Dy.CIT, Central Circle-7, Hyderabad V. M/s Victorian Granites Private Limited, Hyderabad

ITA 1057/HYD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6275 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 19-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 27-05-2014
• Court: TRIBUNAL
• Department Lawyers: A SITARAMRAOD R
• Assessee Lawyers: SHRIP MURALI MOHAN RAO
• Keywords: Search and seizure; Document seized; Revised return; Documents seized
• Section: 143(3); 142(1); 153A; 234B; 131; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1056 TO 1061/HYD/2014 ASSESSMENT YEAR : 2003-04 TO 2008-09 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-7, HYDERABAD. VS. M/S VICTORIAN GRANITES PVT. LTD., HYDERABAD. PAN:AAACV 6736 D APPELLANT RESPONDENT ITA NO. 1270 TO 1275/HYD/2014 ASSESSMENT YEAR : 2003-04 TO 2008-09 M/S VICTORIAN GRANITES PVT. LTD., HYDERABAD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-7, HYDERABAD. PAN: AAACV 6736 D APPELLANT RESPONDENT FOR REVENUE: SHRI A. SITARAMRAO(D.R.) FOR ASSESSEE: SHRIP. MURALI MOHAN RAO (AR) DATE OF HEARING: 26/07/2016 DATE OF PRONOUNCEMENT: 27/07/2016 2 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. O R D E R PER:BENCH THESE ARE GROUPS OF CROSS APPEALS ONE GROUP FILED B Y THE REVENUE AND ANOTHER GROUP FILED BY THE ASSESSEE ARISE AGAIN ST THE ORDER DATED 03/02/2014 PASSED BY THE LD. CIT(A)-6, HYDERABAD F OR THE A.Y. 2003- 04 TO 2008-09. THE COMMON GROUNDS TAKEN BY THE REVE NUE AS WELL AS THE ASSESSEE IN APPEALS ARE AS UNDER:- GROUNDS IN REVENUES APPEALS . 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITIONS BY FOLLOWING THE RATIO LAID DOWN IN THE CASE OF ALL CA RGO GLOBAL LOGISTICS 137 ITD 287 WITHOUT GOING INTO THE MERITS OF THE ISSUES. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. GROUNDS IN ASSESSEES APPEALS . 1. THE CIT(A)-VI, HYDERABAD ERRED WHILE PASSING TH E ORDER FOR THE A.Y. 2003-04, WHEREIN THE GROUNDS FILED FOR THE FOLLOWING DIFFERENT GROUNDS MADE TOWARDS THE ADDITIONS MADE H AD NOT BEEN ADJUDICATED WHICH IS NOT CORRECT AND NOT JUSTI FIED AND BAD IN LAW. 3 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. 2. THE CIT(A)-VI, HYDERABAD PASSED THE APPELLATE OR DER ONLY ON TECHNICAL GROUNDS AND THE FOLLOWING GROUNDS HAS NOT BEEN CONSIDERED WHICH IS NOT CORRECT AND BAD IN LAW. 3. THE CIT(A)-VI, HYDERABAD OUGHT TO HAVE ADJUDICAT ED ALL THE GROUNDS WHICH ARE ON MERITS AGAINST THE ORDER PASSE D U/S 143(3) R.W.S. 153C OF THE INCOME TAX ACT, 1961 TOWA RDS THE ADDITIONS/DISALLOWANCES MADE FOR THE A.Y. 2003-4 WH ICH IS NOT CORRECT, NOT JUSTIFIED AND BAD IN LAW. 4. THE CIT(A)-VI, HYDERABAD ERRED WHILE PASSING THE ORDER WHEREIN THE ORDER OF THE A.O. IS ERRONEOUS, UNJUST AND CONTRARY TO THE FACTS OF THE CASE AND THE GROUNDS S UBMITTED HAS NOT BEEN ADJUDICATED. 5. DURING THE TIME OF SEARCH, NO INCREMENTAL MATERI ALS HAS BEEN FOUND OUT OR DETECTED AND THE ASSESSEE HAS FURNISHE D ALL THE RELEVANT INFORMATION AND JUSTIFICATION AND CLARIFIC ATION WHICH HAS BEEN RAISED AND THE SAME HAS NOT BEEN CONSIDERE D WHICH IS NOT CORRECT AND NOT JUSTIFIED AND BAD IN L AW. 6. THE APPELLANT COMPANY HAS PLACED RELIANCE ON THE CASE LAW OF SAURASTHRA BALL PEN (P) LTD. VS DCIT, ITAT MEMBA I-I BENCH VIDE CITATION NO. 2008-24 SOT 556 MUMBAI WHER EIN IT HAS BEEN HELD THAT THE PROFIT HAS TO BE TAKEN ON TH E BASIS OF THE AVERAGE AND THE SAME SHOULD BE FOLLOWED IN THE CASE OF THE APPELLANT. 