Satkar Fincap Ltd., New Delhi V. ACIT, New Delhi

ITA 1525/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97042 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 23-05-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 13-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Assessee Lawyers: B K DHINGRA
• Keywords: Reopening of assessment; Unexplained cash credit; Income from undisclosed sources; Search and seizure; Document seized; Principle of natural justice; Question of law; Assessment record; Documents seized
• Section: 69C; 143(3); 153A; 68; 69; 132

Judgement Text

-IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NOS.1525 TO 1530/DEL./2014 (ASSESSMENT YEARS : 2003-04 TO 2008-09) M/S. SATKAR FINCAP LTD, VS. ACIT, CENTRAL CIRCLE 21, (AMALGAMATED WITH PRIDE RESIDENCY NEW DELHI. PVT. LTD) THROUGH : PRIDE RESIDENCY PVT. LTD, D-3, COMMERCIAL COMPLEX, VASANT VIHAR NEW DELHI 110 057. (PAN : AAJCS6828A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B.K.DHINGRA, ADVOCATE REVENUE BY : SMT. NIRUPAMA KOTRU, CIT DR DATE OF HEARING : 04.08.2015 DATE OF PRONOUNCEMENT : 14.08.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THESE SIX APPEALS, AT THE INSTANCE OF THE ASSESSEE, ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TA X (APPEALS)-II, NEW DELHI FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09. 2. THE FACTS AND CIRCUMSTANCES IN ALL THE ASSESSMEN T YEARS ARE SIMILAR EXCEPT THE DIFFERENCE IN THE ADDITIONS, THEREFORE, FOR THE SAKE OF BREVITY, WE TAKE THE FACTS FROM THE PROCEEDINGS OF THE ASSESSME NT YEAR 2003-04. BRIEF ITA NOS.1525 TO 1530/DEL./2014 2 FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE ACTIO N U/S 132 OF THE INCOME- TAX ACT, 1961 (HEREINAFTER THE ACT) WAS CARRIED O UT IN THE CASES OF SHRI B.K. DHINGRA, SMT. POONAM DHINGRA, M/S MADHUSUDAN B UILDCON PVT. LTD M/S. MAYANK TRADERS (P) LTD. AND M/S HORIZON PVT. L TD. ON 20.10.2008 AND DURING THE COURSE OF SEARCH AT THEIR RESIDENTIA L PREMISES AT F-6/5, VASANT VIHAR, NEW DELHI, CERTAIN DOCUMENTS BELONGIN G TO THE ASSESSEE, WHICH IS A PRIVATE LIMITED COMPANY WERE SEIZED. ON THE BASIS OF DOCUMENTS SO FOUND BELONGING TO THE ASSESSEE, PROCE EDINGS WERE INITIATED IN THE CASE OF THE ASSESSEE U/S 153C READ WITH SECT ION 153A OF THE ACT. THE CASE OF THE ASSESSEE WAS INITIALLY CENTRALIZED WITH ACIT, CENTRAL CIRCLE 17 U/S 127 OF THE ACT BY CIT, DELHI-III, NEW DELHI VIDE ORDER F.NO.CIT-III/CENTRALIZATION/2009-10/2515 DATED 29.1 0.2010. NOTICE U/S 153C DATED 08.09.2010 WAS ISSUED TO THE ASSESSEE BY THE DCIT, CC 17, NEW DELHI REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME WITHIN 15 DAYS OF SERVICE OF THE NOTICE. MEANWHILE, THE CASE WAS TRANSFERRED TO CENTRAL CIRCLE 21 BY AN ORDER U/S 127 OF THE ACT ISSUED VID E F.NO.CIT (C)-II/ CENT/2010-11/1029 DATED 19/10/2010. IN RESPONSE TO THE NOTICE U/S 153C, THE ASSESSEE FILED A RETURN FOR ASSESSMENT YE AR 2003-04 ON 11.11.2010 DECLARING NIL INCOME. A COPY OF THE PAN CHNAMA, REASONS FOR ISSUING NOTICE U/S 153C AND JURISDICTION ORDER DATE D 19/21.10.2010 U/S 127 OF THE ACT WERE DISPATCHED TO THE ASSESSEE ON 12.11 .2010 AS SOUGHT BY THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE TOOK PART IN THE ITA NOS.1525 TO 1530/DEL./2014 3 PROCEEDINGS. THE AO FOUND THAT THE ASSESSEE COMPAN Y BELONGED TO THE THAPAR GROUP OF CASES AND ONE OF THE MAIN ALLEGATIO NS AGAINST THE GROUP IS THAT SEVERAL CONCERNS HAD BEEN FLOATED BY THE GROUP WITH DUMMY DIRECTORS AND SHAREHOLDERS. HE OBSERVED THAT THESE CONCERNS WERE BASICALLY CAPITAL FORMATION CONCERNS WHICH HAD BUILD UP HUGE RESERVES AND SURPLUSES OVER THE YEARS AND THESE RESERVES AND SURPLUSES WERE DEC LARED AS INVESTED IN STOCKS OF TEXTILES. HE FURTHER FOUND THAT AS AND W HEN CASH WAS REQUIRED, THE STOCKS WERE SOLD AND THE MONEY WAS UTILIZED FOR OTHER PURPOSES AS PER REQUIRED. AGAINST THIS BACKGROUND, THE AO ANALYZED THE FACTS OF THE CASE. THE AO OPENED THE ASSESSMENT UNDER THE PROVISIONS O F SECTION 153C FOR THE ASSESSMENT YEAR 2003-04. THE AO NOTICED THAT T HE COMPANY WAS INCORPORATED ON 13.03.1999 AND HAD BEEN FILLING ITS RETURNS WITH INCOME TAX REGULARLY. THE AO FURTHER FOUND THAT THE ASSESS EE HAD DECLARED A CLOSING STOCK OF RS.11,33,06,829/- AS ON 31.03.2002 , WHICH FORMED THE OPENING STOCK FOR THE PREVIOUS YEAR UNDER CONSIDERA TION. DURING THE RELEVANT ASSESSMENT YEAR, THE AO FOUND THAT THE ASS ESSEE HAD PURCHASED TEXTILE GOODS OF RS.36,50,180/- AND HAD MADE SALES OF RS.39,77,470/-. THE AO DIRECTED THE ASSESSEE TO PROVE ITS TRADING ACTIV ITIES AND TO PRODUCE SALE TAX RECORDS. THE ASSESSEE HAD CLAIMED THAT SINCE IT DEALT WITH TAX FREE GOODS ONLY THERE WAS NO NECESSITY FOR IT TO FILE SALES TA X RETURNS. THUS, THE AO FOUND THAT EXCEPT THE DECLARATION OF THE ASSESSEE, THERE WAS NO INDEPENDENT PROOF OF SALE/PURCHASE OF THE GOODS EXCEPT THE BANK TRANSACTIONS. DURING ITA NOS.1525 TO 1530/DEL./2014 4 THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ASKED T HE ASSESSEE TO GIVE BREAK UP OF CASH OR CHEQUE PURCHASES. IN RESPONSE T HERETO, THE ASSESSEE FILED A REPLY IN WHICH ASSESSEE HAD DECLARED ITS EN TIRE PURCHASE AS CASH/CHEQUE PURCHASES OF RS.36,50,180/- AND IT WAS ALSO STATED THAT IT DID NOT MAINTAIN ANY BANK ACCOUNT DURING THE YEAR AND T HE ASSESSEE DEALT WITH TAX FREE GOODS ONLY THERE WAS NO NECESSITY FOR IT T O FILE SALES TAX RETURN. THE AO FOUND THAT DURING THE POST SEARCH ENQUIRIES COND UCTED BY THE INVESTIGATION WING FROM THE ADDRESS OF THE ASSESSEE , IT INDICATED THAT AT LEAST 6 (SIX) NUMBER OF CONCERNS CONNECTED WITH THE THAPAR GROUP WERE DECLARED AS OPERATING FROM THE ADDRESS, C-105, RAMD UTT ENCLAVE, UTTAM NAGAR, NEW DELHI AND THE NUMBER MIGHT BE MUCH HIGHE R ALSO. DURING THE COURSE OF INQUIRIES, THE AO FOUND THE HOUSE CLOSED AND IT WAS A SMALL RESIDENTIAL HOUSE IN LOWER MIDDLE CLASS LOCALITY; A ND THERE WAS NO SIGN BOARD TO SHOW THAT ANY COMPANY OPERATED FROM THERE. THE AO FURTHER INQUIRED THAT THE DIRECTOR/SHAREHOLDER WAS NOT A MA N OF MEANS AND THE PREMISES AND THE PREMISES WERE NOT COMMERCIAL PREMI SES. IT WAS ALSO REPORTED BY THE INVESTIGATION WING THAT NO EVIDENCE OF STOCK WAS FOUND FROM ANY OTHER PREMISES OF THE THAPAR HOMES GROUP. