Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 6195 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 2 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-03-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
E
Next Hearing Date
05-01-2016
Assessment Year
2009-2010
Appeal Filed On
10-01-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 202/DEL/2014 & ITA NO. 203/DEL/2014 AY: 20 09-10 & 2010-11 MOON BUILDTECH PVT. LTD., VS DCIT, C-119, PREET VIHAR, CENTRAL CIRCLE-7, NEW DELHI. NEW DELHI (PAN: AAECM3908Q) ITA NO. 416/DEL/2014 AY: 2010-11 DCIT, VS MOON BUILDTECH PVT. LTD., CENTRAL CIRCLE-7, NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL JAIN, CA RESPONDENT BY: MS NIRUPMA KOTRU, C IT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER I.T.A. NOS. 202 AND 203 HAVE BEEN FILED BY THE ASSE SSEE AND PERTAIN TO ASSESSMENT YEAR 2009-10 AND 2010-11 RESPECTIVELY WHEREAS I.T.A. NO. 416/2014 HAS BEEN P REFERRED BY THE DEPARTMENT FOR ASSESSMENT YEAR 2010-11. SINCE THE APPEALS HAVE COMMON ISSUE, THEY WERE HEARD TOGETHER AND THE Y ARE BEING DISPOSED OF BY THIS COMMON ORDER. I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 2 2. THE FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE AMRAPALI GROUP ON 9.9.2010. THE ASSESSEE WAS ALSO COVERED IN THE SEARCH. THE ORIGINAL RETURN HAD BEEN FILED ON 21.9.2009 DECLARING INCOME OF RS. 8,53,631 FOR ASSESSMENT YEA R 2009-10. FOR ASSESSMENT YEAR 2010-11, THE ORIGINAL RETURN HA D ALSO BEEN FILED ON 21.9.2009 DECLARING AN INCOME OF RS. 4,64, 619/-. NOTICES U/S 153C OF THE ACT WERE ISSUED FOR BOTH TH E YEARS ON 14.12.2012 AND FOR BOTH THE YEARS, THE ASSESSEE HAD RESPONDED THAT THE ORIGINAL RETURN FILED U/S 139 OF THE ACT M AY BE TREATED AS RETURN FILED U/S 153C. IT IS SEEN THAT DURING THE SEARCH AND SEIZURE OPERATION IN THE AMRAPALI GROUP OF CASES, D OCUMENTS WERE SEIZED FROM THE PREMISES OF SHRI SHIV PRIYA, D IRECTOR OF M/S ULTRA HOME CONSTRUCTION PVT. LTD. (UHCPL) IN WHICH AGREEMENTS ENTERED BY THE ASSESSEE COMPANY WITH M/S UHCPL WERE SEIZED AS PER THE FOLLOWING DETAILS PERTAINING TO ASSESSME NT YEAR 2009- 10:- DOCUMENTS SEIZED FROM THE PREMISES OF SH. SHIV PRIY A, SECTOR-62, NOIDA ON 09.09.2010, AS PER ANNEXURE A-2 , PARTY AB-1 I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 3 THE MOU DATED 26.08.2009 ENTERED BETWEEN M/S UHCL A ND M/S MOON BUILDTECH PVT LTD. SHOWS THAT M/S MOON BUILDTE CH PVT. LTD. HAS INTER ALIA MADE PAYMENT OF RS. 22,55,000/- IN C ASH ON 14.08.2009 FOR BOOKING/ACQUISITION OF TWO FLATS (TO WER-D 1102 & 1103) FOR RS. 42,00,000/-. HOWEVER THE CASH PAYMENT OF RS. 22,55,000/- IS NOT ACCOUNTED FOR IN THE BOOKS OF AC COUNT OF M/S MOON BUILDTECH PVT. LTD. AS THE COST OF TWO FLATS H AS BEEN SHOWN AT RS. 19,45,000/-. ' 3. FOR ASSESSMENT YEAR 2010-11, THE FOLLOWING DOCUM ENTS WERE SEIZED:- PAGE NO. 65 TO 72, ANNEXURE A-2, PARTY-AB-1 THIS IS COPY OF MOU DATED 16.08.2009 ENTERED BETWE EN M/S ULTRA HOME CONSTRUCTION PVT. (BUILDER) & M/S MOON B UILDTECH PVT. LTD. (INVESTOR) FOR INVESTMENT IN NINE FLATS AT A MRAPALI PLATINUM TOWER, 1775 SQ FT. FOR RS. 2,25,00,000/- WHICH HAS BEEN PAID BY INVESTOR. THE RELEVANT EXTRACT OF THE AGREEMENT AR E