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TMI Blog2016 (8) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings u/s 153C of the Act are bad in law and deserve to be quashed as the A.O of the searched person did not record any satisfaction in the present cases. 2. First of all, as agreed by the parties, we take up Cross- Objections of the assessee for hearing. The Ld. Counsel of the assessee pointed out that no satisfaction has been recorded in the case of searched person i.e. Shri B. K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Bulidcon Pvt. Ltd, therefore, initiation of proceedings u/s 153C of the Act against the assessee was illegal assumption of jurisdiction u/s 153C of the Act is bad in law. The Ld. Counsel drew our attention towards order of ITAT, Delhi 'E' Bench dated 27/4/2016 in the case of DCIT vs. N. K. Pipes Pvt. Ltd passed in ITA No. 6222 to 6227/Del/2013 page 4 para 6 & submitted that in the present case also as per reply of RTI no satisfaction note has been recorded by the A.O of the above named searched persons (therefore, it has to be presumed that no satisfaction note has been recorded in the cases of searched persons before initiation of proceedings u/s 153C of the Act. 3. The Ld. Counsel also drew our attention towards Para 10.2 at Page 8 of the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3C of the Act is void ab initio and bad in law and thus assessment order framed u/s 153C read with section 143(3) of the Act should be quashed. The Ld. Counsel vehemently pointed out that the CIT(A) was not correct and justified in dismissing the legal contentions of the assessee. Therefore, Cross-Objections of the assessee in this regard may kindly be allowed and assessment order passed without any valid jurisdiction and bad in law should be demolished and quashed. 6. Replying to the above, the Ld. Departmental Representative reiterated its written submissions and submitted that the Assessing Officer of the person searched and other person is same in the present case, therefore, satisfaction note available at page 74 of the assessee's paper book is sufficient to comply with the legal requirement for initiation of proceedings u/s 153C of the Act. The Ld. DR pointed out that satisfaction note available at page 74 of the assessee's paper book has been recorded by the A.O in the capacity of the searched person and as per Section 114 of the Evidence Act any work or duty discharged by the public servant in the capacity of public servant should be presumed to be done right and correct u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153A of the Act but these powers can validly be assumed only after when the A.O of the searched person records his satisfaction that the document etc which belongs to the other persons have been found during the search and seizure operation and therefore, he find it necessary and appropriate to handover these documents etc to the A.O of the other person, to whom the document etc belongs. The Ld. Counsel again drew our attention towards Para 10 at Page 6 & 7 of the Tribunal order in the case of Bhawna Bhalla (Supra) and submitted that in the similar set of facts and circumstances the ITAT Delhi Bench "G" in the case of ACIT vs. M/s Sheild Home Pvt. Ltd (Supra) held that if the first foremost step for initiation of proceedings u/s 153C of the Act i.e the recording of satisfaction by the Assessing Officer of the person searched is missing, then proceedings are invalid. The Ld. Counsel lastly placing reliance on the decision of Hon'ble Jurisdictional High Court in the case of R.R.J. Securities Ltd. (Supra) and Circular of CBDT No. 24/2015 dated 31/12/2015 (Supra) contended that the initiation of proceedings u/s 153C of the Act has to be held as invalid and deserve to be quashed if n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfaction note has been recorded by the A.O in the capacity of the "other person" and not in the capacity of the A. O of the "persons searched". Therefore, contention of the Ld. CIT DR is dismissed. Secondly, we are also in agreement with the contention of the Ld. Counsel of the assessee that before the CIT(A), the assessee in grounds Nos. 1 to 3 challenged the validity of initiation of proceedings u/s 153C of the Act and when the Revenue filed appeal challenging the impugned order of the CIT(A) wherein First Appellate Authority dismissed legal contentions and relief was granted to the assessee on merits, then the assessee can validly reagitate the legal grounds u/s 253(4) of the Act. In view of above well accepted legal position covered out in Section 253(4) of the Act we decline to accept contention of the Ld. CIT DR that the assessee cannot raise question to the legality of the assessment order and it is stopped from raising any contentions or cross objections against the same. 9. As per ratio of the decision of Hon'ble High Court of Delhi in the case of Anil Kumar Bhatia (Supra) after issuance of notice u/s 153A or 153C of the Act, the Assessing Officer has power u/s 153A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides and after carefully gone through the material available on record, we observe that the identical issue on the similar facts and circumstances have been adjudicated by the ITAT Delhi "A" Bench in the case of Bhavna Bhalla Vs. ACIT (Supra) by following the decision of ITAT Delhi Bench "G" in the case of ACIT Vs. M/s Shield Homes Pvt. Ltd.