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAIMED THAT T HE ASSESSEE HAD A GODOWN AT KHASRA NO. 3417, VILLAGE DERA MANDL, TEHS IL MEHRAULL, NEW DELHI. BUT, THE AO OBSERVED THAT THE CLAIM WAS NON- VERIFIABLE DUE TO LAPSE OF SO MANY YEARS. THE AO ALSO FOUND THAT MOST OF TH E CONCERNS OF THAPAR ITA NOS.1525 TO 1530/DEL./2014 5 GROUP HAD SOUGHT TO DECLARE THIS PREMISES AS THEIR GODOWN BUT NO SUCH CLAIM WAS MADE DURING SEARCH PROCEEDINGS. THE AO OBSERVED THAT IN THE CASE OF PRESENT ASSESSEE, ALL THE PURCHASES & SALES WERE IN CASH. THE ITEMS PURCHASED & SOLD WERE TEXTILE & FABRICS. THE NAME A ND STYLE OF THE TEXTILES & FABRICS WERE DENIM, FABRICS K-III SUPER FINE (N), FABRIC (PS), FABRIC (PS) EMBROIDERY, FABRIC (PS) EXCEL, FABRICS, KASHMI RI FABRICS-I, KASHMIRI FABRICS-I (D), ETC. FROM THESE ITEMS, THE AO OBSER VED THAT THE ASSESSEE WAS NOT DEALING IN BRANDED ITEMS AND THERE WAS NO N AME OF ANY COMPANY IN THESE PRODUCTS. HE FURTHER OBSERVED THAT THE PU RCHASES & SALES WERE WITHIN M/S THAPAR HOMES GROUP OF CASES. HE FOUND TH AT IN INVENTORIES OF FABRIC & TEXTILE GOODS SHOWN IN THE BALANCE SHEET, THE CLOSING STOCK OF LAST YEAR STOOD AT RS.11,33,06,829/- AND THIS YEAR THE FIGURE WAS RS.11,33,51,510/- WHICH WAS ALMOST THE SAME. THEREF ORE, HE OBSERVED THAT THE PURCHASES & SALES WERE ONLY OUT OF CURRENT YEAR TRANSACTIONS WHICH WERE HELD UNVERIFIABLE AND BOGUS. THE AO FURTHER OB SERVED THAT IT WAS HIGHLY IMPROBABLE THAT WITH A HUGE STOCK INVENTORY OF GOODS WHICH CHANGE IN FASHION AND TASTE, THE ASSESSEE HAD TO MA KE SALES FROM FRESH PURCHASES ONLY. THE AO OBSERVED THAT THE PREPONDERA NCE OF PROBABILITY SUGGESTED THAT THE STOCKS WERE NOT GENUINE BUT SINC E THESE WERE DECLARED PRIOR TO 01.04.2002, NO ACTION WAS BEING TAKEN FOR NOW. IN VIEW OF THE ABOVE, THE AO OBSERVED THAT ALL CASH PURCHASES WERE HELD UNVERIFIABLE AND HENCE A SUM OF RS.36,50,180/- WAS DISALLOWED U/S 69 C. SIMILARLY, THE AO ITA NOS.1525 TO 1530/DEL./2014 6 OBSERVED THAT THE EXPENSES CLAIMED BY THE ASSESSEE COMPANY IN P&L ACCOUNT WERE ALSO UNVERIFIABLE AS SUCH 100% OF THE EXPENSES I.E. RS.3,76,465/- WERE DISALLOWED. FURTHER, THE AO FOU ND THAT AS THE IDENTITY AND GENUINENESS OF THE SHAREHOLDERS HAD NOT BEEN PR OVED, THE AMOUNT OF RS.4,51,000/- WAS ALSO HELD UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. AGGRIEVED BY THE SAME, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT (A) WHO WAS PLEASED TO DISMISS THE APPEAL OF THE AS SESSEE. 3. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF TH E LD. CIT (A), IS IN APPEAL BEFORE US. 4. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN A SSESSMENT YEAR 2003-04 IS AS FOLLOW :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW, THE LD CIT APPEAL HAS FAILED TO A PPRECIATE THAT THE NOTICE ISSUED U/S 153 C AND ASSESSMENT ORD ER PASSED BY THE LD AO U/S 153C/ 143(3) IS ILLEGAL, TIME BARR ED, BAD IN LAW, WITHOUT JURISDICTION AND WRONG ON FACTS. THE A DDITIONS MADE ARE UNJUST, UNLAWFUL AND ARBITRARY AND ARE MAD E AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD CIT APPEAL HAS FAILED TO APPRECIATE THAT THE LD AO WAS NOT JUSTIFIED TO IGNORE THE SUBM ISSION OF THE APPELLANT THAT THE ASSESSMENT PROCEEDINGS FOR T HE YEAR UNDER APPEAL WAS NOT PENDING ON THE DATE OF THE REC ORDING OF SATISFACTION U/S 153 C AND SINCE THE SAME DIDN'T AB ATE, THE PROCEEDINGS U/S 153C OF THE INCOME TAX ACT IN THIS CASE ARE BAD IN LAW AND DESERVES TO BE QUASHED. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD CIT APPEAL HAS FAILED TO APPRECIATE THAT THE ASSESSMENT FRAMED BY LD AO IS AGAINST THE STATUTORY PROVISIONS OF THE ACT AND WITHOUT COMPLYING THE PRO CEDURES ITA NOS.1525 TO 1530/DEL./2014 7 PRESCRIBED U/S 153 C OF THE ACT AND AS SUCH THE ASS ESSMENT BEING BAD IN LAW DESERVES TO BE QUASHED. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD CIT APPEAL HAS FAILED TO APPRECIATE THAT THE LD AO WAS NOT JUSTIFIED TO IGNORE THE SUBM ISSIONS OF THE APPELLANT THAT ASSESSMENT U/S 153C OF THE INCOM E TAX ACT BE RESTRICTED TO ASSESSMENT IN RESPECT OF SEIZED DO CUMENTS OF INCRIMINATING NATURE IN THE CASE OF THE APPELLANT F OR THE YEAR UNDER CONSIDERATION AND IN ABSENCE OF ANY INCRIMINA TING SEIZED DOCUMENT IN THE CASE OF APPELLANT, ASSESSMEN T FRAMED U/S153C OF THE INCOME TAX ACT FOR THE YEAR UNDER CONSIDERATION, IS BAD IN LAW AND DESERVE TO BE QUAS HED. 5. A) THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW, THE LD. CIT APPEAL HAS ER RED IN SUSTAINING THE ADDITION OF RS.36,50,180/- BEING PUR CHASES MADE DURING THE YEAR, BY WAY OF ARBITRARILY TREATIN G THE SAME AS UNEXPLAINED PURCHASES U/S 69C OF IT ACT. B) THAT THE LD.CIT APPEAL HAS ERRED IN SUSTAINING T HE ADDITION OF RS.36,50,180/- ON ACCOUNT OF PURCHASES WHEREAS PROFITS FROM SALE OF SAID GOODS HAS ALREADY BEEN TA XED. NO DEFECT IS POINTED OUT IN THE BOOKS OF ACCOUNT AND T HE EVIDENCES PRODUCED, CONFIRMATIONS RECEIVED HAVE BEE N ILLEGALLY AND ARBITRARILY IGNORED. 6. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF TH E CASE AND THE PROVISION OF LAW, THE LD. (IT APPEAL HAS ER RED IN UPHOLDING THE OBSERVATION, FINDING AND ACTION OF TH E LD AO IN RESPECT OF SALES MADE AS INCOME FROM UNDISCLOSED SOURCES U/S 68. THE LD. (IT APPEAL AND LD. AO HAS ERRED IN NOT APPRECIATING THE FACT THAT THE SALES ARE THE CONVER SION OF STOCK, PART OF WHICH IS FROM THE OPENING STOCK AND THE PROFIT FROM SAID SALES IS ALREADY TAXED. 7. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF TH E CASE AND THE PROVISIONS OF LAW, THE LD.CIT APPEAL HAS ER RED IN SUSTAINING THE ADDITION OF RS.3,76,465/- ON ACCOUNT OF ARBITRARILY DISALLOWANCE OF 100% OF THE TOTAL EXPEN SES CLAIMED IN THE PROFIT AND LOSS ACCOUNT ON MERE PRES UMPTIONS AND ASSUMPTIONS. ITA NOS.1525 TO 1530/DEL./2014 8 8. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF TH E CASE AND THE PROVISIONS OF LAW, THE LD.CIT APPEAL HAS ER RED IN SUSTAINING THE ADDITION OF RS.4,51,000/- AS UNEXPLA INED CASH CREDIT ON ACCOUNT OF INCREASE IN AUTHORIZED SHARE C APITAL IGNORING THE FACT THAT THE SAME WAS ON ACCOUNT OF B ONUS ISSUE. 9. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW, THE LD CIT APPEAL HAS ERRED IN HO LDING THE CONCLUSION THAT THE 'AUDITED BOOKS' NOTWITHSTANDING , THE BOOK RESULTS ARE REQUIRED TO BE REJECTED, SINCE THE NARR ATIONS ARE ARTIFICIAL, SHAM AND NOT REFLECTIVE OF THE ACTUAL B USINESS / COMMERCIAL TRANSACTIONS. 10. THAT THE LD. CIT APPEAL HAS ERRED IN IGNORING T HE EXPLANATION GIVEN, EVIDENCES AND MATERIAL PLACED AN D AVAILABLE ON RECORD. THE SAME HAS NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED AND THE SAME DO NOT JUSTIFY THE ADDITIONS/DISALLOWANCES MADE. THE ADDIT IONS HAVE BEEN SUSTAINED WITH PRESET MIND OF THE LD. CIT( A) AND HER ORDER IS BASED ON SURMISES, CONJECTURES AND SUSPICI ON. 11. THAT THE LD.CIT APPEAL HAS ERRED IN IGNORING TH E FACT THAT THE LD AO HAS ERRED BOTH ON FACTS AND IN LAW, IN USING STATEMENT OF VARIOUS PERSONS WITHOUT GIVING A COPY OF THE SAME AND OPPORTUNITY TO CROSS EXAMINE. 12. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE LD CIT APPEAL AND LD AO HAS ERRED IN IGNORING THE CONCEPT OF REAL INCOME AND NOT ALLOWIN G TELESCOPING OF THE INCOME. 13. THAT THE LD CIT APPEAL HAS FAILED TO APPRECIATE THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE VARIOU S OBSERVATIONS AND FINDINGS OF THE LD AO IN THE IMPUG NED ASSESSMENT ORDER IS IRRELEVANT AND VITIATED IN THE LAW. 14. THAT THE APPELLANT CRAVES THE RIGHT TO AMEND, A PPEND, DELETE ANY OR ALL GROUNDS OF APPEAL. 5. THE MAIN GROUND THAT HAS BEEN AGITATED BEFORE US IS THAT SATISFACTION OF THE AO OF THE SEARCHED PERSON AS ENVISAGED UNDER SECTION 153C OF THE ITA NOS.1525 TO 1530/DEL./2014 9 ACT HAS NOT BEEN RECORDED, BEFORE INITIATING THE PR OCEEDINGS AGAINST THE ASSESSEE U/S 153C OF THE ACT, WHICH VITIATED THE EN TIRE IMPUGNED ASSESSMENTS. 6. LD. AR FOR THE ASSESSEE, SHRI B.K. DHINGRA, SUBM ITTED THAT IN THE PRESENT CASE, THERE IS NO SATISFACTION RECORDED BY THE AO OF THE RAIDED PARTY, AS ADMITTED IN RTI REPLIES PLACED AT PAGES 3 TO 5A OF THE PAPERBOOK AND AVAILABLE SATISFACTION NOTE, IS PLACED AT PAG ES 1 OF THE PAPER BOOK, IS ONE RECORDED BY THE AO OF THE PRESENT ASSESSEE/OTHE R PERSON. HE SUBMITTED THAT THE SAME IS HELD TO BE INVALID ON SA ME FACTS IN THE FOLLOWING CASES :- (I) DELHI ITAT, H BENCH ORDER IN THE CASE OF TANV EER COLLECTIONS 168 TTJ 145; (II) DELHI ITAT, C BENCH ORDER IN THE CASE OF IEC S SOLUTIONS PVT. LTD. (ORDER DATED 13.03.2015); (III) DELHI ITAT, C BENCH ORDER IN THE CASE OF GR OVER GARMENTS (P) LTD. (ORDER DATED 29.04.2015); (IV) DELHI ITAT, B BENCH ORDER IN THE CASE OF DSL PROPERTIES 60 SOT 88. LD. AR SUBMITTED THAT IT IS NOW HELD BY HONBLE TEL ANGANA & ANDHRA PRADESH HIGH COURT IN SHETTY PHARMACEUTICALS CASE T HAT TWO SEPARATE NOTES ARE MUST U/S 153C I.E. ONE/FIRST BY RAIDED PARTY AO AND OTHER/SECOND BY NON-RAIDED PARTY AO EVEN IF BOTH ARE SAME, THIS REC ORDING OF SATISFACTION IS A SINE-QUA NON FOR ASSUMPTION OF JURISDICTION U/S 1 53C. HE SUBMITTED THAT RATIO OF THE AFORESAID JUDGMENT WAS ALSO RELIED UPO N BY DELHI ITAT, H ITA NOS.1525 TO 1530/DEL./2014 10 BENCH IN THE CASE OF VINITA CHAURASIA ORDER DATED 2 9.05.2015 AND ALSO IN ITAT MUMBAI, BENCH D IN THE CASE OF DEVEN MEHTA ( ORDER DATED 24.04.2015). 7. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS O F THE AO AND CIT (A) AND WAS OF THE OPINION THAT SATISFACTION HAS BE EN RECORDED BY THE AO BEFORE PROCEEDINGS AGAINST THE ASSESSEE U/S 153C OF THE ACT, AND TOOK OUR ATTENTION TO PAGE 1 OF THE PB WHERE SATISFACTION OF THE AO TO PROCEED AGAINST THE ASSESSEE DATED 03.09.2010 IS THERE, SO THERE IS NO ILLEGALITY AS POINTED OUT BY THE LD. AR. THEREFORE, ACCORDING TO LD DR, THE GROUND RAISED IN THIS BEHALF IS NOT VALID AND NEEDS TO BE REJECTED. 8. WE HAVE HEARD THE RIVAL SUBMISSION AND CAREFULLY GONE THROUGH THE RECORDS AND THE CASE LAWS CITED BEFORE US. THE MAIN ISSUE THAT WAS RAISED BY THE ASSESSEE IS THAT ASSUMPTION OF JURISDICTION BY THE AO BEFORE ISSUING NOTICE U/S 153C OF THE ACT IS NOT IN ACCORDANCE TO LAW AND SO THE IMPUGNED ASSESSMENT U/S 153C READ WITH 153A/143(3) OF THE A CT IS VOID-AB-INITIO AND SHOULD BE QUASHED BEING QUARUM-NON-JUDICE. A P ERUSAL OF THE ASSESSMENT ORDER OF THE ASSESSEE REVEALS THAT A SEA RCH WAS CARRIED OUT U/S 132 OF THE ACT ON SHRI B.K. DHINGRA, SMT. POONAM DH INGRA, M/S MAYANK TRADERS PVT. LTD. AND M/S. HORIZON PVT. LTD., AND I N SUCH SEARCH PROCEEDINGS, CERTAIN DOCUMENTS BELONGING TO THE ASS ESSEE WAS FOUND WHICH LED TO THE MAKING OF ASSESSMENT U/S 153C READ WITH SECTION 153A OF THE ACT. IN ORDER TO APPRECIATE THE CONTENTION MADE BY THE LD. AR ON THE ITA NOS.1525 TO 1530/DEL./2014 11 QUESTION OF RECORDING OF PROPER SATISFACTION, IT WO ULD BE APPOSITE TO NOTE DOWN THE PRESCRIPTION OF THE RELEVANT PARTS OF SECT ION 153(1) AT THE MATERIAL TIME, 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 SECT ION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BEL ONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENT S OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER 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. 9. FROM A BARE READING OF THE ABOVE PROVISION, IT I S CLEAR THAT WHERE THE AO OF THE PERSON SEARCHED IS SATISFIED THAT ANY MON EY, BULLION, JEWELLERY, BOOKS OF ACCOUNTS OR OTHER DOCUMENTS ETC., BELONG T O A PERSON OTHER THAN THE PERSON SEARCHED, THEN, SUCH DOCUMENTS OR ASSETS , ETC., SHALL BE HANDED OVER TO THE AO OF THE OTHER PERSON AND THE LATER AO SHALL PROCEED AGAINST SUCH OTHER PERSON TO ASSESS OR REASSESS HIS INCOME. A BARE PERUSAL OF THE PROVISION INDICATES THAT BEFORE HANDING OVER SUCH D OCUMENTS ETC. TO THE AO OF THE OTHER PERSON , A SATISFACTION HAS TO BE RECORDED BY THE AO OF THE PERSON SEARCHED THAT MONEY, BULLION OR JEWELLERY, E TC., FOUND FROM THE PERSON SEARCHED BELONG TO THE OTHER PERSON . ONLY WHEN SUCH SATISFACTION IS RECORDED BY THE AO OF THE PERSON SEARCHED AND SUCH ITA NOS.1525 TO 1530/DEL./2014 12 DOCUMENTS OR ASSETS SEIZED, ETC., ARE HANDED OVER T O THE AO OF THE OTHER PERSON , THAT THE LATER AO ACQUIRES JURISDICTION TO MAKE A SSESSMENT OR REASSESSMENT OF THE OTHER PERSON. IT IS, THEREFORE, CLEAR THAT THE AO OF THE OTHER PERSON CAN ACQUIRE JURISDICTION TO ASSESS OR REASSESS INC OME OF THE OTHER PERSON ONLY WHEN THE AO OF THE PERSON SEARCHED RECORDS SATISFACTION IN HIS CASE (SEARCHED PERSON) BEFORE H ANDING OVER MONEY, BULLION, JEWELLERY, ETC. TO HIM. SO, WHAT EMERGES IS THAT THE RECORDING OF SATISFACTION BY THE AO OF THE PERSON SEARCHED IS A CONDITION PRECEDENT FOR THE AO OF THE OTHER PERSON TO ACQUIRE JURISDICTION. UNLESS SUCH JURISDICTIONAL FACT IS SATISFIED, THERE CAN BE NO Q UESTION OF MAKING ASSESSMENT OR REASSESSMENT OF THE OTHER PERSON . 10. IN THE CASE OF ANIL KUMAR & ORS. VS. UOI & ORS. REPORTED IN 155 TAXMAN 659 (SC), THE HONBLE APEX COURT OBSERVED TH AT A JURISDICTIONAL FACT IS A FACT WHICH MUST EXIST BEFORE A COURT, A T RIBUNAL OR AN AUTHORITY ASSUMES JURISDICTION OVER A PARTICULAR MATTER. A J URISDICTIONAL FACT IS ONE ON EXISTENCE OR NON-EXISTENCE OF WHICH DEPENDS JURI SDICTION OF A COURT, A TRIBUNAL OR AN AUTHORITY. . IT IS THE FACT UPON WHI CH AN ADMINISTRATIVE AGENCY'S POWER TO ACT DEPENDS. IF THE JURISDICTIONA L FACT DOES NOT EXIST, THE COURT, AUTHORITY OR OFFICER CANNOT ACT. IF A COURT OR AUTHORITY WRONGLY ASSUMES THE EXISTENCE OF SUCH FACT, THE ORDER CAN B E QUESTIONED BY A WRIT OF CERTIORARI. THE UNDERLYING PRINCIPLE IS THAT BY ERR ONEOUSLY ASSUMING EXISTENCE OF SUCH JURISDICTIONAL FACT, NO AUTHORITY CAN CONFER UPON ITSELF ITA NOS.1525 TO 1530/DEL./2014 13 JURISDICTION WHICH IT OTHERWISE DOES NOT POSSESS. THE EXISTENCE OF 'JURISDICTIONAL FACT' IS SINE QUA NON FOR THE EXERC ISE OF POWER BY A COURT OF LIMITED JURISDICTION . 