M/s Amritsar Scanomed Pvt. Ltd., Amritsar V. DCIT, Chandigarh

CO 22/CHANDI/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2774 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 9 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Depreciation; Search and seizure; Document seized; Block assessment; Documents seized; Unabsorbed depreciation
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1083/CHD/2013 (ASSESSMENT YEAR : 2009-10) THE D.C.I.T., VS. M/S AMRITSAR SCANOMED PVT. LTD., CENTRAL CIRCLE-II, 17/8 KENNEDY AVENUE, CHANDIGARH. AMRITSAR. PAN: AABCA3368A AND C.O.NO.3/CHD/2014 IN ITA NO.1083/CHD/2013 (ASSESSMENT YEAR : 2009-10) M/S AMRITSAR SCANOMED PVT. LTD., VS. THE D.C.I.T., 17/8 KENNEDY AVENUE, CENTRAL CIRCLE-II, AMRITSAR. CHANDIGARH. PAN: AABCA3368A ITA NO.255/CHD/2014 (ASSESSMENT YEAR : 2010-11) THE D.C.I.T., VS. M/S AMRITSAR SCANOMED PVT. LTD., CENTRAL CIRCLE-II, 17/8 KENNEDY AVENUE, CHANDIGARH. AMRITSAR. PAN: AABCA3368A AND C.O.NO.22/CHD/2014 IN ITA NO.255/CHD/2014 (ASSESSMENT YEAR : 2010-11) M/S AMRITSAR SCANOMED PVT. LTD., VS. THE D.C.I.T., 17/8 KENNEDY AVENUE, CENTRAL CIRCLE-II, AMRITSAR. CHANDIGARH. PAN: AABCA3368A (APPELLANT) (RESPONDENT) 2 ASSESSEE BY : SHRI JITENDER NAGPAL DEPARTMENT BY : SHRI RAVI SARANGAL, CIT DR DATE OF HEARING : 13.02.2017 DATE OF PRONOUNCEMENT : 21.02.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CENTRAL), GURG AON DATED 25.9.2013 AND 30.1.2014, RELATING TO ASSESSME NT YEARS 2009-10 AND 2010-11 RESPECTIVELY. THE ASSESS EE HAS FILED CROSS OBJECTIONS AGAINST THE ABOVE APPEAL S. 2. SINCE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL IN BOTH THE APPEALS, THE SAME WERE HEARD TOGETHER A ND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. WE SHALL BE DEALING WITH THE APPEA L OF THE REVENUE IN ITA NO.255/CHD/2014 AND C.O.NO.22/CHD/2014 FILED BY THE ASSESSEE, RELATING TO ASSESSMENT YEAR 2010-11. ITA NO.255/CHD/2014 & C.O.NO.22/CHD/2014 : 3. THE BRIEF FACTS RELATING TO THE CASE ARE THAT A SEARCH OPERATION WAS CARRIED OUT ON DOCTORS OF AMRI TSAR GROUP OF CASES BY THE INVESTIGATION WING, LUDHIANA ON 21.8.2009. A SEARCH & SEIZURE OPERATION WAS CONDUC TED AT THE RESIDENCE PREMISES OF DR.ATUL KAPOOR, DIRECT OR OF 3 THE ASSESSEE COMPANY AND CERTAIN DOCUMENTS BELONGIN G TO THE ASSESSEE COMPANY WERE FOUND. SUBSEQUENTLY, A N OTICE U/S 153C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH, R ETURN DECLARING NIL INCOME WAS FILED BY THE ASSESSEE. T HIS WAS ASSESSED AT RS.53,79,543/- AFTER MAKING AN ADDITION OF RS.22 LACS ON ACCOUNT OF INCOME SURRENDERED BY THE ASSESSEE, AGAINST WHICH SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSSES OF EARLIER YEARS, WAS NOT ALLOWED TO THE ASSESSEE AND FURTHER ADDITION OF RS.31,79,543 WAS MADE ON ACCOUNT OF SUPPRESSED RECEIPTS FOR THE IMPUGNED YEAR. 4. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEA L BEFORE THE LD. CIT (APPEALS) CHALLENGING THE ADDITI ON MADE BOTH ON MERITS AS WELL CHALLENGING THE VALIDITY OF THE ORDER PASSED U/S 153C OF THE ACT. THE LD. CIT (APPEALS) VIDE HER ORDER DATED 30.1.2014 REJECTED THE LEGAL GROUND RAISED BY THE ASSESSEE BUT ALLOWED THE ASSESSEE SET OFF O F UNABSORBED DEPRECIATION CARRIED FORWARD AGAINST THE SURRENDERED INCOME . 5. AGGRIEVED BY THE SAME, THE REVENUE FILED THE PRESENT APPEAL BEFORE US AND THE ASSESSEE FILED THE CROSS OBJECTION AGAINST THE SAME. 6. SINCE IN THE CROSS OBJECTION FILED BY THE ASSESSEE THE ASSESSEE HAS CHALLENGED THE VALIDITY O F THE ASSESSMENT FRAMED U/S 153C OF THE ACT, WE SHALL FIR ST BE 4 TAKING UP THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O.NO.22/CHD/2014. 7. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND IN THE CROSS OBJECTION : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) CENTRAL GURGAON HAS ERRED IN CONFIRMING THE LEGALITY OF ORDER PASSED UNDER SECTION 153C READ WITH SECTION 143(3) DATED 30-12-2011 PASSED BY ACIT CENTRAL CIRCLE CHANDIGARH WHICH IS ILLEGAL, UNJUST ARBITRARY AND OPPOSED TO THE ACTUAL FACTS & CIRCUMSTANCES OF THE CASE AND NEEDS TO BE ANNULLED 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL CIRCLE GURGAON HAS ERRED IN LAW A ND IN FACT IN APPROVING THE APPLICABILITY OF SECTION153 C IN A VERY CASUAL MANNER PARTICULARLY WHEN IT WAS ON RECORD THAT NOTHING RELATING TO THE ASSESSE COMPANY & THAT TOO OF DISCRIMINATING NATURE WAS FOUND FROM THE RESIDENCE OF A DIRECTOR OF THE ASSESSE COMPANY ON WHOM SEARCH WAS CONDUCTED. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) CENTRAL GURGAON HAS FURTHER ERRED IN LAW AND IN FAC T IN UPHOLDING THE ORDER WHEREIN THE JURISDICTION UNDER SECTION 153C HAS BEEN ASSUMED BY THE ASSESSING OFFICER WITHOUT EVEN WHISPERING OF ANY DOCUMENT RELATING TO THE CROSS OBJECTOR/RESPONDENT FOUND FRO M THE PREMISES OF THE DIRECTOR ON WHOM SEARCH WAS CONDUCTED AND AS OF WHAT WAS INCRIMINATING THEREIN. PROVISIONS OF SECTION 153C COULD NOT THEREFORE BE APPLIED LIGHT HEARTEDLY ON MERE PRESUMPTIONS & ASSUMPTIONS AS WAS DONE BY THE ASSESSING OFFICER. T HE ORDER PASSED UNDER SECTION 153C READ WITH SECTION 143 (3) THEREFORE NEEDS TO BE ANNULLED BEING BAD IN LAW AND MAY KINDLY BE ANNULLED. 5 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS FURTHER ERRED IN LAW AND IN FACT IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER WHEREIN THE PROCEEDINGS INITIATED UNDER SECTION 153C HAS BEEN INITIATED SIM PLY BECAUSE NOTICE UNDER SECTION 143(2) COULD NOT BE ISS UED IN TIME. THE ORDER OF THE ASSESSING OFFICER BEING BA D IN LAW AND WAS LIABLE TO BE SET ASIDE AND MAY KINDLY BE SET ASIDE. 8. DURING THE COURSE OF HEARING BEFORE US, THE LD COUNSEL FOR THE ASSESSEE OBJECTED TO THE JURISDICTI ON ASSUMED U/S 153C BY THE ASSESSING OFFICER, ON THE G ROUND AND FOR THE REASON THAT THE ASSESSING OFFICER OF TH E SEARCHED PERSON HAD FAILED TO RECORD SATISFACTION T HAT CERTAIN DOCUMENTS PERTAINING TO THE ASSESSEE WERE F OUND DURING THE COURSE OF SEARCH CONDUCTED AT THE PREMIS ES OF DR.ATUL KAPOOR. THE LD.COUNSEL FOR THE ASSESSEE S TATED THAT IT HAD FILED AN APPLICATION UNDER THE RTI ACT IN THE NAME OF ASSESSEE AS WELL AS THE SEARCHED PERSON DR. ATUL KAPOOR, SEEKING CERTIFIED COPY OF SATISFACTION NOTE RECORDED IN THE CASE OF DR.ATUL KAPOOR WHICH INDIC ATED THAT THE DOCUMENTS RELATING TO THE ASSESSEE WERE FO UND DURING SEARCH AT THIS PREMISES. THE LD. COUNSEL FO R THE ASSESSEE FILED COPY OF THE ORDER PASSED U/S 4(1) OF THE RTI ACT AND POINTED OUT THAT IT CATEGORICALLY STATED TH AT IN THE CASE OF DR.ATUL KAPOOR THAT NO SUCH STATEMENT HAD BEEN RECORDED IN THE CASE OF DR.ATUL KAPOOR. 