Harminder Singh Sodhi, Moga V. DCIT, Chandigarh

ITA 206/CHANDI/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9156 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 22-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Search and seizure; Question of law; Assessment record; Block assessment
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SH. PRASHANT MAHARSHI, ACCOUNTANT MEMBER ITA NOS. 206 & 207/CHD/2013 A.YS: 2008-09 & 2009-10 SHRI HARMINDER SINGH SODHI, VS THE DCIT, NEAR PWD REST HOUSE, CENTRAL CIRCLE-1, MOGA. CHANDIGARH. PAN: AEHPS1830H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 11.08.2016 DATE OF PRONOUNCEMENT : 22.08.2016 O R D E R PER BHAVNESH SAINI, JM BOTH THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(APPEALS) CENTRAL, GURGA ON DATED 14.12.2012 FOR ASSESSMENT YEARS 2008-09 AND 2009-10 . 2. BRIEFLY THE FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF SHRI P.L.MIDHA, HOUSE NO. 3 049 SECTOR 21-D, CHANDIGARH ON 17.09.2008 BY INVESTIGAT ION WING. THE JURISDICTION OVER THE CASE OF THE ASSESS EE WAS 2 TRANSFERRED TO DCIT-I CIRCLE-I CHANDIGARH BY CIT-I CHANDIGARH DATED 10.12.2008 UNDER SECTION 127 OF TH E INCOME TAX ACT. IT TRANSPIRED FROM THE IMPUGNED OR DERS THAT CERTAIN DOCUMENT MARKED A-2 WAS FOUND IN THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF SHR I P.L.MIDHA ON 17.09.2008 BELONGING TO THE ASSESSEE. THIS DOCUMENT IS AN AGREEMENT TO SELL DATED 01.03.2008 BETWEEN M/S U.T. BUILDERS & PROMOTERS LTD. THROUGH SHRI P.L.MIDHA AND ASSESSEE AND ONE MR. JASPAL SINGH SID HU IN RESPECT OF ONE FREE HOLD CINEMA BUILDING CALLED PUNJAB PALACE LOCATED AT VILLAGE MADHUPUR. THE TOTAL SALE CONSIDERATION IS FOR RS. 8 CRORES AND SELLER ACKNOW LEDGES RECEIPT OF SUM OF RS. 6.50 CRORES. THE SAID DOCUME NT WAS CONFRONTED TO SHRI P.L.MIDHA WHOSE STATEMENT WAS RECORDED UNDER SECTION 132(4) AND HE HAS ADMITTED EXISTENCE OF THE AGREEMENT BUT INSISTED THAT HE HAS NOT RECEIVED CASH OF RS. 6.5 CRORES AS EARNED MONEY AND THAT DEAL AS SUCH DID NOT MATURE. THE ASSESSING OFFICER MADE ADDITION OF RS. 6.50 CRORES AND COMPUTED THE ASSESS MENT UNDER SECTION 153C READ WITH SECTION 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT IN ASSESSMENT YEAR 2008-09. 3. SIMILARLY, IN ASSESSMENT YEAR 2009-10, CERTAIN DOCUMENTS MARKED PAGES 27-34 OF ANNEXURE A-1 WAS FOUND IN THE COURSE OF SEARCH AT THE RESIDENTIAL PR EMISES OF SHRI P.L.MIDHA ON 17.09.2008 RELATING TO THE ASS ESSEE. THIS DOCUMENT IS A MOU DATED 09.07.2008 BETWEEN M/S 3 U.T. BUILDERS & PROMOTERS LTD. IN WHICH SHRI P.L.MI DHA IS DIRECTOR AND ASSESSEE IS DEVELOPER TRANSFERRING OF OWNERSHIP OF LAND IN TWO BLOCKS OF 20 FLATS EACH WI TH THE SUPER AREA OF 1750 SQ.FT. @ RS. 7,50,000/- PER FLAT FOR A CONSIDERATION OF RS. 3 CRORES AND FURTHER PIECE OF LAND FOR CONSTRUCTION OF THREE BLOCKS OF 12 FLATS EACH WITH SUPER AREA OF 1426 SQ.FT. PER FLAT FOR A TOTAL CONSIDERAT ION OF RS. 2 CRORES. THIS DOCUMENT WAS SIMILARLY CONFRONTED T O SHRI P.L.MIDHA WHOSE STATEMENT WAS RECORDED UNDER SECTIO N 132(2). SHRI P.L.MIDHA HAS ADMITTED EXISTENCE OF M OU BUT STATED THAT MOU WAS CANCELLED AND DEAL DID NOT MATURE. THE ASSESSING OFFICER PASSED THE ORDER UND ER SECTION 153C/143(3) OF THE ACT AND MADE ADDITION OF RS. 5 CRORES. CERTAIN OTHER SMALL ADDITIONS WERE ALSO MA DE AND INCOME WAS ACCORDINGLY COMPUTED. 4. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDERS BE FORE LD. CIT(APPEALS) AS WELL AS ADDITIONS ABOVE. HOWEV ER, THE APPEALS OF THE ASSESSEE HAD BEEN DISMISSED IN BOTH THE ASSESSMENT YEARS. 5. THE ASSESSEE IS IN APPEAL IN BOTH THE ASSESSMENT YEARS CHALLENGING THE ADDITIONS ON MERIT AS WELL AS RAISED DIFFERENT GROUNDS CHALLENGING THE IMPUGNED ORDERS. 6. THE ASSESSEE ALSO FILED APPLICATIONS FOR ADMISSI ON OF THE ADDITIONAL GROUNDS IN BOTH THE APPEALS WHICH IS 4 SUMMARIZED AS UNDER : THE ASSESSMENT ORDER PASSED UNDER SECTION 153C BE QUASHED ON THE GROUND THAT ASSESSING OFFICER OF THE SEARCHED PERSON HAD NOT RECORDED THE SATISFACTION U NDER SECTION 153C BEFORE ASSUMING THE JURISDICTION OVER THE ASSESSEE. FURTHER, THERE IS NO SATISFACTION THAT DOCUMENTS INFACT BELONG TO THE ASSESSEE. THE ASSESSMENT ORDERS ARE, THEREFORE, NULL AND VOID AND DESERVE TO BE QUASHED. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONAL GROUNDS RAISED ABOVE ARE LEGAL IN NATURE AND GOES TO THE ROOT OF THE MATTER AND DOES NOT REQUIRE ANY FRESH EVIDENCE TO BE INVESTIGATED. HE HAS REFERRED TO NOTICE ISSUED UNDER SECTION 153C OF THE ACT IN ASSE SSMENT YEAR UNDER APPEALS AND ALSO FILED COPY OF THE APPLI CATION FILED BEFORE ACIT, CIRCLE 4(1) CHANDIGARH UNDER RTI ACT SEEKING COPY OF THE SATISFACTION NOTE RECORDED BY T HE ASSESSING OFFICER OF THE SEARCHED PERSON SHRI P.L.M IDHA BEFORE HANDING OVER THE DOCUMENTS TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE. THE ASSESSEE ALSO SOUGHT INTIMATION AS TO WHAT ACTION H AS BEEN TAKEN AGAINST SHRI AMARJIT SINGH SODHI. HE HAS ALSO REFERRED TO REPLY FILED BY ACIT, CIRCLE 4(1) CHANDI GARH UNDER RTI ACT FOR FINANCIAL YEARS 2007-08 AND 2008- 09 (FOR ASSESSMENT YEARS 2008-09 AND 2009-10 UNDER APP EAL) IN WHICH THE COPY OF SATISFACTION NOTE RECORDED DAT ED 26.08.2010 IN THE CASE OF THE ASSESSEE BY ASSESSING 5 OFFICER OF THE ASSESSEE UNDER SECTION 153C OF THE A CT HAVE BEEN PROVIDED. NO OTHER INFORMATION HAS BEEN PROVI DED TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT EVEN UNDER RTI, NO SATISFACTION NOTE RECORDED BY THE ASSESSING OFFICER OF THE PERSON SEARCHED I.E. SHRI P.L.MIDHA HAVE BEEN PROVIDED IF RECORDED, THEREFORE, ASSUMPTI ON OF JURISDICTION UNDER SECTION 153C OF THE ACT IS BAD I N LAW AND ASSESSMENTS ARE LIABLE TO BE QUASHED. HE HAS, THER EFORE, SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE AS SESSEE BY ORDER OF ITAT (DB) CHANDIGARH IN THE CASE OF SHRI PAWAN MANGLA VS DCIT IN ITA 445/2015 DATED 14.06.2016. C OPY OF THE ORDER IS PLACED ON RECORD. 7(I) LD. DR, HOWEVER, RELIED ON ORDERS OF AUTHORITI ES BELOW AND PLACED ON RECORD WRITTEN SUBMISSIONS. 