Gali Janardhana reddy, Bellary V. Deputy Commissioner of Income tax, Bangalore

ITA 1444/BANG/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3765 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 19-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEEN S DCIT CC
• Assessee Lawyers: MAYANK JAIN; MADHUR JAIN S
• Keywords: Search and seizure; Document seized; Block assessment; Documents seized
• Section: 143(3); 153A; 148; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS. 1444 TO 1450/BANG/2014 ASSESSMENT YEARS : 2005-06 TO 2011-12 SHRI GALI JANARDHANA REDDY, NO.8, ASHOKNAGAR, HAVAMABAVI, SIRUGUPPA ROAD, BELLARY - 583 101. PAN: AFBPR 9737D VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : S/SHRI MAYANK JAIN & MADHUR JAIN, ADVOCATES RESPONDENT BY : MS. NEERA MALHOTRA, CIT(DR) & SHRI S. PRAVEEN S., DCIT, CC, 1(3) DATE OF HEARING : 26.08.2016 DATE OF PRONOUNCEMENT : 17.10.2016 O R D E R PER BENCH ALL THESE 7 APPEALS ARE FILED BY THE ASSESSEE WHI CH ARE DIRECTED AGAINST A COMBINED ORDER OF LD. CIT(APPEALS)-VI, BA NGALORE DATED 25.8.2014 FOR THE ASSESSMENT YEARS 2005-06 TO 2011- 12. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WA Y OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.1444 TO 1450/BANG/2014 PAGE 2 OF 19 2. APART FROM RAISING VARIOUS GROUNDS ALONG WITH T HE APPEAL MEMO IN ALL THESE 7 YEARS, THE ASSESSEE HAS ALSO RAISED A C OMMON ADDITIONAL GROUND IN ALL THESE YEARS AND HENCE, WE FIRST PROCE ED TO DISPOSE OF THE ADDITIONAL GROUND OF ASSESSEES APPEAL, WHICH IS AS UNDER:- 9. FOR THAT THE IMPUGNED ADDITIONS ARE LIABLE TO BE SET ASIDE SINCE THERE IS NO SATISFACTION AS CONTEMPLATED UNDE R SECTION 153C OF THE ACT OF THE A.O. OF THE SEARCHED PERSONS IN T HE CASE OF THE APPELLANT. 3. IT WAS SUBMITTED BY THE LD. AR OF ASSESSEE THAT AS PER THE PROVISIONS OF SECTION 153C OF THE I.T. ACT, THE AO OF THE SEAR CHED PERSON HAS TO RECORD SATISFACTION AND ONLY AFTER THAT, THE AO OF ANY OTHER PERSON CAN INITIATE PROCEEDINGS U/S. 153C AGAINST SUCH OTHER P ERSON. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE ON THE TRIBUNALS OR DER RENDERED IN THE CASE OF SHRI VINOD KUMAR CHAURASIA V. ACIT IN ITA NO.245 TO 251/LKW/2012 DATED 10.12.2014. HE SUBMITTED A COPY OF THIS TRIBUNALS ORDER AND POINTED OUT THAT IN THIS ORDER, THE TRIBUNAL HAS CONSIDERED AND FOLLOWED THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT V. CALCUTTA KNITWEARS IN CIVIL APPEAL NO.3958 OF 2014 DATED 12.03.2014 . 4. AS AGAINST THIS, IT WAS SUBMITTED BY THE LD. DR OF REVENUE THAT WRITTEN SUBMISSIONS HAS BEEN FILED BY HER ON 10.08. 2016 AND THE SAME SHOULD BE CONSIDERED FOR DECIDING THIS ADDITIONAL G ROUND BECAUSE IT IS HER SUBMISSION THAT IN THE PRESENT CASE, THE AO OF ASSE SSEE AND AO OF THE SEARCHED PERSONS I.E., SHRI K. RAGHAVACHARYULU AND MRS. G. RENUKA IS ITA NOS.1444 TO 1450/BANG/2014 PAGE 3 OF 19 SAME I.E., SHRI SHIVANAND H KALAKERI, DCIT, CENTRAL CIRCLE 1(3), BANGALORE AND AS PER THE SATISFACTION NOTE ENCLOSED WITH THE WRITTEN SUBMISSIONS, A SATISFACTION WAS RECORDED ON 14.12.2012 BY THE SAME AO AND THEREFORE, THE REQUIREMENTS OF SECTION 153C ARE SATISFIED AND THERE IS NO INFIRMITY IN ASSUMING OF JURISDICTION U/S. 153C BY THE AO OF THE ASSESSEE. HE ALSO SUBMITTED THAT COPY OF ASSESSMENT ORDER IN BOTH THO SE CASES OF SEARCHED PERSONS IS ALSO ENCLOSED WITH THE SAID WRITTEN SUBM ISSIONS IN SUPPORT OF THIS CONTENTION THAT THE AO OF THE ASSESSEE AND AO OF SE ARCHED PERSONS IS ONE AND THE SAME PERSON. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE THE WRITTEN SUBMISSIONS OF LD. DR OF REVE NUE DATED 10.08.2016. THE SAME IS AS UNDER:- DURING THE COURSE OF HEARING HELD ON 03.08.2016 T HE HON'BLE BENCH HAD DIRECTED FOR PRODUCTION OF SEARCH RECORDS OF THE ASSESSES IN WHOSE CASE SEARCH U/S 132 WAS CONDUCTED AND SEIZED MATERIAL PERTAINING TO SHRI GALI JANARDHAN R EDDY WAS FOUND ON THE BASIS OF WHICH SATISFACTION WAS RE CORDED FOR INITIATING PROCEEDINGS U/S 153C IN THE CASE OF THE ASSESSEE. ON PERUSAL OF THE ORDER SHEET RECORDING SATISFACTION N OTE BEFORE ISSUANCE OF NOTICE U/S 153C OF THE I.T ACT FOR A.YS 205-06 TO 2011-12, IT IS NOTED THAT THE FOLLOW ING PREMISES WERE COVERED U/S 132 OF THE LT ACT: (A) SHRI K. RAGHAVACHARYALU, AT FLAT NO.402, KAKATEEYA RESIDENCY, KAPPAGAL