7. ALTERNATIVELY, THE INCOME RETURNED BY THE APPELL ANT COMPANY MAY PLEASE BE ACCEPTED FOR THE PURPOSE OF TAXATION. 8. THE CIT(A)-VI, HYDERABAD ERRED WHILE PASSING THE ORDER WHEREIN THE A.O. IS ERRED IN DISALLOWING OF RS. 8,6 92/- TOWARDS PRIOR PERIOD EXPENSES TO ARRIVE THE TOTAL I NCOME WITHOUT GIVING THE OPPORTUNITY TO THE APPELLANT COM PANY. 4 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. 9. THE CIT(A) -VI, HYDERABAD ERRED WHILE PASSING TH E ORDER, WHEREIN THE A.O. ERRED BY DISALLOWING RAW BLOCK CUT TING AND DRESSING CHARGES OF RS. 63,08,838/- AS THE ADDITION AL INCOME OF THE APPELLANT HAS NOT BEEN ADJUDICATED. 10. THE CIT(A) -VI, HYDERABAD ERRED WHILE PASSING T HE ORDER WHEREIN IT SHOULD HAVE BEEN CONSIDERED THAT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT COM PANY HAS ALREADY SUBMITTED ALL THE INFORMATION PERTAININ G TO THE PAYMENTS MADE TO THE PARTIES AND ALSO SUBMITTED INC OME TAX PARTICULARS OF THE ABOVE PERSONS. HENCE, THE DISALLOWANCE ARE NOT WARRANTED. 11. THE CIT(A) -VI, HYDERABAD ERRED WHILE PASSING T HE ORDER, WHEREIN THE A.O. ERRED BY DISALLOWING RAW BLOCK CUT TING AND DRESSING CHARGES OF RS. 31,25,000/- AS THE ADDITION AL INCOME OF THE APPELLANT THE GROUNDS WHICH HAS NOT B EEN ADJUDICATED AND WHICH IS NOT CORRECT AND NOT JUSTIF IED. 12. THE CIT(A) -VI, HYDERABAD ERRED WHILE PASSING T HE ORDER WHEREIN DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE APPELLANT COMPANY HAS ALREADY SUBMITTED ALL THE INFORMATION PERTAINING TO THE PAYMENTS MADE TO THE PARTIES AND ALSO SUBMITTED INCOME TAX PARTICULARS OF THE AB OVE PERSONS. HENCE, THE DISALLOWANCE CANNOT SUSTAIN ON MERITS. 13. THE CIT(A) -VI, HYDERABAD ERRED WHILE PASSING T HE ORDER WHEREIN THE A.O. ERRED IN CHARGING INTEREST U/S 234 A OF RS. 8,05,390/- U/S 234B OF RS. 29,03,491/- AND RS. 2,89 ,346/- U/S 234C HAS NOT BEEN ADJUDICATED. 14. THE CIT(A) -VI, HYDERABAD ERRED WHILE PASSING T HE ORDER WHEREIN THE A.O. HAS ERRED WHILE INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT, 1961 ON THE 5 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. CONTENTION THAT THE ASSESSEE COMPANY HAS CONCEALED INCOME WHICH IS NOT CORRECT AND NOT JUSTIFIED. 15. THE CIT(A) -VI, HYDERABAD ERRED WHILE PASSING T HE ORDER WHEREIN THE ASSESSEE COMPANY HAS NOT CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF INFOR MATION. HENCE, PENALTY PROCEEDINGS U/S 271(1)(C) IS NOT COR RECT AND NOT JUSTIFIED. 16. THE CIT(A) -VI, HYDERABAD ERRED WHILE PASSING T HE ORDER WHEREIN ONLY THE ADDITIONAL GROUNDS REGARDING NO INCRIMINATING SEIZED MATERIALS FOUND HAS BEEN CONSI DERED AND OTHER ABOVE STATED GROUNDS HAVE NOT BEEN CONSID ERED WHICH IS NOT CORRECT AND NOT JUSTIFIED AND BAD IN L AW. 17. THE ASSESSEE MAY ADD, ALTER OR MODIFY OR SUBSTI TUTE ANY OTHER POINTS TO THE GROUNDS OF APPEAL AT ANY TIME B EFORE OR AT THE TIME OF HEARING OF THE APPEAL. ADDITIONAL GROUND OF APPEAL 18. WE WOULD LIKE TO SUBMIT THAT AS PER THE RATION LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF N ATIONAL THERMAL POWER CO. LTD. VS CIT (1998) 229 ITR 383 (S C) THE ITAT HAS JURISDICTION TO EXAMINE THE QUESTION OF LA W WHICH THOUGH NOT AROSE BEFORE THE A.O. BUT AROSE BEFORE T HE ITAT FOR THE FIRST TIME. 19. THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE A.O. BY INVOKING THE PROVISIONS OF SECTION 153C OF THE ACT FOR THE ASSESSMENT YEAR 2003-04, THERE BEING NO SATISFACTIO N RECORDED BY HIM AS WELL AS BY THE A.O. HAVING JURIS DICTION OVER THE COMPANY SEARCHED. 