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2017 (7) TMI 539 - DELHI HIGH COURT

2017 (7) TMI 539 - DELHI HIGH COURT - TMI - Assessment u/s 153C - existence of satisfaction note - Held that:- While the documents may ‘pertain to’ the Assessee, but in the context explained above, they cannot be presumed to be documents that ‘belonged to’ the searched person. Consequently, even with regard to these documents, the jurisdictional requirement under Section 153 C (1) of the Act, of the AO of the searched person having to be satisfied that the said documents do not belong to searche .....

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oned therein belong not to the searched person but to the Assessee. - For all the aforementioned reasons, the two satisfaction notes dated 13th and 19th March, 2014 issued by the AOs of the searched person and the Assessee respectively, and all proceedings consequent thereto, are hereby quashed. - Decided in favour of assessee. - W.P.(C) 3241/2015, W.P.(C) 3242/2015, W.P.(C) 3243/2015, W.P.(C) 3245/2015, W.P.(C) 3246/2015, W.P.(C) 3248/2015 - Dated:- 10-7-2017 - S. Muralidhar And Prathiba M. .....

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i [hereinafter referred to the Assessing Officer ( AO') of the searched person ] and the Income Tax Officer, Ward 3(2), New Delhi [hereinafter AO of the Assessee ] respectively initiating proceedings against the Assessee under Section 153C of the Income Tax Act, 1961 ( Act ). 2. A search and seizure operation was carried out in the case of M/s. Dalmia Group of cases on 20th, 27th and 28th January 2012 by the Investigation Wing Unit-VI(1), New Delhi of the Income Tax Department ('Departme .....

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Nos. Description of documents A-3/DB-8 1-48 These pages contain letter from M/s Canyon Financial Services Ltd. (AAACC3744J) written to Board of Directors, Dalmia Equities Pvt. Ltd. Regarding application for equity shares of ₹ 10/- each at a premium of ₹ 110/- per share. Certificate of Canyon Financial Services Ltd., confirming issue of equity shares of Dalmia Equities Pvt. Ltd. Copy of Form 32, copy of return of income of Canyon Financial Services Ltd. Director's report, certific .....

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th January, 2012 and the satisfaction note by the AO of the searched person was dated 13th March, 2014. Therefore, Section 153C as it stood prior to the amendment with effect from 1st June, 2015 applied to the case on hand. In terms of the said provision i.e., 153C(1), the AO of the searched person had to be satisfied that the documents seized belongs or belong to a person other than the person referred to in Section 153A' in order that the AO of the searched person could to hand over such d .....

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the Department is not relieved of the burden of showing that the seized documents in fact belong to (and not merely pertain to) the Assessee. 6. In the present case, after recording the satisfaction note as above on 13th March 2014, the AO of the searched person made over the aforementioned documents to the AO of the Assessee. On 19th March 2014, the AO of the Assessee recorded his satisfaction note. This AO reproduced the same tabular columns as well as description of documents as set out in th .....

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2. 8. On 20th March, 2015, the Assessee submitted objections to the initiation of proceedings under Section 153C of the Act. Inter alia it was pointed out that it was not shown in either of the satisfaction notes as to how the documents seized as referred to therein belongs to the Assessee in terms of Section 153C. The presumption in terms of Section 132(4A) read with Section 292C that the documents belonged to the searched person was also not rebutted by the Revenue. A reference inter alia was .....

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t as it stood prior to the amendment with effect from 1st June 2015, it was incumbent on the Department to show the documents seized and referred to in the satisfaction notes of both the AO of the searched person and of the AO of the Assessee in fact belong to the Assessee. Apart from the decision in Pepsico India Holdings (P) Ltd v. Assistant Commissioner of Income Tax (supra), Mr. Jetley also referred to the decision in Pepsi Foods (P) Ltd. v. Assistant Commissioner of Income Tax (2015) 376 IT .....

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eized in fact did not belong to the searched person but to some other person against whom the proceedings under Section 153C of the Act were to be initiated. 12. The two decisions that are relevant in this context are Pepsico India Holdings (P) Ltd v. Assistant Commissioner of Income Tax (supra) and Pepsi Foods (P) Ltd. v. Assistant Commissioner of Income Tax (supra). What Section 153C (1) of the Act requires in the context of the present case is for two satisfaction notes to be prepared since t .....

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ome Tax (supra) that, given the nature of a particular seized document, in the process of recording his satisfaction, the AO of the searched person may have to note the reasons for his conclusion that the said document does not belong to the searched person but to the other person. It is not necessary that this should be done in each and every case. If, as in the present case, the AO of the 'other person' is not the AO also of the searched person, then the AO of the other person has an o .....

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he satisfaction note of the AO of the searched person is an application made by the Assessee for subscription to the shares of DEPL. Being an application for subscription of equity shares, it is a document filled up by the Assessee and submitted to DEPL. The said application having being found in the possession of the searched person should safely be presumed to belong to the searched person by virtue of Section 132 (4A) read with Section 292 C of the Act. DEPL, there is also presumption that it .....

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d Section 292 C of the Act. These provisions do not dilute the obligation on the Department and in particular the AO of the searched person, under Section 153 C (1) of the Act as it stood prior to 1st April 2015 of showing that the seized document belongs to the other person (here, the Assessee) and not the searched person from whom it was seized. 16. The application submitted by the Assessee for subscription of shares of DEPL can certainly be said to be pertaining to to the Assessee. However, o .....

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resent case that is not the position. The jurisdictional requirement under Section 153C (1) of the Act of the Department having to show that the application made by the Assessee for the equity shares of DEPL belongs to the Assessee is not satisfied. 17. The second document is the certificate issued by the Assessee confirming the issuance in its favour of the equity shares of DEPL. The said document is titled To whomsoever it may concern . It is, clearly, not addressed to a particular person but .....

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