TMI Blog2018 (12) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the case of the person searched i.e., Manish Mehta group of cases in whose case search have been conducted. The statement of Manish Mehta was recorded on 11.09.2009 after the search and was subjected to cross-examination on behalf of the assessee in which the assessee pointed-out several infirmities and inconsistencies because Manish Mehta was not connected with the seller M/s. Honest Estate Pvt. Ltd., and he denied meeting any of the Directors of the assessee-company. He has also stated that at no point of time he takes any cash from the Directors of the assessee-company. He has stated that cash was received from a local Agent whose name and address he does not remember. Further Manish Mehta retracted from his statement, therefore, such statement has no evidentiary value because the Revenue has failed to record statement of any of the Agent who have allegedly received any cash against the sale of the property. No evidence have been found on record to justify payment of cash against the property on behalf of the assessee-company over and above what is recorded in the sale deed. The person who has recorded BAHIs found during the course of search was not subjected to cross- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 15 years. His statement was recorded under section 132(4) of the I.T. Act in which he has admitted to have written these BAHIs. He has also stated that figures in the BAHIs dealing with ledger account have been written by suppressing two zeros i.e., 1000 is written as 10. He has also admitted that these BAHIs contained actual record of the business activities of Mahesh Mehta group. In the annexure A-4, the transaction relating to sale of property by Mahesh Mehta group of companies to the assessee was also noticed. The transaction related to the property situated at 56/7, Karol Bagh, New Delhi (basement and ground floor) which was purchased by the assessee company from M/s. Honest Estates Pvt. Ltd., a company belonging to Mahesh Mehta group. As per the documents seized, it was noticed that M/s. Honest Estates Pvt. Ltd., has sold a property to M/s. Magic Leasing Finance Pvt. Ltd., and received cash of ₹ 3,55,91,000/- apart from the sale consideration as per sale deed. The statement of Mahesh Mehta was recorded on oath 11.09.2009 under section 131(1A) of the I.T. Act before Investigation Wing in which he has explained that an aggregate amount of ₹ 7.61 crores was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Department on 11.09.2009. 2.1. The A.O. however noted that Mahesh Mehta is the key person of the family because he is the lone male member involved in business activities of KATHA as well as Property and he is managing all the affairs. In the BAHIs unaccounted transactions are recorded. He has, therefore, held that assessee made cash payment of ₹ 3,55,91,000/- to Mahesh Mehta group of companies i.e., M/s. Honest Estate Pvt. Ltd., The addition was accordingly made to the returned income. The A.O. also made addition of ₹ 3,55,910/- on account of 1% amount paid as brokerage charges. The assessment under section 143(3) r.w.s. 153C was completed vide Order dated 29.12.2011. 3. The assessee challenged the initiation of proceedings under section 153C of the I.T. Act as well as the addition on merits before Ld. CIT(A). It was contended that A.O. has erred in assuming jurisdiction under section 153C by serving a vague and non-speaking notice. No incriminating material was seized in relation to the assessee. No satisfaction had been recorded by the A.O. of the person searched. No documents had been handed-over by the A.O. of the person searched to the A.O. of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of the paper book which is recorded in the case of the assessee. He has submitted that since no satisfaction note under section 153C have been recorded in the case of the person searched, therefore, condition precedent of Section 153C are not satisfied in this case. Therefore, entire proceedings are illegal and bad in law. He has referred to the copy of the sale deed in question which is filed at page 68 of the paper book which is recorded for a consideration of ₹ 5 crores in respect of the property in question executed on 19.05.2008 between M/s. Honest Estate Pvt. Ltd., seller/ vendor and M/s. Magic Leasing Finance Pvt. Ltd., (vendee/ purchaser) i.e., assessee. He has submitted that copy of the sale deed was found from the vendor, therefore, the same did not belong to the assessee as it belongs to the vendor/seller only. A.O. was, therefore, wholly unjustified in holding that the said sale deed belongs to Mahesh Mehta. There is no evidence found if any amount in cash was paid over and above what is recorded in the sale deed. The contents of BAHIs are incorrect as it did not belongs to the assessee. Statement of Mahesh Mehta is not an admissible in evidence and has no evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OME TAX APPELLATE TRIBUNAL DELHI BENCHES D : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA.No.6238/Del./2014 Assessment Year 2008-2009 The Asst. Commissioner of Income Tax, Central Circle- 09, Room No.357, ARA Centre, E-2, Jhandewalan Extn., New Delhi. M/s. Victory Accommodations Pvt. Ltd., 208, Gupta Tower, Azadpur Commercial Complex, Azadpur, Delhi 110 033 PAN AACCV3923C ( Appellant) ( Respondent) For