11. AS NOTED EARLIER SECTION 153C PROVIDES FOR TAKI NG RECOURSE TO ASSESSMENT IN RESPECT OF ANY OTHER PERSON, THE COND ITIONS PRECEDENT WHEREFORE ARE : (I) SATISFACTION MUST BE RECORDED B Y THE AO THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER S. 132; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONE D HAD BEEN HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSO N; AND (III) THE AO HAS PROCEEDED UNDER S. 153C AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISIONS OF S. 153C, T HUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVISIONS OF SAID SECTION ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEE N SEARCHED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED U NDER S. 132A. THAT THE RECORDING OF SATISFACTION BY THE AO HAVING JURISDIC TION OVER THE PERSON SEARCHED IS AN ESSENTIAL AND PREREQUISITE CONDITION FOR BESTOWING JURISDICTION TO THE AO OF THE OTHER PERSON . 12. LET US EXAMINE THE FACTS OF THE INSTANT CASE MO RE ELABORATELY. IT IS SEEN THAT SOME SATISFACTION WAS RECORDED, A COPY OF WHICH IS AVAILABLE ON PAGE 1 OF THE PAPER BOOK, AS UNDER :- ITA NOS.1525 TO 1530/DEL./2014 14 SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF T HE I.T. ACT, 1961 IN THE CASE OF M/S. SATKAR FINCAP LD. C-1 05, RAMDUTT ENCLAVEW, UTTAM NAGAR, NEW DELHI, PAN : AAJCS6828A FOR A.Y. 2003-04 TO 2008-09. 08.09.2010 IN THE CASE OF SH. B.K. DHINGRA, SMT. POONAM DHINGRA, M/S MADHUSUDAN BUILDCON PVT. LTD., M/S. MAYANK TRADERS PVT. LTD., M/S. HORIZON PVT. LTD., SEARCH & SEIZURE TOOK PLACE U/S 132 ON 20.10.2008. THE UNDERSIGNED IS THE JURISDICTIONAL AO OF THESE CASES. DURING THE COURSE OF SEARCH & SEIZURE DOCUMENTS/PAPERS PAGE 1 TO 31 OF ANNEXURE A-28 SEIZED BY PARTY R-2, ANNEXURES A-56, A-57 AND A-58 SEIZED BY PARTY 04 ARE FOUND TO BELONG TO OF M/S SATKAR FINCAP LD., C-105, RAMDUTT ENCLAVEW, UTTAM NAGAR, NEW DELHI. I HAVE EXAMINED THE ABOVE MENTIONED DOCUMENTS/PAPERS AND PROVISION OF SECTION 153C IS INVOKEABLE IN THIS CASE. AS THE UNDERSIGNED IS ALSO THE JURISDICTIONAL AO OF M/S. SATKAR FINCAP LD.,C-105, RAMDUTT ENCLAVEW, UTTAM NAGAR, NEW DELHI, THIS SATISFACTION NOTE IS RECORDED AND IS PLACED IN THE FILE BEFORE ISSUING NOTICE U/S 153 C. SD/- ACIT, CENTRAL CIRCLE 17, NEW DELH I IT CAN BE SEEN FROM THE ASSESSMENT ORDER THAT NOTIC E U/S 153C WAS ISSUED TO THE ASSESSEE BY THE DCIT, CENTRAL CIRCLE-17 ON 08.0 9.2010 AND SATISFACTION WAS RECORDED ON 08.09.2010. IT IS APPA RENT THAT IT WAS: SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF TH E I.T. ACT, 1961 IN THE CASE OF M/S. SATKAR FINCAP LD.. IT IS FURTHER NOTICEABLE FROM THE ABOVE THAT : THIS SATISFACTION NOTE IS RECORDED AND IS PLACED I N THE FILE BEFORE ISSUING NOTICE U/S 153C. THE CONTENTS OF THE ABOVE SATISFACTION NOTE STATES THAT THE SAID NOTE WAS RECORDED BY THE AO OF THE ASSESSEE BEFORE ITA NOS.1525 TO 1530/DEL./2014 15 INITIATING ASSESSMENT U/S 153C OF THE ACT PURSUANT TO THE SEARCH CONDUCTED ON SHRI B.K. DHINGRA, SMT. POONAM DHINGRA, MUDHUSUD AN BUILDCON PVT. LTD. M/S MAYANK TRADERS PVT. LTD. AND M/S. HORIZON PVT. LTD. PAGES 3 5A OF THE PAPER BOOK ARE THE COPIES OF THE REPLY DA TED 10.06.2013 AND 28.06.2013/02.07.2013 FURNISHED BY THE DY. COMMISSI ONER OF INCOME-TAX, CENTRAL CIRCLE-17, NEW DELHI TO SHRI B.K. DHINGRA, SMT. POONAM DHINGRA, MUDHUSUDAN BUILDCON PVT. LTD. , SHRI PRABASH SWAIN, DIRECTOR OF M/S. HORIZONS SOLUTIONS INTEGRATION PVT. LTD. (NOW KNOWN AS SURIDHI INFRATECH PVT. LTD.), AND NARENDRA SINGH, M/S MAYANK TRADERS, UNDER THE PROVISIONS OF RTI ACT, 2005. THE RELEVANT PART OF THE REPLY D ATED 10.6.2013 GIVEN TO SH. B.K. DHINGRA, IS AS UNDER:- 2. FROM THE ASSESSMENT RECORDS OF SH. BHUPESH KUMA R DHINGRA, WHICH IS COVERED UNDER SECTION 153A, FOR T HE ASST. YEARS FROM 2003-04 TO 2008-09 (BLOCK PERIOD) IT IS NOTICED THAT THERE IS NO SATISFACTION NOTE AVAILABLE/RECORDED IN RESPECT OF OTHER ENTITIES. SIMILAR REPLIES HAVE BEEN GIVEN TO SMT. POONAM DHIN GRA, MUDHUSUDAN BUILDCON PVT. LTD., SHRI PRABASH SWAIN, DIRECTOR OF M/S. HORIZONS SOLUTIONS INTEGRATION PVT. LTD. (NOW KNOWN AS SURID HI INFRATECH PVT. LTD.) AND NARENDRA SINGH, MAYANK TRADERS (P) LTD. ON A CO NSIDERATION OF THE ABOVE REPLIES GIVEN BY THE DEPARTMENT TO THE PERSON S SEARCHED, IT IS MANIFEST THAT THERE IS NO SATISFACTION NOTE AVAILABLE/RECORDED IN RESPECT OF OTHER ENTITIES . ON A CONJOINT READING OF THE SATISFACTION NOTE A ND REPLIES ITA NOS.1525 TO 1530/DEL./2014 16 GIVEN BY THE DEPARTMENT TO THE PERSONS SEARCHED UND ER THE RTI ACT, IT CLEARLY EMERGES THAT NO SATISFACTION WAS RECORDED B Y THE AO IN THE CASES OF THE PERSONS SEARCHED U/S 132(1) OF THE ACT (I.E. SH RI B.K. DHINGRA, SMT. POONAM DHINGRA, M/S MADHUSUDAN BUILDCON PVT. LTD. , M/S HORIZON PVT. LTD AND NARENDRA SINGH AND MAYANK TRADERS (P) LTD.) THAT SOME BOOKS OF ACCOUNT OR DOCUMENTS ETC. BELONGING TO THE ASSESSEE WERE FOUND WHICH WERE HANDED OVER TO THE AO OF THE OTHER PERSON (I.E. THE ASSESSEE). THE SATISFACTION NOTE AS REPRODUCED ABOVE HAS BEEN PREP ARED BY THE AO OF THE ASSESSEE. 13. THE LD. DR WAS OF THE OPINION THAT SINCE THE A O OF THE PERSONS SEARCHED AND THE ASSESSEE IS SAME, IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE SATISFACTION IS RECORDED IN THE CASE OF THE PER SONS SEARCHED OR OTHER PERSON. HE EMPHASIZED ON THE FACTUM OF RECORDING SA TISFACTION BY THE AO, WHICH CONDITION IN HIS OPINION STOOD SATISFIED, BY VIRTUE OF IT HAVING BEEN RECORDED BY THE COMMON AO. 14. THIS PARTICULAR ARGUMENT OF THE REVENUE WAS ANS WERED BY THE COORDINATE BENCH IN THE CASE OF M/S. TANVIR COLLECT IONS PVT. LTD. VS. ACIT, CENTRAL CIRCLE 21, NEW DELHI IN ITA NO.2421/D EL/2014 ORDER DATED 16.01.2015 AS UNDER :- 16. IN OUR CONSIDERED OPINION, THIS CONTENTION ADV ANCED ON BEHALF OF THE REVENUE IS DEVOID OF MERIT. WE FAI L TO COMPREHEND AS TO HOW THE REQUIREMENT OF RECORDING SATISFACTION BY THE AO OF THE PERSON SEARCHED PROVI DED BY THE STATUTE CAN BE SUBSTITUTED WITH ANYTHING ELSE. THERE IS ITA NOS.1525 TO 1530/DEL./2014 17 AN UNDERLYING RATIONALE IN PROVIDING FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED. AS T HE MONEY, BULLION, JEWELLERY, BOOKS OF ACCOUNT OR DOC UMENTS ETC. ALWAYS COME TO THE POSSESSION OF THE AO OF THE PERSON SEARCHED WHO HAS TO FRAME