ROAD, BELLARY. (B) SMT. G.RENUKA, AT 'RISHIKES', NO.36, GOLDSMITH STREET, BELLARY. ITA NOS.1444 TO 1450/BANG/2014 PAGE 4 OF 19 DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS CALCUTTA KNITWEARS 43 TAXMANN.COM 446 (SC) 1. FIRSTLY, THE DECISION OF HON'BLE SUPREME COURT IN T HE CASE OF CIT VS CALCUTTA KNITWEARS 43 TAXMANN.COM 446 (SC) , WHICH IS RENDERED IN CONNECTION WITH SEARCH ASSESSM ENTS UNDER CHAPTER XIV-B (SECTIONS 158B TO 158BI), WHICH ARE DIFFERENT PROVISIONS COMPARED TO ASSESSMENTS OF THE ASSESSEE WHICH RELATE TO THE NEW SEARCH ASSESSMENT PROCEDUR E AS CONTAINED UNDER SECTIONS 153A TO 153A WHICH ARE BROUGHT INTO STATUTE W.E.F 1-6-2003. 2. SECONDLY, THE FACTS IN THE CASE OF CIT VS CALCUTTA KNITWEARS 43 TAXMANN.COM 446 (SC) ARE DIFFERENT FROM THAT OF THE ASSESSEE AS THE OFFICER OF THE PERSON COVERED UNDER PROVISIONS OF SECTION 158BC WAS DIFFERENT FROM THE OFFICER OF THE PERSON COVERED UNDER PROVISIONS OF SECTION 158BD AND THERE FORE THE ISSUE OF 'TRANSMISSION OF RECORDS' (REFER PARA 39) CAME UP BEFORE THE HON'BLE COURT AND CONSEQUENTLY THE ISSUE OF THE 'WHO SHOULD RECORDING OF SATISFACTION' AND 'AT WHAT POINT OF TIME THE SATISFACTION SHOULD BE RECORDED WAS ALS O CONSIDERED ' . IN THIS CONTEXT THE HON'BLE COURT STATED THAT THE SATISFACTION CAN BE RECORDED AT ANY OF THE 3 STAGES - (1) AT THE TIME OF INITIATION OF PROCEEDINGS U/S 158BC, (2) ALONG WITH THE PROCEEDINGS U/S 158BC AND (3) IMMEDIATELY AFTER CONCLUDING THE PROCEEDINGS U/S 158BC. 3. THE AFORESAID DECISION OF CIT VS CALCUTTA KNITWEARS 43 TAXMANN.COM 446 (SC) IS NOT APPLICABLE TO THE CASE OF THE ASSESSE FOR THE FOLLOWING REASONS: (I) AS THE ASSESSMENTS OF THE ASSESSEE ARE COMPLETED U NDER DIFFERENT PROVISIONS OF THE STATUTE AS THEY WHICH R ELATE TO THE NEW SEARCH ASSESSMENT PROCEDURE AS CONTAINED UNDER SECTIONS 153A TO 153A WHICH ARE BROUGHT INTO STATUTE W.E.F 1-6-2003. (II) THE ASSESSING OFFICER OF THE PERSON COVERED UNDER PROVISIONS OF SECTION 153 A IS THE SAME AS THE OFFI CER OF THE PERSON COVERED UNDER PROVISIONS OF SECTION 153C AND ,THEREFORE, THERE IS NO ISSUE OF 'TRANSMISSION OF RECORDS' . COPIES OF ASSESSMENT ITA NOS.1444 TO 1450/BANG/2014 PAGE 5 OF 19 ORDERS IN THE CASES OF SHRI K. RAGHAVACHARYALU AND SMT. G.RENUKA ARE ENCLOSED TO ESTABLISH THAT THE ASSESSMENTS ARE COMPLETED BY THE SAME ASSESSING OFFICER I.E SHRI, SHIVANAND H. KALAKERI, DCIT CENTRAL CIRCLE 1(3) WHO HAD DONE THE ASSESSMENTS IN THE CASE OF THE ASSESSEE . (III) THE ASSESSING OFFICER HAS RECORDED SATISFACTION IN THE CASE OF THE ASSESSEE. (IV) THE EVENTUALITY OF AN ASSESSING OFFICER OF THE PERS ON COVERED UNDER PROVISIONS OF SECTION 153BC BEING THE SAME AS THE OFFICER OF THE PERSON COVERED UNDER PROVISIONS OF SECTION 153 BD IS NOT EXAMINED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS CALCUTTA KNITWEARS 43 TAXMANN.COM 446 (SC) . (V) IT IS HUMBLY SUBMITTED THAT JUDGMENTS MUST BE REA D AS A WHOLE AND OBSERVATIONS IN JUDGMENTS SHOULD BE CONSIDERED IN THE CONTEXT IN WHICH THEY ARE MADE AN D IN THE LIGHT OF QUESTIONS THAT WERE BEFORE THE COUR T. IN CIT V. SUN ENGINEERING WORKS PVT. LTD.(198 ITR 297) THE SUPREME COURT OBSERVED: IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OUT A WORD OR A SENTENCE FROM THE JUDGMENT OF THE SUPREME COURT DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATION AND TREAT IT TO BE THE COMPLETE LAW DECLARED BY THE COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JUDGMENT HAVE T O BE CONSIDERED IN THE LIGHT OF THE QUESTIONS WHICH W ERE BEFORE THE COURT. A DECISION OF THE SUPREME COURT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE IN WHICH IT IS RENDERED AND, WHILE APPLYING THE DECISION TO A LATER CASE, COURTS MUST CAREFULLY TRY TO ASCERTAIN THE TRUE PRINCIPLE LAID DOWN BY THE DECIS ION. THIS HAS BEEN REITERATED BY THE HON'BLE SUPREME COU RT IN ITS DECISION OF CIT VS CALCUTTA KNITWEARS 43 TAXMANN.COM 446 (SC). 4. THEREFORE, IN VIEW OF THE FACT THAT ASSESSING OFFIC ER OF THE PERSON COVERED UNDER PROVISIONS OF SECTION 153 A BE ING THE SAME AS THE OFFICER OF THE PERSON COVERED UNDER PRO VISIONS OF SECTION 153 C AND THE ASSESSING OFFICER HAVING RECO RDED THE ITA NOS.1444 TO 1450/BANG/2014 PAGE 6 OF 19 SATISFACTION BEFORE ISSUING NOTICE U/S 153C, SUFFIC IENT COMPLIANCE HAS BEEN MADE BY THE A.O AS REQUIRED UND ER THE PROVISIONS OF THE STATUTE. SUBMITTED FOR KIND CONSIDERATION. 