REPRODUCED AS UNDER:- 1. THAT IN PURSUANCE OF THE MEETINGS HELD AND THE AGR EEMENT BETWEEN THE BUILDER AND THE INVESTOR, THE INVESTOR HAS PAID A PAGE. 74-81 THIS I S COPY OF MOU DATED 26.08.2009 ENTERED BETWEEN M/S ULTRA HOME CONSTRUCTION PVT LTD. (BUILD ER) & M/S MOON BUILDTECH L*VT. LTD., C-119 PREET VIHAR DELHI- 92 (INVESTOR) - FOR INVESTMENT IN TWO FLATS AT AMRAPALI PLATINUM, T OWER, 1495 SQFT. FOR RS. 42,00,000/- WH ICH HAS BEEN PAID BY INVESTOR AS PER FOLLOWING DETAILS. CHEQUE NO. DATE AMOUNT IN RUPEES TOWER NOJ FLAT NO./SIZE RECEIPT NO. (ISSUED BY BUILDER) 605955 CASH 13.08.2008 14.08.2008 15,00,000/ - 6,00,000/ - TOWER - D/1102/1775 SQ. FT. 853 DATED 14.08.2008 605960 CASH 22.08.2008 14.08.2008 4,45,000/ - 16,55,000/- TOWER - D/1103/1775 SQ. FT. 855 DATED23.08.2008 TOTAL 42,00,000/ - ALL CHEQUES ARE DRAWN ON INDIAN OVERSEAS BANK, PREE T VIHAR, NEW DELHI - 110092. I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 4 SUM OF RS. 2,25,00,000/- (RUPEES TWO CRORE TWENTY F IVE LACS ONLY) TOWARDS THE FULL AND FINAL VALUE/COST OF THE NINE FLATS AND THE BUILDER HAS ALLOCATED FLATS WITH NUMBER AND TOWER NAMES/NUMBERS AND SIZES IN FAVOR OF THE INVESTOR, A S PER THE DETAILS GIVEN: 2. ALL THE CHEQUES ARE DRAWN ON INDIAN BANK, PREET VIH AR, NEW DELHI-110092 - WITH THE CONDITION TO CONTINUE TO HOLD OR TAKE REF UND AFTER EXPIRY OF ONE YEAR - FOR WHICH BUILDER HAS ISSUED POST DATED CHEQUE OF RS. 2,25,00,000/- DATED 13.07.2010 DRAWN ON SYNDICATE BANK, RAJ NAGAR GHAZIABAD. - ALONG WITH ASSURED RETURN OF RS. 5,62,500/- PER MO NTH FOR 12 MONTHS STARTING FROM 13.09.2009 TOTALING TO RS. 67,50,000/- AND 12 CHEQUES HAVE ALSO ISSUED. - IN CASE OF DELAY/BOUNCING OF CHEQUE ON THE PART OF BUILDER PENALTY OF 4% PER MONTH. CHEQUE NO. DATE AMOUNT (IN RS.) TOWER NO./FLAT NOJSIZE RECEIPT NO. (ISSUED BY BUILDER) 606936 13.06.2008 RS. 25,00,000/- TOWER-D/703/J 775 SQ. FT. 656 DATED 13.06.2008 606937 13.06.2008 RS. 25,00,000/ - TOWER - D/704/1775 SQ. FT. - DO - 606938 13.06.2008 RS.25,00,000/ - TOWER - D/801/1775 SQ. FT. - DO - 606939 13.06.2008 RS.25,00,000/- TOWER-D/803/1775 SQ. FT. 657 DATED 13.06.2008 606940 13.06.2008 RS.25,00,000/ - TOWER - D/804/1775 SQ. FT. - DO - 606941 13.06.2008 RS. 25,00,000/ - TOWER - D/901/1775 SQ. FT. - DO - 606942 13.06.2008 RS. 25,00,000/- TOWER-D/902/1775 SQ. FT. 658 DATED 13.06.2008 606943 13.06.2008 RS. 25,00,000/ - TOWER - D/904/1775 SQ. FT. - DO - 606944 13.06.2008 RS. 25,00,000/ - TOWER - D/1001/1775 SQ. FT. - DO - TOTAL 2,25,00,000/ -- I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 5 4. FOR ASSESSMENT YEAR 2009-10, THE ASSESSMENT WA S COMPLETED AT A TAXABLE INCOME OF RS. 39,90,631/- AF TER MAKING ADDITIONS AS UNDER:- (I) RS. 22,55,000/- U/S 68 OF THE ACT ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CASH AS PER SEIZED DOCUMENTS. (II) RS. 8,82,000/- ON ACCOUNT OF ASSURED RETURN AS PER THE SEIZED DOCUMENTS. 5. THE ASSESSMENT FOR ASSESSMENT YEAR 2010-11 W AS COMPLETED AT THE TAXABLE INCOME OF RS. 5,00,32,119/ - AFTER MAKING THE FOLLOWING ADDITIONS- (I) RS. 4,50,00,000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT U/S 69A OF THE ACT AS PER SEIZED DOCUMENTS. (II) RS. 45,67,500/- ON ACCOUNT OF ASSURED RETURN AS PER THE SEIZED DOCUMENTS. 