9. DURING THE COURSE OF HEARING BEFORE US, THE LD. DR WAS ASKED TO PRODUCE THE COPY OF SATISFACTION NO TE OF THE ASSESSING OFFICER OF THE SEARCHED PERSON INDICA TING 6 THE DOCUMENTS RELATING TO THE ASSESSEE, FOUND DURIN G THE COURSE OF SEARCH AND ON THE BASIS OF WHICH THE DOCU MENTS WERE TRANSFERRED TO THE ASSESSING OFFICER OF THE AS SESSEE WHO IN TURN ASSUMED JURISDICTION TO ISSUE NOTICE U/ S 153C TO THE ASSESSEE. THE LD. DR FILED REPLY RECEIVED F ROM THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E-II, CHANDIGARH IN THIS BEHALF ENCLOSING THE DOCUMENTS RELATING TO THE ASSESSEE FOUND DURING SEARCH AT THE RESIDENTIAL PREMISES OF DR.ATUL KAPOOR AND ALSO STA TED THAT ON THE BASIS OF THESE DOCUMENTS THE ASSESSING OFFICER OF THE ASSESSEE RECORDED SATISFACTION NOTE FOR ISSU ING NOTICE U/S 153C TO THE ASSESSEE. COPY OF THE SATIS FACTION NOTE WAS ALSO ENCLOSED. 10. THE LD. COUNSEL FOR THE ASSESSEE THEREAFTER STATED THAT CLEARLY NO SATISFACTION HAD BEEN RECORD ED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON BEFORE TRANSFERRING THE SEIZED DOCUMENTS RELATING TO THE A SSESSEE TO THE ASSESSING OFFICER OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS WAS A SINE QUA NO N FOR THE ASSESSING OFFICER OF THE ASSESSEE TO ASSUME JURISDICTION FOR ISSUING NOTICE U/S 153C AND FRAMIN G ASSESSMENT THEREUNDER. IN THE ABSENCE OF THE SAID, LD.COUNSEL STATED THAT THE ASSESSMENT ORDER WAS INV ALID AND OUGHT TO BE. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF SH.PAWAN MANGLA VS. DCIT IN ITA 7 NO.445/CHD/2015 DATED 14.6.2016 IN SUPPORT OF ITS CONTENTIONS. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ON PERUSING THE DOCUMENTS PLACED BEFORE US, WE FIND ME RIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. IT IS NOT DENIED THAT THE ASSESSMENT IN THE PRESENT CASE WAS FRAMED U/S 153C OF THE ACT. IN THE CASE OF SH.PAWA N MANGLA (SUPRA) THE HON'BLE BENCH HAD DEALT WITH THE ISSUE OF RECORDING OF SATISFACTION BY THE ASSESSING OFFIC ER OF THE SEARCHED PERSON INDICATING THE DOCUMENTS RELATING T O THE ASSESSEE FOUND DURING THE COURSE OF SEARCH. THE I. T.A.T. HELD IN THAT CASE THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON IS REQUIRED IN LAW TO RECORD SATISF ACTION QUA THE DOCUMENTS RELATING TO THE ASSESSEE FOUND DU RING THE COURSE OF SEARCH. THE I.T.A.T. RELIED UPON THE DECISION RENDERED BY THE HON'BLE APEX COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT (2007) 289 ITR 341 (SC) AND CIT VS. CALCUTTA KNITWEARS (2014) 362 ITR 673 RENDE RED IN THE CONTEXT OF SECTION 158BD ON THIS ISSUE. THE I.T.A.T. ALSO RELIED UPON THE DECISION OF THE HON'B LE GUJARAT HIGH COURT IN THE CASE OF RAJHANS BUILDERS VS. CIT, 226 TAXMAN 415 (GUJARAT), WHICH STATED THAT TH E PROVISIONS OF SECTION 158BD AND SECTION 153C ARE IN PARI- MATERIA. THEREAFTER RELYING UPON THE DECISION OF T HE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V S.. GOPI APARTMENTS, 365 ITR 411 (ALL) AND HON'BLE MADH YA PRADESH HIGH COURT IN THE CASE OF CIT VS. MECHMEN, 380 8 ITR 59 (MP) THE ITAT HELD THAT RECORDING OF SATISF ACTION BY THE AO OF THE SEARCHED PERSON REGARDING DOCUMENT S FOUND DURING SEARCH RELATING TO THIRD PERSONS IS A PREREQUISITE BEFORE THE AO OF THE THIRD PERSON CAN VALIDLY ASSUME JURISDICTION TO FRAME ASSESSMENT ON THE THIR D PERSON. THE RELEVANT FINDINGS OF THE ITAT AT PARA 8 & 9 OF ITS ORDER IS AS UNDER: 8. IN THE PRESENT CASE A.O. OF THE SEARCHED PERSON DID NOT RECORD ANY SATISFACTION THAT ANY OF THE DOCUMENTS FOUND DU RING THE COURSE OF SEARCH BELONGED TO THE THIRD PERSON I.E. THE APP ELLANT ASSESSEE AS CAN BE SEEN FROM THE PLAIN READING OF THE REASON RE CORDED. MOREOVER, SUCH SATISFACTION HAS NOT BEEN RECORDED IN THE CASE RECORDS OF THE SEARCHED PERSON BY THE A.O. OF THE SEARCHED PERSON IN THAT CAPACITY. A.O. OF THE SEARCHED PERSON AND A.O. OF THE APPELLA NT ASSESSEE I.E. THE THIRD PERSON EVEN IF IS ONE