6. WE ALSO REPRODUCE THE SATISFACTION NOTE DATED 14 .12.2012 WHICH HAS BEEN SUBMITTED BY THE LD. DR OF REVENUE ALONG WITH HER WRITTEN SUBMISSIONS. THE SAME IS AS UNDER:- RECORDING OF SATISFACTION NOTE BEFORE ISSUANCE OF N OTICE UNDER SECTION 153C : NAME OF THE ASSESSEE: SRI GALI JANARDHANA REDDY (AY: 2005-06 TO 2010-11) A SEARCH U/S. 132 WAS CONDUCTED ON 25/10/2010 IN TH E CASE OF MR K. RAGHVACHARYULU AT FLAT NO.402, KAKATEEYA RESIDEN CY, KAPPAGAL ROAD, BELLARY. DURING THE COURSE OF THE SE ARCH, FOLLOWING DOCUMENTS/BOOKS OF ACCOUNT BELONGING TO S RI GALI JANARDHANA REDDY WERE SEIZED AND THE CONTENTS ARE E XPLAINED IN BRIEF AS BELOW- RB/1 PAGE NO.2 THIS PAGE CONTAINS APPLICATION FILED BY MR G JANARD HANA REDDY BEFORE THE RETURNING OFFICER WHILE CONTESTING FOR T HE ELECTION TO THE MEMBER OF LEGISLATIVE COUNCIL IN THE STATE OF K ARNATAKA. RB/1 PAGES 27-32 THESE PAGES CONTAIN DETAILS OF ASSETS (MOVABLE, IMM OVABLE, ASSETS ETC) BELONGING TO MR JANARDHANA REDDY, HIS S POUSE AND DEPENDENTS. RB/1PAGES 116-121 THIS CONTAIN INSTRUMENTS OF PARTNERSHIP DEED ENTERE D ON 8.1.2006 BETWEEN SRI B SRININIVAS REDDY, SRI PARAMESHWARA RE DDY, SRI B ITA NOS.1444 TO 1450/BANG/2014 PAGE 7 OF 19 SREERAMULU, SRI G KARUNAKAR REDDY, SRI SOMASHEKHAR REDDY, SMT G LAKSHMI ARUNA IN THE NAME AND STYLE OF HOTEL NAGARJUN. A SEARCH U/S. 132 WAS ALSO CONDUCTED ON 25/10/2010 IN THE CASE OF SMT G RENUKA AT 'RISHIKESH' #36, GOLDSMITH STREE T, BELLARY ON 25-10-2010. DURING THE COURSE OF THE SEARCH, FOLLOW ING DOCUMENTS/BOOKS OF ACCOUNT BELONGING TO SRI GALI JA NARDHANA REDDY WERE SEIZED AND THE CONTENTS ARE EXPLAINED IN BRIEF AS BELOW- RN/1 PAGES 179-181. THESE PAGES CONTAIN TRIAL BALANCE OF GALI JANARDHAN A REDDY FOR F.Y.2009-10. RN/1 PAGES 184-185. THESE PAGES CONTAIN TRIAL BALANCE OF GALI JANARDHAN A REDDY FOR F.Y.2009-10 RN/1 PAGES 129 TO 139. THESE PAGES CONTAIN SALE DEED DATED 22-10-2005 BETW EEN SRI SUNIL KUMAR GUPTA (SELLER) AND SRI G JANARDHANA RED DY (PURCHASER) IN RESPECT OF PROPERTY AT PLOT NO.1121 AT JUBILEE HILLS, HYDERABAD. IN VIEW OF THE ABOVE, I AM SATISFIED THAT THE DOCU MENTS AND BOOKS OF ACCOUNT BELONGING TO SRI GALI JANARDHANA R EDDY HAVE BEEN FOUND AND SEIZED FROM THE SEARCHED PREMISES OF SRI RAGHAVACHARYULU AND SMT G RENU KA. ISSUE NOTICE U/S. 153C OF THE INCOME TAX ACT, 1961. SD/- (SHIVANAND H KALAKERI) DEPUTY COMMISSIONER OF INCOME-TAX, DATE: 14.12.2012 CENTRAL CIRCLE 1(3), BANGALOR E.' 7. WE FIND THAT AS PER SATISFACTION NOTE DATED 14.1 2.2012, SATISFACTION NOTE HAS BEEN RECORDED BY SHRI SHIVANAND H. KALAKER I, DCIT, CENTRAL ITA NOS.1444 TO 1450/BANG/2014 PAGE 8 OF 19 CIRCLE 1(3), BANGALORE AND AS PER THE COPY OF THE T WO ASSESSMENT ORDERS FOR AY 2005-06 U/S. 153A DATED 27.3.2013 AND 30.3.2 013 IN THE CASE OF SHRI K. RAGHAVACHARYALU AND SMT. G. RENUKA RESPECTI VELY, THE AO IS THE SAME PERSON WITH THE SAME DESIGNATION AND HENCE, TH IS IS THE ADMITTED POSITION THAT THE AO OF ASSESSEE AND OF THE SEARCHE D PERSONS IS ONE AND THE SAME PERSON AND SATISFACTION NOTE HAS BEEN RECO RDED BY HIM ON 14.12.2012 BEFORE ISSUE OF NOTICE U/S. 153C OF THE I.T. ACT. IN THE SAME SATISFACTION NOTE, HE HAS NOTED IN THE LAST THAT I SSUE NOTICE U/S. 153C OF THE INCOME TAX ACT, 1961. THIS LAST LINE OF THE SATIS FACTION NOTE PROVES BEYOND DOUBT THAT SUCH SATISFACTION NOTE HAS BEEN R ECORDED BY THE SAME OFFICER WHO IS THE AO OF ASSESSEE AS WELL AS OF THE SEARCHED PERSONS IN HIS CAPACITY AS AO OF ASSESSEE AND NOT IN HIS CAPACITY AS AO OF SEARCHED PERSONS, BECAUSE IF SATISFACTION NOTE IS RECORDED B Y THE AO OF THE SEARCHED PERSON, IT CANNOT BE SAID IN THE SAID SATISFACTION NOTE THAT ISSUE NOTICE U/S. 153C OF THE INCOME-TAX ACT, BECAUSE SUCH NOTICE U/ S. 153C OF THE ACT IS NOT REQUIRED TO BE ISSUED IN THE CASE OF SEARCHED P ERSON, BUT IN THE CASE OF THE OTHER PERSON I.E., THE PRESENT ASSESSEE. IN O UR CONSIDERED OPINION, EVEN IF THE AO OF ASSESSEE AND THE SEARCHED PERSON IS ONE AND THE SAME, THEN ALSO, THE SATISFACTION NOTE HAS TO BE RECORDED BY THE AO IN HIS CAPACITY AS AO OF THE SEARCHED PERSON AND NOT IN HIS CAPACIT Y AS AO OF THE OTHER PERSON IN WHOSE CASE NOTICE U/S. 153C IS REQUIRED T O BE ISSUED. 