6. IN THE APPEALS BEFORE THE FIRST APPELLATE AUT HORITY, THE ASSESSEE, BESIDES CONTESTING THE ISSUE ON THE MERIT S OF ADDITION, ALSO CHALLENGED THE ASSESSMENT ON THE LEGAL GROUND THAT THE I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 6 ASSESSING OFFICER HAD ERRED IN FACT AND LAW IN INIT IATING THE ASSESSMENT PROCEEDINGS UNDER THE PROVISIONS OF SECT ION 153C OF THE ACT ONLY ON THE BASIS OF MEMORANDUM OF UNDERSTA NDING (MOU) SEIZED DURING THE COURSE OF SEARCH AND SEIZUR E OPERATION OF A THIRD PARTY ON THE ASSUMPTION THAT THE SAME BE LONGED TO THE ASSESSEE WHEREAS THE PRESUMPTION U/S 132(4A) OF THE ACT WAS APPLICABLE ONLY IN THE CASE OF THE PERSON IN WHOSE CASE THE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT UNDER SECTION 132 OF THE ACT. 7. HOWEVER, THIS LEGAL GROUND OF THE ASSESSEE W AS DISMISSED BY THE LD. CIT (A) WITH THE FOLLOWING OBSERVATIONS:- 3.3 THE RECORDING OF SATISFACTION BY THE AO OF THE PERSON SEARCHED HAS TWO PURPOSES. ONE, THE PROCEEDI NG U/S 153A AGAINST THE PERSON SEARCHED CEASES WITH REGARD TO THE VALUABLES OR BOOKS / DOCUMENTS BELONG ING TO OTHER PERSONS, WHICH CAN THEN BE TAKEN UP U/S 15 3C AGAINST SUCH OTHER PERSONS TO WHOM THE VALUABLES OR BOOKS / DOCUMENTS BELONG. TWO, THE COMMENCEMENT, CONCLUSION AND THE PERIOD TO WHICH THE PROCEEDING U /S 153C RELATE CAN BE DETERMINED FROM THE DATE OF HAND ING OVER. THUS, WHEN THE AO OF THE PERSON SEARCHED AND THE PERSON AGAINST WHOM PROCEEDING U/S 153C IS INITIATE D ARE THE SAME, IT IS NOT NECESSARY THAT THE REASONS SHOULD BE RECORDED IN THE SPECIFIC FILE OF THE PERSON SEAR CHED SO AS TO ESTABLISH THAT THE SATISFACTION WAS REACHED B Y THE AO OF THAT PERSON ONLY. WHEN THE AO IS THE SAME OFF ICER IN BOTH CASES, RECORDING OF A SIMPLE AND VALID SATISFACTION FOR INITIATION OF THE PROCEEDINGS U/S 153C WILL SUFFICE. I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 7 3.4 HONBLE SUPREME COURT HAS HELD IN ESTATE OF LATE RANGALAL JAJODIA V. CIT [1971] 79 ITR 505 THAT AN ASSESSMENT PROCEEDING DOES NOT CEASE TO BE A PROCEEDING UNDER THE ACT MERELY BY REASON OF WANT O F NOTICE. IT WILL BE A PROCEEDING LIABLE TO BE CHALLE NGED AND CORRECTED. SIMILARLY, IF THERE IS A MISTAKE AS TO N AME OR THERE IS A MISDESCRIPTION OF THE NAME, THE PROCEEDI NG WILL BE LIABLE TO BE CHALLENGED AND CORRECTED BY GIVING NOTICE TO THE ASSESSEE SUBJECT TO SUCH JUST EXCEPTIONS AS AN ASSESSEE CAN TAKE UNDER LAW. IT HAS FURTHER HELD I N ISHA BEEVI V. TRO [1975] 101 ITR 449 THAT WHERE THE POW ER TO PROCEED IS ACTUALLY THERE, THE MERE REFERENCE TO A WRONG SECTION FOR AUTHORITY TO ACT WILL NOT VITIATE THE ACTION TAKEN. IT IS NOT ENOUGH IF A WRONG SECTION OR PROVISION OF LAW IS CITED IN A NOTICE OR ORDER IF T HE POWER TO PROCEED IS ACTUALLY THERE UNDER ANOTHER PROVISIO N. 3.5 IN THE PRESENT CASE A MOU DATED 26.08.2009 BETWEEN THE APPELLANT AND M/S ULTRA HOME CONSTRUCTI ON PVT. LTD. (UHC) WAS FOUND AT THE PREMISES OF SH. SH IV PRIYA, DIRECTOR OF UHC. SINCE THE APPELLANT WAS SIGNATORY TO THE MOU, THE SAID DOCUMENT BELONGED TO THE APPELLANT. FURTHER, THE SAME SEIZED DOCUMENT INDICA TED THAT THE APPELLANT HAD PAID CASH TO UHC WHICH