6 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. 20. THE LD. CIT(A) OUGHT TO HAVE ANNULLED THE ORDER OF THE A.O. APPRECIATING THAT INVOKING OF THE PROVISIONS U/S 15 3C WITHOUT RECORDING SATISFACTION BY HIM AS WELL AS BY THE A.O. HAVING JURISDICTION OVER THE SEARCHED PARTY BECOMES INVALID AS HELD BY THE HONBLE A.P. HIGH COURT IN THE CASE OF CIT VS M/S SHETTYS PHARMACEUTICALS &BIOLOGICALS LTD. IN IT A NO. 662 OF 2014 DATED 26/11/2014. SIMILAR IDENTICAL GROUNDS WERE TAKEN BY THE REVENU E AND ASSESSEE IN OTHER YEARS I.E. FROM 2004-05 TO 2008-09. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS ASSESSED TO INCOME TAX. FOR THE A.Y. 2003-04, DUE DATE FOR FILI NG THE RETURN WAS 30/11/2003 AND THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 02/8/2004. THE SAID RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). SIMILARLY, THE AS SESSEE FILED RETURN OF INCOME FOR THE A.Y. 2004-05 ON 01/10/2004 AND THE R ETURN WAS PROCESSED U/S 143(1) ON 31/3/2005 AND THEREAFTER SC RUTINY ASSESSMENT WAS TAKEN PLACE AND THE ORDER U/S 143(3) OF THE ACT WAS PASSED ON 29/08/2006. THE ASSESSEE FILED RETURN OF INCOME ON 26/10/2005 WITH RESPECT TO A.Y. 2005-06 AND THE CAS E OF THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE ACT. SIMILARLY FOR A.Y. 2006-07, THE RETURN OF INCOME WAS FILED ON 30/11/2006. FOR THE A .Y. 2007-08, THE ASSESSEE FILED RETURN OF INCOME ON 31/10/2007 AND T HEREAFTER THE 7 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. REVISED RETURN WAS FILED ON 29/11/2007 AND THE INTI MATION U/S 143(1) OF THE ACT WAS SENT ON 21/2/2009. SIMILARLY FOR THE A.Y. 2008-09, THE ASSESSEE FILED RETURN OF INCOME ON 30/09/2008 AND T HE INTIMATION U/S 143(1) OF THE ACT WAS RECEIVED ON 13/08/2010. 2.1 THE REVENUE HAS CONDUCTED A SEARCH AND SEIZURE OPERATION IN THE CASE OF M/S MIDWEST GRANITES PVT. LTD. GROUP ON 24/ 07/2008. IT IS ALLEGED THAT DURING THE SEARCH, SOME MATERIAL/DOCUM ENTS WERE RECOVERED CONNECTED WITH THE ASSESSEE. THE LD A.O. BASED ON THE SAID DOCUMENTS, ISSUED NOTICE U/S 153C OF THE ACT ON 27/ 08/2010 REQUIRING THE APPELLANT TO FILE RETURN OF INCOME FO R THE A.YS. 2003-04 TO 2008-09. IN RESPONSE TO THE SAID NOTICE, THE APPELL ANT FILED ITS RETURN OF INCOME FOR THE A.Y. 2003-04 AND OTHER ASSESSMENT YE ARS ON 26/10/2010. FOR THE A.Y. 2003-04, A TOTAL INCOME OF RS. 1,24,72,846/- WAS FILED CONSEQUENT TO RETURN FILED U/S 153C OF THE ACT. THE LD A.O. ISSUED NOTICE U/S 143(2) AND 142(1 ) OF THE ACT ALONGWITH QUESTIONNAIRE. IT IS THE CASE OF THE ASSE SSEE DURING THE SEARCH CONTENDED IN THE PREMISES OF M/S MIDWEST GRA NITES PVT. LTD., NO INCRIMINATING MATERIAL WAS FOUND OR CONNECTED MA TERIAL WITH THE ASSESSEE. THE ASSESSEE HAS SUBMITTED THAT THE ASSES SEE HAS FURNISHED 8 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. ALL THE DETAILS TO THE LDA.O.. THE LD A.O. REFERRED THE MATTER FOR THE SPECIAL AUDIT U/S 142(2A) OF THE ACT FOR THE YEAR U NDER CONSIDERATION (2003-04) WITH A VIEW TO SAFEGUARD THE INTEREST OF REVENUE AND ALSO FOR OTHER ASSESSMENT YEARS. THE SPECIAL AUDIT SUBMITS I TS REPORT ON 24/6/2010. ON