TMI Blog2019 (10) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... see u/s 153C of the Act. So, in the absence of existence of any incriminating material, power u/s 153C cannot be invoked. When the assessment or reassessment, as the case may be, has been made u/s 153C, the necessary requirements to proceed with such initiation of assessment proceedings must be fulfilled. But, in the instant case, as discussed in the preceding paras, the AO has failed to record the satisfaction note as required u/s 153C rather mechanically recorded the satisfaction and made the assessment. The contention raised by the ld. DR and case laws relied upon are not applicable to the facts and circumstances of the case. - Decided in favour of assessee - ITA No.1095/Del./2015, ITA No.1096/Del./2015, ITA No.1097/Del./2015, ITA No.1098/Del./2015 - - - Dated:- 1-10-2019 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri Satish Aggarwal, Advocate For the Revenue : Shri J.K. Mishra, CIT DR, Smt. Naina Soin Kapil, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Since common questions of facts and law have been raised in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n documents/ books of account were seized. Assessing Officer (AO) of the searched person recorded satisfaction note dated 23.01.2014 on the basis of documents seized stating therein that certain documents belonging to assessee company were seized and provisions contained under section 153C of the Income-tax Act, 1961 (for short the Act ) are attracted. Thereafter, AO of the person other than searched person examined the documents seized and recorded a fresh satisfaction note dated 23.01.2014 by recording satisfaction that said documents belonged to assessee company and thereby issued notice dated 23.01.2014 u/s 153C read with section 153A of the Act for AYs 2006-07 to 2011-12 and notice u/s 143 (3) for AY 2012-13 on the basis of satisfaction note dated 20.01.2014 prepared by AO of M/s. ABW Infrastructure (P) Ltd. i.e. searched person, requiring the assessee to file the return of income for the aforesaid assessment years within 15 days. Assessee filed returns. Then notice u/s 142 (1)/143 (2) along with detailed questionnaire was issued. For AYs 2009-10, 2010-11 2011-12, assessment order framed u/s 153C read with section 153A and in AY 2012-13, assessment order u/s 143 (3) has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Those transactions contained transfer of funds between the assessee and ABW Developers Pvt. Ltd., Atul Bansal and group concerns. Those transactions contained in SMS exchanges were further investigated by the AO. 3. The statement of the assessee was also recorded u/s 131 on 15.02.2012 by the AO in which inter alia questions pertaining to transfer of funds were asked. The investigation of source of transfer/receipt of funds necessitated examination of bank accounts of the assessee also. The conspectus of investigation resulted into addition made by the AO. 4. In this regard, reliance is placed on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Mukundray K. Shah [2007] 290 ITR 433 (SC). In this case, a diary was seized a statement of the assessee was recorded. The diary indicated investment of 26.35 crore by the assessee in RBI Relief Bonds. The AO made subsequent investigation and deemed dividend of ₹ 5.99 crore was added u/s 2(22)(e). In this case, the Hon'ble Kolkata High Court held that since all the transactions were disclosed in the Returns, the case of the assessee did not fall under chapter XIVB of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s allegedly belonging to the assessee belongs to him and are incriminating in nature. 10. For ready perusal, satisfaction note dated 20.01.2014 prepared by the AO of M/s. ABW Infrastructure (P) Ltd. and satisfaction note dated 23.01.2014 prepared by the AO of the assessee are extracted for ready perusal as under :- M/s. ABW Infrastructure Limited PAN AAECA54664 Satisfaction note for initiating proceedings u/s 153C read with Section 153A of Income Tax Act, 1961 in the case of persons other then the person search M/s. ABW Infrastructure Ltd. PAN : AAECA54664 in which case action U/s 132 was conducted on 9.11.2011 20.01.2014 Action u/s 132 of the Income Tax Act, 1961 was carried out in the case of M/s. Infrastructure Ltd. on 09.11.2011. This action was carried out at the business premises of M/s ABW Infrastructure Ltd. and at the residential premises of the Atul Bansal, Director of this company. During the course of search action various books of account and documents etc were found and seized. While examining the seized material of ABW Infrastructure Pvt. Ltd. an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that those documents belong to Sh Jajit Singh - PAN: AFTPS0204A. After examining the contents of these documents I am satisfied that proceedings u/s 153C read with Section 153A of the Act are required to be initiated in this case. Accordingly, notices u/s 153C read with section 153A of the Act are being issued for the assessments years 2006-07 to 2011-12. 