(Supra) after considering the ratio of the decision of Hon'ble Jurisdiction High Court of Delhi in the case of R.R.J. Securities Ltd. (Supra) and Circular of CBDT dated 31/12/2015 (supra) with following conclusions: 10. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that an identical issue having similar facts has been adjudicated by the ITAT Delhi Bench 'G', New Delhi in the case of ACIT Vs M/s Shield Home Pvt. Ltd. (supra) wherein the relevant findings have been given in paras 6 to 10 which read as under: "6. We have considered the rival submissions and have perused the relevant material placed before us. Learned CIT-DR has contended that the ground raised by the assessee before the learned CIT(A) with regard to validity of Section 153C was differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot belong to the searched person but to another person. Thereafter, the AO has to transfer the seized assets/documents to the AO having jurisdiction of the assessee to whom such assets/documents belong. Section 153C(1) of the Act clearly postulates that once the AO of a person, other than the one searched, has received the assets or the documents, he is to issue a notice to assess/re-assess the income of such person - that is, the assessee other than the person searched - in accordance with provisions of Section 153A of the Act." (emphasis by underlining supplied by us) From the above, it is evident that Hon'ble Jurisdictional High Court has held in clear words that first and foremost step for initiation of proceedings u/s 153C is for the Assessing Officer Bhawna Bhalla of the searched person to be satisfied that the assets or documents seized belong to the assessee. Admittedly, no such satisfaction is recorded by the Assessing Officer of the person searched. The CBDT, vide Circular No.24/2015 dated 31st December, 2015, held as under:- "Subjects: Recording of satisfaction note under section 158BD/153C of the Act - reg.- The issue of recording of satisfaction for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the purpose of proceedings u/s 153C. The Circular also observed that recording of satisfaction note is a pre-requisite and the satisfaction must be prepared by the Assessing Officer before he transmits the record to the other Assessing Officer who has jurisdiction over such other person. In paragraph 4, it has been further clarified that such satisfaction note is essential even if the Assessing Officer of the searched person and the other person is the one and the same. Admittedly, in the case of the assessee, no such satisfaction is recorded by the Assessing Officer of the person searched. In paragraph 5 of the above Circular, the CBDT has directed the Revenue authorities to withdraw the appeal if there is no recording of the satisfaction note in the light of above judgment. In our opinion, the above decision of Hon'ble Jurisdictional High Court and the Circular of the CBDT are squarely applicable to the facts of the case, as no satisfaction is recorded by Assessing Officer of person searched. Respectfully following the decision of Hon'ble Jurisdictional High Court in the case of RRJ Securities Ltd. (supra) and CBDT's Circular No.24/2015 dated 31st December, 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years are allowed. 12. Before us on specific query from the Bench the Ld. Counsel of the assessee as well as CIT DR have not disputed that the facts of the present case are similar to the facts involved in the case of Bhawna Bhalla (Supra) and M/s Sheild Homes Pvt. Ltd (Supra). Therefore, respectfully, following the said orders dated 25/4/2016 and 24/2/2016 the initiation of proceedings u/s 153C of the Act in the present assessee's case for all six assessment years are held to be void ab initio and invalid and accordingly the assessments framed u/s 153C of the Act for all the six assessment years are quashed and Cross-Objections of the assessee for all six assessment years are allowed consequently. 13. Since the legal issue has been decided in favour of the assessee by allowing Cross-Objections of the assessee in the former part of this order therefore, other issues and ground raised by the Revenue on merits becomes academic and infructuous and no findings is being recorded thereon. Accordingly, Cross-Objections of the assessee for all six years are allowed and appeals of the Revenue for all six assessment years having become infructuous are dismissed. 14. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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