THE BASIS OF THE SAID REPORT OF THE S PECIAL AUDIT, THE LD A.O. ISSUED SUMMONS U/S 131 OF THE ACT ON DATED 01/ 7/2011 AND ALSO ISSUED FRESH NOTICE U/S 142(1) OF THE ACT. THE ASSESSEE SUBMITTED THE DETAILS AND PRODUCED ALL THE INFORMATION AND BO OKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION. HOWEVER, THE LD A.O. WAS NOT SATISFIES AND THEREFORE HAS COMPLETED ASSESSMENT U/S 143(3) R EAD WITH SECTION 153C OF THE ACT BY MAKING THE ADDITION/DISALLOWANCE S AND ARRIVED AT THE TAXABLE PROFIT FOR RS. 2,19,15,376/-. SIMILAR ASSESSMENT U/S 143(3) READ WITH SECTION 153C OF THE ACT BY MAKING THE ADDITION/DISALLOWANCES WERE MADE BY THE ASSESSING O FFICER FOR OTHER ASSESSMENT YEARS. 3. BEING AGGRIEVED BY THE ORDER OF THE LD A.O., THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). THE LD. CIT(A) AF TER DISCUSSING SECTION 153A AND THE JUDGMENTS HAS CONCLUDED AS UND ER:- 9 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. VIDE THE ABOVE DISCUSSION AND DECIDED CASE LAWS, I T HAS BEEN DECIDED THAT JURISDICTION IN SEARCH CASES IS T WO WAY; I) ONE IN CASE OF CONCLUDED ASSESSMENT, WHETHER UNDER SECTION 143(3) OR 143(1), WHERE DATE OF ISSUE OF NOTICE U/S 143(2) HAS EXPIRED AND II) THE OTHER IN RESPECT OF PENDING ASSESSMENT WHICH ABATES CONSEQUENT TO SEARCH. IN CA SE OF THE FORMER, THE JURISDICTION TO ASSESS IS LIMITED T O INCRIMINATING MATERIAL AND IN OTHER CASES THE ASSES SING OFFICER HAS UNFETTERED JURISDICTION TO MAKE ASSESSM ENT BOTH BY EXERCISING HIS NORMAL JURISDICTION TO MAKE ASSES SMENT BOTH BY EXERCISING HIS NORMAL JURISDICTION TO MAKE ASSESSMENT BOTH BY EXERCISING HIS NORMAL JURISDICTI ON AND ALSO BY UTILIZING THE INCRIMINATING MATERIAL/EVIDEN CE. SIMILARLY IN RESPECT OF A.Y.S 2004-05 TO 2008-09, T HE LDCIT(A) HAS HELD AS UNDER:- 4.9 COMING TO THE FACTS OF THE CASE, THE ASSESSMEN TS FOR THE ASSESSMENT YEARS 2003-04, 2004-05, 2005-06, 2006-07 , 2007-08 AND 2008-09 WERE UNABATED AND TREATED TO HAVE BEEN CONC LUDED. IT IS ALSO EVIDENT FROM THE ASSESSMENT ORDERS THAT ASSESSING O FFICER HAS NOT SPECIFICALLY POINTED OUT TO ANY AVAILABILITY OF SEI ZED/INCRIMINATING MATERIAL RELATED TO THE ASSESSEE FOUND DURING THE S EARCH PROCEEDINGS CONDUCTED IN CASE OF MGPL OR THE DIRECTORS OF THE G ROUP COMPANIES. THERE IS NO SPECIFIC REFERENCE TO ANY MATERIAL OR V ALUABLES THAT ARE RELATABLE TO THE ASSESSEE AND HAVE BECOME THE BASIS FOR MAKING THE ADDITIONS OR DISALLOWANCES, AND PROMPT THE ASSESSIN G OFFICER TO 10 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. REAGITATE THE ISSUES WHICH WERE OTHERWISE SETTLED I N THE UNABATED ASSESSMENT. THUS, CONSIDERING THE LEGAL ADDITIONAL GROUND RAISE D BY THE APPELLANT, IT IS REASONABLE TO HOLD THAT THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSE SSMENT ORDERS FOR THE ASSTT. TEAR 2003-04 IS NOT JUSTIFIED AND AR E DIRECTED TO BE DELETED. SINCE, THE ADDITIONAL GROUND RAISED ON LEG AL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT, IT IS REAS ONABLE TO HOLD THAT IT IS NOT NECESSARY TO ADJUDICATE ON THE VARIO US ADDITIONS MADE IN ASSESSMENT ORDER, ON MERIT. 