Revenue : Shri Vijay Verma, CIT-D.R. For Assessee : Shri Ved Jain, Advocate Date of Hearing : 04.06.2018 Date of Pronouncement : 27.06.2018 ORDER PER BHAVNESH SAINI, J.M. This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-XXXII, New Delhi, dated 20.08.2014, for the A.Y. 2008-2009, on the following grounds: 1. The Commissioner of Income Tax (Appeals) e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidential premises of Shri Pramod Goel, Smt. Savita Goel and Sh. Ashish Goel at BN-33, East Shalimar Bagh, Delhi, wherefrom the documents belonging to the assesseecompany were found and seized which is Page No. 102 and 103 of Annexure A-l of Party V-2 is a copy of the Balance Sheet, Profit Loss account, pertaining to M/s Victory Accommodations Pvt Ltd. for the financial year ending31.03.2010. On the basis of the above documents found during the course of search, the Assessing Officer recorded a satisfaction note on 27.02.2013 and issued and served upon the assessee a notice under section 153C of the I.T. Act, 1961. In response to the same, the assessee filed a letter stating that the return filed under section 139(1) may be treated as return filed in response to notice under section 153C of the I.T. Act, 1961. It was claimed, it is filed in protest and objected to initiation of proceedings us 153C of the I.T. Act. However, the contention of the assessee was rejected. The A.O. accordingly completed the assessment under section 143(3) r.w.s.153C of the I.T. Act vide Order dated 28.03.2013 at a total income of ₹ 48 lakhs as against NIL income declared by the assesseecompany. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiating action under section 153C of the I.T. Act, 1961. The Ld. CIT(A) in support of this interpretation of section 153C, relied upon the decision of Hon'ble Apex Court in the case of Manish Maheswari vs. ACIT another (2007) 289 ITR 341 (SC). He has also noted that the language of section 158BD and section 153C has similarity.Therefore, it is evident that the condition for recording satisfaction by the Assessing Officer of the person searched is present in both the Sections.To this extent, decision of Hon ble Supreme Court in the case of Manish Maheshwari vs. ACIT and another (supra), is applicable while interpreting the provisions of Section 153C. The Ld. CIT(A) called for the assessment record of the assessee-company and found that the AO recorded the satisfaction note in the file of the assessee-company which is reproduced as under: Satisfaction u/s 153C of the Income Tax Act. 1961 in the case M/s Victory Accommodations Pvt. Ltd. PAN-AACCV3923C 208. Gupta Tower. Azadpur Commercial Complex. Azadpur. Delhi- 11 0033. During the course of assessment proceedings u/s 153A in the case of Sh. Pramod Gael, it is noticed that search and seizure operation u/s 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person. The Ld. CIT(A) on perusal of the assessment record of Shri Pramod Goel found that such exercise of recording satisfaction note in the case under section 153A was not carried-out and no such satisfaction note was found recorded in the case of the person searched. It is, therefore, clear that no satisfaction note was found recorded in the file of Shri Pramod Goel, the person searched under section 132 and assessed under section 153A of the I.T. Act. Therefore, satisfaction note recorded in the case of the assessee i.e., other person is not valid under section 153C of the I.T. Act. Ld. CIT(A) also noted that the balance-sheet dated 31.03.2010 is not incriminating in nature. Ld. CIT(A) relied upon the order of ITAT in the case of CIT vs. Sinhgad Technical Education Society in ITA.No.114 to 117/PN/2010 in support of his findings that since no satisfaction note have been recorded in the case of the person searched as required under section 153C of the I.T. Act, therefore, proceedings under section 153C are not proper and bad in law. This issue was decided in favour of assessee. 3.3. The Ld. CIT(A) as regards giving opportunity to the assessee-company held that no sufficient ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Shri Tarun Goel, there is no restriction to use it under sections 153A and 153C regarding the same. Ld. D.R. relied upon decision of Hon ble Supreme Court in the case of CIT vs. Mukundray K. Shah 290 ITR 433. The Ld. D.R. relied upon Judgment of the Hon ble jurisdictional Delhi High Court in the case of Pr. CIT vs. Sheetal International Pvt. Ltd., dated 10.07.2017 in which decision of Hon ble jurisdictional Delhi High Court in the case of Ganapati Fincap Services Pvt. Ltd., vs. CIT dated 25.05.2017 was referred in which it was held that (iv) where the A.O. of the searched person and theother person is the same, such a satisfaction note qua the other person has to be recorded by the A.O. of the searched person prior to the initiation of the proceedings against the other person. This is a sine qua non for triggering the proceedings against the other person under section 153C of the Act. (v) There do not have to be two separate satisfaction notes prepared by the A.O. of the searched person even where he is also the A.O. of the other person. In such event, the A.O. need make only one satisfaction note. That satisfaction note is qua the other person. Further, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. initiated the proceedings against the assessee under section 153A of