AND THE SAME PERSON BUT IT HAS BEEN HELD IN VARIOUS JURIDICAL DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE THAT A.O. OF THE SEARCHED PERSON IS REQUIR ED IN LAW TO RECORD SATISFACTION IN THE CASE RECORDS OF THE SEAR CHED PERSON AS AN A.O. OF THE SEARCHED PERSON. IT IS NOT OUT OF PLACE TO MENTION THAT THE RECORDING OF SATISFACTION BY THE A.O. EVEN IF A SSESSING OFFICER IS ONE AND THE SAME PERSON IS NO LONGER RES-INTEGRA IN AS MUCH AS HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOPI APARTMENTS 365 ITR 411 (ALL) AND HON'BLE MADHYA PRADESH HIGH C OURT IN THE CASE OF CIT VS. MECHMEN 380 ITR 591 (MP) HAVE SIMILARLY HELD. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOPI AP ARTMENTS (SUPRA) HELD AS FOLLOWS: 25. A BARE PERUSAL OF THE PROVISION CONTAINED IN SECTIO N I53C OF THE I.T. ACT LEAVES NO DOUBT THAT, AS IS PROVIDED U NDER SECTION 158BD, WHERE THE ASSESSING OFFICER, WHILE PROCEEDIN G UNDER SECTION 153A AGAINST A PERSON WHO HAS BEEN SUBJECTE D TO SEARCH AND SEIZURE UNDER SECTION132(1]OR HAS BEEN PROCEEDE D UNDER SECTION 132A, IS SATISFIED THAT ANY MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERS ON OTHER THAN THE PERSON REFERREDTOINSECTION153A,THEN THE BOOKS OF AC COUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL B E HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINSTEAC H SUCH OTHER 9 PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSES SOR REASSESS INCOME OF SUCH OTHE RPERSON IN ACCORDANCE WITH THEP ROVISIONS OF SECTION 153A. 26. THUS, THERE ARE TWO STAGES: (1J THE FIRST STAGE COMPRISES OF A SEARCH AND SEIZU RE OPERATION UNDER SECTION 132 OR PROCEEDING UNDER SECTION 132A AGAINS T A PERSON, WHO MAY BE REFERRED AS 'THE SEARCHED PERSON'. BASED ON SUCH SEARCH AND*SEIZURE, ASSESSMENT PROCEEDINGS ARE INITIATED A GAINST THE 'SEARCHED PERSON' UNDER SECTION 153A. AT THE TIME OF INITIATI ON OF SUCH PROCEEDINGS AGAINST THE 'SEARCHED PERSON' OR DURING THE ASSESSMENT PROCEEDINGS AGAINST HIM OR EVEN AFTER THE COMPLETIO N OF THE ASSESSMENT PROCEEDINGS AGAINST HIM, THE ASSESSING O FFICER OF SUCH A 'SEARCHED PERSON', MAY, IF HE IS SATISFIED, THAT AN Y MONEY, DOCUMENT ETC. BELONGS TO A PERSON OTHER THAN THE SEARCHED PE RSON, THEN SUCH MONEY, DOCUMENTS ETC. ARE TO BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER 'SUCH OTHER PERSON'. (2) THE SECOND STAGE COMMENCES FROM THE RECORDING O F SUCH SATISFACTION BY THE ASSESSING OFFICER OF THE 'SEARC HED PERSON' FOLLOWED BY HANDING OVER OF ALL THE REQUISITE DOCUMENTS ETC. TO THE ASSESSING OFFICER OF SUCH 'OTHER PERSON', THEREAFTER FOLLOWED BY ISSUANCE OF THE NOTICE OF THE PROCEEDINGS UNDER SECTION 153C READ W ITH SECTION I53A AGAINST SUCH 'OTHER PERSON'. 27. THE INITIATION OF PROCEEDINGS AGAINST 'SUCH OTHER P ERSON' ARE DEPENDANT UPON A SATISFACTION BEING RECORDED. SUCH SATISFACTION MAY BE DURING THE SEARCH OR AT THE TIME OF INITIATION O F ASSESSMENT PROCEEDINGS AGAINST THE 'SEARCHED PERSON', OR EVEN DURING THE ASSESSMENT PROCEEDINGS AGAINST HIM OR EVEN AFTER COMPLETION OF THE SAME, BUT BEFORE ISSUANCE OF NOTI CE TO THE 'SUCH OTHER PERSON 'UNDER SECTION I53C. 28. EVEN IN A CASE, WHERE THE ASSESSING OFFICER OF BOTH THE PERSONS IS THE SAME AND ASSUMING THAT NO HANDING OVER OF DOCU MENTS IS REQUIRED, THE RECORDING OF 'SATISFACTION' IS A MUST , AS, THAT IS THE FOUNDATION, UPON WHICH THE SUBSEQUENT PROCEEDINGS A GAINST THE 'OTHER PERSON' ARE INITIATED. THE HANDING OVER OF DOCUMENT S ETC. IN SUCH A CASE MAY OR MAY NOT BE OF MUCH RELEVANCE BUT THE RECORDI NG OF SATISFACTION IS STILL REQUIRED AND IN FACT IT IS MANDATORY. 