8. AFTER HEARING RIVAL CONTENTIONS, WE ARE OF THE V IEW THE ADDITIONAL GROUNDS ARE RAISED IN RELATION TO JURISD ICTION ISSUE IN AS MUCH AS IT MENTIONS THAT NO SATISFACTIO N WAS RECORDED BY THE A.O. OF THE PERSON SEARCHED I.E. SH RI P.L.MIDHA, THEREFORE, THE ISSUE OF NOTICE UNDER SEC TION 153C OF THE ACT IN THE CASE OF THE ASSESSEE WAS BAD IN L AW. THIS GROUND IS SUPPORTED BY INFORMATION PROVIDED BY THE REVENUE DEPARTMENT UNDER RTI ACT, THEREFORE, IT GOES TO THE ROOT OF THE MATTER AND THEREFORE, CONSIDERING IT TO BE LEGA L IN NATURE, ADDITIONAL GROUNDS ARE ADMITTED FOR HEARING . WE ARE FORTIFIED IN OUR VIEW BY JUDGEMENT OF HON'BLE SUPRE ME COURT IN THE CASE OF NTPC LTD. V CIT 229 ITR 383. WE MAY ALSO ADD HERE THAT SIMILAR ADDITIONAL GROUND WAS ADMITTE D BY ITAT (DB) CHANDIGARH IN THE CASE OF SHRI PAWAN MANG LA V 6 DCIT (SUPRA). WE, THEREFORE, ADMIT THE ADDITIONAL GROUNDS IN BOTH THE APPEALS. 9. AFTER HEARING RIVAL CONTENTIONS ON MERITS, WE FI ND THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ON ADDITIONAL GROUND OF APPEAL BY ORDER OF ITAT, DIVIS ION BENCH, CHANDIGARH IN THE CASE OF SHRI PAWAN MANGLA V DCIT (SUPRA) IN WHICH IN PARAS 3 TO 12, WHICH READ AS UNDER : 3. DURING THE COURSE OF HEARING, LD. COUNSEL FOR T HE ASSESSEE VIDE PETITION DATED 04.01.2016 PRAYED FOR ADMISSION FOR ADDITIONAL GROUND, WHICH READS AS UNDER:- YOUR HONOUR IS REQUESTED TO ACCEPT THE FOLLOWING A DDITIONAL GROUND OF APPEAL IN THE ABOVE STATED APPEAL:- 'THAT THE LEARNED PRINCIPAL CIT (OSD) HAS WRONGLY U PHELD VALIDITY OF NOTICE ISSUED U/S 153C OF THE INCOME TAX ACT, 19 61 TO THE APPELLANT, WITHOUT APPRECIATING THE FACT THAT NO SA TISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER OF SEARCHED PERSON REGARDING ANY DOCUMENT BELONGING TO THE APPELLANT T HAN THE PERSON SEARCHED.' THIS ISSUE WAS RAISED BEFORE THE LEARNED ASSESSING OFFICER AND THE LEARNED PRINCIPAL CIT (OSD) AND THE SAME IS DISCUSS ED BY BOTH THE OFFICERS IN THEIR ORDERS. THE HON'BLE BENCH IS REQUESTED TO ACCEPT THE AFORES AID ADDITIONAL GROUNDS OF APPEAL, WHICH IS BASED ON LEGAL ISSUE TO BE ADJUDICATED BY THE HON'BLE BENCH IN THIS APPEAL FOR THE SAKE OF JUSTICE. FURTHER NO NEW FACTS ARE PLACED BEFORE THE HON'BLE BENCH THROUGH THIS GROUNDS OF APPEAL. WE MAY LIKE TO RELY ON THE JUDGMENT OF HON'BLE SUPR EME COURT IN THE CASE OF NTPC VS. CIT, 229 ITR 0383 AND THE ORDE R OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MANOJ AH UJA VS. IAC 150 ITR 696. YOUR HONOUR IS HUMBLY REQUESTED TO ADMIT THIS ADDIT IONAL GROUND OF APPEAL, BASED ON LAW POINT, WHICH COULD NOT BE TAKE N BEFORE THE CIT (A) DUE TO MISTAKE OF THE COUNSEL. 4. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT THE ADDITIONAL GROUND IS PURELY LEGAL GROUND W HICH GOES TO THE ROOT OF THE MATTER AND DOES NOT REQUIRE FRESH FACTS TO BE INVESTIGATED AND THEREFORE, IT SHOULD BE ADMITTED. ON THE OTHER 7 HAND, LD CIT DR OPPOSED THE PRAYER SO MADE AND SUBM ITTED THAT IT IS AN AFTERTHOUGHT AND IT SHOULD NOT BE ADMITTED. 5. HAVING HEARD THE RIVAL SUBMISSIONS RELATING TO T HE ADMISSION OF ADDL. GROUND, WE FIND THAT THE ADDITIONAL GROUND IS IN RELATION TO THE JURISDICTIONAL ISSUE IN AS MUCH AS IT MENTIONS THAT NO SATISFACTION WAS RECORDED BY THE A.O. OF THE SEARCHED PERSON AND THE REFORE, THE VERY ISSUE OF NOTICE U/S 153C WAS BAD. THE ADDITION AL GROUND IS PURELY LEGAL GROUND AND GOES TO THE ROOT OF THE MAT TER AND THEREFORE, SUCH LEGAL ISSUE RAISED IN THE ADDITIONA L GROUND IS ADMITTED. IT GOES WITHOUT SAYING THAT THE HONBLE S UPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. COM MISSIONER OF INCOME