TMI Blog2021 (8) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of expenditure u/s 140A(3) that is payable to the cultivators, expenses towards Hamali i.e. labour charges, unexplained money u/s 69A of the Act, negative cash and unaccounted stock. This was not on account of the discovery of incriminating materials concerning the Petitioner found in the course of the search. In fact there was no search warrant under Section 132 of the Act against the Petitioner firm. In the absence of incriminating materials vis-a-vis the present Petitioner being found in the course of the search of the searched persons viz., Sri Jami Ramesh and Sri Jami Sivasai, the impugned assessment order and the consequential demand order are unsustainable in law and are hereby set aside. - WRIT PETITION (CIVIL) No.2936 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the proceedings were liable to be quashed. 4. For the reasons stated therein, I.A. No.9051 of 2018 is allowed. 5. This Court has heard the submission of Mr. Sidhartha Ray, learned counsel for the Petitioner and Mr. R.S. Chimanka, learned Senior Standing Counsel for the Opposite Party (IT Department). 6. The background facts are that the Petitioner firm is engaged in the business of manufacturing/processing of cashew nuts into cashew kernel. It filed its original return of income on 18th October, 2016 for the AY 2016-17 declaring the total income at ₹ 8,94,1000/-. The Authorized Officer (ITO) at Keonjhar undertook a survey operation under Section 133A of the Act on 12th February, 2016. Instead of conducting a survey a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng steps are imperative: (i) a satisfaction note has to be prepared either at the time of or along with the initiation of the proceedings; or (ii) in the course of the assessment proceeding under Section 153C of the Act; or (iii) immediately after the assessment proceedings are completed of the search persons. 10. Section 153C of the Act has been held to be similar to Section 158 BD of the Act. Therefore, the law explained in the judgment of the Supreme Court in Commissioner of Income Tax (CIT) v. Calcutta Knitwears (2014) 362 ITR 673 SC applies. In the said decision the Supreme Court while interpreting Section 158 BD of the Act explained the legal position as under: We would certainly say that before initiating p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person. xx xx xx In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the Assessing Officer before he transmits the records to the other Assessing Officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages : (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 26 (All) the Delhi High Court held as under: From the foregoing discussion, it is evident that in order that the Assessing Officer of the searched W.P.(C) No.2936 of 2018 Page 8 of 8 person comes to the satisfaction that documents or materials found during the search belong to a person other than the searched person, it is necessary that he arrives at the satisfaction that the said documents or materials do not belong to the searched person. 14. In view of the clear legal position explained in the above decisions, and in the absence of incriminating materials vis-a-vis the present Petitioner being found in the course of the search of the searched persons viz., Sri Jami Ramesh and Sri Jami Sivasai, the impugned assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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