TMI Blog2018 (5) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... did not file his return of income for the relevant assessment years within the due dates. A search and seizure operation u/s 132 of the IT Act, was conducted at the residential premises of Shri OSS Prasad on 17.09.2008 during the course of which, certain loose papers indicating the name of the assessee were found and seized. Consequent thereto, the A.O issued a notice u/s 153C of the Act on 28.07.2009 to the assessee in response to which, the assessee filed the return of income on 29.10.2010 admitting the income of ₹ 2,10,810/- which includes agricultural income of ₹ 75,000/-. Thereafter, the A.O proceeded to complete the assessment u/s 143(3) r.w.s 153C of the Act and after disallowing the various expenses claimed by the assessee, the income was assessed at ₹ 1,74,65,690/- against which, the assessee preferred an appeal before the CIT(A) who confirmed the order of the A.O and the assessee is in second appeal before us. The assessee has raised grounds of appeal against the addition made by the A.O towards gain on sale of agricultural lands and also raised additional grounds of appeal against the validity of the proceedings u/s 153C of the Act. The assessee has ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l grounds of the appeal filed on 15.05.2017 are against the validity of the proceedings u/s 153C of the IT Act and are therefore legal grounds and prayed for admission and adjudication of the same. In support of his above contention, he placed reliance upon the decision of the Hon ble Supreme Court in the case of NTPC Limited, reported in TIOL-199-SC.IT. He submitted that the A.O of the assessee, has not recorded any satisfaction as is required u/s 153C of the IT Act, before issuing the notice u/s 153C of the Act, and hence as per the judgment of the Hon ble Supreme Court in the case of Calcutta Knitwear in civil appeal No. 3959/2014 dated 12.03.2014, the Revenue cannot pursue the appeal without there being such satisfaction recorded. He has also placed reliance upon the CBDT Circular No. 24/2015 dated 31.12.2015 in support of the above contention. 6. The Ld. DR, however opposed the admission of the additional ground of appeal. 7. Having regard to the fact that the additional grounds filed on 15.05.2017 are legal grounds and do not need any fresh verification of the facts, and also respectfully following the judgment of Hon ble Supreme Court in the case of NTPC Limited (cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 wherein it was held as under: 30. From a plain reading of these sections, we f ind that section 153A is procedural section which deals with the mode of assessment. A notice u/s. 153A of the Act can only be issued to such person where a search is initiated u/s. 132 of the Act or books of account or other documents or any assets are requisitioned u/s. 132A of the Act after 31st day of May, 2003, requiring him to furnish within such period as may be specified in the notice, return of income in respect of each assessment year following within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisitioned is made. Thereafter assessment would be framed as per the provisions of section 143 of the Act. Section 153C deals with the situation where the AO is satisfied that any money, bullion, jewellery or other valuable articles or things or books of account or documents seized or requisitions belongs or belong to a person other than the person ref erred to in section 153A of the Act, then the books of account or documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment u/s. 153A of the Act. In the present case the Bench categorically asked the DR to produce the satisfaction notes recorded in this case so as to issue notice u/s. 153C to the present assessee. To the query of the Bench the DR produced the order sheet entries for both the assessment years as mentioned in para 26 (supra). 31. The order sheet entries are said to have been recorded by the AO who has passed the order u/s. 153C of the Act in the case of the assessee and it is also satisfaction note to that effect that there exists income-tax belonging to any person other than the searched person in respect of whom search was made u/s. 132 of the Act or requisition of books of account were made u/s. 132A of the Act. The satisfaction note is to be recorded by the AO who has initiated proceedings f or completion of assessment u/s. 153A of the Act and also it should be recorded. It is also to be noted that f or the purpose of s. 153C a satisfaction note is sine qua non and must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) At the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice does not record any satisfaction on the part of the AO. Documents and other assets recovered during search had not been handed over to the AO having jurisdiction in the matter. No proceeding under s. 158BC had been initiated. There is, thus, a patent non-application of mind. A prescribed form had been utilized. Even the status of the assessee had not been specified. It had only been mentioned that the search was conducted in the month of November, 1995. No other information had been furnished. The provisions contained in Chapter XIV-B are drastic in nature. It has draconian consequences. Such a proceeding can be initiated, it would bear repetition to state, only if a raid is conducted. When the provisions are attracted, legal presumptions are raised against the assessee. The burden shifts on the assessee. Audited accounts for a period of ten years may have to be reopened. As the AO has not recorded his satisfaction, which is mandatory; nor has he transferred the case to the AO having jurisdiction over the matter, the impugned judgments of the High Court cannot be sustained. 33. The above two judgments were delivered u/s. 158BD. We have carefully gone through the language use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocopy of a supply and loan agreement made between PDL and petitioner. Thereafter, the Assessing Officer issued notices to the petitioner under section 153C seeking to reopen the assessments of the petitioner for the assessment years 2006-07 to 2011-12 and to f ollow the procedure prescribed under section 153A. In response to the said notices, the petitioner submitted its objections which were rejected by the Assessing Officer and the petitioner was directed to comply with the assessment proceedings under section 153C. On writ: HELD In order that the Assessing Officer of the searched person comes to the satisfaction that documents or materials found during the search belong to a person other than the searched person, it is necessary that he arrives at the satisfaction that the said documents or materials do not belong to the searched person. In the instant case, it is nobody's case that the Jaipuria Group had disclaimed those documents as belonging to them. Unless and until it is established that the documents do not belong to the searched person, the provisions of section 153C do not get attracted because the very expression used in section 153C is that 'wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents - copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement can be said to 'belong to' the petitioner. In view of the foregoing discussion, the ingredients of section 153C have not been satisfied in this case. Consequently, the notices issued under section 153C are quashed. Accordingly, all proceedings pursuant thereto stand quashed . 9. As can be seen from the satisfaction recorded by the AO while initiating proceedings u/s. 153C, there is neither any linking up of the documents nor any finding that certain seized documents pertain to assessee. Moreover, AO also has not recorded any satisfaction while initiating proceedings u/s. 153C. In view of this, we are of the opinion that there is no satisfaction recorded by the AO, as required under the provisions. 9.1. Consequently, the proceedings u/s. 153C are not as per the provisions of the law. Following the principles laid down on this issue and on the f acts of the case, we uphold the additional grounds raised. We, accordingly hold that the proceedings initiated u/s. 153C are bad in law. Since the very proceedings are held to be bad in law, there is no need to ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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