8. IN THE LIGHT OF THE ABOVE FACTS, NOW WE EXAMINE THE APPLICABILITY OF THE TRIBUNALS ORDER CITED BY THE LD. AR OF ASSESSE E HAVING BEEN RENDERED ITA NOS.1444 TO 1450/BANG/2014 PAGE 9 OF 19 IN THE CASE OF SHRI VINOD KUMAR CHAURASIA V. ACIT (SUPRA) . IN THAT CASE, THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT HAS BE EN CITED BEFORE THE TRIBUNAL RENDERED IN THE CASE OF CIT V. M/S. GOPI APARTMENT IN ITA NO.60 OF 2014 . THE RELEVANT PORTION OF THE JUDGMENT OF THE HON BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT V. M/S. GOPI APARTMENT HAS BEEN REPRODUCED BY THE TRIBUNAL IN THAT CASE ON PAGES 5 & 6 OF THAT ORDER AND THE SAME IS REPRODUCED HEREINBELOW FOR THE SAKE OF READY REFERENCE:- 5. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUT HORITIES BELOW, WE FIND THAT THE LD. CIT(A) HAS NOT GIVEN ANY SPECIFIC FINDING WITH REGARD TO RECORDING OF SATISFACTION BY THE ASSESSING OFFIC ER OF THE SEARCHED PERSON BEFORE INITIATING PROCEEDINGS UNDER SECTION 153C OF THE ACT. THE LD. CIT(A) HAS RATHER REJECTED THE CONTENTIONS OF THE ASSESSEE IN THIS REGARD BY HOLDING THAT THE ASSESSING OFFICER O F THE SEARCHED PERSON WAS NOT REQUIRED TO RECORD SATISFACTION AS R EQUIRED UNDER SECTION 158BD OF THE ACT BEFORE INITIATING PROCEEDI NGS UNDER SECTION 153C OF THE ACT. DURING THE COURSE OF HEARING, VARI OUS OPPORTUNITIES WERE AFFORDED TO THE REVENUE TO PLACE SOME EVIDENCE IN ORDER TO DEMONSTRATE THAT BEFORE INITIATING PROCEEDINGS UNDE R SECTION 153C OF THE ACT AGAINST THE ASSESSEE, SATISFACTION WAS RECO RDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON THAT INCRI MINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN FACT RELATE TO THE ASSESSEE. BUT NOTHING HAS BEEN PLACED ON RECORD BY THE REVENUE. M OREOVER, FROM THE ORDERS OF THE LOWER AUTHORITIES, IT IS APPARENT THAT SATISFACTION WAS NOT RECORDED BY THE ASSESSING OFFICER OF THE SEARCH ED PERSON BEFORE INITIATING PROCEEDINGS UNDER SECTION 153C OF THE AC T. NOW THE QUESTION ARISES WHETHER IN THE ABSENCE OF SATISFACT ION RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON, THE ASSES SMENT FRAMED UNDER SECTION 153C OF THE ACT, IS SUSTAINABLE IN TH E EYES OF LAW? THIS QUESTION WAS ANSWERED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT (CENTRAL) VS. M/S GOPI APARTMENT (S UPRA) BY HOLDING THAT A CLEAR AND PLAIN READING OF SECTION 153C LEAV ES NO DOUBT THAT RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED IS MANDATORY AND IT HAS TO PRECEDE THE INI TIATION OF PROCEEDINGS AGAINST THE OTHER PERSON (NOT SEARCHED) . THE RELEVANT ITA NOS.1444 TO 1450/BANG/2014 PAGE 10 OF 19 OBSERVATIONS OF THE JURISDICTIONAL HIGH COURT ARE E XTRACTED HEREUNDER:- 'WE HAVE HEARD SRI BHARAT JI AGRAWAL, LEARNED SENIO R COUNSEL ASSISTED BY SRI ASHOK KUMAR, LEARNED COUNSEL FOR AP PELLANT AND SRI ASHISH BANSAL, LEARNED COUNSEL FOR RESPONDENT A SSESSEE AND HAVE PERUSED THE RECORDS. THE CONTENTION OF SRI AGRAWAL IS TWO FOLD. FIRSTLY, HE CONTENDS THAT IN THE INSTANT CASE, THE ASSESSING OFFICER OF THE 'SEARCHED PERSON' AND THE 'OTHER PERSON' BEING THE SAME, THER E WAS NO REQUIREMENT OF HANDING OVER OF THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED, AS IS MENTIONED IN SECTION 153C NOR THERE WAS ANY NECESSITY OF RECORDI NG A PRIOR SATISFACTION BEFORE PROCEEDING TO ASSESS THE 'OTHER PERSON'. THE SATISFACTION SUBSEQUENTLY RECORDED IN THE ASSESSMEN T ORDER IN RESPECT OF THE 'OTHER PERSON' WAS SUFFICIENT COMPLI ANCE OF PROVISIONS OF SECTION 153C, WHICH, IN ANY CASE, WAS PROCEDURAL IN NATURE. THE A.O. OF BOTH THE PROCEEDINGS, BEING THE SAME, HE WAS NEITHER REQUIRED TO HANDOVER THE DOCUMENTS TO A NOTHER ASSESSING OFFICER NOR HE HAD TO RECORD ANY SATISFAC TION FOR THE PURPOSE OF ANY OTHER ASSESSING OFFICER SINCE SAME A SSESSING OFFICER OF THE SAME DESIGNATION IS HAVING JURISDICT ION OVER BOTH THE PERSONS, I.E. 