4. NOW THE REVENUE AS WELL AS THE ASSESSEE ARE IN A PPEAL BEFORE US. IN FACT DURING THE COURSE OF ARGUMENT, BASIC GROUND WHICH HAS BEEN TAKEN BY THE LD AR FOR THE ASSESSEE WAS THAT: THE LD A.O. WAS ERRED IN INVOKING THE PROVISIONS OF SECTION 153C OF THE ACT WITHOUT THERE BEING ANY SATISFACTION RECORDED B Y HIM AS WELL AS BY THE LD. A.O. HAVING JURISDICTION OVER THE COMPANY S EARCHED, IN VIEW OF THE JUDGMENT OF THE HONBLE A.P. HIGH COURT IN THE CASE OF CIT VS M/S SHETTYS PHARMACEUTICALS &BIOLOGICALS LTD. IN ITA NO . 662 OF 2014 DATED 26/11/2014 . 4.1 THE LD DR VIDE ORDER DATED 19-21/07/2016 HAS DI RECTED TO FILE THE COPY OF THE ORDERSHEET OF THE A.O. FOR ISSUANCE OF THE NOTICE U/S 153C OF THE ACT FOR THE A.Y. 2003-04 TO 2009-10. IN PURSUANCE THERETO, 11 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. THE LD DR HAS PRODUCED ENTIRE ORDERSHEET. THE SATIS FACTION RECORDED IN THE ORDERSHEET BY THE LD DCIT CC-7, HYDERABAD WASA S UNDER:- SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN CA SE OF M/S MIDWEST GRANITES PVT. LTD. GROU ON 24/07/2008. THIS CASE IS NOTIFIED TO DCIT, CENTRAL CIRCLE-7, HYDERAB AD. SEARCH OPERATIONS CONDUCTED IN THE GROUP INCLUDES THE CASE OF M/S VICTORIAN GRANITES PVT. LTD. WHEREIN DOCUMENTS RELA TING TO THE ASSESSEE WERE FOUND. AS SUCH THE CASE COMES UND ER SECTION 153C OF THE IT ACT. PLEASE PUT UP NOTICE U/ S 153C CALLING FOR RETURNS OF INCOME FOR THE A.Y. 2003-04 TO 2008-09 AND NOTICE U/S 142(1) CALLED FOR RETURN OF INCOME F OR THE A.Y. 2009-10. 4.2 AFTER GOING THROUGH THIS NOTE, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT NOTING/ORDERSHEET PRODUCED BY THE LD DR IS NOT A SATISFACTION AS CONTEMPLATED U/S 153C OF THE ACT, W HICH HAS BEEN DISCUSSED IN DETAIL AND DECIDED BY THE HONBLE DELH I HIGH COURT IN THE CASE OFPEPSI FOODS P. LTD. VS. ACIT [2014] 52 TAXMA NN.COM 220 (DELHI), HONBLE A.P. HIGH COURT IN THE CASE OF CIT VS M/S SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. (2015) 57 TAXMAN N.COM 283. BESIDES, THE LD AR HAS ALSO RELIED UPON VARIOUS OTH ER JUDGMENTS. THE RELEVANT PARAGRAPHS OF THE JUDGMENT RELIED UPON BY THE LD AR AS UNDER:- 12 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. (I) THE HONBLE GUJARAT HIGH COURT IN THE CASE OF V IJAYBHAI N. CHADRANIVS. ACIT (2011) 333 ITR 0436 (II) THE HONBLE ALLAHABAD HIGH COURT IN THE CASE O F CIT VSGOPI APARTMENT (2014) 365 ITR 0411 (III) THE HONBLE DELHI HIGH COURT IN THE CASE OF P EPSI FOODS P. LTD. VS. ACIT [2014] 52 TAXMANN.COM 220 (DELHI) HAS HELD AS UNDER: 6. ON A PLAIN READING OF SECTION 153C, IT IS EVIDENT T HAT 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 S EARCHED PERSON. IT IS ONLY THEN THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON CAN HA NDOVER SUCH DOCUMENT TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHE R PERSON (OTHER THAN THE SEARCHED PERSON). FURTHERMORE, IT IS ONLY AFTER SUCH HA NDING 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 SECTI ON 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 B ELONG TO HIM BUT TO SOME OTHER PERSON. THE SECOND STEP IS - AFTER SUCH SATISFACTI ON IS ARRIVED AT - THAT THE DOCUMENT IS HANDED OVER TO THE ASSESSING OFFICER OF T HE PERSON TO WHOM THE SAID DOCUMENT 'BELONGS'. IN THE PRESENT CASES IT HAS BEEN URGED ON BEHALF OF THE PETITIONER THAT THE FIRST STEP ITSELF HAS NOT BEEN FU LFILLED. FOR THIS PURPOSE IT WOULD BE NECESSARY TO EXAMINE THE PROVISIONS OF PRESUMPTIONS AS IN DICATED ABOVE. SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SE ARCH IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGS TO SUCH PERSON. IT