ASSESSMENT, IT IS ONLY HE WHO CAN FIND OUT THAT WHICH OF SUCH DOCUMENTS ETC. DO N OT BELONG TO THE PERSON SEARCHED AND ARE RELEVANT FOR THE ASSESSMENT OF THE OTHER PERSON. IT IS NOT AS IF ALL THE BOOKS OF ACCOUNT AND DOCUMENTS ETC. FOUND DURING THE COUR SE OF A SEARCH ARE EVALUATED BY A SEPARATE AUTHORITY TO FIG URE OUT THAT WHICH OF THESE DOCUMENTS BELONG TO THE PERSON SEARCHED AND TO THE OTHERS AND THUS HANDED OVER TO THE CONCERNED AOS OF THE PERSON SEARCHED AND OTHERS FOR MAKING ASSESSMENT. AS IT IS ONLY THE AO OF THE PERS ON SEARCHED WHO CAN REACH A CONCLUSION THAT SOME OF TH E DOCUMENTS ETC. DO NOT BELONG TO THE PERSON SEARCHED BUT TO SOME OTHER PERSON, THE LEGISLATURE HAS PROVIDED FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PER SON SEARCHED. IT IS NOT PERMISSIBLE UNDER THE LAW TO RE QUIRE THE AO OF THE OTHER PERSON TO RECORD SUCH SATISFACTION BY THE AO. 17. AS REGARDS THE OTHER ARGUMENT OF THE LD. DR THA T SINCE THE AO OF BOTH THE PERSONS SEARCHED AND THE A SSESSEE IS THE SAME PERSON, HENCE THE REQUIREMENT OF RECORD ING SATISFACTION BY THE AO OF THE PERSONS SEARCHED SHOU LD BE DEEMED TO HAVE BEEN FULFILLED WITH THE RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE. WE ARE AGA IN UNABLE TO APPRECIATE THIS CONTENTION THAT THE COMMO NNESS OF THE AO WOULD MAKE NO DIFFERENCE IN SO FAR AS THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSON S SEARCHED IS CONCERNED. WHAT IS RELEVANT FOR THIS PURPOSE IS NOT THE IDENTITY OF THE PERSON ASSESSING BUT HIS POSITION A ND THE CAPACITY. WHEN THE LAW REQUIRES THE AO OF THE PERSO N SEARCHED TO RECORD THE NECESSARY SATISFACTION, IT I S THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED WHO IS OBLIGED TO RECORD SUCH SATISFACTION IN THE CAPACITY OF THAT AO AND THAT TOO IN THE CASE OF THE PERSON SEARCHED. THE ME RE FACT THAT THE AO OF THE PERSON SEARCHED AND THE ASSESSEE IS THE SAME PERSON, DOES NOT, IN ANY MANNER, OBLITERATE TH E REQUIREMENT OF LAW NECESSITATING THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSON SEARCHED THA T MONEY, BULLION, JEWELLERY, ETC., FOUND FROM THE PERSON SEA RCHED ITA NOS.1525 TO 1530/DEL./2014 18 BELONGS TO THE OTHER PERSON. WHAT IS CRUCIAL TO NOTE IS CAPACITY OF THE AO AND NOT HIS IDENTITY. IN VIEW OF THE FACT THAT WHEN THE STATUTORY STIPULATION IS FOR RECORDIN G THE SATISFACTION BY THE AO OF THE PERSON SEARCHED, THEN , IT CANNOT BE SUBSTITUTED WITH THE SATISFACTION OF THE AO OF THE OTHER PERSON. THIS CONTENTION ALSO FAILS. 18. AT THIS STAGE, IT IS RELEVANT TO NOTE THAT THE LEGISLATURE HAS SUBSTITUTED THE LATTER PART OF SECTION 153C(1) BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 1.10.2014. THE HIT HERTO PART OF SUB-SECTION (1) : AND THAT ASSESSING OFFIC ER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NO TICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PER SON REFERRED TO IN SUB-SECTION (1) OF SECTION 153A. HAS BEEN SUBSTITUTED AS UNDER : - AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION O F THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SU B- SECTION (1) OF SECTION. 19. THE ABOVE SUBSTITUTION HAS THE EFFECT OF NOW MA KING IT MANDATORY FOR THE AO OF THE OTHER PERSON ALSO TO RECORD SATISFACTION THAT THE BOOKS OF ACCOUNT OR DOCUMENTS , ETC., HAVE A BEARING ON THE DETERMINATION OF THE TOTAL IN COME OF SUCH OTHER PERSON BEFORE EMBARKING UPON THE EXERC ISE OF HIS ASSESSMENT OR REASSESSMENT. THEREFORE, NOW UND ER THE LAW, W.E.F. 1.10.2014 IT HAS BECOME OBLIGATORY NOT ONLY FOR THE AO OF THE PERSON SEARCHED TO RECORD SATISFACTIO N BEFORE HANDING OVER BOOKS OF ACCOUNT OR DOCUMENTS, ETC., T O THE AO OF THE OTHER PERSON, BUT, SUCH AO OF THE OTHE R PERSON IS ALSO REQUIRED TO RECORD SATISFACTION THA T THE BOOKS OF ACCOUNT OR DOCUMENTS, ETC. HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PER SON. IN THE PRE-SUBSTITUTION ERA OF THE RELEVANT PART OF SU B-SECTION (1) OF SECTION 153C COVERING THE PERIOD UNDER CONSIDERATION, THE JURISDICTIONAL CONDITION REMAINS THAT THE ITA NOS.1525 TO 1530/DEL./2014 19 SATISFACTION IS REQUIRED TO BE RECORDED BY AND IN T HE CASE OF THE PERSON SEARCHED SO AS TO ENABLE THE AO OF THE OTHER PERSON TO START WITH THE PROCEEDINGS FOR MAKING AS SESSMENT OR REASSESSMENT. 20. THE LD. DR CONTENDED THAT RECORDING OF SATISFAC TION BY THE AO OF THE ASSESSEE AT THE MOST CAN BE TREATE D AS A TECHNICAL MISTAKE AND HENCE SHOULD NOT ECLIPSE THE ASSESSMENT. RELYING ON CERTAIN JUDGMENTS, THE LD. D R SUBMITTED THAT THE TECHNICALITIES CANNOT BE ALLOWED TO PREVAIL IN THE COURSE OF INDULGENCE OF JUSTICE. 21. WE AGREE IN PRINCIPLE THAT TECHNICALITIES CANNO T COME IN THE WAY OF DISPENSATION OF JUSTICE. HOWEVER, IT IS IMPORTANT TO NOTE THAT THE LACK OF JURISDICTION BY THE AO CANNOT BE PUT UNDER THE CARPET IN THE GUISE OF A TE CHNICAL DEFECT. IT GOES WITHOUT SAYING THAT NO ASSESSMENT OR OTHER PROCEEDINGS CAN BE LAWFULLY TAKEN UP AND COMPLETED UNLESS THE CONCERNED AUTHORITY HAS JURISDICTION TO DO SO. LACK OF JURISDICTION GOES TO THE VERY ROOT OF THE MATTER AN D CUTS THE TREE OF ASSESSMENT IF THE FOUNDATION OF JURISDICTIO N IS MISSING. 22. THE LD. AR HAS BROUGHT TO OUR NOTICE TWO ORDERS PASSED BY THE DELHI BENCHES OF THE TRIBUNAL, NAMELY , ACIT VS. INLAY MARKETING PVT. LTD. (ITA NO.4200/DEL/2012 ), ETC. AND DCIT VS. AAKASH AROGYA MANDIR PVT. LTD. (ITA NO.5437/DEL/2013), ETC., IN WHICH THE NOTICES AND THE CONSEQUENTIAL ASSESSMENTS U/S 153C, UNDER IDENTICAL CIRCUMSTANCES, HAVE BEEN QUASHED. THE LD. DR CONTEN DED THAT THE ABOVE REFERRED TWO TRIBUNAL ORDERS ARE PER INCURIUM AND SHOULD NOT BE FOLLOWED. THE MAIN REASON FOR DECLARING THE TRIBUNAL ORDERS AS PER INCURIUM WAS THE NON- CONSIDERATION OF THE JUDGMENT OF THE HONBLE JURISD ICTIONAL HIGH COURT IN JUDGMENT IN THE CASE OF SSP AVIATION LTD. VS. DCIT (2012) 252 CTR (DEL) 291 . 