WAS PRIMA-FACIE UNACCOUNTED. THEREFORE, A REASONABLE PRESUMPTION OF UNACCOUNTED MONEY / INCOME IN THE HANDS OF THE APPELLANT ALSO AROSE. THE AO OF THE APPELLANT IS ALSO THE AO OF UHC AND SH. SHIV PRIYA. IN BOTH THESE CASES ASSESSMENTS HAVE BEEN COMPLETED U/ S 153A. THEREFORE, RECORDING OF THE SATISFACTION BY T HE AO ON 14.12.2012, EVEN IN THE MANNER IT HAS BEEN RECOR DED, CANNOT LEAD TO THE CONCLUSION THAT SATISFACTION WAS NOT RECORDED BY THE AO OF THE PERSON SEARCHED, I.E. SH. SHIV PRIYA. IN MY RESPECTFUL VIEW, THIS IS THE CORRECT L EGAL POSITION IN THE MATTER. 3.6 IN THE ABOVE FACTUAL AND LEGAL VIEW OF THE MATTER, THE OBJECTION RAISED BY THE APPELLANT TO THE LEGALI TY OF THE PROCEEDINGS U/S 153C IS NOT VALID AND IS REJECTED. THIS GROUND OF APPEAL IS DISMISSED. I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 8 8. HOWEVER, ON MERITS, THE LD. CIT(A) DELETED THE A DDITION OF RS. 8,82,000/- ON ACCOUNT OF ALLEGED ASSURED RETURN IN THE APPEAL FOR ASSESSMENT YEAR 2009-10 AND FOR ASSESSME NT YEAR 2010-11 THE LD. CIT(A) DELETED THE ADDITION OF RS. 4,50,00,000/- ON ACCOUNT OF ALLEGED UNDISCLOSED INVESTMENT ADDED BACK U/S 69A OF THE ACT AND RS. 34,20,000/- ON ACCOUNT OF AL LEGED ASSURED RETURN. 9. NOW, THE ASSESSEE IS IN APPEAL FOR ASSESSMENT YE ARS 2009- 10 AND 2010-11 CHALLENGING FIRST AND FOREMOST THE I NITIATION OF PROCEEDINGS U/S 153C OF THE ACT. THE ASSESSEE HAS ALSO CHALLENGED THE SUSTENANCE OF ADDITION OF RS. 22,50, 000/- ON MERITS FOR ASSESSMENT YEAR 2009-10 AND OF RS.11,47, 500/- ON MERITS FOR ASSESSMENT YEAR 2010-11 WHEREAS THE DEPA RTMENT IS IN APPEAL IN ASSESSMENT YEAR 2010-11 CHALLENGING TH E ACTION OF THE LD. CIT(A) IN DELETING THE ADDITIONS OF RS. 4,5 0,00,000/- AND RS. 34,20,000/-. 10. AT THE OUTSET IT WAS SUBMITTED BY THE LD. AR THAT BEFORE PROCEEDING TO DECIDE THE APPEAL ON MERITS, T HE LEGAL ISSUE REGARDING THE VALIDITY OF PROCEEDINGS U/S 153C OF T HE ACT SHOULD I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 9 BE ADJUDICATED UPON WHICH IS GERMANE TO THE WHOLE C ONTROVERSY IN BOTH THE ASSESSMENT YEARS. THE LD. DR ALSO AGRE ED TO THE SAME AND, THEREFORE, WE PROCEED TO EXAMINE THE GROU NDS RELATING TO THE INITIATION OF PROCEEDINGS U/S 153C OF THE AC T FIRST AND THE HEARING ON MERITS WILL BE TAKEN UP AT A LATER STAGE IF IT IS SO REQUIRED. 11. THE LD. AR SUBMITTED THAT THE INITIATIO N OF PROCEEDINGS U/S 153C FOR BOTH THE ASSESSMENT YEARS WERE BAD AND ILLEGAL IN LAW AND THE ASSESSMENTS FRAMED WERE AGAINST THE STA TUTORY PROVISIONS OF THE ACT AND WERE MADE WITHOUT COMPLYI NG WITH THE PROCEDURE PRESCRIBED IN SECTION 153C. HE SUBMITTED THAT NO SATISFACTION NOTE HAS BEEN RECORDED THAT THE DOCUME NTS BELONG TO THE THIRD PARTY I.E. THE ASSESSEE. HE SUBMITTED TH AT AS PER PROVISIONS OF SECTION 153C, WHERE THE ASSESSING OFF ICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS S EIZED OR REQUISITIONED BELONG TO A PERSON OTHER THAN THE PER SON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUM ENTS OR ASSETS REQUISITIONED SHALL BE HANDED OVER TO THE AS SESSING OFFICER WHO SHALL PROCEED AGAINST SUCH OTHER PERSON AND ISS UE SUCH I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 10 PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THE LD. AR SUBMITTED THAT IN THE PRESENT CASE IN THE ALLEGE D SATISFACTION NOTE NOWHERE IT HAS BEEN RECORDED THAT THE SEIZED D OCUMENTS IN THE SHAPE OF MOU BELONG TO THE THIRD PARTY I.E. M/S MOON BUILDTECH PVT. LTD. WHICH IS THE BASIC CONDITION AS OBSERVED FROM THE LANGUAGE OF THE SECTION 153C. THE LD. AR FURTHE R SUBMITTED THAT THE HONBLE DELHI HIGH COURT HAS HELD IN THE C ASE OF PEPSI FOODS PVT. LTD. VS. AC1T 270 CTR 459 THAT BEFORE IN ITIATING PROCEEDINGS U/S 153C, THE AO OF THE SEARCHED PARTY HAS TO BE SATISFIED THAT THE DOCUMENTS SEIZED BELONG TO PERSO N OTHER THAN THE SEARCHED PERSON. IT IS ONLY THEN THAT THE AO OF THE SEARCHED PERSON CAN HAND OVER THE DOCUMENTS TO THE AO HAVING JURISDICTION OVER THE OTHER PERSON. IN LIGHT OF THE DECISION OF THE HONBLE DELHI HIGH COURT, IT WAS SUBMITTED THAT BEF ORE A NOTICE U/S 153C CAN BE ISSUED, TWO STEPS HAVE TO BE TAKEN. THE FIRST STEP IS THAT THE AO OF THE PERSON WHO IS SEARCHED M UST ARRIVE AT A CLEAR SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DOES NOT BELONG TO HIM BUT TO SOME OTHER PERSON. THE SECOND STEP IS AFTER SUCH SATISFACTION IS ARRIVED AT, THE DOCUMENT IS HA NDED OVER TO THE AO OF THE PERSON TO WHOM THE SAID DOCUMENTS 'BELONG' . THE I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 11 LD. AR FURTHER SUBMITTED THAT IN THE PRESENT APPEAL S, THE FIRST STEP ITSELF HAS NOT BEEN FULFILLED. THE LD. AR ALSO SUBMITTED THAT SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN ANY DOCUMENT IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT MAY BE PRESUMED THAT SUCH DOCUMENT BEL ONGS TO SUCH PERSON AND IT IS FOR THE AO TO REBUT THAT PRES UMPTION AND COME TO A CONCLUSION OR SATISFACTION THAT THE DOCUM ENT IN FACT BELONGS TO SOMEONE ELSE. THE LD. AR ARGUED THAT THE RE MUST BE SOME COGENT MATERIAL AVAILABLE WITH THE AO BEFORE H E ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. THE LD. AR AL SO RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSICO INDIA HOLDINGS (P) LTD. VS ACIT 270 ITR 467 FOR THE PREPOSITION THAT THE MOU SEIZED DID NOT BELONG TO T HE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT NO SATISFACTION W AS RECORDED AS THE ASSESSING OFFICER OF THE SEARCHED PERSON BUT AS THE AO OF THE THIRD PARTY I.E. THE ASSESSEE. THE LD. AR RELI ED ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. AAKASH AROGYA MANDIR PVT. LTD. IN ITA NO. 509/2015 THAT SATISFACTION NOTE SHOULD BE RECORDED FIRST AS THE A O OF THE SEARCHED PARTY AND THAT EVEN IF THE AO OF BOTH THE PARTIES WERE I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 12 THE SAME, SATISFACTION WOULD HAVE TO BE RECORDED SE PARATELY QUA THE SEARCHED PERSON AND THE ASSESSEE. 12. THE LD. DR SUBMITTED THAT SINCE THE ASSESSIN G OFFICER OF BOTH PARTIES WAS THE SAME, NO SEPARATE SATISFACT ION WAS REQUIRED. HE VEHEMENTLY ARGUED THAT THE SPIRIT OF THE PROVISION HAS TO BE FOLLOWED AND IMPLEMENTED AND THE SAME SHO ULD NOT BE LOST IN MERE TECHNICALITIES. THE LD. DR FURTHER SU BMITTED THAT THE IMPUGNED MOU MENTIONED THE NAME OF THE ASSESSEE AND, THEREFORE, THE ONUS WAS ON THE ASSESSEE TO DISPROVE THAT THE DOCUMENT DID NOT BELONG TO HIM. THE LD. DR RELIED HEAVILY ON THE ORDER OF THE LD. CIT (A) AND SUBMITTED THAT THE SAME SHOULD BE UPHELD. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CARE FULLY PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE EXTRACT OF SATISFACTION NOTE RECORDED FOR INITIATIO N OF PROCEEDINGS U/S 153C OF THE INCOME TAX ACT, 1961 ON THE BASIS O F DOCUMENTS SEIZED ALLEGEDLY BELONGING TO THE ASSESSEE WAS PROV IDED TO THE ASSESSEE THROUGH A COMMUNICATION DATED 17.1.2013 AN D IS PLACED AT PAGES 9 AND 10 OF THE PAPER BOOK. IT HAS ALSO BEEN I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 13 REPRODUCED IN THIS ORDER ELSEWHERE. THE POINT URGE D BY THE LD. AR WITH REFERENCE TO THE SATISFACTION NOTE IS THAT THE BASIC INGREDIENT OF SECTION 153C OF THE ACT HAS NOT BEEN SATISFIED AND, THEREFORE, THE NOTICES WERE WITHOUT JURISDICTION AN D, HENCE, OUGHT TO BE QUASHED. A PERUSAL OF SECTION 153C REVEALS T HAT SECTION 153C PERMITS THE ISSUANCE OF A NOTICE BY THE ASSESS ING OFFICER OF A PERSON WHO HAS NOT BEEN SEARCHED ON THE BASIS OF SATISFACTION NOTE PREPARED BY THE ASSESSING OFFICER OF A SEARCHE D PERSON INDICATING THAT DURING THE SEARCH, CERTAIN DOCUMENT S BELONGING TO THE OTHER PERSON (THE PERSON NOT SEARCHED) WERE FOUND. HOWEVER, BEFORE A NOTICE U/S 153C CAN BE ISSUED IN THE MANNER INDICATED, THE ASSESSING OFFICER OF THE SEARCHED PE RSON MUST ARRIVE AT A POSITIVE SATISFACTION THAT THE DOCUMENT S BELONG TO THE PERSON NOT SEARCHED. IN THE FIRST INSTANCE, A PRES UMPTION IS CREATED BY VIRTUE OF PROVISION OF RETURN U/S 132(4A )(I) OF THE ACT THAT THE DOCUMENTS BELONG TO THE SEARCHED PERSON. HOWEVER, BEFORE THE ASSESSING OFFICER OF THE SEARCHED PERSON CAN BE SAID TO HAVE ARRIVED AT THE SATISFACTION THAT THE DOCUMENTS BELONGED TO THE OTHER PERSON (THE PERSON NOT SEARCHED), THERE H AS TO BE SOME COGENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICE R BEFORE HE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMEN T DOES NOT I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 14 BELONG TO THE SEARCHED PERSON BUT TO THE OTHER PERS ON. THE HON'BLE DELHI HIGH COURT HAS DISCUSSED THE PROVISIO N OF SECTION 153C IN PEPSI FOODS (P) LTD. VS ACIT 270 CTR 459 IN PARA 6 AS UNDER:- 6. ON A PLAIN READING OF S. 153C, IT IS EVIDENT TH AT THE AO OF THE SEARCHED PERSON MUST BE 'SATISFIED' T HAT INTER ALIA ANY DOCUMENT SEIZED OR REQUISITIONED 'BELONGS TO' A PERSON OTHER THAN THE SEARCHED PERSO N. IT IS ONLY THEN THAT THE AO OF THE SEARCHED PERSON CAN HANDOVER SUCH DOCUMENT TO THE AO HAVING JURISDICTIO N OVER SUCH OTHER PERSON (OTHER THAN THE SEARCHED PERSON). FURTHERMORE, IT IS ONLY AFTER SUCH HANDING OVER THAT THE AO OF SUCH OTHER PERSON CAN ISSUE A NOTICE TO THAT PERSON AND ASSESS OR REASSESS HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF S. 153A . THEREFORE, BEFORE A NOTICE UNDER S. 153C CAN BE ISSUED, TWO STEPS HAVE TO BE TAKEN. THE FIRST STEP IS THAT THE AO OF THE PERSON WHO IS SEARCHED MUST ARRI VE AT A CLEAR SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DOES NOT BELONG TO HIM BUT TO SOME OTHER PERSON . THE SECOND STEP IS - AFTER SUCH SATISFACTION IS ARR IVED AT- THAT THE DOCUMENT IS HANDED OVER TO THE AO 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 FULFILLED. FOR THIS PURPOSE IT WOULD BE NECESSARY TO EXAMINE T HE PROVISIONS OF PRESUMPTIONS AS INDICATED ABOVE. SEC . 