TMI Blog2023 (8) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... r person u/s 158BD. This requirement would apply even if AO of searched person as well as other person is one and the same. Such a satisfaction note could be prepared by AO of searched person at various stages of framing of assessment u/s 158BC. Therefore, in our considered opinion, in the absence of satisfaction note in the case of searched person, the proceedings u/s 153C would be vitiated by law. The recording of satisfaction note in the case of present assessee is not sufficient compliance of law. When proceedings are proposed to be initiated u/s 153C against the other person , it has to be preceded by a satisfaction note by the Assessing Officer of the searched person. Without fulfilling this requirement, no jurisdiction could be acquired u/s 153C. Gain on sale of land - HELD THAT:- The assessee has purchased the plots in joint ownership with Shri Sanjay Chawla. Therefore, we direct Ld. AO to adopt sale rate of Rs. 400/- per Sq. ft. Assessment of income - Head of income - We find that the assessee has consistently developed and sold plot of lands. The intention was to develop and sell the land as real estate dealer. The assessee has also incurred development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated to be engaged in business under proprietorship concern by the name M/s Jayakumar Textiles. Proceedings before lower authorities 3.1 From perusal of case records of AY 2010-11, it transpires that a search was conducted by the department on 10-01-2012 at residential premises of one Shri Madanlal D. Chawla of Salem. During the search, a copy of Sale Agreement was found which was entered into between Shri Sanjay M. Chawla s/o Shri Madanlal D. Chawla and the assessee. The document was seized. Upon perusal of this document, Ld. AO arrived at a conclusion that real estate profit of Rs. 17 Lacs was unaccounted income of the assessee. Accordingly, notice u/s 153C was issued and the assessee was directed to file the requisite details. After considering assessee s submissions, Ld. AO made certain addition on account of income from land sale and property sale. Similar assessments were framed for AYs 2011-12 and 2012-13. 3.2 During appellate proceedings, the assessee assailed impugned additions by way of elaborate written submissions which have been extracted in the impugned order. One of the legal grounds raised by the assessee was that the order of Ld. AO was opposed to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation. 2. The Hon'ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No. 3958 of 2014 dated 12-3-2014 [2014] 43 taxmann.com 446 (SC) (available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person u/s 158BD. The Hon'ble Court held that the satisfaction note could be prepared at any 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; or ( b ) in the course of the assessment proceedings under section 158BC of the Act; or ( c ) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. 3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/ pari-materia to the provisions of section 158BD of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account or documents seized or requisitioned belong to , i.e., in this case, the assessee company, a person other than the person referred to under section 153A of the Act. It is submitted that thereafter and on being satisfied that the books of account or documents or assets so seized or requisitioned shall be handed over by the Assessing Officer of searched person, i.e., the Directors in this case to the Assessing Officer having jurisdiction over such other person i.e., the assessee company. That the aforesaid requirements before issuing notice under section 153C of the Act are held to be mandatory by this Court in catena of decisions. Reliance is placed upon the decision of this Court in the case of CIT v. Calcutta Knitwears [2014] 43 taxmann.com 446/223 Taxman 115 (Mag.)/362 ITR 673 (SC); decision of the Delhi High Court in the case of Pepsi Food (P.) Ltd. v. Asstt. CIT [2014] 367 ITR 112 (Delhi); decision of the Gujarat High Court in the case of CIT v. Bipinchandra Chimanlal Doshi [2017] 79 taxmann.com 211/395 ITR 632; and the decision of the Delhi High Court in the case of Ganpati Fincap Services (P.) Ltd. v. CIT [2017] 82 taxmann.com 408/395 ITR 692. 3.3 That e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e searched person and the other person is the same, there need not be two separate satisfaction notes recorded by the Assessing Officer of the searched person, where he is also the Assessing Officer of the other person. 4.3 Making the above submissions and relying upon the aforesaid decision, it is prayed to dismiss the present appeals. 5. We have heard the learned counsel for the respective parties at length. 5.1 As observed hereinabove, the short question which is posed for the consideration of this Court is, whether there is a compliance of the provisions of Section 153C of the Act by the Assessing Officer and all the conditions which are 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 Knitwears (supra) as well as by the Delhi High Court in the case of Pepsi Food (P.) Ltd. (supra). As held, before issuing notice under section 153C of the Act, the Assessing Officer of the searched person m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting 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 himself is the Assessing Officer of the searched person and also the Assessing 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 docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the other person , it has to be preceded by a satisfaction note by the Assessing Officer of the searched person. Without fulfilling this requirement, no jurisdiction could be acquired u/s 153C. 6. In the case law of Hon ble High Court of Madras in R.K.M. Powergen (P.) Ltd. (146 Taxmann.com 68), as referred to by Ld. CITDR, AO of the searched person has recorded the requite satisfaction. The same is not the case here. Similar is the case law of Indore Tribunal in Yogesh Jhingan (135 Taxmann.com 351) wherein AO of searched person has recorded the satisfaction. Therefore, these case laws are distinguishable. 7. In the present case, undisputedly, no satisfaction has been recorded by AO of search person i.e. Shri Madanlal D Chawla. Therefore, the jurisdiction acquired for AYs 2010-11 to 2012-13 u/s 153C stood vitiated by law and liable to be quashed. We order so. The corresponding grounds raised by the assessee stand allowed. The other grounds have been rendered academic in nature. All three appeals stand allowed. 8. In AY 2013-14, the short point urged by Ld. AR is that adjudication done by Tribunal in the case of Shri Sanjay Chawla vide ITA Nos.394 to 396/Chny/2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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