TMI Blog2021 (5) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... nce(s) on merits and direct him to decide the same afresh within three effective opportunities of hearing. The assessee or its authorised representative shall appear before the CIT(A) on or before 30-09-2021 with all the relevant details and evidences to be followed by three effective opportunities of hearing; at its own risk and responsibility. Revenue's appeals allowed for statistical purposes. - I.T.A. Nos. 2148, 2149 & 2150/HYD/2018 - - - Dated:- 10-5-2021 - S.S. Godara, Member (J) And Laxmi Prasad Sahu, Member (A) For the Appellant : Y.V.S.T. Sai, CIT-DR For the Respondents : M. Chandramouleswara Rao, AR ORDER Per S.S. Godara, JM These three Revenue's appeals for A.Ys. 2014-15 to 2016-17 arise from the CIT(A)-12 Hyderabad's order(s) all dated 23-08-2018, passed in appeal Nos. 10453, 10456 10460/2017-18; respectively in proceedings u/s. 143(3) r.w.s. 153C of the Income Tax Act, 1961 [in short, 'the Act']. Heard both parties. Case files perused. 2. The Revenue's identical sole substantive ground pleaded in all these appeals seems to reverse the CIT(A)'s action quashing Section 153C proceedings on the ground that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the Appellant's name has been mentioned it has been inferred that the satisfaction has been recorded by the AO of the person other than the searched person. The satisfaction note of the AO of the searched person has not been made. Hence the notice u/s. 153C was not valid and consequently the assessment made was bad-in-law and liable to be quashed . 5.2 The Assessing officer, vide this office letter dated 17/07/2018, was called upon to furnish his report/comments on this issue, and to send a copy of the satisfaction notes recorded by the Assessing Officer of the searched party, and the Assessing Officer of the assessee covered u/s. 153C, Vide his letter No. ACIT/CC-2(4)/MSR/2018-19, dated 20/08/2018, the Assessing Officer has furnished his report on the matter, as under: In this regard, please find herewith the contents of satisfaction notes prepared by the AO and placed on concern assessment records of searched person u/s. 153A and other person (the assessee) u/s. 153C. The copy of satisfaction note which is placed on record for each assessment year is enclosed herewith for ready reference. It is pertinent to mention that the AO of the searched party and the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: 5.3 I have carefully considered the submissions of the appellant and the order of the Assessing Officer, the additional grounds raised, as well as the report/comments of the assessing officer, and the counter-comments of the assessee's AR thereon. 5.3.1 The ground raised by the assessee's AR regarding the validity of proceedings u/s. 153C is that before initiating the said proceedings, satisfaction was supposed to be separately recorded by the AO having jurisdiction over the assessee, as well as by the AO having jurisdiction over the searched party, which was not done. In this regard, the appellant has relied upon many judicial decisions, including the decision of Supreme Court, jurisdictional High Court, and of the jurisdictional ITAT. The said decisions have been perused, and the notings regarding the recording or non-recording of reasons have also been called for and perused. The specific observation of High Court of AP on this issue, in the case of CIT vs. M/s. S. Shetty Pharmaceuticals Biologicals Ltd., in ITTA No. 662 of 2014, runs as under: It is clear from Section 153C that fastly satisfaction has be recorded by the Assessing Officer who conduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein, and that as such, the proceedings initiated u/s. 153C in this case are void ab-initio, and assessment proceedings need to be quashed. On verification, this contention of the appellant is found to be correct. As can be seen from the AO's remand report, and the 'Satisfaction notes' reproduced in (sic) 5.2 above, the 'Satisfaction note' has only been recorded by the A.O. of IH/s-MSR Construction, i.e., the assessee. No satisfaction has been recorded by the AO of the searched party. The 'Satisfaction note' placed in the file of the searched party is merely a carbon copy of the same satisfaction note which is recorded by the AO of the assessee, and, as held by the Hon'ble Supreme Court, it fails to fulfil the jurisdictional requirement. Neither does the plea taken by the Assessing Officer in the remand report, that the Assessing Officer in both cases was the same, help the case of the A.O. in any manner. This has been held by the jurisdictional ITAT in numerous cases. The case of the assessee is squarely covered by the decision of ITAT, Hyderabad dated 31.03.2017, in the case of the M/s. Madhucon Infra Ltd. in ITA No. 266/Hyd/2015, wherein th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal No. 7 and hold that the assessment u/s. 153C is not sustainable. 5. Since the assessment itself has been held to be void ab initio, the other grounds of appeal need no adjudication. The, same is also held by ITAT, Hyderabad in its recent judgment dated 11/05/2018 in the case of Bondugula Krishna Reddy Vs. Dy. Commissioner of Income Tax, Central Circle-7, Hyderabad in ITA Nos. 1116, 1117, 1118 and 1119/Hyd/2016. Moreover, the CBDT in its circular No. 24/2015 dated 31st December 2015 clarified that recording of a satisfaction note is a prerequisite and the satisfaction must be prepared by the Assessing Officer before he transmits the record to the other AO who has jurisdiction over such other person. 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. 5.3.2 In light of the aforesaid discussion, and in view of the orders of Supreme Court, jurisdictional High Court and jurisdictional ITAT, discussed above, which are on similar set of facts, I am of the considered opinion that the order under reference does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e required to be fulfilled before initiating the proceedings under Section 153C of the Act have been satisfied or not? 6. This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of the Act in the case of Calcutta Knit wears (supra) as well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd. (supra). As held, before issuing notice under Section 153C of the Act, 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. That thereafter, after recording such satisfaction by the Assessing Officer of the searched person, he may transmit the records/documents/things/papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue a notice for the purpose of completion of the assessment under Section 158BD of the Act and the other provisions of Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer of the other person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the Assessing Officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. 6.2. Now let us consider from the satisfaction note recorded by the Assessing Officer, in the present case. Whether there is a sufficient compliance of Section 153C of the Act or not. The satisfaction note reads as under: Name and address of the assessee : M/s. Super Malls (P) Ltd. Sector 12, HUDA, Karnal Regd. Office at 51, Transport Centre Punjabi Bagh, New Delhi. PAN : AAICS2163F Status : Company Reasons/Satisfaction note for taking up the case of M/s. Super Malls (P) Ltd. Sector-12, HUDA, Karnal Regd. Office at 51, Transport Centre, Punjabi Bagh, New Delhi under Section 153C of the Income Tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akash Bharti belonged to the assessee - the other person. Therefore, the Assessing Officer was satisfied and it is specifically mentioned that the documents so seized belonged to the assessee - the other person. Therefore, it cannot be said that the mandatory requirements of Section 153C of the Act, in the facts and circumstances of the case, have not been complied with. The satisfaction note by the Assessing Officer clearly states that the documents so seized belonged to the other person - the assessee and not the searched person. Thus, the High Court is justified in observing that the requirement of Section 153C has been fulfilled. On facts, we are in complete agreement with the view taken by the High Court on the requirement of Section 153C of the Act being fulfilled by the Assessing Officer before initiating the proceedings under Section 153C of the Act. 7. In view of the above and for the reasons stated above, all these APPEALS fail and the same deserve to be dismissed and are accordingly dismissed. Now, the learned ITAT shall decide and dispose of the appeals afresh on merits, at the earliest, in accordance with law, as observed by the High Court in the impugned Jud ..... 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