IS SIMILAR LY PROVIDED IN SECTION 292C(1)(I). IN OTHER WORDS, WHENEVER A DOCUMENT IS F OUND FROM A PERSON WHO IS BEING SEARCHED THE NORMAL PRESUMPTION IS THAT THE SAI D DOCUMENT BELONGS TO THAT PERSON. IT IS FOR THE ASSESSING OFFICER TO REBUT THAT PRE SUMPTION AND COME TO A CONCLUSION OR 'SATISFACTION' THAT THE DOCUMENT IN FAC T BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME COGENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICER BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUM ENT DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. SURMISE AND CONJ ECTURE CANNOT TAKE THE PLACE OF 'SATISFACTION'. 13 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. 7. THIS WOULD BE THE APPROPRIATE STAGE TO CONSIDER THE DECISIONS REFERRED TO BY THE LEARNED COUNSEL FOR THE REVENUE. THE DECISION REFERR ED TO IN KAMLESHBHAIDHARAMSHIBHAI PATEL CASE (SUPRA) IS OF NO RELEVANCE INSOFAR AS THE PRESENT CASE IS CONCERNED. IN THAT CASE CERTAIN DOCUME NTS WERE SAID TO HAVE BELONGED TO THE PETITIONERS THEREIN BUT A PLEA HAD B EEN TAKEN THAT AS THE LAND, IN RELATION TO WHICH THE DOCUMENTS WERE, NO LONGER BELO NGED TO THE PETITIONERS THEREFORE THE SAID DOCUMENTS COULD NOT BE REGARDED AS BELONGING TO THE PETITIONERS. THAT IS AN ENTIRELY DIFFERENT SITUATION AND THE FACT S OF THAT CASE ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. INSOF AR AS THE DECISION OF THE ALLAHABAD HIGH COURT IN CLASSIC ENTERPRISES (SUPRA) IS CONCERNED, WE ARE, WITH RESPECT, UNABLE TO AGREE WITH THE OBSERVATIONS THAT AS THE PROCEEDINGS ARE AT THE VERY INITIAL STAGE THE 'SATISFACTION' IS NEITHER REQU IRED TO BE FIRM OR CONCLUSIVE. WE SAY SO BECAUSE WE ARE OF THE VIEW THAT THIS CONCLUSION OF THE ALLAHABAD HIGH COURT IS PREMISED ON A CONSIDERATION OF THE PROVISIONS OF SECTI ON 158BD OF THE SAID ACT WHICH ARE ENTIRELY DIFFERENT FROM SECTION 153C. UNDER SEC TION 158BD THE ASSESSING OFFICER'S SATISFACTION IS WITH REGARD TO UNDISCLOSED ' INCOME' BELONGING TO A PERSON OTHER THAN THE SEARCHED PERSON. IT IS OBVIOUS THAT SU CH SATISFACTION UNDER SECTION 158BD BY ITS VERY NATURE HAS TO BE PRIMA FACIE AND TENTATIVE. THE SAME METHODOLOGY CANNOT BE IMPORTED INTO SECTION 153C WHERE, IN OUR VIEW, THE ASSESSING OFFICER IS REQUIRED TO ARRIVE AT A CONCLUSIVE SATISFACTION THAT THE DOCUMENT BELONGS TO A PERSON OTHER THAN THE SEARCHED PERSON BECAUSE SUCH ASSESSING OFFI CER HAS TO REBUT THE NORMAL PRESUMPTIONS WHICH ARE SUGGESTED BY THE STATUTE UNDER SECTIONS 132(4A)(I) AND 292C(1)(I) OF THE SAID ACT. THEREFORE, THE DECIS ION OF THE ALLAHABAD HIGH COURT IN THE CASE OF CLASSIC ENTERPRISES ( SUPRA ) WOULD NOT COME TO THE AID OF THE REVENUE. (IV) THE COORDINATE BENCH IN THE CASE OF SHETTYS PHARMACEUTICALS AND BIOLOGICAL LTD. VS DCIT [2014] 47 TAXMANN.COM 85 (HYDERABAD - TRIB.) (V) COMMISSIONER OF INCOME-TAX, III, HYDERABAD VS. SHETT YS PHARMACEUTICALS &BIOLOGICALS LTD.