TAX (1998) 229 ITR 0383 HAVE HELD THAT PURE LEGAL QUESTION OF LAW WHICH DOES NOT REQUIRE FRESH FACTS TO BE INV ESTIGATED SHOULD BE ADMITTED AS ADDITIONAL GROUND. THEREFORE, ADDL. GROUND IS ADMITTED. ADVERTING TO THE MERIT OF THE ADDITIONAL GROUND, LD . COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO SATISFACTION HAS BEEN RE CORDED BY THE A.O. OF THE SEARCHED PERSON IN THE FILE OF THE SEAR CHED PERSON AND ALL THAT HAS BEEN RECORDED IS IN THE FILE OF THE AP PELLANT VIDE THE ORDER SHEET ENTRY DATED 17.08.2012 WHICH READS AS U NDER:- REASONS RECORDED FOR ISSUING NOTICE U/S 153C A SEARCH WAS CONDUCTED ON 17.11.2010 AT THE RESIDEN TIAL PREMISES OF DR. NARESH MITTAL AT H. NO. 212, SECTOR-6, PANCHKULA. D URING THE COURSE OF SEARCH, DOCUMENTS MARKED AS A1, A2 AND A3 WERE FOUN D AND SEIZED. PAGES 21-25,127-136 OF DOCUMENT A1, PAGES 1-14,65-6 9, 95-96, 150, 178- 251,253 OF DOCUMENT A2 AND PAGES 31-32 OF DOCUMENT A3 CONTAIN THE DETAILS OF TRANSACTIONS IN IMMOVABLE PROPERTY MADE BY SH. PAWAN MANGLA WHICH NEED TO BE VERIFIED. IN ORDER TO PROTECT THE INTEREST OF REVENUE I AM SA TISFIED THAT THE CASE OF PAWAN MANGLA NEEDS TO BE ASSESSED AND THEREFORE NOT ICE U/S 153C OF THE IT ACT, 1961 IS BEING ISSUED. 6. LD. COUNSEL FOR THE ASSESSEE ASSAILED THE ASSUMP TION OF JURISDICTION U/S 153C ON THE ABOVE MENTIONED GROUND AND SUPPORTED HIS ARGUMENT WITH THE DECISION OF DELHI H IGH COURT IN THE 8 CASE RRJ SECURITIES LTD. ITA NO. 164/2015, DATED 30 .10.2015 AND ANOTHER DECISION DCIT CENTRAL CIRCLE21, NEW DELHI VS. SATKAR ROAD LINES P. LTD. AND CO. NO. 341-346/DEL./2015, DATED 14.08.2015. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, EVEN IF THE ASSESSING OFFICER OF THE SEARCHED PERSON AND THIRD PERSON IS ONE AND THE SAME OFFICER YET RECORDING OF MANDATORY SATISFACTIO N HAS TO BE MADE BY THE A.O. IN THE CAPACITY OF THE A.O. OF THE SEARCHED PERSON AND THAT TOO IN THE ASSESSMENT RECORD OF THE SEARCHED PERSON. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, SINCE THIS JURISDICTIONAL REQUIREMENT WAS NOT MET, THE ASSUMPT ION OF JURISDICTION U/S 153C WAS LACKING. 7. ON THE OTHER HAND LD. CIT DR SUBMITTED THAT ACCO RDING TO THE COMMUNICATION DATED 27.04.2016 RECEIVED FROM ACIT V S. CENTRAL CIRCLE-II, CHD., REASON HAS BEEN RECORDED VIDE ORDE R SHEET DATED 17.08.2012 AND NO OTHER REASON WAS FOUND TO HAVE BE EN RECORDED U/S 153C IN THE ASSESSMENT RECORDS AVAILABLE WITH T HAT OFFICE. ACCORDING TO LD. CIT DR, SATISFACTION HAS BEEN RECO RDED VIDE ORDER SHEET ENTRY DATED 17.08.2012 AND THAT IS THE SUFFIC IENT COMPLIANCE OF REQUIREMENT OF SECTION 153C. LD. CIT DR FILED NO TE DATED 25.3.2016 & 27.04.2016 IN WHICH IT WAS SUBMITTED TH AT A.O. OF THE SEARCHED PERSON (DR. NARESH MITTAL) AND IN THE CASE OF THE ASSESSEE IS THE SAME AND THEREFORE, SATISFACTION RECORDED BY THAT VERY A.O. VIDE ORDER SHEET ENTRY DATED 17.08.2012 IS IN TERMS OF THE REQUIREMENT OF LAW. ACCORDING TO LD. CIT DR, HONBL E SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS (20 14) 362 ITR 673 , NOWHERE STATED THAT THE A.O. OF THE SEARCHED PERSON MUST RECORD SATISFACTION IN THE CASE RECORDS OF THE SEARCHED PE RSON ONLY AND NOWHERE ELSE. DECISION OF KOLKATTA BENCH IN THE KPC MEDICAL COLLEGE & HOSPITAL VS. DCIT 59 TAXMANN.COM 393 WAS RELIED EXTENSIVELY. LD. CIT DR IN THE END SUBMITTED THAT T HE ADDL. GROUND MAY BE DISMISSED ON MERIT ALSO. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND HAVE TAKEN OURS ELVES TO THE MATERIAL PLACED BEFORE US. UNDISPUTEDLY A.O. OF THE SEARCHED 9 PERSON AND THE A.O. OF THE APPELLANT ASSESSEE IS ON E AND THE SAME A.O. THERE IS NO DISPUTE ON THIS FACT ALSO THAT A.O . OF THE ASSESSEE RECORDED REASON U/S 153C ON 17.08.2012 ON THE ORD ER SHEET OF THE CASE RECORDS OF THE APPELLANT ASSESSEE. IT IS ALSO UNDISPUTED FACT THAT NO SATISFACTION FOR ASSUMING JURISDICTION U/S 153C WAS RECORDED IN THE CASE RECORDS OF THE PERSON SEARCHED I.E. DR. NARESH MITTAL. IN THE SETTING OF THE ABOVE UNDISPUTED FACTS, WE HAVE TO EXAMINE AS TO WHETHER ASSUMPTION OF JURISDICTION U/S 153C WAS IN ACCORDANCE WITH LAW. SECTION 153C PROVIDES THAT IF BOOKS OF ACCOUNTS, DO CUMENTS ETC. BELONGING TO THE THIRD PERSON ARE FOUND DURING THE COURSE OF SEARCH, THE A.O. SHALL HAND OVER SUCH DOCUMENTS, BO OKS OF ACCOUNTS ETC. TO THE A.O. OF SUCH THIRD PERSON AND THEREAFTER THE A.O. OF SUCH THIRD PERSON SHALL PROCEED TO ASSESS O R REASSESS THE TOTAL OF INCOME OF THIRD PERSON IN TERMS THE PROVISION U/ S 153A. THE VERY FACT THAT A THIRD PERSON WHO HAS NOT BEEN SEARCHED IS ALSO SOUGHT TO BE PROCEEDED U/S 153A UPON THE BOOKS OF ACCOUNT OR DOCUMENTS ETC. BELONGING TO HIM, FOUND DURING SEARC H SPEAKS THE SERIOUS CONSEQUENCES OF SECTION 153C QUA THIRD PERS ON. THEREFORE THE PROVISION OF SECTION 153C HAVE TO BE CONSTRUED STRICTLY AND IN CASE IT IS FOUND THAT JURISDICTIONAL CONDITIONS ARE NOT SATISFIED, THE VERY ASSUMPTION OF JURISDICTION BY THE A.O. UNDER T HAT SECTION IS LIABLE TO BE SET ASIDE. THIS PROPOSITION OF LAW HAS FOUND APPROVAL FROM THE HIGHEST COURT OF THE LAND THOUGH IN THE BA CK DROP OF SECTION 158BD IN THE CASES OF MANISH MAHESHWARI VS. ACIT 289 ITR 341(SC), CIT VS. CALCUTTA KNITWEARS (2014) 362 ITR 673. IT HAS ALSO BEEN HELD IN THE CASE OF RAJHANS BUILDERS VS. CIT 2 26 TAXMAN 415(GUJARAT) THAT PROVISION OF SECTION 158BD AND TH OSE OF SECTION 153C ARE IN PARI--MATERIA. 8. IN THE PRESENT CASE A.O. OF THE SEARCHED PERSON DID NOT RECORD ANY SATISFACTION THAT ANY OF THE DOCUMENTS F OUND DURING THE COURSE OF SEARCH BELONGED TO THE THIRD PERSON I.E. THE APPELLANT ASSESSEE AS CAN BE SEEN FROM THE PLAIN READING OF T HE REASON RECORDED. MOREOVER, SUCH SATISFACTION HAS NOT BEEN RECORDED IN THE 10 CASE RECORDS OF THE SEARCHED PERSON BY THE A.O. OF THE SEARCHED PERSON IN THAT CAPACITY. A.O. OF THE SEARCHED PERSO N AND A.O. OF THE APPELLANT ASSESSEE I.E. THE THIRD PERSON EVEN I F IS ONE AND THE SAME PERSON BUT IT HAS BEEN HELD IN VARIOUS JURIDIC AL DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE THAT A.O. OF THE SEARCHED PERSON IS REQUIRED IN LAW TO RECORD SATISFACTION IN THE CASE RECORDS OF THE SEARCHED PERSON AS AN A.O. OF THE SEARCHED PERS ON. IT IS NOT OUT OF PLACE TO MENTION THAT THE RECORDING OF SATISFACT ION BY THE A.O. EVEN IF ASSESSING OFFICER IS ONE AND THE SAME PERSO N IS NO LONGER RES- INTEGRA IN AS MUCH AS HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOPI APARTMENTS 365 ITR 411(ALL) AND HONBL E MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. MECHMEN 3 80 ITR 591(MP) HAVE SIMILARLY HELD. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOPI APARTMENTS (SUPRA) HELD AS FOLLOWS: 25. A BARE PERUSAL OF THE PROVISION CONTAINED IN SE CTION 153C OF THE I.T. ACT LEAVES NO DOUBT THAT, AS IS PROVIDE D UNDER SECTION 158BD, WHERE THE ASSESSING OFFICER, WHILE PROCEEDIN G UNDER SECTION 153A AGAINST A PERSON WHO HAS BEEN SUBJECTE D TO SEARCH AND SEIZURE UNDER SECTION 132(1) OR HAS BEEN PROCEE DED UNDER SECTION 132A, IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DO CUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHE R THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL B E HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER S UCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINSTEAC H SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSES SOR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THEP ROVISIONS OF SECTION 153A. 26. 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 AGAINST A PERSON, WHO MAY BE REFERRED AS 'THE SEARCHED PERSON '. BASED ON SUCH SEARCH AND SEIZURE, ASSESSMENT PROCEEDINGS ARE INITIATED AGAINST THE 'SEARCHED PERSON' UNDER SECTION 153A. A T THE TIME OF INITIATION OF SUCH PROCEEDINGS AGAINST THE 'SEARCHE D PERSON' OR DURING THE ASSESSMENT PROCEEDINGS AGAINST HIM OR EV EN AFTER THE COMPLETION OF THE ASSESSMENT PROCEEDINGS AGAINST HI M, THE ASSESSING OFFICER OF SUCH A 'SEARCHED PERSON', MAY, IF HE IS SATISFIED, THAT ANY MONEY, DOCUMENT ETC. BELONGS TO A PERSON O THER THAN THE SEARCHED PERSON, THEN SUCH MONEY, DOCUMENTS ETC . ARE TO BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDI CTION 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 DOCUM ENTS ETC. TO THE ASSESSING OFFICER OF SUCH 'OTHER PERSON', THEREAFTE R FOLLOWED BY 11 ISSUANCE OF THE NOTICE OF THE PROCEEDINGS UNDER SEC TION 153C READ WITH SECTION 153A AGAINST SUCH 'OTHER PERSON'. 27. THE INITIATION OF PROCEEDINGS AGAINST SUCH OTH ER PERSON AREDEPENDANT UPON A SATISFACTION BEING RECORDED. SU CH SATISFACTION MAY BE DURING THE SEARCH OR AT THE TIM E OF INITIATION OF ASSESSMENT PROCEEDINGS AGAINST THE 'SEARCHED PERSON ', OR EVEN DURING THE ASSESSMENT PROCEEDINGS AGAINST HIM OR EV EN AFTER COMPLETION OF THE SAME, BUT BEFORE ISSUANCE OFNOTIC E TO THE SUCH OTHER PERSON UNDER SECTION 153C. 28. EVEN IN A CASE, WHERE THE ASSESSING OFFICER OF BOTH THE PERSONS IS THE SAME AND ASSUMING THAT NO HANDING OV ER OF DOCUMENTS IS REQUIRED, THE RECORDING OF 'SATISFACTI ON' IS A MUST, AS, THAT IS THE FOUNDATION, UPON WHICH THE SUBSEQUENT P ROCEEDINGS AGAINST THE 'OTHER PERSON' ARE INITIATED. THE HANDI NG OVER OF DOCUMENTS ETC. IN SUCH A CASE MAY OR MAY NOT BE OF MUCH RELEVANCE BUT THE RECORDING OF SATISFACTION IS STIL L REQUIRED AND IN FACT IT IS MANDATORY. 29. IN THIS REGARD, THE RATIO OF THE JUDGMENT OF TH E SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX-III VS. M/S CALCUTTA KNITWEARS, LUDHIANA (SUPRA), AS NOTED ABOV E, CLEARLY APPLIES TO THE PROCEEDINGS UNDER SECTION 153C ALSO. 30. 