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TMI Blog2019 (5) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... hese appeals are that the search and seizure action under section 132 of the Act was conducted in the case of various assesses belonging to Prakash Group of Companies on 21.11.2013 and on subsequent dates. In consequence of the said action, a survey under section 133A was carried out at the business premises of the assessee, which was connected with the Prakash Group. During the course of survey, books of account identified as IIPL/13 to IIPL/19 relating to the assessee-company were found and impounded. Thereafter notices under section 153 were issued by the Assessing officer on 09.12.2015, in response to which the copies of returns of income regularly filed for the years under consideration were submitted by the assessee. As noticed by the Assessing Officer, the assessee-company had received share capital and share premium amounts aggregating to Rs. 4,04,00,000/- during the previous year relevant to assessment year 2008-09 while a sum of Rs. 2,30,00,000/- was received as share application money during the previous year relevant to assessment year 2009-10. During the course of assessment proceedings, the assessee company was called upon by the Assessing Officer to explain the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search and the same, therefore, were not sustainable. The ld. CIT(Appeals) found merit in this ground raised by the assessee and deleted the additions made by the Assessing Officer for all the three years under consideration for the following reasons given in paragraph no. 8 of his impugned order, which are identical in all the three years under consideration:- "8. I have considered the findings of the AO in the assessment order, different case laws brought on record and appeal orders passed by my predecessors on this legal issue. I find that it seems that during the search and seizure operations conducted u/s 132 of the I.T. Act, 1961, in the case of Sri Balaji Log Products Pvt Ltd (SBLP) no incriminating documents/papers related/pertaining to the assessee were seized and I also find that in the case of the assessee a survey u/s 133A was conducted in which some papers/documents were impounded. There was no search in the case of the assessee. At least, additions made by the AO In the assessment order passed u/s 153C 143(3) are not based on any incriminating documents/papers seized during the search operation. It would also not be out of context to mention here that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s. Imax Infrastructure Pvt. Ltd. Thus it is reason to satisfy that this case is considered to be a fit case for issuing a notice u/s 153C of the Act. Hence, notice u/s 153C is issued to the assessee for compliance". On perusal of the satisfaction recorded by the Assessing Officer as above, the ld. Counsel for the assessee has contended that the said satisfaction appears to have been recorded by the Assessing Officer of the assessee and not by the Assessing Officer of the searched person as specifically required by section 153C. He has also contended that the said satisfaction in any case is very vague and not specific, inasmuch as, there is no reference particularly to any document found and seized which belonged to the assessee. He has pointed out that what is recorded by the Assessing Officer in the satisfaction is only that certain documents belonged to the assessee without pointing out specifically such documents and the satisfaction recorded by the Assessing Officer thus is not proper or sufficient. Relying on the decision of the Hon'ble Delhi High Court in the case of CIT -vs.- M/s. N.S. Software (I.T.A. No. 791/2017 dated 18.04.2018), he has contended that in the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm. It was further observed that the satisfaction note had been prepared in a standard mechanical format and did not provide any details about the books of account, which allegedly belonged to the assesee-firm. It was held that the Assessing Officer at the stage of sending notice under section 153C was required to record a specific reason or reasons why the material seized from the other person has a nexus to the assessee to whom the notice under that provision is addressed. It was held that the failure of the Assessing Officer to record a specific satisfaction as to how the recovered material belonged to the assessee in the note that preceded the notice issued under section 153C vitiated the assessment. It was held that since the satisfaction recorded by the Assessing Officer in terms of section 153C(1) was clearly inadequate, the assessment completed in pursuance thereof was also invalid. 6. In arriving at a conclusion as discussed above in the case of M/s. N.S. Softwares (supra), Hon'ble Delhi High Court relied heavily on its earlier decision rendered in the case of Pepsi Foods Pvt. Limited [52 taxmann.com 220 (Delhi), wherein it was clarified that section 132(4A) creates a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. There is a failure on the part of the Assessing Officer to provide clear and cogent reasons, which can explain why the seized material belonged to the assessee apart from saying that the documents belonged to the assessee and he was satisfied that it was a fit case for issuing of notice under section 153C. If all these facts of the case are considered in the light of the decision of the Hon'ble Delhi High Court in the case of N.S. Softwares (supra) and Pepsi Foods Pvt. Limited (supra), we find that the satisfaction recorded by the Assessing Officer is neither adequate nor proper and since it does not meet the requirement of the concept of satisfaction as used in section 153C of the Act, we hold that the initiation of proceedings under section 153C itself was bad-in-law and the assessments completed in pursuance of such initiation are liable to be cancelled being invalid. We accordingly uphold the impugned orders of the ld. CIT(Appeals) giving relief to the assessee for all the three years under consideration, although on a different ground. 8. Keeping in view our decision rendered above on the preliminary issue raised by the assessee-company in its Cross Objections canc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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