[2015] 57 TAXMANN.COM 282 (ANDHRA PRADESH) HAS HELD AS UNDER:- 6. IT IS THEREFORE CLEAR THAT FIRSTLY SATISFACTION HA S TO BE RECORDED BY THE ASSESSING OFFICER WHO CONDUCTED SEARCH, THAT ANY MO NEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. THEREAFTER, THE 14 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. ASSESSING OFFICER HAVING JURISDICTION OVER THIRD PA RTY ON RECEIPT OF THE SEIZED MATERIAL OR BOOKS OF ACCOUNTS OR DOCUMENT BE ING HANDED OVER TO HIM SHALL RECORD HIS OWN SATISFACTION AFTER EXAMINI NG THE SAME INDEPENDENTLY WITHOUT BEING INFLUENCED BY THE SATIS FACTION OF THE SEIZING OFFICER. IN OTHER WORDS IT IS NOT AN AUTOMA TIC ACTION. WE FIND SATISFACTION OF TWO OFFICERS IS MISSING. IN THIS CO NNECTION WE SET OUT THE TEXT OF THE ORDER OF THE ASSESSING OFFICER WHICH IS AS FOLLOWS: 'A SEARCH AND SEIZURE OPERATION U/S. 132 WAS CARRIE D OUT IN THE GROUP CASE OF DR. T. YADHAIAHGOUD AND OTHERS ON 25.3.2010 . DURING THE COURSE OF SEARCH OPERATION DOCUMENTS BELONGING TO S HETTY PHARMACEUTICALS & BIOLOGICAL LTD., HAS BEEN SEIZED. HENCE IT IS CONSIDERED TO INITIATE PROCEEDING U/S. 153C OF THE I.T. ACT.' 7. THE AFORESAID SECTION MANDATES RECORDING OF SATISF ACTION OF THE ASSESSING OFFICER(S) IS A PRE-CONDITION FOR INVOKIN G JURISDICTION AND IT IS NOT A MERE FORMALITY BECAUSE RECORDING OF SATISF ACTION POSTULATES APPLICATION OF MIND CONSCIOUSLY AS THE DOCUMENTS SE IZED MUST BE BELONGING TO THE ANY OTHER PERSON OTHER THAN THE PE RSON REFERRED TO IN SECTION 153-A OF THE ACT. IT IS CONTENDED THAT THE SAME ASSESSING OFFICER IS INVOLVED IN THE MATTER. THIS FACT DOES N OT DISPENSE WITH ABOVE REQUIREMENT. IT IS SETTLED POSITION OF LAW TH AT WHEN A THING IS TO BE DONE IN ONE PARTICULAR MANNER UNDER LAW THIS HAS TO BE DONE IN THAT MANNER ALONE AND NOT OTHER WAY (SEE NAZIR AHMED V. KING EMPEROR ). WE THINK THE LEARNED TRIBUNAL HAS CORRECTLY FOLLOWE D THE PRINCIPLE. WE DO NOT FIND ANY ELEMENT OF LAW TO BE DECIDED. 5. ON THE BASIS OF THE ABOVE SAID CONTENTION, IT WA S SUBMITTED THAT THERE WAS NO APPLICATION OF MIND BY THE A.O. OF THE COMPANY SEARCHED AND ALSO BY THE LD. A.O. OF THE ASSESSEE AND THE A. O. HAS MECHANICALLY AND STEREO TYPE MANNER ISSUED THE NOTICES U/S 153C OF THE ACT. IT WAS FURTHER CONTENDED THAT THE LD. A.O. BEFORE ISSUING THE NOTICE U/S 153C MUST APPLY HIS MIND ON THE DOCUMENTS SEIZED AND REC ORD HIS 15 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. SATISFACTION IN UNEQUIVOCAL MANNERS THAT THE DOCUME NTS SEIZED BELONGS TO NONE OTHER THAN THE ASSESSEE. IN FACT, T HE LD AR HAS SUBMITTED THAT THE SATISFACTION RECORDED BY THE LD. A.O. IS SIMILAR TO THE SATISFACTION RECORDED IN CASE OF SHETTY PHARMAC EUTICALS & BIOLOGICAL LTD. (SUPRA) WHEREIN THE HONBLE JURISDI CTIONAL HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL. THE TRI BUNAL IN THE SAID MATTER HAS QUASHED THE ASSESSMENT PROCEEDINGS BEING INITIATED WITHOUT RECORDING THE SATISFACTION IN ACCORDANCE WI TH LAW.THE LD AR PRAYED FOR THE DISMISSAL OF THE ASSESSMENT PROCEEDI NGS INITIATED PURSUANT TO THE NOTICE U/S 153C OF THE ACT IN THE L IGHT OF THE ORDER PASSED IN THE CASE OF SHETTY PHARMACEUTICALS & BIOL OGICAL LTD. (SUPRA). 6. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE HONBLEA.P. HIGH COURT IN THE CASE GOPALLALBADRUKA VS. DCIT (20 12) 253 CTR 80 (AP) ANDHONBLE HIGH COURT OF KARNATAKA IN THE CAS E OF CAMARA HOUSING DEVELOPMENT CO. VS DCIT (2014) 49 TAXMANN.C OM 98 (KAR) HAS DISCUSSED THE SCOPE OF THE ABATED AND UNABATED PROCEEDINGS AND ALSO THE MATERIAL ON THE BASIS OF WHICH THE ASSESSM ENT AND REASSESSMENT CAN BE MADE BY THE A.O. IN PURSUANCE T O SECTION 153A 16 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. OF THE ACT. HE ALSO SUBMITTED THAT IN THE ORDER ITS ELF, THE LD A.O. HAS DISCLOSED THE MATERIAL SEIZED DURING THE COURSE OF SEARCH, WHICH IS CONNECTED WITH THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND TH E LAW CITED BEFORE US. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHETTY PHARMACEUTICALS & BIOLOGICAL LTD. (SUPRA) HA S CLEARLY HELD THAT THE RECORDING OF SATISFACTION BY THE A.O. IS PRECONDITION FOR INVOKING THE PROVISIONS AND IS NOT A MERE FORMALITY BECAUSE THE RECORDING OF SATISFACTION POS TULATE THE APPLICATION OF MIND, CONSCIOUSLY AS TO THE DOCUMENT S SEIZED MUST BE BELONGING TO ANY OTHER PERSONS OTHER THAN T HE PERSONS REFERRED TO IN SECTION 153A OF THE ACT. SIMILARLY, THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSI FOODS P. LTD. VS. ACIT (SUPRA) HAS HELD THAT AS PER LAW, ONCE THE DOCUMENT S ARE SEIZED FROM THE PREMISES OF A PERSON THEN THE PRESUMPTION IS THAT THE DOCUMENTS/MATERIALS BELONG TO THE PERSONS SEARCHED, THEREFORE, IT IS FOR THE A.O. TO REBUT THE PRESUMPTION WHICH A RE NORMAL TO BE RAISED IN FAVOUR OF THE PERSONS SEARCHED BUT BEL ONGS TO ANY 17 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. OTHER PERSON. THIS SATISFACTION MUST BE DISPLAYED F ROM THE REASONS OR THE BASIS FOR CONCLUSION OF THE A.O. THA T THE DOCUMENTS SEARCHED BELONGS TO THE OTHER THAN THE SE ARCHED PERSON. IF WE EXAMINE THE SATISFACTION/ORDERSHEET P RODUCED BEFORE US (REPRODUCED HEREINABOVE), THERE IS NO SAT ISFACTION IN OUR VIEW. IT IS NOT REFLECTED FROM THE NOTE THAT TH E DOCUMENTS RECOVERED DO NOT BELONG TO THE M/S MIDWEST GRANITES P. LTD. BUT BELONGS TO THE ASSESSEE BEFORE US. IT IS ALSO NOT R ECORDED AS TO WHICH DOCUMENTS PERTAINS TO THE ASSESSE ON THE BASI S OF WHICH THE ADDITIONS CAN BE MADE BY THE LD. A.O.IN VIEW TH EREOF, THE SATISFACTION RECORDED BY THE A.O. IS LACKING IN MAT ERIAL PARTICULARS AND ONLY THE CRYPTIC MECHANICAL DIRECTI ON WAS ISSUED FOR ISSUANCE OF NOTICE U/S 153C OF THE ACT WITHOUT RECORDING OF PROPER SATISFACTION. IRONICALLY, IN THE PRESENT NOT E, THE WORD SATISFACTION HAS ALSO NOT BEEN USED BY THE AO. T HEREFORE, THERE IS NO QUESTION OF EVEN THE CRYPTIC OF MECHANICAL RE CORDING OF SATISFACTION ALSO. IN THE LIGHT OF THE ABOVE, WE AR E LEFT WITH NO OTHER OPTION BUT TO ALLOW THE APPEAL OF THE ASSESSE E. CONSEQUENTLY THE ORDERS OF LD. CIT(A) ARE UPHELD. A S A RESULT 18 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. THEREOF, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWE D AND THE APPEALS OF THE REVENUE ARE DISMISSED. SINCE WE ARE ALLOWING THE APPEALS OF THE ASSESSEE ON THE GROUND OF NON-RECORD ING OF SATISFACTION IN ACCORDANCE WITH LAW, THEREFORE, WE HAVE NOT DEALT WITH THE APPEALS OF THE REVENUE ON MERIT. 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED AND ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/07/2016 SD/- SD/- (B. RAMAKOTAIAH ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 27 TH JULY, 2016 *RANJAN COPY FORWARDED TO: 1. THE DEPUTY COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE-7, 8 TH FLOOR, AAYAKARBHAVAM, J.B. STADIUM ROAD, BASHEERBA GH, HYDERABAD-500004 (A.P.) 2. M/S VICTORIAN GRANITES PVT. LTD., 8-2-684/3/25 & 26 , ROAD NO. 12, BANJARA HILLS, HYDERABAD. 3. CIT(APPEALS)-9, HYDERABAD. 19 ITA NO. 1056 TO 1061/HYD/2014 & 1270 TO 1275/HYD/2 014 DCIT VS M/S VICTORIAN GRANITES P. LTD. 4. PR. CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.