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOUND IN THE POSSESSION OR CONTROL OF A NY PERSON IN THE COURSE OF A SEARCH IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGS TO SUCH PERSON. IT IS SIMILARLY PROVIDED IN S. 292C (1) (I). IN OTHER WO RDS, WHENEVER A DOCUMENT IS FOUND FROM A PERSON WHO IS BEING SEARCHED THE NORMAL PRESUMPTION IS THAT THE SAID DOCUMENT BELONGS TO THAT PERSON. IT IS FOR TH E ASSESSING OFFICER TO REBUT THAT PRESUMPTION AND COM E TO A CONCLUSION OF SATISFACTION THAT THE DOCUMENT IN FACT BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 15 COGENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICE R BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. SURMISE AND CONJECTUR E CANNOT TAKE THE PLACE OF SATISFACTION. 14 . A PERUSAL OF THE SATISFACTION NOTE IN THE PRESENT A PPEALS WOULD SHOW THAT NOWHERE HAS IT BEEN RECORDED THAT T HE SEIZED DOCUMENTS IN THE FORM OF MOU BELONG TO THE THIRD PA RTY I.E. M/S MOON BUILDTECH PVT. LTD. OR THE ASSESSEE WHICH IS T HE BASIC CONDITION ENVISAGED IN SECTION 153C. FURTHER, THE PERUSAL OF THE SATISFACTION NOTE ALSO LEADS US TO THE CONCLUSION T HAT IT HAS BEEN RECORDED AS THE ASSESSING OFFICER OF THE THIRD PART Y I.E. THE ASSESSEE AND THERE IS NO SATISFACTION NOTE OF THE A SSESSING OFFICER OF THE SEARCHED PARTY. THE LD. DR HAS VEHEMENTLY C ONTENDED THAT SINCE THE ASSESSING OFFICER OF THE PERSON SEARCHED AND THE ASSESSEE IS THE SAME, IT DOES NOT MAKE ANY DIFFEREN CE WHETHER THE SATISFACTION IS RECORDED IN THE CASE OF PERSON SEAR CHED OR THE OTHER PERSON. IN OUR CONSIDERED OPINION, THIS CONTENTION ADVANCED ON BEHALF OF THE REVENUE IS DEVOID OF ANY MERIT. WE FA IL TO COMPREHEND AS TO HOW THE REQUIREMENT OF RECORDING SATISFACTION BY THE AO OF THE PERSON SEARCHED PROVIDED BY THE STATUTE CAN BE SUBSTITUTED WITH ANYTHING ELSE. THERE IS AN UNDERLYING RATIONAL E IN PROVIDING FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSON I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 16 SEARCHED. AS THE MONEY, BULLION, JEWELLERY, BOOKS O F ACCOUNT OR DOCUMENTS 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 ASSESS MENT OF THE OTHER PERSON. IT IS NOT AS IF ALL THE BOOKS OF ACCO UNT AND DOCUMENTS ETC. FOUND DURING THE COURSE OF A SEARCH ARE EVALUATED BY A SEPARATE AUTHORITY TO FIGURE 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. IT IS ONLY THE AO OF THE PERSON SEARCHED WHO CAN REACH A CONCLUSION THAT SOME OF TH E DOCUMENTS ETC. DO NOT BELONG TO THE PERSON SEARCHED BUT TO SO ME OTHER PERSON, THE LEGISLATURE HAS PROVIDED FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED. IT I S NOT PERMISSIBLE UNDER THE LAW TO REQUIRE THE AO OF THE OTHER PERSON TO RECORD SUCH SATISFACTION BY THE AO. 15. AS REGARDS THE OTHER ARGUMENT OF THE LD. DR THAT SINCE THE AO OF BOTH THE PERSONS SEARCHED AND THE ASSESSEE IS THE SAME PERSON, HENCE THE REQUIREMENT OF RECORDING SATISFAC TION BY THE AO I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 17 OF THE PERSONS SEARCHED SHOULD BE DEEMED TO HAVE