'SEARCHED PERSON' AND THE 'OTHER PERSON' (NOT SEARCHED). SRI AGRAWAL RELIED UPON A DIVISION BENCH JUDGMENT OF THIS COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. CLASSIC ENTERPRISES, (2013) 358 ITR 465. IT WAS CONTENDED THAT THE TRIBUNAL WAS NOT JUSTIFIE D IN QUASHING THE NOTICE UNDER SECTION 153C, INSTEAD OF DECIDING THE QUESTION ON MERITS AS TO WHETHER ADDITIONS ARE TO BE MADE AND/ OR TO W HAT EXTENT THE INCOME IS TO BE ASSESSED IN THE HANDS OF GOPI APART MENTS. SRI AGRAWAL ALSO CONTENDED THAT BY THE FINANCE ACT, 2003, AMENDMENT IN SECTION 153A W.E.F. 01.06.2003 WAS MAD E AND SECTIONS 153A AND 153C WERE ADDED IN PLACE OF SECTI ONS 153BC AND 153BD. SECTION 158BC IS EQUIVALENT TO SECTION 153A AND SECTION 158BD IS EQUIVALENT TO SECTION 153C. HE ALSO CONTENDED THAT THE RELIANCE PLACED BY THE I .T.A.T. UPON THE JUDGMENT OF THE SUPREME COURT IN MANISH MAHESHWARI (SUPRA) WAS MISPLACED AND THE CASE, AT HAND, WAS SQUARELY COVER ED BY THE DIVISION BENCH OF THIS COURT IN THE CASE OF CLASSIC ENTERPRISES ITA NOS.1444 TO 1450/BANG/2014 PAGE 11 OF 19 (SUPRA). IN THIS REGARD, SRI AGRAWAL REFERRED TO TH E OBSERVATION IN MANISH MAHESHWARI'S CASE TO THE EFFECT THAT 'NO PRO CEEDING UNDER SECTION 158BC HAD BEEN INITIATED. THERE IS, THUS, A PATENT NON- APPLICATION OF MIND. SRI ASHISH BANSAL, LEARNED COUNSEL FOR RESPONDENT ASSESSEE, ON THE OTHER HAND, CONTENDED T HAT THE INITIATION OF THE PROCEEDINGS UNDER SECTION 153C AGAINST THE R ESPONDENT ASSESSEE ITSELF WAS ILLEGAL, AS NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER OF THE 'SEARCHED PERSON' PRIOR TO INITIATION OF SUCH PROCEEDINGS AGAINST RESPONDENT ASSESSEE AS WAS MAND ATORY. HE INVITED THE ATTENTION OF THE COURT TO THE SPECIFIC FINDING RECORDED BY THE LEARNED C.I.T. (APPEALS), AS UPHELD BY THE I.T. A.T., BASED ON THE ADMISSION BY THE A.O. BEFORE IT, WHICH HAS ALREADY BEEN TAKEN NOTE OF BY US IN THE EARLIER PART OF THE JUDGMENT. SRI BANS AL RELIED UPON A RECENT JUDGMENT OF THE APEX COURT IN THE CASE OF CO MMISSIONER OF INCOME TAX-III VS. M/S CALCUTTA KNITWEARS, LUDHIANA PASSED IN CIVIL APPEAL NO.3958 OF 2014 DECIDED ON 12.03.2014 IN SUP PORT OF HIS CONTENTION. APART FROM THE ARGUMENTS, AS NOTED ABOVE, NO OTHER ARGUMENT WAS RAISED BY THE LEARNED COUNSEL FOR EITHER OF THE PAR TIES NOR ANY OTHER JUDGMENT WAS CITED BEFORE US IN SUPPORT OF THEIR RE SPECTIVE CONTENTIONS. THE RELEVANT PROVISION IN THE INSTANT CASE, I.E. SE CTION 153C IS AS UNDER: '153C. ASSESSMENT OF INCOME OF ANY OTHER PERSON. (1 ) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCO UNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISI TIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDI CTION OVER SUCH OTHER PERSON 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.' THE AFORESAID PROVISION IS CONTAINED IN CHAPTER- XI V OF THE INCOME TAX ACT, WHICH CONTAINS THE PROCEDURE FOR ASSESSMEN T. ITA NOS.1444 TO 1450/BANG/2014 PAGE 12 OF 19 A SOMEWHAT SIMILAR PROVISION EXISTS IN SECTION 158B D UNDER CHAPTER XIV-B, WHICH CONTAINS THE PROCEDURE FOR ASSESSMENT OF SEARCHED CASES, WHICH READS AS UNDER: '158BD. WHERE THE ASSESSING OFFICER IS SATISFIED TH AT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY AS SETS WERE REQUISITIONED UNDER SECTION 132A, THEN, THE BOOKS O F ACCOUNT, OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED S HALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION O VER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED [UN DER SECTION 158BC] AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHALL APPLY ACCORDINGLY.' THE MEANING AND SCOPE OF THE AFORESAID PROVISION CO NTAINED IN SECTION 158BD CAME UP FOR CONSIDERATION BEFORE THE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX-III VS. M /S CALCUTTA KNITWEARS, LUDHIANA (SUPRA). THE ISSUE THAT FELL FOR CONSIDERATION BEFORE THE SU PREME COURT, AS MENTIONED IN PARAGRAPH-3 OF THE JUDGMENT IS BEING Q UOTED HEREINBELOW: '3. THE ISSUE THAT FALLS FOR OUR CONSIDERATION AND DECISION IN ALL THESE APPEALS IS: AT WHAT STAGE OF THE PROCEEDINGS UNDER CHAPTER XIV-B DOES THE ASSESSING AUTHORITY REQUIRE TO RECOR D HIS SATISFACTION FOR ISSUING A NOTICE UNDER SECTION 158 BD OF THE INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT).' AFTER CONSIDERING THE RIVAL CONTENTIONS, RELEVANT P ROVISIONS OF THE INCOME TAX ACT AND THE AUTHORITIES ON THE SUBJECT, THEIR LORDSHIPS HELD AS UNDER: '41. WE WOULD CERTAINLY SAY THAT BEFORE INITIATING PROCEEDINGS UNDER SECTION 158BD OF THE ACT, THE ASSESSING OFFIC ER WHO HAS INITIATED PROCEEDINGS FOR COMPLETION OF THE ASSESSM ENTS UNDER SECTION 158BC OF THE ACT SHOULD BE SATISFIED THAT T HERE IS AN UNDISCLOSED INCOME WHICH HAS BEEN TRACED OUT WHEN A PERSON WAS