence the opinion of the Assessing Officer having jurisdiction over such other person, also cannot be the basis to take any other view. As a matter of fact, the other Assessing Officer to whom the items are handed over, before issuing notice must himself be satisfied after due verification of the items received and the disclosures made by the other person in the returns for the relevant period already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not persuaded by the argument of Ld. CIT DR for the simple reason that the position of law as explained in the above mentioned judicial decisions has interpreted section 153C in the manner as interpreted by the Ld. Counsel for the assessee. Reliance of the decision of Kolkata Bench by Ld. CIT DR in the case of KPC Medical College Hospital, Supra, does not help the cause of revenue in as much as there are decisions of High Court of Delhi, Allahabad, and Madhya Pradesh as referred above. Moreover, even from the plain reading of the reason recorded on 17.8.2012, there is nothing to suggest that any document etc. found in search belonged to the appellant. All that is mentioned is that the page no. 21-25, 127-136 of document no. A1 etc i.e. documents found in search contain details of transactions in immovable property made by the assessee. This is not the case of AO of the assessee in the reason recorded that documents found during search belonged to the assessee. Documents belonging to a person and transactions contained in some documents made by a person are two different things. Section 153C can be invoked only if the finding is there that documents etc. found during searc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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