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 AN Y OTHER ORDER, NOTE OR RECORD MAINTAINED BY THE ASSESSING OFFICER OF THE 'SEARCHED PERSON'. THE WORD 'SATISFACTION' REFERS T O THE STATE OF MIND OF THE ASSESSING OFFICER OF THE PERSON SEARCHED, WH ICH GETS REFLECTED IN A TANGIBLE SHAPE/ FORM, WHEN IT IS RED UCED INTO WRITING. IT IS THE CONCLUSION DRAWN OR THE FINDING RECORDED ON THE FOUNDATION OF THE MATERIAL AVAILABLE. IN THIS REGAR D, 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 DI VISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF C.I.T. VS. CL ASSIC ENTERPRISES REPORTED IN (2013) 358 ITR 465 (ALLAHABAD). 31. IN THE CASE OF MANISH MAHESHWARI VS. ASSISTANT COMMISSIONER OFINCOME TAX AND ANOTHER, (2007) 289 I TR 341 (SC), THEIR LORDSHIPS HAD THE OCCASION TO CONSIDER THE PR OVISIONS OF SECTIONS 158BC AND 158BD AND HELD THAT THE CONDITIO NS PRECEDENT FOR TAKING RECOURSE TO A BLOCK ASSESSMENT INTERMS O F SECTON 158BC AND 158BD (I) WERE AS UNDER: (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 MAD E UNDER SECTION 132 OF THE ACT; (II) THE BOOKS OF ACC OUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED H AD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVINGJURISDIC TION OVER SUCH OTHER PERSON; AND (III) THE ASSESSING OFF ICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. 11. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVI SIONS OFSECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVISIONS, OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THEPERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS ANDOTHER ASSETS HA D BEEN REQUISITIONED UNDER SECTION 132A OF THE ACT. 32. THE RATIO OF THE JUDGMENT IN MANISH MAHESHWARI S CASE ALSO APPLIES TO THE PROVISIONS OF SECTION 153C AND TO TH E FACTS OF THIS CASE. 12 THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE O F CIT VS. MECHMEN (SUPRA) LIKEWISE HELD AS FOLLOWS: 18. THE CONCOMITANT OF THIS CONCLUSION, IS THAT, T HE LEGAL POSITION AS APPLICABLE TO SECTION 158BD REGARDING S ATISFACTION IN THE FIRST INSTANCE OF THE FIRST ASSESSING OFFICER F ORWARDING THE ITEMS TO THE ASSESSING OFFICER HAVING JURISDICTION; AND I N THE SECOND INSTANCE OF THE ASSESSING OFFICER HAVING JURISDICTI ON WHILST SENDING NOTICE TO SUCH OTHER PERSON (OTHER THAN THE PERSON REFERRED TO IN SECTION 153A), MUST APPLY PROPRIO VIGORE. THE FACT THAT INCIDENTALLY THE ASSESSING OFFICER IS COMMON AT BOTH THE STAGES WOULD NOT EXTRICATE HIM FROM RECORDING SATISFACTION AT THE RE SPECTIVE STAGES. IN THAT, THE ASSESSING OFFICER IS SATISFIED THAT TH E ITEMS REFERRED TO IN SECTION 153C BELONGS OR BELONG TO A PERSON (OTHER T HAN THE PERSON REFERRED TO IN SECTION 153A), BEING A SINE QUA NON. HE CANNOT ASSUME JURISDICTION TO TRANSMIT THOSE ITEMS TO ANOT HER FILE WHICH INCIDENTALLY IS PENDING BEFORE HIM CONCERNING OTHER PERSON (PERSON OTHER THAN THE PERSON REFERRED TO IN SECTIO N 153A). THE QUESTION AS TO WHETHER THAT MAY INFLUENCE THE OPINI ON OF THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON, ALSO CANNOT BE THE BASIS TO TAKE ANY OTHER VIEW. AS A MA TTER OF FACT, THE OTHER ASSESSING OFFICER TO WHOM THE ITEMS ARE H ANDED OVER, BEFORE ISSUING NOTICE MUST HIMSELF BE SATISFIED AFT ER DUE VERIFICATION OF THE ITEMS RECEIVED AND THE DISCLOSURES MADE BY T HE OTHER PERSON