29. IN THIS REGARD, THE RATIO OF THE JUDGMENT OF THE SU PREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX-ILL VS. M/S CALC UTTA KNITWEARS, LUDHIANA (SUPRA),AS NOTED ABOVE, CLEARLY APPLIES TO THE PROCEEDINGS UNDER SECTION I53C ALSO. 30. THE 'SATISFACTION 1 HAS TO BE IN WRITING AND CAN BE GATHERED FROM THE ASSESSMENT ORDER PASSED IN RESPECT OF THE 'SEARCHED PERSON', IF IT IS SO MENTIONED/RECORDED OR FROM ANY OTHER ORDER, NOTE OR RECORD MAINTAINED BY THE ASSESSING OFFICER OF THE SEARCHE D PERSON'. THE WORD 'SATISFACTION' REFERS TO THE STATE OF MIND OF THE A SSESSING OFFICER OF THE PERSON SEARCHED, WHICH GETS REFLECTED IN A TANGIBLE SHAPE/ FORM, WHEN IT IS REDUCED INTO WRITING. IT IS THE CONCLUSION DRAWN OR THE FINDING RECORDED ON THE FOUNDATION OF THE MATERIAL AVAILABL E. IN THIS REGARD, REFERENCE MAY BE MADE TO THE PRONOUNCEMENTS IN THE CASE OF C.I.T. VS. RADHEY SHYAM BANSAL, (2011) 337 ITR 217 (DELHI) AND THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF C.I.T. VS. CLASSIC ENTERPRISES REPORTED IN (2013) 358 ITR 465 (ALLAHABAD). 31. IN THE CASE OF MANISH MAHESHWARI VS. ASSISTANT COM MISSIONER OF LNCOME TAX AND ANOTHER, (2007) 289 ITR 341 (SC), THEIR LORDSHIPS HAD THE OCCASION TO CONSIDER THE PROVISIONS OF SECT IONS 158BC AND 158BD AND HELD THAT THE CONDITIONS PRECEDENT FOR TA KING RECOURSE TO A BLOCK ASSESSMENT INTERMS OF SECTON 158BC AND 158BD (I) WERE AS 10 UNDER: '(II) SATISFACTION MUST BE RECORDED BY THE ASSESSIN G OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OF THE ACT; (IF) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVINGJURISDICTION OVER SUCH OTHER PERSON; AND (III ) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHE R PERSON. 11. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVI SIONS OFSECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVI SIONS, OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THEPERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS ANDOFHER ASSETS HAD BEEN REQUISITIONED UNDER SECTION J32A OF THE ACT.' 32. THE RATIO OF THE JUDGMENT IN MANISH MAHESHWARI' S CASE ALSO APPLIES TO THE PROVISIONS OF SECTION 153C AND TO THE FACTS OF THIS CASE. THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE O F CIT VS. MECHMEN (SUPRA) LIKEWISE HELD AS FOLLOWS: '18. THE CONCOMITANT OF THIS CONCLUSION, IS THAT, T HE LEGAL POSITION AS APPLICABLE TO SECTION 158BD REGARDING S ATISFACTION IN THE FIRST INSTANCE OF THE FIRST ASSESSING OFFICE R FORWARDING THE ITEMS TO THE ASSESSING OFFICER HAVING JURISDICTION; AND IN THE SECOND INSTANCE OF THE ASSESSING OFFICER HAVING JUR ISDICTION WHILST SENDING NOTICE TO SUCH OTHER PERSON (OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A), MUST APPLY PRO PRIO VIGORE. THE FACT THAT INCIDENTALLY THE ASSESSING OFFICER IS COMMON AT BOTH THE STAGES WOULD NOT EXTRICATE HIM FROM RECORDING S ATISFACTION AT THE RESPECTIVE STAGES. IN THAT, THE ASSESSING OF FICER IS SATISFIED THAT THE ITEMS REFERRED TO IN SECTION 153C BELONGS OR BELONG TO A PERSON (OTHER THAN THE PERSON REFERRED TO IN SECTIO N 153A), BEING A SINE QUA NON. HE CANNOT ASSUME JURISDICTION TO TR ANSMIT THOSE ITEMS TO ANOTHER FILE WHICH INCIDENTALLY IS PENDING BEFORE HIM CONCERNING OTHER PERSON (PERSON OTHER THAN THE PERS ON REFERRED TO IN SECTION 153A). THE QUESTION AS TO WH ETHER THAT MAY INFLUENCE THE OPINION OF THE ASSESSING OFFICER HAVI NG