TMI Blog2022 (10) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd [ 2020 (3) TMI 361 - SUPREME COURT] has held that if the Assessing Officer of the searched person and of the other person is same, then recording of satisfaction in the file of one of the persons will not make any difference. The relevant paragraph of the above said judgement had already been reproduced elsewhere. Admittedly, the Tribunal had directed the Revenue to file the copy of the satisfaction note, if any, available in the case record of the assessee to show that the assessment proceedings u/s 153C were initiated after due recording of the satisfaction. On the last date of hearing i.e. on 4.10.2022 the Tribunal had again reiterated its earlier direction. The revenue is not in a position to trace the satisfaction note as of now as the record is not traceable and may be available with the office(s) of the Revenue. We hold additional ground raised by the assessee is admitted. The matter is remanded back to the file of the learned CIT (A) with a direction to decide the additional ground after collecting the documents/record from the offices of the Assessing Officer/Investigation/Central Circle in accordance with law after affording opportunity of being heard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other ground that may be urged at the time of hearing . 3. At the time of hearing, the learned AR submitted that the assessee has filed a petition for admission of the additional grounds of appeal which read as under: 1. The Appellant has filed appeal before the Hon'ble Tribunal by raising grounds of appeal on the legal issues under the provisions of section 153C of the 1.T. Act, 1961 (henceforth However, the Act') and also on merits. appellant desires to raise specific ground with regard to recording of satisfaction by the Assessing Officer before issuance or notice under section 153C of the Act. Since it is not raised specifically before the authorities below, the same is raised as additional ground before the Hon'ble Tribunal. 2. It is settled position of law by virtue of judgement of jurisdictional high court and that of the Hon'ble Tribunal and so also the circular issued by CBDT that the AO has to record satisfaction on the material before 1ssuing notice under section 153C of the Act, and if such satisfaction is not recorded, the proceedings initiated under section 153C of the Act would be illegal and non est. 3. The Appellant with the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment u/s 153C pursuant to the search initiated in the hands of the individuals namely Mr. M. Rajesh Naidu and Mrs. Kalpana Raj on 16.11.2012. For the above purposes, he has drawn the attention of the Bench to the assessment order and more particularly Paragraph 1 2 of the said assessment order for the A.Y 2007-08 which is to the following effect. It was submitted that as it is clear from the assessment order, the assessment was framed in the hands of the assessee u/s 153C, therefore, it was the contention of the learned AR that the recording of satisfaction by the Assessing Officer of the assessee was essential before initiating proceedings u/s 153C of the Act. Besides it was submitted that the assessee after suffering the assessment order challenged the order passed by the Assessing Officer before the CIT (A) and before the learned CIT (A), raised ground No.2 which is to the following effect: 2. The Assessing Officer erred in initiating proceedings u/s 153C though the authorities has not found any incriminating material during the course of search and the assessment is not made based on any seized material . 7. The learned AR submitted that the assessee had filed detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: Amendment of section 153C. 55. In section 153C of the Income-tax Act, in sub-section (1), for the words, figures and letter and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A , occurring at the end but before the first proviso, the words, brackets, figures and letter and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in subsection (1) of section 153A shall be substituted with effect from the 1st day of October, 2014. 9. The learned AR also relied upon the decision of the Hon'ble Supreme Court in the case of Commissioner Of Income Tax vs M/S. Calcutta Knitwears reported in (2014) (6SCC 444) and in the case of Super Malls Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra), the same is for the administrative convenience and the failure by the Assessing Officer of the searched person, after preparing and dispatching the satisfaction note and the documents to the Assessing Officer of the other person, to make a note in the file of a searched person, will not vitiate the entire proceedings under Section 153C of the Act against the other person. At the same time, the satisfaction note by the Assessing Officer of the searched person that the documents etc. so seized during the search and seizure from the searched person belonged to the other person and transmitting such material to the Assessing Officer of the other person is mandatory. However, in the case where the Assessing Officer of the searched person and the other person is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, then the requirement of Section 153C of the Act is fulfilled. In case, where the Assessing Officer of the searched person and the other person is the same, there can be one satisfaction note prepared by the Assessing Officer, as he himsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trictly fall either u/s 153A or 153C of the Act. It was submitted that the authorization was only issued in favour of the two Directors namely Mr. Rajesh Naidu and Mrs. Kalpana Raj Muniratnam and further the search was carried at the residential premises of these two Directors and the business premises of the assessee namely Genera Agri