23. LET US EXAMINE THE CASE OF SSP AVIATION LTD. (SUPRA) FOR EVALUATING THE CONTENTION THAT THE INSTANT ASSE SSMENT BE DECLARED AS PER LAW. THE HONBLE HIGH COURT IN THAT CASE HAS HELD THAT THE ASSESSING OFFICER HAVING JURISDIC TION OVER THE SEARCHED PERSON SHOULD BE SATISFIED THAT THE VA LUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DUR ING THE ITA NOS.1525 TO 1530/DEL./2014 20 SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED P ERSON AND THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUC H VALUABLE ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST CONCLUSIVELY REF LECT OR DISCLOSE ANY UNDISCLOSED INCOME. WE FIND THAT THER E IS NO SUCH CONTROVERSY BEFORE US AS WAS THERE BEFORE THE HONBLE HIGH COURT. IT IS NOT THE CASE OF THE ASSESSEE BEFO RE US IN THIS GROUND THAT THE DOCUMENTS ETC. FOUND FROM THE PERSONS SEARCHED DID NOT POSITIVELY INDICATE THE EXISTENCE OF SOME INCOME IN THE HANDS OF THE ASSESSEE. THE ARGUMENT I S SIMPLY CONFINED TO NON-RECORDING OF SATISFACTION BY THE AO OF THE PERSONS SEARCHED. INSTEAD OF SUPPORTING THE DEPARTMENTS CASE, WE FIND THAT THIS JUDGMENT STREN GTHENS THE ASSESASEES CASE BY MAKING IT CLEAR IN NO UNCER TAIN TERMS THAT THE AO OF THE PERSON SEARCHED IS OBLIGED TO RECORD THE SATISFACTION. THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT CONTAINED IN PARA 15 MERIT REPRODUCTION AS UNDER: - IT NEEDS TO BE APPRECIATED THAT THE SATISFACTION THAT IS REQUIRED TO BE REACHED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON IS THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST BE SHOWN TO SHOW TO CONCLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. 24. IT IS PRETTY CLEAR FROM THE ABOVE EXTRACTION TH AT THE SATISFACTION AS REFERRED TO IT IN THIS CASE IS THAT OF THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEAR CHED PERSON. AS SUCH, WE ARE OF THE CONSIDERED OPINION T HAT THIS JUDGMENT DOES NOT SUPPORT THE REVENUES CASE. RESUL TANTLY, THE CHARACTERIZATION OF THE ABOVE TRIBUNAL ORDERS A S PER INCURIUM BY THE LD. DR, IS ABSOLUTELY WITHOUT ANY LEGALLY SUSTAINABLE BASIS. ITA NOS.1525 TO 1530/DEL./2014 21 25. EVEN OTHERWISE, THE JUDICIAL DISCIPLINE REQUIRE S A SUBSEQUENT BENCH TO THE FOLLOW AN EARLIER ORDER OF A CO- ORDINATE BENCH ON THE POINT. IT IS ONLY IF THE SUBS EQUENT BENCH FEELS ITSELF UNABLE TO CONCUR WITH THE VIEW T AKEN EARLIER THAT IT IS REQUIRED TO REFER THE CASE FOR C ONSIDERATION BY A SPECIAL BENCH. IN OUR CONSIDERED OPINION, THES E TWO ORDERS OF THE CO-ORDINATE BENCHES ARE PERFECTLY IN ACCORDANCE WITH LAW. 26. COMING BACK TO FACTS OF THE INSTANT CASE, IT IS PALPABLE THAT THE AO OF SHRI B.K. DHINGRA, SMT. PO ONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD., DID NOT RECORD ANY SATISFACTION THAT SOME MONEY, BULLION, J EWELLERY OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS FOUND FROM THESE PERSONS BELONGED TO THE ASSESSEE. THE ABSENCE OF SU CH SATISFACTION, IN OUR CONSIDERED OPINION, FAILED TO CONFER ANY VALID AND LAWFUL JURISDICTION ON THE AO OF THE ASSE SSEE TO PROCEED WITH THE MATTER OF THE ASSESSMENT U/S 153C OF THE ACT. WE, ERGO, SET ASIDE THE INITIATION AND THE ENS UING ASSESSMENT ON THE ASSESSEE AS VOID AB INITIO . 27. THE RELIANCE OF THE LD. DR ON SOME DECISIONS ON OTHER LEGAL ISSUES OR MERITS IS OF NO CONSEQUENCE I N VIEW OF THE LACK OF JURISDICTION OF THE AO TO PROCEED WITH THE ASSESSMENTS U/S 153C OF THE ACT. IN VIEW OF OUR DE CISION ON THE FIRST LEGAL ISSUE, THERE IS NO NEED TO ESPOU SE THE OTHER GROUNDS TAKEN BY THE ASSESSEE DEALING WITH OTHER LE GAL ISSUES OR MERITS. 28. IN THE RESULT, THE APPEAL IS ALLOWED. 15. IN THE LIGHT OF THE SAID RATIO-DECIDENDI OF THE AFORESAID ORDER OF THE TRIBUNAL, THE LD COUNSEL FOR ASSESSEE, SUBMITTED TH AT THE FIRST STEP ITSELF HAS NOT BEEN FULFILLED. SO ACCORDING TO THE LD COUNSEL, THE ISSUANCE OF NOTICE U/S 153C IS ILLEGAL. 16. WE ALSO TAKE NOTE OF THE RECENT JUDGEMENT OF TH E HONBLE JURISDICTIONAL HIGH COURT IN A SIMILAR CASE IN PEPS ICO INDIA HOLIDAY (P) LTD ITA NOS.1525 TO 1530/DEL./2014 22 VS. ACIT (2014) 50 TAXMANN. COM 299 (DELHI), AFTER CONSIDERING THE DECISIONS CITED BY THE REVENUE HELD IN PARA 5 AS FO LLOWS:- 5. WHILE COMING TO THE AFORESAID CONCLUSIONS THE C OURT HAD ALSO EXAMINED THE DECISIONS WHICH HAD BEEN CITED ON BEHALF OF THE REVENUE AND WHICH ARE, ONCE AGAIN, BEING REITER ATED BY THE LEARNED COUNSEL FOR THE REVENUE BEFORE US. THOSE DE CISIONS ARE KAMLESHBHAI DHARAMSHIBHAI PATEL V. CIT [2013] 214 T AXMAN 558/31 TAXMANN.COM 50 (GUJ.); CIT V. CLASSIC ENTERP RISES [2013] 358 ITR 465/219 TAXMAN 237/35 TAXMANN.COM 24 4 (ALL.) AND A DECISION OF A DIVISION BENCH OF THIS C OURT IN SSP AVIATION LTD. V. DY. CIT [2012] 346 ITR 177/207 TAX MAN 260/20 TAXMANN.COM 214. THIS COURT HAD INDICATED IN ITS JUDGEMENT IN PEPSI FOODS (P.) LTD. (SUPRA) THAT THE CASE OF KAMLESHBHAI DHARAMSHIBHAI PATEL (SUPRA) WAS DISTING UISHABLE ON FACTS. THOSE OBSERVATIONS WOULD APPLY TO THE PRE SENT WRIT PETITIONS ALSO. AS REGARDS THE DECISION OF THE ALLA HABAD HIGH COURT IN CLASSIC ENTERPRISES (SUPRA), THIS COURT HA D INDICATED THAT IT COULD NOT AGREE WITH THE CONCLUSIONS AND OB SERVATIONS OF THE ALLAHABAD HIGH COURT INASMUCH AS THE DECISION O F THE ALLAHABAD HIGH COURT WAS PREMISED ON A CONSIDERATIO N OF THE PROVISIONS OF SECTION 158BD OF THE SAID ACT WHICH A RE ENTIRELY DIFFERENT FROM THE PROVISIONS OF SECTION 153C OF TH E SAID ACT. FURTHERMORE, WITH REGARD TO THE DECISION IN SSP AVI ATION LTD. (SUPRA), THIS COURT HAD NOTED THAT THE SAID DECISIO N DOES NOT MILITATE AGAINST THE VIEW TAKEN IN PEPSI FOODS (P.) LTD. (SUPRA). 6. THE LEARNED COUNSEL FOR THE REVENUE HAS CITED AN ADDITIONAL DECISION BEFORE US TODAY AND THAT IS THE CASE OF SARVESH KUMAR AGARWAL V. UNION OF INDIA [2013] 353 ITR 26/216 TAXMAN 109 (MAG.)/35 TAXMANN.COM 85 (ALL). T HIS DECISION ALSO, IN OUR VIEW, DOES NOT ADVANCE THE CA SE OF THE REVENUE. THIS WOULD BE EVIDENT FROM THE OBSERVATION S OF THE ALLAHABAD HIGH COURT IN PARAGRAPHS 19 TO 21 OF THE SAID DECISION, WHICH READ AS UNDER: '19. IN MANISH MAHESHWARIS CASE (SUPRA) THE SUPREM E COURT OBSERVED THAT TAXING STATUTE MUST BE CONSTRUC TED STRICTLY. THE COURT, HOWEVER, SHALL NOT INTERPRET S TATUTORY PROVISIONS IN SUCH A MANNER, WHICH WOULD CREATE AN ADDITIONAL PHYSICAL BURDEN ON A PERSON. IN CASE OF ANY ITA NOS.1525 TO 1530/DEL./2014 23 DOUBT OR DISPUTE, CONSTRUCTION IS TO BE MADE IN FAV OUR OF THE TAX PAYER AND AGAINST THE REVENUE. 20. IN THE PRESENT CASE WE DO NOT FIND ANYTHING WRO NG IN THE SATISFACTION NOTE AND THE FORWARDING OF THE ENTIRE MATTER BY THE INCOME TAX OFFICER, WARD-ILL (2), AHMEDABAD TO THE ASSESSING OFFICER OF THE PETITIONE R AT BAREILLY. ALL THE REQUIREMENTS OF SECTION 153(C) WE RE COMPLIED WITH BY THE INCOME TAX OFFICER, WARD-ILL ( 2), AHMEDABAD. A SEARCH UNDER SECTION 132A WAS CARRIED OUT AND BULLION WAS SEIZED. THE CASE WAS SELECTED F OR COMPULSORY SCRUTINY FOR SIX ASSESSMENT YEARS. THE ASSESSEE ESTABLISHED THAT THE SEIZED SILVER BELONGS TO M/S SARVESH JEWELLERS, BAREILLY - THE PETITIONER. THE OWNERSHIP AND CONSIGNMENT OF THE PETITIONER WAS ALS O CONFIRMED BY THE ASSESSING OFFICER OF THE PETITIONE R AT BAREILLY. THE INCOME TAX OFFICER, WARD-ILL (2), AHMEDABAD DID NOT COMMIT ANY ERROR IN LAW, IN RECORDING THE SATISFACTION NOTE REQUESTING THE PETI TIONERS ASSESSING OFFICER TO PROCEED UNDER SECTION 153(C) O F THE LT. ACT. 21. AFTER THE ASSESSMENT OF THE PERSON IN RESPECT O F WHOM SEARCH ACTION WAS CARRIED OUT IS COMPLETED, TH E OFFICER UNDER SECTION 153C, WHERE HE FIND THAT SEIZ ED ARTICLES BELONG TO SOME OTHER PERSON, HAS TO FORWAR D A SATISFACTION NOTE TO THE ASSESSING OFFICER ON SUCH PERSON. THE SATISFACTION IN SUCH CASE IS IN RESPECT OF THE MATERIAL AND DISCLOSURES OF THE PERSON WITH WHICH THE ARTICL ES OR ASSETS ARE FOUND AND NOT IN RESPECT OF THE PERSON W HO WHOM THEY BELONG.'