SEARCHED UNDER SECTION 132 OR THE BOOKS OF ACCOUNTS WERE REQUISITIONED UNDER SECTION 132A OF THE ACT. THIS I S IN CONTRAST TO THE PROVISIONS OF SECTION 148 OF THE ACT WHERE RECO RDING OF REASONS IN WRITING ARE A SINE QUA NON. UNDER SECTIO N 158BD THE EXISTENCE OF COGENT AND DEMONSTRATIVE MATERIAL IS G ERMANE TO THE ITA NOS.1444 TO 1450/BANG/2014 PAGE 13 OF 19 ASSESSING OFFICERS' SATISFACTION IN CONCLUDING THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHE D PERSON IS NECESSARY FOR INITIATION OF ACTION UNDER SECTION 15 8BD. THE BARE READING OF THE PROVISION INDICATES THAT THE SATISFA CTION NOTE COULD BE PREPARED BY THE ASSESSING OFFICER EITHER AT THE TIME OF INITIATING PROCEEDINGS FOR COMPLETION OF ASSESSMENT OF A SEARC HED PERSON UNDER SECTION 158BC OF THE ACT OR DURING THE STAGE OF THE ASSESSMENT PROCEEDINGS. IT DOES NOT MEAN THAT AFTER COMPLETION OF THE ASSESSMENT, THE ASSESSING OFFICER CANNOT PREPAR E THE SATISFACTION NOTE TO THE EFFECT THAT THERE EXISTS I NCOME TAX BELONGING TO ANY PERSON OTHER THAN THE SEARCHED PER SON IN RESPECT OF WHOM A SEARCH WAS MADE UNDER SECTION 132 OR REQU ISITION OF BOOKS OF ACCOUNTS WERE MADE UNDER SECTION 132A OF T HE ACT. THE LANGUAGE OF THE PROVISION IS CLEAR AND UNAMBIGUOUS. THE LEGISLATURE HAS NOT IMPOSED ANY EMBARGO ON THE ASSE SSING OFFICER IN RESPECT OF THE STAGE OF PROCEEDINGS DURING WHICH THE SATISFACTION IS TO BE REACHED AND RECORDED IN RESPE CT OF THE PERSON OTHER THAN THE SEARCHED PERSON. 44. 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 TRANSMI TS 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 SECTI ON 158BC OF THE ACT; (B) ALONG WITH THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT; AND (C) IMMEDIATELY AFTER THE ASS ESSMENT PROCEEDINGS ARE COMPLETED UNDER SECTION 158BC OF TH E ACT OF THE SEARCHED PERSON. 45. WE ARE INFORMED BY SHRI SANTOS H KRISHAN, WHO IS APPEARING IN SEVEN OF THE APPEALS THAT THE A SSESSING OFFICER HAD NOT RECORDED THE SATISFACTION NOTE AS REQUIRED UNDER SECTION 158BD OF THE ACT, THEREFORE, THE TRIBUNAL AND THE H IGH COURT WERE JUSTIFIED IN SETTING ASIDE THE ORDERS OF ASSES SMENT AND THE ORDERS PASSED BY THE FIRST APPELLATE AUTHORITY. WE DO NOT INTEND TO EXAMINE THE AFORESAID CONTENTION CANVASSED BY THE L EARNED COUNSEL SINCE WE ARE REMANDING THE MATTERS TO THE H IGH COURT FOR CONSIDERATION OF THE INDIVIDUAL CASES HEREIN IN LIG HT OF THE OBSERVATIONS MADE BY US ON THE SCOPE AND POSSIBLE I NTERPRETATION OF SECTION 158BD OF THE ACT. 46. WITH THESE OBSERVA TIONS, THE APPEALS ARE DISPOSED OF.' ITA NOS.1444 TO 1450/BANG/2014 PAGE 14 OF 19 THE PROVISIONS OF SECTION 158BD BEING PARI MATERIA WITH THE PROVISIONS OF SECTION 153C, THE RATIO OF THE AFORES AID JUDGMENT CLEARLY APPLIES TO THE PRESENT CASE ALSO. THE REFERENCE TO THE ASSESSMENT PROCEEDINGS UNDER S ECTION 158BC BY THE SUPREME COURT IN THE EXTRACTS QUOTED ABOVE IS W ITH REGARD TO THE 'ASSESSMENT PROCEEDINGS' IN RELATION TO THE 'SEARCH ED PERSON' AND NOT THE 'OTHER PERSON' AS REFERRED TO IN SECTION 158BD. A BARE PERUSAL OF THE PROVISION CONTAINED IN SECTIO N 153C OF THE I.T. ACT LEAVES NO DOUBT THAT, AS IS PROVIDED UNDER SECT ION 158BD, WHERE THE ASSESSING OFFICER, WHILE PROCEEDING UNDER SECTI ON 153A AGAINST A PERSON WHO HAS BEEN SUBJECTED TO SEARCH AND SEIZURE UNDER SECTION 132(1) OR HAS BEEN PROCEEDED UNDER SECTION 132A, IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITION ED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SE IZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESS ING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SU CH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THUS, THERE ARE TWO STAGES: (1) 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 AGAIN ST 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 ITA NOS.1444 TO 1450/BANG/2014 PAGE 15 OF 19 NOTICE OF THE PROCEEDINGS UNDER SECTION 153C READ W ITH SECTION 153A AGAINST SUCH 'OTHER PERSON'. 