JURISDICTION OVER SUCH OTHER PERSON, ALSO CANNOT BE THE BASIS TO TAKE ANY OTHER VIEW. AS A MATTER OF FACT, THE OTHER ASSESSIN G OFFICER TO WHOM THE ITEMS ARE HANDED OVER, BEFORE ISSUING NOTI CE MUST HIMSELF BE SATISFIED AFTER DUE VERIFICATION OF THE ITEMS RECEIVED AND THE DISCLOSURES MADE BY THE OTHER PERSON IN THE RETURNS FOR THE RELEVANT PERIOD ALREADY FILED BY THE OTHER PERS ON IN THE RETURNS FOR THE RELEVANT PERIOD ALREADY FILED BY TH E OTHER PERSON BEFORE HIM. FOR THE SAME REASON, WE MUST REJECT THE ARGUMENT OF THE DEPARTMENT THAT THE DISCRETION OF THE ASSESSING OFFICER HAVING JURISDICTION WILL BE IMPAIRED IN ANY MANNER, IF HE WERE TO HOLD A DIFFERENT VIEW. SIMILARLY, AS THERE IS NO PR OVISION EITHER EXPRESS OR IMPLIED (IN THE ACT) TO DISPENSE WITH TH E REQUIREMENT OF SATISFACTION, IF THE ASSESSING OFFICER HAPPENS T O BE THE SAME, AS IN THIS CASE, THE ARGUMENT OF THE DEPARTMENT MUS T BE NEGATIVED. 19. AFTER RECEIPT OF THE MATERIALS, THE ASSESSING O FFICER HAVING JURISDICTION IS EXPECTED TO CONDUCT ENQUIRY AND DUE VERIFICATION OF THE RELEVANT FACTS; BEFORE FORMING HIS PRIMA FAC IE SATISFACTION. THE ASSESSING OFFICER HAVING JURISDICTION WILL BE W ELL WITHIN HIS RIGHTS TO FORM AN INDEPENDENT VIEW BEFORE ISSUING N OTICE TO THE OTHER PERSON (PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A) UNDER HIS JURISDICTION ON THE BASIS OF HIS OW N ENQUIRY. IN OUR OPINION, THE VIEW FORMED BY THE ASSESSING OFFIC ER AFTER HIS OWN ENQUIRY DOES NOT ENTAIL IN SEATING IN APPEAL OV ER THE 11 SATISFACTION OF THE FIRST ASSESSING OFFICER, WHO HA D HANDED OVER THE ITEMS TO HIM. 20. AS A RESULT, WE HOLD THAT THERE IS NO INFIRMITY IN THE VIEW TAKEN BY THE TRIBUNAL ON THE QUESTIONS UNDER CONSIDERATION. THE VIEW TAKEN BY US IS REINFORCED F ROM THE DECISIONS OF OTHER HIGH COURTS IN THE CASES OF CIT V. GOPI APARTMENT (SUPRA), PEPSI FOODS P. LTD. (SUPRA), PEP SICO INDIA HOLDINGS P. LTD. (SUPRA) AND LASTLY, CIT V. SMT. MA DHU KESHWANI (SUPRA). THE OBSERVATIONS OF THE DELHI HIG H COURT IN THE CASE OF SSP AVIATION LTD. (SUPRA) HAVE BEEN EXPLAINED IN THE SUBSEQUENT CASE OF PEPSICO INDIA H OLDINGS P. LTD. (SUPRA). 21. WE CONCLUDE THAT THE CONDITION PRECEDENT FOR RE SORTING TO ACTION UNDER SECTION 158BD DELINEATED BY TH E SUPREME COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) AND IN THE RECENT CASE OF CIT V. CALCUTTA KNITWEARS (SUPRA),WO ULD APPLY ON ALL FOURS MANDATING SATISFACTION OF THE ASSESSING O FFICER(S) DEALING WITH THE CASE AT THE REPRESENTATIVE STAGES REFERRED TO IN SECTION I53C. 9. IN VIEW OF THE ABOVE WE HOLD THAT IN THE ABSENCE OF A VALID RECORDING OF SATISFACTION BY THE AO OF THE SEARCHED PERSON I.E; DR. NARESH MITTAL THAT CERTAIN DOCUMENTS FOUND DURING THE COUR SE OF SEARCH BELONG TO THE ASSESSEE, THE ASSUMPTION OF JURISDICT ION U/S 153 C IN THE CASE OF THE ASSESSEE WAS INVALID. 12. MOREOVER, WE FIND THAT EVEN THE CBDT HAS ISSUED A CIRCULAR ON THE ISSUE CIRCULAR NO.24/2015, DATED 31.12.2015 ACCEPTING THE VIEW OF THE APEX COURT IN THE CASE OF CALCUTTA KNITWEARS (SUPRA) THAT THE RECORDI NG OF SATISFACTION BY THE AO OF THE SEARCHED PERSON IS A PRE REQUISITE BEFORE TRANSMITTING THE DOCUMENTS TO THE AO OF THE THIRD PERSON. THE CIRCULAR ALSO DIRECTS APPEAL S ON THE SAID ISSUE TO BE DECIDED ON THIS VIEW AND ALSO THAT PENDING LITIGATION ON THE ISSUE BE WITHDRAWN. THE C BDT CIRCULAR NO.24/2015 DATED 31.12.2015 IS REPRODUCED HEREUNDER: CIRCULAR NO. 24/2015 F.NO.279/MISC./140 /2015/ITJ GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES 12 NEW DELHI, 31ST DECEMBER, 2015 SUBJECT: RECORDING OF SATISFACTION NOTE UNDER SECTI ON 158BD/153C OF THE ACT - REG.