(UNDERLINING ADDED) 7. THE ABOVE EXTRACT MAKES IT CLEAR THAT A TAXING S TATUTE MUST BE CONSTRUED STRICTLY AND IN THE CASE OF A DOU BT OR DISPUTE THE CONSTRUCTION IN FAVOUR OF THE ASSESSEE HAS TO B E ADOPTED. APART FROM THIS, THE MATERIAL OBSERVATION OF THE AL LAHABAD HIGH COURT IN THE CASE OF SAVESH KUMAR AGARWAL (SUPRA) I S TO BE FOUND IN PARAGRAPH 20 PAGE 13 OF 16 THEREOF WHERE I T HAS BEEN OBSERVED THAT THE ASSESSEE ESTABLISHED THAT THE SEI ZED SILVER BELONGS TO M/S. SARVESH JEWELLERS, BAREILLY - THE P ETITIONER. IN OTHER WORDS, THE PERSON FROM WHOM THE BULLION WAS S EIZED WAS ABLE TO ESTABLISH THAT IT DID NOT BELONG TO HIM BUT TO SARVESH JEWELLERS. IT IS IN THAT CONTEXT THAT THE PROVISION S OF SECTION ITA NOS.1525 TO 1530/DEL./2014 24 153C OF THE ACT WERE INVOKED INASMUCH AS THE ASSESS ING OFFICER WOULD THEN BE CONSIDERED AS HAVING BEEN SAT ISFIED THAT THE BULLION WHICH WAS SEIZED FROM THE SEARCHED PERS ON DID NOT BELONG TO THE SEARCHED PERSON BUT TO SOME OTHER PER SON (IN THAT CASE M/S. SARVESH JEWELLERS, BAREILLY). 8. FROM THE FOREGOING DISCUSSION IT IS EVIDENT THAT IN ORDER THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON C OMES TO THE SATISFACTION THAT DOCUMENTS OR MATERIALS FOUND DURI NG THE SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON, IT IS NECESSARY THAT HE ARRIVES AT THE SATISFACTION THAT THE SAID DOCUMENTS OR MATERIALS DO NOT BELONG TO THE SEARCHE D PERSON. WE MAY POINT OUT THAT IN THE COURSE OF THE ARGUMENT S WE HAD ASKED THE LEARNED COUNSEL FOR THE REVENUE AS TO WHE THER THE DOCUMENTS IN QUESTION HAD BEEN DISCLAIMED BY THE JA IPURIA GROUP. THE LEARNED COUNSEL FOR THE REVENUE, ON INST RUCTIONS, STATES THAT THIS WAS NOT THE CASE. IN OTHER WORDS, IT FOLLOWS THAT THE JAIPURIA GROUP DID NOT SAY THAT THE DOCUMENTS D ID NOT BELONG TO THEM. 17. THE HONBLE DELHI HIGH COURT FURTHER HELD AS UN DER:- 13. HAVING SET OUT THE POSITION IN LAW IN THE DECI SION OF THIS COURT IN THE CASE OF PEPSI FOODS PVT. LTD. (SUPRA), IT MUST BE SEEN AS TO WHETHER THE ASSESSING OFFICER OF THE SEA RCHED PERSON (THE JAIPURIA GROUP) COULD BE SAID TO HAVE ARRIVED AT A SATISFACTION THAT THE DOCUMENTS MENTIONED ABOVE BEL ONGED TO THE PETITIONERS. 14. FIRST OF ALL WE MAY POINT OUT, ONCE AGAIN, THAT IT IS NOBODY'S CASE THAT THE JAIPURIA GROUP HAD DISCLAIME D THESE DOCUMENTS AS BELONGING TO THEM. UNLESS AND UNTIL IT IS ESTABLISHED THAT THE DOCUMENTS DO NOT BELONG TO THE SEARCHED PERSON, THE PROVISIONS OF SECTION 153C OF THE SAID ACT DO NOT GET ATTRACTED BECAUSE THE VERY EXPRESSION USED IN S ECTION 153C OF THE SAID ACT IS THAT 'WHERE THE ASSESSING OFFICE R IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR RE QUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A .... ' IN VIEW OF THIS PHRASE, IT I S NECESSARY THAT BEFORE THE PROVISIONS OF SECTION 153C OF THE SAID A CT CAN BE INVOKED, THE ASSESSING OFFICER OF THE SEARCHED PERS ON MUST BE SATISFIED THAT THE SEIZED MATERIAL (WHICH INCLUDES DOCUMENTS) ITA NOS.1525 TO 1530/DEL./2014 25 DOES NOT BELONG TO THE PERSON REFERRED TO IN SECTIO N 153A (I.E., THE SEARCHED PERSON). IN THE SATISFACTION NOTE, WHI CH IS THE SUBJECT MATTER OF THESE WRIT PETITIONS, THERE IS NO THING THEREIN TO INDICATE THAT THE SEIZED DOCUMENTS DO NOT BELONG TO THE JAIPURIA GROUP. THIS IS EVEN APART FROM THE FACT THAT, AS WE HAVE NOTED ABOVE, THERE IS NO DISCLAIMER ON THE PART OF THE JA IPURIA GROUP INSOFAR AS THESE DOCUMENTS ARE CONCERNED. 15. SECONDLY, WE MAY ALSO OBSERVE THAT THE FINDING OF PHOTOCOPIES IN THE POSSESSION OF A SEARCHED PERSON DOES NOT NECESSARILY MEAN AND IMPLY THAT THEY 'BELONG' TO TH E PERSON WHO HOLDS THE ORIGINALS. POSSESSION OF DOCUMENTS AN D POSSESSION OF PHOTOCOPIES OF DOCUMENTS ARE TWO SEPA RATE THINGS. WHILE THE JAIPURIA GROUP MAY BE THE OWNER O F THE PHOTOCOPIES OF THE DOCUMENTS IT IS QUITE POSSIBLE T HAT THE ORIGINALS MAY BE OWNED BY SOME OTHER PERSON. UNLESS IT IS ESTABLISHED THAT THE DOCUMENTS IN QUESTION, WHETHER THEY BE PHOTOCOPIES OR ORIGINALS, DO NOT BELONG TO THE SEAR CHED PERSON, THE QUESTION OF INVOKING SECTION 153C OF THE SAID A CT DOES NOT ARISE. 16. THIRDLY, WE WOULD ALSO LIKE TO MAKE IT CLEAR TH AT THE ASSESSING OFFICERS SHOULD NOT CONFUSE THE EXPRESSIO N 'BELONGS TO' WITH THE EXPRESSIONS 'RELATES TO' OR 'REFERS TO '. A REGISTERED SALE DEED, FOR EXAMPLE, 'BELONGS TO' THE PURCHASER OF THE PROPERTY ALTHOUGH IT OBVIOUSLY 'RELATES TO' OR 'REF ERS TO' THE VENDOR. IN THIS EXAMPLE IF THE PURCHASERS PREMISES ARE SEARCHED AND THE REGISTERED SALE DEED IS SEIZED, IT CANNOT B E SAID THAT IT 'BELONGS TO' THE VENDOR JUST BECAUSE HIS NAME IS ME NTIONED IN THE DOCUMENT. IN THE CONVERSE CASE IF THE VENDORS PREMISES ARE SEARCHED AND A COPY OF THE SALE DEED IS SEIZED, IT CANNOT BE SAID THAT THE SAID COPY 'BELONGS TO' THE PURCHASER JUST BECAUSE IT REFERS TO HIM AND HE (THE PURCHASER) HOLDS THE ORIG INAL SALE DEED. IN THIS LIGHT, IT IS OBVIOUS THAT NONE OF THE THREE SETS OF DOCUMENTS - COPIES OF PREFERENCE SHARES, UNSIGNED L EAVES OF CHEQUE BOOKS AND THE COPY OF THE SUPPLY AND LOAN AG REEMENT - CAN BE SAID TO 'BELONG TO' THE PETITIONER. 17. IN VIEW OF THE FOREGOING DISCUSSION, WE DO NOT FIND THAT THE INGREDIENTS OF SECTION 153C OF THE SAID ACT HAV E BEEN SATISFIED IN THIS CASE. CONSEQUENTLY THE NOTICES DA TED 02.08.2013 ISSUED UNDER SECTION 153C OF THE SAID AC T ARE ITA NOS.1525 TO 1530/DEL./2014 26 QUASHED. ACCORDINGLY ALL PROCEEDINGS PURSUANT THERE TO STAND QUASHED. 18. THE WRIT PETITIONS ARE ALLOWED AS ABOVE. THERE SHALL BE NO ORDERS AS TO COSTS. 