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 CO MPLETION OF THE SAME, BUT BEFORE ISSUANCE OF NOTICE TO THE 'SUCH OT HER PERSON' UNDER SECTION 153C. EVEN IN A CASE, WHERE THE ASSESSING OFFICER OF BOTH THE PERSONS IS THE SAME AND ASSUMING THAT NO HANDING OVER OF DOCUMENTS IS REQUIRED, THE RECORDING OF 'SATISFACTION' IS A MUST, AS, THAT IS THE FOUNDATION, UPON WHICH THE SUBSEQUENT PROCEEDINGS AGAINST THE ' OTHER PERSON' ARE INITIATED. THE HANDING OVER OF DOCUMENTS ETC. IN SU CH A CASE MAY OR MAY NOT BE OF MUCH RELEVANCE BUT THE RECORDING OF S ATISFACTION IS STILL REQUIRED AND IN FACT IT IS MANDATORY. IN THIS REGARD, THE RATIO OF THE JUDGMENT OF THE SU PREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX-III VS. M/S CALC UTTA KNITWEARS, LUDHIANA (SUPRA), AS NOTED ABOVE, CLEARLY APPLIES T O THE PROCEEDINGS UNDER SECTION 153C ALSO. THE 'SATISFACTION' 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 O R RECORD MAINTAINED BY THE ASSESSING OFFICER OF THE 'SEARCHE D PERSON'. THE WORD 'SATISFACTION' REFERS TO THE STATE OF MIND OF THE ASSESSING OFFICER OF THE PERSON SEARCHED, WHICH GETS REFLECTED IN A T ANGIBLE SHAPE/ FORM, WHEN IT IS REDUCED INTO WRITING. IT IS THE CONCLUSI ON DRAWN OR THE FINDING RECORDED ON THE FOUNDATION OF THE MATERIAL AVAILABLE. 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 CA SE OF C.I.T. VS. CLASSIC ENTERPRISES REPORTED IN (2013) 358 ITR 465 (ALLAHABAD). IN THE CASE OF MANISH MAHESHWARI VS. ASSISTANT COMM ISSIONER OF INCOME TAX AND ANOTHER, (2007) 289 ITR 341 (SC) , T HEIR 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 IN TERMS OF SECTION 158BC AND 158B D (I) WERE AS UNDER: ITA NOS.1444 TO 1450/BANG/2014 PAGE 16 OF 19 '(I) SATISFACTION MUST BE RECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S ECTION 132 OF THE ACT; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON; AND (III) THE ASSESSING OFFICER HAS PROCEEDED UNDER SEC TION 158BC AGAINST SUCH OTHER PERSON. 11. THE CONDITIONS PRECEDENT FOR INVOKING THE P ROVISIONS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED B EFORE THE PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELAT ION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARC HED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED U NDER SECTION 132A OF THE ACT.' THE RATIO OF THE JUDGMENT IN MANISH MAHESHWARI'S CA SE ALSO APPLIES TO THE PROVISIONS OF SECTION 153C AND TO THE FACTS OF THIS CASE. IN THE INSTANT CASE, A CATEGORICAL FINDING HAS BEEN RECORDED BY THE C.I.T. (APPEALS) AND THE I.T.A.T. THAT THERE IS NO MATERIAL SHOWING THE RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE 'SEARCHED PERSON' PRIOR TO ISSUANCE OF NOTICE UNDER SECTION 1 53C TO THE RESPONDENT ASSESSEE, I.E. 'THE OTHER PERSON'. IT WA S THE ADMITTED CASE OF THE REVENUE BEFORE THE C.I.T. (APPEALS) AND THE I.T .A.T. THAT THOUGH THE ASSESSING OFFICER (OF THE OTHER PERSON) IN THE ASSESSMENT ORDER HAD STATED THAT SATISFACTION FOR ISSUING NOTICE UND ER SECTION 153C WAS RECORDED, HOWEVER, ON EXAMINATION, RECORDING OF SUC H SATISFACTION ALLEGED TO BE RECORDED BY THE ASSESSING OFFICER WAS NOT AVAILABLE. IN VIEW OF THE LEGAL POSITION, AS ALREADY DISCUSSED ABOVE AND THE ADMITTED FACTUAL POSITION AS AFORESAID, WE ARE UNAB LE TO ACCEPT THE CONTENTIONS OF SRI AGRAWAL. WE ARE ALSO OF THE VIEW THAT PLEA, WHICH IS BEING R AISED IN THIS APPEAL, WAS NOT RAISED IN THE GROUNDS OF APPEAL BEFORE THE I.T.A.T., HOWEVER, EVEN OTHERWISE SUCH PLEA DOES NOT HAVE ANY MERIT. THE CONTENTION OF SRI AGRAWAL THAT SECTION 153C IS ONLY PROCEDURAL IN NATURE, THEREFORE, THE NON-RECORDING OF PRIOR SA TISFACTION DOES NOT VITIATE THE ASSESSMENT ORDER, AS, SUCH SATISFACTION , HAS BEEN RECORDED ITA NOS.1444 TO 1450/BANG/2014 PAGE 17 OF 19 IN THE ASSESSMENT ORDER PASSED SUBSEQUENTLY WITH RE GARD TO THE OTHER PERSON, IS ALSO NOT ACCEPTABLE FOR THE REASON THAT THE SUPREME COURT IN THE CASE OF M/S CALCUTTA KNITWEARS (SUPRA) HAS ALRE ADY CONSIDERED THIS ASPECT OF THE MATTER IN THE CONTEXT OF SECTION 158BD, AND AFTER TAKING NOTE OF THE FACT THAT THE SAID PROVISION IS A MACHINERY PROVISION HAS INTERPRETED THE SAME. IN THE LIGHT OF THE INTER PRETATION GIVEN BY IT AND IN VIEW OF THE RATIO LAID DOWN THEREIN, THE CON TENTION OF SRI AGRAWAL DOES NOT HOLD GROUND. A CLEAR AND PLAIN REA DING OF SECTION 153C LEAVES NO DOUBT THAT RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED IS MANDATORY AND IT HAS TO PRECEDE THE INITIATION OF PROCEEDINGS AGAINST THE OTHER PERSON (NOT SEARCHED). A SPECIFIC QUERY WAS PUT TO SRI AGRAWAL AS TO WHETH ER, ON THE BASIS OF THE MATERIAL COLLECTED DURING THE SEARCH