- THE ISSUE OF RECORDING OF SATISFACTION FOR THE PURP OSES OF SECTION 158BD/153C HAS BEEN SUBJECT MATTER OF LITIGATION. 2. THE HON'BLE SUPREME COURT IN THE CASE OF M/S CAL CUTTA KNITWEARS IN ITS DETAILED JUDGMENT IN CIVIL APPEAL NO.3958 OF 2014 DATED 12.3.2014(AVAILA BLE IN NJRS AT 2014-LL-0312-51) HAS LAID DOWN THAT FOR THE PURPOSE OF SECTION 158BD OF THE A CT, RECORDING OF A SATISFACTION NOTE IS A PREREQUISITE AND THE SATISFACTION NOTE MUST BE PREP ARED BY THE AO BEFORE HE TRANSMITS THE RECORD TO THE OTHER AO WHO HAS JURISDICTION OVER SUCH OTHE R PERSON U/S 158BD. THE HON'BLE COURT HELD THAT 'THE SATISFACTION NOTE COULD BE PREPARED AT AN Y 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 T HE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT; OR (C) IMMEDIATELY AFTER THE ASSE SSMENT PROCEEDINGS ARE COMPLETED UNDER SECTION 15SBC OF THE ACT OF THE SEARCHED PERSON.' 3. SEVERAL HIGH COURTS HAVE HELD THAT THE PROVISIONS O F SECTION 153C OF THE ACT ARE SUBSTANTIALLY SIMILAR/PARI-MATERIA TO THE PROVISIONS OF SECTION 1 58BD OF THE ACT AND THEREFORE, THE ABOVE GUIDELINES OF THE HON'BLE SC, APPLY TO PROCEEDINGS U/S 153C OF THE IT ACT, FOR THE PURPOSES OF ASSESSMENT OF INCOME OF OTHER THAN THE SEARCHED PER SON. THIS VIEW HAS BEEN ACCEPTED BY CBDT. 4. THE GUIDELINES OF THE HON'BLE SUPREME COURT AS REFE RRED TO IN PARA 2 ABOVE, WITH REGARD TO RECORDING OF SATISFACTION NOTE, MAY BE BROUGHT TO T HE NOTICE OF ALL FOR STRICT COMPLIANCE. IT IS FURTHER CLARIFIED THAT EVEN IF THE AO OF THE SEARCH ED PERSON AND THE 'OTHER PERSON' IS ONE AND THE SAME, THEN ALSO HE IS REQUIRED TO RECORD HIS SATISF ACTION AS HAS BEEN HELD BY THE COURTS. 5. IN VIEW OF THE ABOVE, FILING OF APPEALS ON THE ISSU E OF RECORDING OF SATISFACTION NOTE SHOULD ALSO BE DECIDED IN THE LIGHT OF THE ABOVE JUDGEMENT. ACC ORDINGLY, THE BOARD HEREBY DIRECTS THAT PENDING LITIGATION WITH REGARD TO RECORDING OF SATI SFACTION NOTE UNDER SECTION 158BD /153C SHOULD BE WITHDRAWN/NOT PRESSED IF IT DOES NOT MEET THE GU IDELINES LAID DOWN BY THE APEX COURT. (RAMANJIT KAUR SETHI) DCIT (OSD) (ITJ), CBDT, NEW DELHI. 13. THEREFORE, IT IS SETTLED THAT FOR THE PURPOSE OF ASSUMING JURISDICTION U/S 153C, THE FIRST PRE-REQUI SITE IS THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON H AS TO RECORD SATISFACTION THAT THE DOCUMENTS RELATING TO OTHER PERSON WERE FOUND DURING THE COURSE OF SEARCH AND THEREAFTER HANDOVER THE DOCUMENTS TO THE ASSESSING OFFICER OF THE OTHER PERSON. 14. IN THE PRESENT CASE, THE ORDER PASSED IN RESPONSE TO THE RTI APPLICATION FILED BY THE ASSESS EE AS ALSO THE REPLY OF THE LD. DR ON A SPECIFIC QUERY RA ISED BY THE BENCH IN THIS REGARD, AMPLY PROVES THAT THERE W AS NO 13 SATISFACTION RECORDED BY THE ASSESSING OFFICER OF T HE SEARCHED PERSON VIS-A-VIS THE DOCUMENTS RELATING TO THE ASSESSEE FOUND DURING THE COURSE OF SEARCH. THE OR DER PASSED U/S 4(1) OF THE RTI ACT, 2005 ON APPLICATION FILED BY DR.ATUL KAPOOR THE SEARCHED PERSON SPECIFICALLY SEEKING THE FOLLOWING INFORMATION: I) CERTIFIED COPY OF THE SATISFACTION NOTE RECORDED IN THE CASE OF THE APPLICANT INDICATING THAT THE DOCUMENTS RELATING TO THE LAB TESTING MACHINE PERTAINS TO AMRITSAR SCANOMED PVT. LTD. THE REPLY WAS GIVEN AS UNDER : NO SUCH STATEMENT IS RECORDED IN THE CASE OF THE APPLICANT. HOWEVER, THE ASSESSING OFFICER HAS RECORDED SATISFACTION NOTE IN THE CASE OF M/S AMRITSAR SCANOMED PVT. LTD., 17/8, KENNEDY AVENUE, AMRITSAR-143001, PUNJAB, IN WHICH NOTICE U/S 153C HAD BEEN ISSUED. 