Corporation Ltd. It was submitted by the learned DR that once during the course of search carried out at the business premises of the assessee of which the searched persons were the Directors then there was no necessity to issue notices u/s 153A and the Revenue was right in initiating proceedings u/s 153C of the Act. Further, it was submitted that the panchnama was only prepared in the name of M/s. Genera Agr.Corp. and no panchnama was prepared against the two Directors. Besides that it was submitted that under the scheme of the Act, it is not necessary to have the authorization against the company and search was carried out at the premises of the Directors and no material pertaining to the company(assessee) were found and the necessary corollary to frame assessment u/s 153C of the Act. The Bench had specifically asked as to whether any satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sec. 132 and 153A, it is absolutely clear that issue of warrant of authorization against a person u/s 132 is sine qua non for assumption of jurisdiction u/s 153A against such person. 6.0 Coming to the case on hand, as seen from two warrants of authorization issued in Form No. 45 dated 15.11.2012, the Authorized Officers were directed to initiate action u/s. 132 against Sri Muniratnam Rajesh Naidu and Smt. Kalpana Raj Muniratnam, being the directors of the assessee company, in two different premises or locations, in order to find out books of account, valuables, etc., belonging to the directors. While doing so, the first warrant of authorization was issued to cover the residential premises of Sri Muniratnam Rajesh Naidu and Smt. Kalpana Raj Muniratnam i.e., Plot No. 267, MLA/MP Colony, CRPF Southern Gate, Road No. 10, Jubilee Hills, Hyderabad, and the second warrant of authorization was issued to cover the business premises of the assessee company M/s. Genera Agri Corporation Limited i.e., H. No. 8-2-293, Block 3, Sree Sai Rekha Nalayam, Road No. 82, Plot No. 383, Film Nagar, Jubilee Hills, Hyderabad 7.0 As such, the main purpose of issuing both the warrants of authoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO, Ward-2(2) [since merged with the incumbent AO i.e., ITO, Ward-2(1),Hyderabad], alongwith the MRs maintained in the office of DCIT, Central Circle, 1(3) Hyderabad. Further, it is reported that the MRs maintained in the office of the erstwhile ITO,Ward- 2(2), DCIT, Central circle-2(3) and DCIT, Central Circle-5 have not been transferred to the present AO. In view of this, the AO is not in a position to verify such MRs so as to certify whether any satisfaction note was recorded by the AO prior to issue of notice u/s 153C or not. A copy of letter dated 06- 10 2022 received from the incumbent AO is enclosed herewith for kind reference of the Bench. 9.0 Notwithstanding the aforementioned factual-matrix of the case, it is respectfully submitted that, in the given set of facts and circumstances, there is no requirement of recording of any satisfaction note either by the AO of persons searched u/s. 132 and covered u/s. 153A i.e., Sri Muniratnam Rajesh Naidu and Smt. Kalpana Raj Muniratnam or the AO of the assessee company covered u/s. 153C on account of two grounds given below: i. The AO of the persons covered u/s. 153A i.e., Sri Muniratnam Rajesh Naidu and Smt. Kalpana Raj M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, it is respectfully submitted that the reliance placed by the assessee on the decision of the Hon'ble jurisdictional High Court in the case of CIT Vs. Shettys Pharmaceuticals Biologicals Ltd. and the Hon'ble jurisdictional ITAT in the case of T. Nanda Kishore Vs. DCIT, apart from others (vide assessee's paper book dated 11-03-2022), are distinguishable on specific fact-situation of the instant case, and, therefore, is of no help to the assessee. 13.0 Alternatively, it is submitted that non-recording of reasons by the AO of the assessee company could not be said to be fatal for initiating proceedings u/s. 153C inasmuch as, admittedly, no objection was raised by the assessee before the AO and, in fact, filed the return of income in response to notice issued u/s. 153C and, thereafter, participated in the assessment proceeding by way of filing reply to various queries raised by the AO on merits of the case, but no question of jurisdiction on account of nonrecording of reasons by the AO for initiating u/s. 153C was raised before the AO. Similarly, the assessee did not raise the said ground before the Ld. CIT(Appeals), but, for the first time, such objection was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the searched person and of the other person is same, then recording of satisfaction in the file of one of the persons will not make any difference. The relevant paragraph of the above said judgement had already been reproduced elsewhere. 18. Admittedly, the Tribunal had directed the Revenue to file the copy of the satisfaction note, if any, available in the case record of the assessee to show that the assessment proceedings u/s 153C were initiated after due recording of the satisfaction. On the last date of hearing i.e. on 4.10.2022 the Tribunal had again reiterated its earlier direction. The ld.DR DR for the Revenue had filed the written submission along with the letter of the Assessing Officer dated 6.10.2022, stating therein as under: 2. In continuation to this office letter dated 16.02.2022, 08.07.2022 ft this office email communication dated 29/09/2022, I would like to submit the following facts for your kind perusal and necessary action: (i) In regard to the satisfaction note recorded by the assessing officer prior to issue of notice u/s. 153C of the IT Act, 1961, it is submitted that copy of such satisfaction note is not placed in the miscellaneous records ..... X X X X Extracts X X X X X X X X Extracts X X X X
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