11. When we examine aforesaid two satisfaction notes, one recorded in the case of searched person and another in the case of such other person, assessee in this case, referred in provisions contained u/s 153C(1), it is undisputed fact on record that the satisfaction note of the searched person is dated 20.01.2014 and in such circumstances, the date of handing over the seized material to the AO of the present assessee is to be treated the date of search. In other words, before 20.01.2014, the incriminating material, if any, pertaining to the assessee was required to be handed over to the AO of the assessee. In these circumstances, six years period is to be reckoned with from the date of handing over of the documents to the AO of the assessee i.e.20.1.2014 and as such, AO was empowered to issue the notices u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. ABW Infrastructure (P) Ltd. and how and under what circumstances, the same do not belong to searched person rather mechanically recorded in the satisfaction note that these aforesaid documents belong to assessee. 17. Hon ble Delhi High Court in the case of Pepsico India Holdings Private Ltd. vs. ACIT 370 ITR 295 discussed the issue as to how the liability of such other person, the assessee in this case, can be fastened on the basis of seized documents from searched person, the operative part of which is extracted for ready perusal as under :- 4. Before we examine these writ petitions in detail it would be pertinent to point out that recently in the case of Pepsi Foods Pvt. Ltd. Vs. Assistant Commissioner of Income Tax, WP (C) No.415/2014 and other connected matters, this court had occasion to examine the very provisions which are under consideration in the matters before us. In the judgement delivered on 07.08.2014 in the case of Pepsi Foods Pvt. Ltd.(supra), after examining the provisions of Sections 153C, 132(4A)(i) 292C(1)(i) of the said Act, this Court had observed as under: 6. On a plain reading of Section 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word satisfaction or the words I am satisfied in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the said Act. The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person is satisfied that the seized documents belong to a person other than the searched person. We are afraid, 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. 18. When we examine the facts of the present case in the light of the ratio laid down by Hon ble High Court in cases of CIT vs. RRJ Securities Ltd. and Pepsico India Holdings Private Ltd. vs. ACIT (supra), it leads to the irresistible conclusion that firstly, AO of the searched person, namely, M/s. ABW Infrastructure (P) Ltd. must arrive at a categoric satisfaction that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. We find this reasoning to be logical and valid, having regard to the provisions of Section 1S3C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and It showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material In para 9 of the order, the position that emerges therefrom Is discussed In para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It Is for this reason the High Court has also given Its Imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice In respect of Assessment Years 2000-01 and 2001-02 was even time barred. 21. Without prejudice, the ld. AR for the assessee further contended that seized documents, referred to by the AO, do not belong to the assessee and referred to his application dated 06.11.2018, available at pages 59 60 of the paper book, wherein AO was requested to provide copy of alleged seized documents i.e. Annexure A-7 to A-16 on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. 24. At the same time, SMS mentioned by the AO at page 2 of the assessment order found on the mobile phone of Atul Bansal, searched person, are relevant only for AY 2012-13 and not AY 2011-12 as the date of search on the basis of which assessment u/s 153C was initiated on 09.11.2011. Moreover, CIT (A) in para 5.2 of AY 2011-12 failed to clarify if any incriminating material was seized for this year. 25. In view of what has been discussed above, we are of the considered view that assessment framed by the assessee u/s 153A r/w section 153C for AYs 2009-10, 2010-11 and 2011-12 is bad in law for want of jurisdictional error with the AO. At the same time, assessment framed u/s 143 (3) for AY 2012-13 is also bad in law because date of handing over the seized document is 20.01.2014 and the assessment in this case was required to be framed u/s 153C of the Act. Because Hon ble jurisdictional High Court in case of CIT vs. RRJ Securities Ltd. (supra) has categorically held that, In terms of proviso to section 153C of the Act, a reference to the date of the search under the second proviso to section 153A of the Act has to be constr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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