15. MOREOVER, THE COPY OF THE REPLY FILED BY THE L D. DR IN RESPONSE TO HIS QUERY PUT TO THE CONCERNED AC IT IN THIS REGARD, FINDS NO MENTION OF ANY SATISFACTION N OTE RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED P ERSON. THE REPLY DATED 25.11.2016 RECEIVED BY THE LD. DR I S REPRODUCED HEREUNDER: GOVERNMENT OF INDIA INCOME TAX DEPARTMENT OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, ROOM NO.2, C.R. BUILDING, SECTOR 17-E, CHANDIGARH NO. ACIT/CC-H/CHD / 2016-17/1881 DATED: 25.11.2016 TO THE COMMISSIONER OF INCOME TAX (DR) (ITAT)-L, AAYAKAR BHAWAN, FOURTH FLOOR, HIMLAYA MARG, SECTOR 17-E, CHANDIGARH - 160017 14 SIR, SUB.: APPEAL IN THE CASE OF M/S AMRITSAR SCANOMES P VT. LTD., AMRITSAR ITA NO. 1083/CHD/2013-A.Y. 2009-10 - REG- ***** IN THIS REGARD, IT IS SUBMITTED THAT DURING THE COU RSE OF SEARCH PROCEEDINGS AT THE RESIDENTIAL PREMISES OF DR. ATUL KAPOOR AT H. NO. 114, DAYANAND SAGAR, AMRITSAR FOLLOWING DOCUMENTS WERE F OUND RELATING TO M/S AMRITSAR SCANOMES PVT. LTD. :- ANNEXURE A-L, PAGE 29 & 30 THESE ARE THE COPIES OF THE INVOICES DATED 08.09.20 08 ISSUED BY RFCL OF RS.13,52,000/- (COPIES OF SAME ARE ENCLOSED). ON THE BASIS OF THESE DOCUMENTS, THE ASSESSING OFFI CER ISSUED NOTICE U/S 153C OF THE I.T. ACT, 1961 TO M/S AMRITSAR SCANOMES PVT. LTD AFTER RECORDING REASONS AND SATISFACTION NOTE FOR ISSUING OF NOTICE U/S 153C OF I.T. ACT61. COPY OF SATISFACTION NOTE RECORDED IN THIS REGARD IS ENCLOSED HEREWITH AS DESIRED. (BANDANA DIWEDI) ENCL. AS ABOVE. ASSTT. COMMISSIONER OF INCOME TA X, CENTRAL CIRCLE-II, CHANDIGARH 16. IT IS EVIDENT FROM THE ABOVE THAT NO SATISFAC TION WAS RECORDED IN THE CASE OF SEARCHED PERSON DR.ATU L KAPOOR QUA THE DOCUMENTS FOUND RELATING TO THE ASSE SSEE. THEREFORE, IN VIEW OF THE JUDICIAL PRECEDENCE IN TH IS REGARD, WE HOLD THAT THE ASSESSING OFFICER OF THE A SSESSEE HAD NO JURISDICTION TO PASS THE IMPUGNED ORDER U/S 153C OF THE ACT AND FOR THIS REASON WE SET ASIDE THE ORD ER PASSED BY THE ASSESSING OFFICER. IN VIEW OF THE AB OVE, THE CROSS OBJECTION FILED BY THE ASSESSEE STANDS ALLOWE D. 17. SINCE WE HAVE SET ASIDE THE ORDER PASSED U/S 153C IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THE ADDITIONS MADE THEREIN DO NOT SURVIVE. FOR THIS RE ASON, THE APPEAL OF THE REVENUE AGAINST THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE HAS NO RELEVANCE AND THE SAME THEREFORE STANDS DISMISSED. 15 18. IN EFFECT, THE APPEAL OF THE REVENUE IS DISMIS SED AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWE D. ITA NO.1383/CHD/2013 & C.O.NO.3/CHD/2014 : 19. SINCE THE FACTS & CIRCUMSTANCES AND ISSUES INVOLVED IN BOTH THE APPEALS AND CROSS OBJECTIONS A RE IDENTICAL AND EVEN THE SUBMISSIONS MADE BY COUNSELS WERE SIMILAR TO THAT FOR ASSESSMENT YEAR 2010-11 IN ITA NO.255/CHD/2014 & C.O.NO.22/CHD/2014, THEREFORE, OU R DECISION RENDERED IN ITANO.255/CHD/2014 & C.O.NO.22/CHD/2014 FOR ASSESSMENT YEAR 2009-10 WILL APPLY TO ITA NO.1083/CHD/2013 & C.O.NO.3/CHD/2014 WITH EQUAL FORCE. 20. IN EFFECT, THE APPEAL OF THE REVENUE IS DISMIS SED AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWE D. 21. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED AND BOTH THE CROSS OBJECTIONS FILED B Y THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST FEBRUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 16