18. THE LD AR TOOK OUR ATTENTION TO THE ORDER OF TH E CO-ORDINATE BENCH IN DCIT VS. AAKASH AROGYA MINDIR P.LTD. (ITA NOS. 5 437 TO 5442/DEL/ 2013) (PB PAGES 49 TO 64) WHEREIN ON SIMILAR FACTS AS IN THE INSTANT CASE, WHERE, I.E.B. K DHINGRA, SMT. POONAM DHINGRA, M/S M ADHUSUDAN BUILDCON PVT. LTD., M/S. MAYANK TRADERS (P) LTD. A ND M/S HORIZON PVT. LTD. WERE SEARCHED, BUT NO SATISFACTION WAS RECORDE D IN THE SEARCHED PERSONS RECORDS LIKE IN THIS CASE, BEFORE PROCEEDIN G AGAINST OTHER PERSON UNDER SECTION 153C OF THE ACT WHERE IT WAS HELD AS UNDER: 11. THE ASSESSEE FALLS INTO THE JURISDICTION OF HONBLE DELHI HIGH COURT IN VIEW OF THE CASE LAW OF PEPSI F OODS (P) LTD, THEREFORE, WE HELD THAT RECORDING OF SATISFACT ION BY AO OF SEARCHED PERSONS IS A NECESSARY PRE CONDITION FOR I NITIATION OF PROCEEDINGS U/S 153C WHICH HAS NOT BEEN DONE IN THE PRESENT APPEALS. THEREFORE, WE QUASH THE ASSESSMENT PROCEED INGS BEING ILLEGAL. THEREAFTER, WE FIND THAT THE DEPARTMENT WENT IN APP EAL BEFORE THE HONBLE HIGH COURT OF DELHI CHALLENGING THIS ORDER ( P. R. COMMISSIONER OF INCOME TAX, CENTRAL-II) VS. AAKASH AROGYA MANDIR PVT. LTD. ) (PAGE 65) WHEREIN HONBLE HIGH COURT, WHILE DISMISSING THE APPEAL OF THE REVENUE, HELD AS UNDER :- (PAGE 69TO70). 8. THE REVENUE HAS NOT PLACED ANY MATERIAL TO DISP UTE THE FACTUAL FINDING OF THE ITAT THAT THE REQUIREMENT OF THE LAW ITA NOS.1525 TO 1530/DEL./2014 27 EXPLAINED BY THIS COURT IN PEPSI FOODS REGARDING TH E RECORDING OF SATISFACTION BY THE AO EVEN IN RESPECT OF THE SE ARCHED PERSON WAS NOT FULFILLED. CONSEQUENTLY, THE FACT THAT IT W AS THE SAME AO BOTH FOR THE SEARCHED PERSON AND THE ASSESSEE MA KES NO DIFFERENCE TO THE CONSEQUENCE OF NON-COMPLIANCE WIT H THE LEGAL REQUIREMENT REGARDING THE RECORDING OF SATISFACTION . THE COURT ALSO AGREES WITH THE ITAT THAT EVEN IF THE AO WERE THE SAME, SATISFACTION WOULD HAVE TO BE RECORDED SEPARATELY Q UA THE SEARCHED PERSON AND THE ASSESSEE. 9. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERM INATION. THE APPEAL ARE DISMISSED. 19. IN THE LIGHT OF THE CASE LAWS CITED ABOVE AND O N A READING OF SECTION 153A AND 153C OF THE ACT, THE EXERCISE THAT IS REQU IRED TO BE DONE BY THE AO HAS BEEN SPELT OUT BY THE COORDINATE BENCH OF TH IS TRIBUNAL IN THE CASE OF DSL PROPERTIES PVT. LTD. VS. DCIT 33 TAXMAN.COM 420 VIDE PARA 15 HAS HELD THAT IF THE ASSESSING OFFICER IS ASSESSING THE PERSON SEARCHED AS WELL AS OTHER PERSON WHOSE ASSETS, BOOKS OF ACCOUNT OR DOCUMENTS WERE FOUND AT THE TIME OF SEARCH, THEN ALSO, FIRST WHILE MAKING THE ASSESSMENT IN THE CASE OF THE PERSON SEARCHED, HE HAS TO RECORD T HE SATISFACTION THAT THE MONEY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGED TO THE PERSON OTHER T HAN THE PERSON SEARCHED. THEN THE COPY OF THIS SATISFACTION NOTE I S TO BE PLACED IN THE FILE OF SUCH OTHER PERSON AND THE RELEVANT DOCUMENT SHOU LD ALSO BE TRANSFERRED FROM THE FILE OF THE PERSON SEARCHED TO THE FILE OF SUCH OTHER PERSON. THEREAFTER, IN THE CAPACITY OF THE ASSESSING OFFICE R OF SUCH OTHER PERSON, HE HAS TO ISSUE THE NOTICE U/S 153A READ WITH SECTI ON 153C. THE ASSESSING OFFICER OF THE SEARCHED PERSON AND SUCH OTHER PERSO N MAY BE THE SAME BUT ITA NOS.1525 TO 1530/DEL./2014 28 THESE ARE TWO DIFFERENT ASSESSEES AND THEREFORE THE ASSESSING OFFICER HAS TO CARRY OUT THE DUAL EXERCISE FIRST AS THE ASSESSING OFFICER OF THE PERSON SEARCHED IN WHICH HE HAS TO RECORD THE SATISFACTION , DURING THE COURSE OF ASSESSMENT ORDER PROCEEDINGS OF THE PERSON SEARCHED . WE CONCUR WITH THE SAID VIEW OF THE COORDINATE BENCH AND WOULD LIKE TO ADD THAT THIS SATISFACTION MUST BE AN OBJECTIVE SATISFACTION BASE D ON AN ENQUIRY BY THE AO TO ESTABLISH THAT THE DOCUMENTS REFERRED TO IN S ECTION 153C WHICH IS FOUND DURING THE SEARCH U/S. 132, WHICH ARE SEIZED OR REQUISITIONED BELONGS TO A PERSON OTHER THAN THE PERSON SEARCHED; AND THE RE SHOULD BE A CLEAR FINDING TO THAT EFFECT BASED ON WHICH ONLY SATISFAC TION AS ENVISAGED U/S. 153C CAN BE INFERRED. SUCH A FINDING BY THE AO IS R EQUIRED FOR ATTAINING THE SAID SATISFACTION AND THEN IT SHOULD BE RECORDE D IN THE FILE OF THE ASSESSEE WHICH IS A SINE-QUA-NON TO TRIGGER THE J URISDICTION FOR THE AO TO PROCEED AGAINST SUCH OTHER PERSON. IN THIS CASE THI S EXERCISE OF RECORDING THE SATISFACTION DURING THE ASSESSMENT PROCEEDINGS OF THE PERSON SEARCHED HAS NOT BEEN CARRIED OUT AND THE SATISFACTION DOES NOT SATISFY THE REQUIREMENT OF SECTION 153C. WE COULD NOT FIND ANY MENTION OF ANY SEIZED MATERIALS LIKE VALUABLE ARTICLES OR THINGS OR ANY B OOKS OF ACCOUNT OR DOCUMENTS HAVE BEEN REFERRED EVEN IN THE IMPUGNED A SSESSMENT ORDERS. THE AO LACKS JURISDICTION TO INITIATE PROCEEDINGS U /S. 153C AGAINST THE ASSESSEE AND THEREFORE, THE ISSUANCE OF NOTICE ITSE LF IS NULL AND VOID AND ITA NOS.1525 TO 1530/DEL./2014 29 THEREFORE QUASHED. CONSEQUENTLY, THE IMPUGNED ASSES SMENT ORDER PASSED U/S. 153C IS ALSO A NULLITY. 20. SINCE WE HAVE QUASHED THE NOTICE U/S 153C OF TH E ACT ITSELF, THE OTHER GROUNDS ARE NOT ADJUDICATED BEING ACADEMIC. 21. AS THE FACTS AND CIRCUMSTANCES IN THE CASE OF T HE ASSESSEE IN OTHER FIVE ASSESSMENT YEARS I.E. 2004-05 TO 2008-09 ARE S IMILAR TO ASSESSMENT YEAR 2003-04, WE ORDER THAT THE IMPUGNED ASSESSMENT ORDERS PASSED U/S 153C IN ASSESSMENT YEARS 2004-05 TO 2008-09 ARE ALS O A NULLITY. 22. BEFORE WE PART WITH THIS ORDER, WE WERE WONDERI NG WHETHER DURING SEARCH, REVENUE AUTHORITIES CAN RESORT TO CARTE-BLANCHE SEIZURE OF ANYTHING AND EVERYTHING FROM THE PREMISES OF THE RAIDED PART Y WITHOUT THE SAID DOCUMENTS HAVING ANY BEARING IN ASSESSMENT OF INCOM E AS PER LAW. IT SHOULD BE REMEMBERED THAT ANY EXERCISE OF POWER UND ER SECTION 153C HAS CATASTROPHIC EFFECT ON THE PARTY AGAINST WHOM PROCE EDINGS ARE REOPENED FOR SCRUTINY FOR SIX ASSESSMENT YEARS. SO THE RAIDING PARTY HAS TO APPLY ITS MIND AT LEAST TO PRIMA FACIE SATISFY THEMSELVES THA T THE DOCUMENTS SEIZED HAVE A NEXUS WITH INCOME. ANY ARBITRARY EXERCISE O F POWER WHICH IS UNBRIDLED IS A SWORN ENEMY OF THE ARTICLE 14 OF THE CONSTITUTION AND SUCH EXERCISE OF POWER WOULD OFFEND THE RIGHT TO PRIVACY AND RULE OF LAW WHICH IS A BASIC FEATURE OF THE CONSTITUTION. THEREFORE, THE OFFICERS CONDUCTING THE SEARCH WHILE SEIZING THE DOCUMENTS HAS TO EXERC ISE THE SAID POWERS WITH EXTREME CARE AND CAUTION; AND SEIZURE MUST BE USED WITH ITA NOS.1525 TO 1530/DEL./2014 30 CIRCUMSPECTION. THE HONBLE APEX COURT AND THE HON BLE DELHI HIGH COURT IN N.K. TEXTILE MILLS VS CIT, (1966) 61 ITR 5 8, HAS FROWNED UPON THE PRACTICE OF INDISCRIMINATE SEIZURE PAVING WAY F OR REOPENING OF ASSESSMENTS WHICH FINALLY WILL FALL IN CASE IT IS N OT INCRIMINATING AND WILL BE AN EXERCISE OF FUTILITY. 23. IN THE RESULT ALL THE APPEALS PREFERRED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 14 TH DAY OF AUGUST, 2015. SD/- SD/- (R.S. SYAL) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 14 TH DAY OF AUGUST, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-II, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.