TMI Blog2019 (1) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... the direction for issue of notice u/s 153C was also remained unsigned and undated. The order sheet is a manually maintained record and not a digital document which does not require signature. An order or endorsement required to be dated and duly signed by the officer who is recording the reasons being satisfied that the case is fit case for taking action u/s 153C. An order, without having signature of the person, who recorded the satisfaction or issued the direction for taking action loses its relevance and to be treated as invalid. An order without signature is not an order for execution or for implementation. In the instant case, there is no dispute that the AO of the searched person has not recorded the reasons and order sheet of the AO of the assessee though reasons are typed, it remained unsigned. The direction for issue of notice u/s 153C was also unsigned. We have already decided that unsigned order sheet looses its relevance and it would be construed as non recording of reasons. The reasons typed also are very vague without any valid reason. Therefore, notice issued u/s 153C held to be invalid. - Decided in favour of assessee. - I. T. A. Nos. 301 And 302/Viz/2015 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfaction recoded by the AO of the assessee. The assessee further submitted that the said information was obtained from the AO under the Right to Information Act vide letter No. DCIT/CC-VJA/RTI/3/2017-18 dated 23. 11. 2017 and the same is placed in the paper book Thus the assessee came to know that there was no satisfaction recorded by the AO in the case of searched person or in the case of the assessee under Right to Information Act after the first appeal order and there was no occasion to the assessee to canvass the additional ground before the first appellate authority. Therefore a need has arisen to take up the ground of validity of assessments made without recording the satisfaction in the case of searched person as well as in the case of the assessee. Since the recording of satisfaction is crucial for initiating the proceedings u/s 153C and for issue of notice, the Ld. AR argued that the issue goes to the root of assessment and it is a purely legal ground, hence, requested to admit the same. 4. On the other hand, the Ld. DR has opposed the admission of the additional ground. The assessee has raised two additional grounds which read as under : (1) On the facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... searched person as well as the AO of the assessee have not recorded the satisfaction as required u/s 153C of the income tax act and as per the decision of Hon ble Supreme Court in the case of CIT Vs. Calcutta Knitwears, [2014] 43 taxmann. com, 446 (SC) dated 12. 03. 2014 and the Board Circular No. 24/2015 dated 31. 12. 2015 it is mandatory on the part of the AO of the searched person to record the satisfaction and in the absence of satisfaction the assessment made u/s 153C r. w. s. 143(3) is invalid. As an evidence for not recording the satisfaction, the Ld. AR placed the material collected from the AO vide letter No. DCIT/CC-VJA/RTI/3/2017-18 dated 23. 11. 2017. 9. On the other hand the Ld. DR submitted that the AO of the searched person as well as the assessee is one and the same, hence no separate satisfaction required to be recorded and accordingly supported the order of the AO and relied on the decision of Hon ble High Court of Delhi in the case of Ganapati Fincap Services Pvt. Ltd. Vs. CIT in W. P (C) 525/2015 dated 25. 05. 2017 and others and also the order of the Hon ble High Court of Delhi in the case of Pr. Commissioner of Income Tax Vs. Instronics Lt, in ITA No. 613/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s connection, it is pertinent to mention section 292C of the Act places presumption that the material found during the course of search belongs to the searched person and the contents of such books of account and other documents are true. So it is the obligation of the AO as well as the searched person to prove that the incriminating material found during the course of search in fact does not belong to the searched person, but belonged to the other person. Therefore, unless there is satisfaction recorded with valid reasons it cannot be simply presumed that the seized material does not belong to the searched person, but in fact belonged to the other person. Therefore, satisfaction of the assessing officer of the searched person is mandatory requirement to transfer the records and to hold that the incriminating material found in the premises of the searched person in fact belonged to such other person. 12. Similar view is expressed by the Coordinate Bench of ITAT, Hyderabad in the case of Shri Srinivas Babu, Hyderabad Vs. ACIT supra relied upon by the assessee. For ready reference, we extract para No. 6 of the order of the Coordinate Bench of ITAT in the case of Shri Srinivas Babu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een satisfied. 14. The departmental circular dated 31. 12. 2015 also directed the AO to record the satisfaction, even if the AO of the searched person and the other person is one and the same and the Circular is binding on the assessing officers. Non recording of satisfaction of the assessing officer of the searched person renders the assessment proceedings u/s 153C as invalid. This view is supported by the decision of Hon ble High court of Delhi in Pepsi Foods (P. ) Ltd. v. Assistant Commissioner of Income-tax, [2014] 52 taxmann. com 220 (Delhi). Hon ble High court of Delhi held as under: 6. On a plain reading of Section 153C, it is evident that the Assessing Officer of the searched person must be satisfied that inter alia any document seized or requisitioned belongs to a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or re-assess his income i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid, that going through the contents of the satisfaction note, we are unable to discern any satisfaction of the kind required under Section 153C of the said Act. 12. This being the position the very first step prior to the issuance of a notice under Section153C of the said Act has not been fulfilled. Inasmuch as this condition precedent has not been met, the notices under Section 153C are liable to be quashed. It is ordered accordingly. Hon ble supreme court dismissed the SLP filed by the revenue against decision of Hon ble High Court ruling that before issue of notice under section 153C, Assessing Officer is required to arrive at a conclusive satisfaction that documents belongs to a person other than searched person in[2018] 89 taxmann. com 10 (SC). Therefore, the courts held that the satisfaction not only should be recorded but also should be written in detail with valid reasons and it should not be vague. In the instant case, there is no dispute that the department could not establish that the AO of the searched person has recorded satisfaction before issue of notice u/s 153C of the Act. Therefore, respectfully following the view taken by the decision of judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for issue notice and for direction for issue of notice u/s 153C. Therefore, it is to be construed that no reasons were recorded by the AO as required u/s 153C of the Act. As per section 153C it is mandatory on the part of the AO to record satisfaction for issue of notice u/s 153C. For ready reference, we extract relevant part of the provisions of the section 153C which reads as under : 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, - (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the proceedings u/s 153C is the satisfaction of the assessing officer that the incriminating material found and seized in the premises of the searched person is belonged to the assessee and it has bearing on the determination of income of the assessee for the relevant year. Similar issue was considered by the coordinate bench of ITAT Ahmedabad in Parshwa Corporation. v. Deputy Commissioner of Income-tax, Central Circle2, Baroda [2017] 88 taxmann. com 43 (Ahmedabad - Trib. ) and held basic condition for issue of notice u/s153C has not been satisfied. 19. The co-ordinate bench of ITAT Mumbai in the case of Rajesh A. Yagnik Vs. ACIT, 88 taxmann. com 335 considered the similar issue of unsigned order with regard to levy of penalty u/s 271(1)(c) and held that such order has no sanctity, hence, it is invalid. The issue of unsigned draft order u/s 144B was considered by the ITAT, Jaipur in 40 Taxmann 200 in ITO Vs. Super Tools India Ltd and held that the proposed order was not an order at all especially when it was not signed by the ITO. This Tribunal in the case of Sri Pinnamaraju Venkatapathi Raju in I. T. A. No. 132/Viz/2016 dated 28. 12. 2018 considered the similar issue of not r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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