AND SEIZUR E OPERATION OR DURING THE ASSESSMENT, PROCEEDINGS AGAINST THE 'SEA RCHED PERSON' OR THEREAFTER, ANY PROCEEDING COULD BE INITIATED AGAIN ST THE 'OTHER PERSON' UNDER ANY OTHER PROVISION OF THE INCOME TAX ACT, HE CATEGORICALLY REPLIED THAT EXCEPT SECTION 153C, THERE WAS NO OTHE R PROVISION UNDER WHICH ACTION COULD BE INITIATED AGAINST HIM. THE RELIANCE PLACED BY SRI AGRAWAL UPON THE DIVISIO N BENCH JUDGMENT OF THIS COURT IN THE CASE OF C.I.T. VS. CL ASSIC ENTERPRISES (SUPRA) FAR FROM HELPING HIS CAUSE GOES AGAINST HIM . WE HAVE ALREADY RELIED UPON THE SAID JUDGMENT TO EXPLAIN THE CONCEP T OF 'SATISFACTION' UNDER SECTION 153C, WHICH IS REQUIRED TO BE RECORDE D IN WRITING. HOWEVER, ON THE OTHER ISSUES, THE SAID JUDGMENT IS DISTINGUISHABLE FOR THE REASON THAT IN THE SAID CASE, THE ASSESSING OFF ICER HAD RECORDED HIS 'SATISFACTION' AND AFTER RECORDING THE SATISFAC TION ON THE SUBJECT MATTER ON 02.08.2006 HANDED OVER THE BOOKS OF ACCOU NT AND SEIZED MATERIAL, THUS, THE ISSUE, WHICH FALLS FOR CONSIDER ATION IN THIS APPEAL, IN FACT, DID NOT ARISE FOR CONSIDERATION IN THE SAI D APPEAL. IN ANY CASE, THE CASE AT HAND BEING SQUARELY COVERED BY THE PRON OUNCEMENTS OF THE SUPREME COURT, AS ALREADY REFERRED, THE RELIANCE PL ACED BY SRI AGRAWAL ON THE AFORESAID JUDGMENT DOES NOT CUT MUCH ICE.' 6. NOW IT IS CLEAR FROM THE RECORD THAT SATISFACTI ON BY THE ASSESSING OFFICER OF THE SEARCHED PERSON WAS NOT RECORDED BEF ORE INITIATING PROCEEDINGS UNDER SECTION 153C OF THE ACT AGAINST T HE ASSESSEE AND THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE AFORE SAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT. WE, THEREFORE, HAVE NO HESITATION IN HOLDING THAT SINCE THE ASSESSMENT WAS FRAMED CONSEQ UENT TO THE PROCEEDINGS INITIATED UNDER SECTION 153C OF THE ACT , WITHOUT RECORDING SATISFACTION BY THE ASSESSING OFFICER OF THE SEARCHED ITA NOS.1444 TO 1450/BANG/2014 PAGE 18 OF 19 PERSON, THE ASSESSMENT IS BAD IN LAW AND DESERVES T O BE QUASHED. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) A ND QUASH THE ASSESSMENT FRAMED UNDER SECTION 153C READ WITH 143( 3) OF THE ACT. 9. FROM THE ABOVE TRIBUNALS ORDER, IT IS SEEN THAT THE TRIBUNAL HAS NOT ONLY FOLLOWED THE JUDGMENT OF HONBLE ALLAHABAD HIG H COURT RENDERED IN THE CASE OF M/S. GOPI APARTMENT (SUPRA), BUT THE TRIBUNAL HAS ALSO CONSIDERED AND FOLLOWED THE JUDGMENT OF HONBLE APEX COURT REP ORTED IN THE CASE OF CALCUTTA KNITWEARS (SUPRA) AND THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF MANISH MAHESHWARI AS REPORTED IN 289 ITR 341. THE FACTS OF THE PRESENT CASE AS DISCUSSED ABOVE SHOWS THAT IN T HE PRESENT CASE ALSO, NO SATISFACTION WAS RECORDED BY THE AO IN HIS CAPAC ITY AS AO OF THE SEARCHED PERSON BECAUSE IT IS SEEN THAT THE SO-CALL ED SATISFACTION NOTE PREPARED BY THE AO IS IN HIS CAPACITY AS AO OF ASSE SSEE, ALTHOUGH HE HAPPENS TO BE THE AO OF THE SEARCHED PERSONS ALSO, IT COULD NOT BE SHOWN BY THE REVENUE THAT ANY SATISFACTION NOTE WAS PREPA RED BY HIM AS AO OF SEARCHED PERSONS AND THEREFORE, UNDER THESE FACTS, THIS IS TO BE ACCEPTED THAT NO SATISFACTION WAS RECORDED BY THE AO OF SEAR CHED PERSON AND THEREFORE, THIS TRIBUNAL ORDER AND THOSE JUDGMENTS OF THE HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF M/S. GOPI APARTMENT (SUPRA) AND OF THE HONBLE APEX COURT RENDERED IN THE CASE OF CALCUTTA KNITWEARS (SUPRA) AND MANISH MAHESHWARI (SUPRA) ARE APPLICABLE AND THEREFORE, RESPECTFULLY FOLLOWING THESE JUDGMENTS, WE HOLD THAT IN THE PRES ENT CASE, NOTICE ISSUED BY THE AO U/S. 153C OF THE I.T. ACT DESERVES TO BE QUASHED AND ITA NOS.1444 TO 1450/BANG/2014 PAGE 19 OF 19 ACCORDINGLY, WE QUASH THESE ASSESSMENT ORDERS FRAME D BY THE AO U/S. 153C R.W.S. 143(3) OF THE I.T. ACT. ACCORDINGLY, A DDITIONAL GROUND IS ALLOWED IN ALL THE SEVEN YEARS. 10. IN VIEW OF OUR DECISION WITH REGARD TO THE ADDI TIONAL GROUND AS ABOVE, OTHER GROUNDS RAISED BY THE ASSESSEE IN THES E APPEALS DO NOT REQUIRE ANY SEPARATE ADJUDICATION. 11. IN THE RESULT, ALL THE SEVEN APPEALS OF THE ASS ESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF OCTOBER, 2016. SD/- SD/- ( SUNIL KUMAR YADAV ) (A.K. GARO DIA ) JUDICIAL MEMBER ACC OUNTANT MEMBER BANGALORE, DATED, THE 17 TH OCTOBER, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.