BE EN FULFILLED WITH THE RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE. WE ARE AGAIN UNABLE TO APPRECIATE THIS CONTENTION THAT THE COMMONNESS OF THE AO WOULD MAKE NO DIFFERENCE IN SO FAR AS THE RE CORDING OF SATISFACTION IN THE CASE OF THE PERSONS SEARCHED IS CONCERNED. WHAT IS RELEVANT FOR THIS PURPOSE IS NOT THE IDENTI TY OF THE PERSON ASSESSING BUT HIS POSITION AND THE CAPACITY. WHEN T HE LAW REQUIRES THE AO OF THE PERSON SEARCHED TO RECORD THE NECESSA RY SATISFACTION, IT IS THE AO HAVING THE JURISDICTION OVER THE PERSO N SEARCHED WHO IS BOUND TO RECORD SUCH SATISFACTION IN THE CAPACIT Y 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 S AME PERSON, DOES NOT, IN ANY MANNER, OBLITERATE THE REQUIREMENT OF LAW NECESSITATING THE RECORDING OF SATISFACTION IN THE CASE OF THE PERSON SEARCHED THAT MONEY, BULLION, JEWELLERY, ETC., FOUN D FROM THE PERSON SEARCHED BELONGS TO THE OTHER PERSON. WHAT IS CRUCIAL TO NOTE IS THE CAPACITY OF THE AO AND NOT HIS IDENTITY . IN VIEW OF THE FACT THAT WHEN THE STATUTORY STIPULATION IS FOR REC ORDING 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. I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 18 16. HENCE, ON THE FACTS AND CIRCUMSTANCES OF T HE CASE, IT IS OUR CONSIDERED OPINION THAT THE ASSESSING OFFICER O F THE SEARCHED PERSON HAS FAILED TO RECORD HIS SATISFACTION THAT T HE SEIZED DOCUMENTS BELONGED TO THE ASSESSEE I.E. OTHER THAN THE SEARCHED PERSON. THE RECORDING OF SUCH A SATISFACTION IS SI NE QUA NON FOR COMMENCING ANY PROCEEDINGS U/S 153C OF THE ACT. HE NCE, NO ACTION COULD HAVE BEEN INITIATED AGAINST THE ASSESS EE IN ABSENCE OF RECORDING OF SATISFACTION BY THE ASSESSING OFFIC ER OF THE SEARCHED PERSON. SANS SUCH SATISFACTION, THE ASSES SING OFFICER HAS INVALIDLY TAKEN RECOURSE TO THE INITIATION OF P ROCEEDINGS U/S 153C OF THE ACT. HENCE, THE ACTION U/S 153C IS NOT JUSTIFIED. THE LACK OF JURISDICTION BY THE ASSESSING OFFICER CANNO T BE BRUSHED ASIDE UNDER THE GUISE OF A TECHNICAL DEFECT. NO AS SESSMENT CAN BE LAWFULLY TAKEN UP AND COMPLETED UNLESS THE CONCE RNED AUTHORITY HAS THE JURISDICTION TO DO SO. LACK OF J URISDICTION CANNOT BE CURED. SINCE THE VERY FIRST STEP PRIOR T O THE ISSUANCE OF NOTICE U/S 153C OF THE ACT HAS NOT BEEN FULFILLED A ND INASMUCH AS THE CONDITION PRECEDENT HAS NOT BEEN MET, THE PR OCEEDINGS U/S 153C ARE LIABLE TO BE QUASHED. IT IS ORDERED A CCORDINGLY FOR BOTH THE YEARS UNDER APPEAL AND THE APPEALS OF THE ASSESSEE ARE I.T.A. NOS. 202, 203, 416/D/2014 ASSESSMENT YEARS: 2009-10, 2010-11 19 ALLOWED. THE OTHER GROUNDS ON MERITS ARE NOT BEING TAKEN UP AS THEY HAVE BECOME IN FRUCTUOUS. 17. SINCE THE PROCEEDINGS U/S 153C ITSELF HAVE BE EN QUASHED, THE DEPARTMENTAL APPEAL FOR ASSESSMENT YEAR 2010-11 BECOMES IN FRUCTUOUS AND THE SAME IS DISMISSED. 18. IN THE RESULT, I.T.A. NOS. 202 & 203 OF THE A SSESSEE ARE ALLOWED AND I.T.A. NO. 416 OF THE DEPARTMENT IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.03.2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: THE 31ST OF MARCH, 2016 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 4. DR, ITAT BY ORDER ASSTT. REGISTRAR
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