the I.T. Act and when it was found that no search have been conducted in the case of assessee, therefore, action under section 153A was dropped. The A.O, in the case of assessee-company recorded satisfaction under section 153C of the I.T. Act, which is illegal and bad in law and is not in conformity with Section 153C of the I.T. Act because no satisfaction note have been recorded in the case of the person searched i.e., Shri Pramod Goel. Further, the balance sheet found during the course of search ending 31.03.2010 did not relate to assessment year under appeal i.e., 2008-2009. Further, the balance-sheet is in public domain and contains list of shareholders which could not be considered as incriminating material. He has submitted that identical issue have been decided by ITAT, Delhi Bench in case of assessee in favourof assessee-company [Victory Accommodation Pvt. Ltd., New Delhi vs. ACIT, Central Circle-09, New Delhi] reported in 2017-(5)-TMI-1050-ITATDelhi for A.Ys. 2009-2010 and 2010-2011. He has relied upon decision of Hon ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (2017) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 132, or documents or assets have been requisitioned under Section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132A or documents or assets have been requisitioned under Section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of Section 158BC in respect of any other person, the conditions precedents wherefor are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) The Assessing Officer has proceeded under Section 158BC against such other person. The conditions precedent for invoking the provisions of Section 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct are substantially similar/pari- materia to the provisions of section 158BD 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 CBDT. 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 is required to record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgement. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. 6.4. The Hon ble Bombay High Court in the case of CIT vs. Singhad Technical Education Society (2015) 378 ITR 84 (Bom.) he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not establish any co-relation, document-wise, with these four assessment years. The Tribunal found that the material disclosed in the satisfaction note belonged to assessment year 2004-05 or thereafter. The Tribunal rightly permitted this additional ground to be raised and correctly dealt with the ground on the merits as well. The High Court was right in affirming this view of the Tribunal. Decision of the Bombay High Court in CIT v. Sinhgad Technical Education Society [2015] 378 ITR 84 (Bom) affirmed. ( ii) That the assessment order passed by the Assessing Officer covered eight assessment years. For six assessment years the assessment was under section 153C of the Act. The assessment order was set aside only in respect of four of those assessment years and on a technical ground. The objection pertaining to the four assessment years in question did not relate to the other tax assessment years, namely, 2004-05 and 2005-06. Nor did this decision have a bearing in respect of assessment for assessment year 1999-2000 or assessment year 2006-07. The necessary consequence would be that the conclusions of the Assessing Officer in his assessment order regarding the activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer having jurisdiction over such other person. In the absence of any adequate material produced by the department contention of the assessee was justified that in this case, the Assessing Officer had not recorded any satisfaction that any seized document or material belongs to any person other person searched. * Since the revenue is in appeal, therefore, burden was upon them to prove that necessary ingredients of section 153C have been complied with in this case before invoking jurisdiction under section 153C. * It is added further here that the Assessing Officer has not referred to any seized document or material in the assessment orders on the basis of which, additions on merit have been made. Therefore, the conditions of section 153Cas noted above are also not satisfied in this case. Therefore, there is no infirmity in the order of the Commissioner (Appeals) in quashing the proceedings under section 153C. 6.8. The ITAT, Delhi Bench, in the case of assessee for A.Ys. 2009-2010 and 2010-2011 in the matter of Victory Accommodation Pvt. Ltd., vs. ACIT, Central Circle- 09, New Delhi 2017 (5) TMI 1050-ITAT-Delhi (supra), on identical facts held as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal Appeal. The Ld. CIT(A) called for the assessment record of the assessee-company and found that A.O. has recorded the satisfaction note in the file of the assessee- company which is reproduced above in which the A.O. has referred to the seized paper i.e., balance sheet and P L A/c of the assessee-company ending 31.03.2010. The notice was issued on the same day when satisfaction note was recorded by the A.O. of the assessee i.e., other person. The same A.O. who recorded satisfaction in the case of assessee passed assessment order under section 143(3)/153C of the I.T. Act. The Ld. CIT(A) also called for the assessment record of the person searched Shri Pramod Goel and it was found that no such satisfaction have been recorded in the case of the person searched relating to the assessee-company. It is, therefore, clear that no satisfaction note as required by Law have been recorded in the case of the person searched i.e., Shri Pramod Goel so as to initiate proceedings against the assessee-company under section 153C of the I.T. Act. It may also be noted here that initially the A.O. proceeded against the assessee-company under section 153A of the I.T. Act, on the premise that search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. are, therefore, not applicable to the facts and circumstances of the case as the same are clearly distinguishable. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) in holding that initiation of proceedings under section 153C of the I.T. Act are improper and bad in law. No interference is called for. Ground Nos. 1 and 2 of the appeal of the Revenue are accordingly dismissed. 8. As regards giving of no opportunity to the assessee-company, would not be significant at this stage in view of the findings given above. The addition, on merit, deleted by Ld. CIT(A) is, left with academic discussion only because the proceeding under section 153C have not been validly initiated against the assessee-company. However, we may note in brief that assessee-company filed all the relevant documents before A.O. to prove the existence of the investor companies, their creditworthiness and genuineness of the transaction, on which, A.O. has not made any enquiry. The A.O. simply relied upon report of the Investigation Wing, Kolkata, which is not relevant to the assessee-company. The A.O. did not make any independent enquiry on the documents furnished by the assessee-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KumarVaish. M/s. Magic Leasing Finance Pvt. Ltd., 2. During the year 2008-09, Mahesh Mehta sold a property bearing Number 56/7 Karol Bagh, Delhi through his company M/s Honest Estate Pvt. Ltd. The basement and ground floor was sold to a company M/s Magic Leasing ; Finance Pvt. Ltd. (Maruti car dealer by the name Magic Auto). The first and second floors were sold to one Udai Kumar Vaish,.who run a coaching-class at the premises now. He has admitted having received unaccounted cash of ₹ 5.55 Crore on account of sale of this property. Mahesh Mehta, seller of property, has admitted having received cash from both Udai Kumar Vaish and M/s Magic Leasing Finance Pvt. Ltd. He has admitted to have received cash of ₹ 2 crore from Udai Kumar Vaish and cash of ₹ 3.5 crore from M/'s Magic Leasing Finance Pvt. Ltd. on the basis of entries mentioned on seized documents. During the course of post search investigation a survey was carried out at the business premises of the assessee company. M/s Magic Leasing Finance Ltd. is leading car dealer of Maruti by the brand name Magic Auto and has four show rooms at Dwarka, Karol bagh, Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Circle-3, New Delhi . 16.06.2011 : Issue Notice under section 153C of the I.T.Act. Photo copy of the satisfaction note placed in cover for the A.Ys. 2005-2006 to 2009-2010. Sd/-xxx ACIT, 8.1. It is well settled law that recording of the satisfaction by the A.O. of the person searched is a condition precedent for initiating action under section 153C of the I.T. Act. However, in the present case, no satisfaction under section 153C of the I.T. Act have been recorded in case of the person searched i.e., Manish Mehta group of cases. The language of the satisfaction note reproduced above clearly show that it is recorded in the case of the assessee on 13.06.2011 and notice under section 153C have been issued on 14.06.2011 by ACIT, CC-3, New Delhi who has framed the assessment under section 153C of the I.T. Act in the case of the assessee. It is, therefore, clear that no satisfaction note as required by Law have been recorded in the case of the person searched i.e., Manish Mehta group of cases in whose case search have been conducted. Learned Counsel for the Assessee relied upon decision of Hon ble Delhi High Court in the case of Pepsico India Holdings Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that seized documents belonged to assessee and not to searched person and no reason was recorded how satisfaction notes recorded by Assessing Officer of assessee and Assessing Officer of searched person were identically worded carbon copy, proceedings could not be initiated against assessee under section 153C. 8.3. Considering the above discussion in the light of the Order of the tribunal in the case of M/s. Victory Accommodations Pvt. Ltd., (supra), it is proved on record that A.O. of the person searched has not recorded any satisfaction note. Such satisfaction note under section 153C has been recorded by the A.O. of the assessee, therefore, condition of Section 153C are not satisfied in the present case. Further, the A.O. has failed to prove that any documents seized belong or belongs to the person other than the person searched under section 153A of the I.T. Act. No incriminating material was seized during the assessment year under appeal. Even during the course of survey, no incriminating material was found against the assessee. The statement of Manish Mehta was recorded on 11.09.2009 after the search and was subjected to cross-examination on behalf of the assessee in w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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