IN THE RETURNS FOR THE RELEVANT PERIOD ALREA DY FILED BY THE OTHER PERSON IN THE RETURNS FOR THE RELEVANT PERIOD ALREADY FILED BY THE OTHER PERSON BEFORE HIM. FOR THE SAME REASON, W E MUST REJECT THE ARGUMENT OF THE DEPARTMENT THAT THE DISCRETION OF THE ASSESSING OFFICER HAVING JURISDICTION WILL BE IMPAI RED IN ANY MANNER, IF HE WERE TO HOLD A DIFFERENT VIEW. SIMILARLY, AS THERE IS NO PROVISION EITHER EXPRESS OR IMPLIED (IN THE ACT) TO DISPENSE WITH THE REQUIREMENT OF SATISFACTION, IF THE ASSESSING OFFIC ER HAPPENS TO BE THE SAME, AS IN THIS CASE, THE ARGUMENT OF THE DEPA RTMENT MUST BE NEGATIVED. 19. AFTER RECEIPT OF THE MATERIALS, THE ASSESSING O FFICER HAVING JURISDICTION IS EXPECTED TO CONDUCT ENQUIRY AND DUE VERIFICATION OF THE RELEVANT FACTS; BEFORE FORMING HIS PRIMA FACIE SATISFACTION. THE ASSESSING OFFICER HAVING JURISDICTION WILL BE WELL WITHIN HIS RIGHTS TO FORM AN INDEPENDENT VIEW BEFORE ISSUING NOTICE TO T HE OTHER PERSON (PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A) UNDER HIS JURISDICTION ON THE BASIS OF HIS OWN ENQU IRY. IN OUR OPINION, THE VIEW FORMED BY THE ASSESSING OFFICER AFTER HIS OWN ENQUIRY DOES NOT ENTAIL IN SEATING IN APPEAL OVER THE SATIS FACTION OF THE FIRST ASSESSING OFFICER, WHO HAD HANDED OVER THE ITEMS TO HIM. 20. AS A RESULT, WE HOLD THAT THERE IS NO INFIRMITY IN THE VIEW TAKEN BY THE TRIBUNAL ON THE QUESTIONS UNDER CONSID ERATION. THE VIEW TAKEN BY US IS REINFORCED FROM THE DECISIONS O F OTHER HIGH COURTS IN THE CASES OF CIT V. GOPI APARTMENT (SUPRA ), PEPSI FOODS P.LTD. (SUPRA), PEPSICO INDIA HOLDINGS P. LTD.(SUPR A) AND, LASTLY, CIT V. SMT. MADHU KESHWANI (SUPRA). THE OBSERVATIONS OF THE DELHI HIGH COURT IN THE CASE OF SSP AVIATION LTD. (SUPRA) HAVE BEEN EXPLAINED IN THE SUBSEQUENT CASE OF PEPSICO INDIA HOLDINGS P. LTD. (SUPRA). 21. WE CONCLUDE THAT THE CONDITION PRECEDENT FOR RE SORTING TO OF MANISH MAHESHWARI (SUPRA) AND IN THE RECENT CASE OF CIT V. CALCUTTA KNITWEARS (SUPRA), WOULD APPLY ON ALL FOUR S MANDATING SATISFACTION OF THE ASSESSING OFFICER(S) DEALING WI TH THE CASE AT THE REPRESENTATIVE STAGES REFERRED TO IN SECTION 153C. 13 9. IN VIEW OF THE ABOVE WE HOLD THAT IN THE ABSENCE O F A VALID RECORDING OF SATISFACTION BY THE AO OF THE SEARCHED PERSON I.E; DR. NARESH MITTAL THAT CERTAIN DOCUMENTS FOUND DURING T HE COURSE OF SEARCH BEYOND TO THE ASSESSEE, THE ASSUMPTION OF JU RISDICTION U/S 153 C IN THE CASE OF THE ASSESSEE WAS INVALID. 10. WE ARE NOT PERSUADED BY THE ARGUMENT OF LD. CIT DR FOR THE SIMPLE REASON THAT THE POSITION OF LAW AS EXPLAINED IN THE ABOVE MENTIONED JUDICIAL DECISIONS HAS INTERPRETED SECTIO N 153C IN THE MANNER AS INTERPRETED BY THE LD. COUNSEL FOR THE AS SESSEE. RELIANCE OF THE DECISION OF KOLKATA BENCH BY LD. CIT DR IN T HE CASE OF KPC MEDICAL COLLEGE & HOSPITAL, SUPRA, DOES NOT HELP TH E CAUSE OF REVENUE IN AS MUCH AS THERE ARE DECISIONS OF HIGH C OURT OF DELHI, ALLAHABAD, AND MADHYA PRADESH AS REFERRED ABOVE. MO REOVER, EVEN FROM THE PLAIN READING OF THE REASON RECORDED ON 17.8.2012, THERE IS NOTHING TO SUGGEST THAT ANY DOCUMENT ETC. FOUND IN SEARCH BELONGED TO THE APPELLANT. ALL THAT IS MENTIONED IS THAT THE PAGE NO. 21-25, 127-136 OF DOCUMENT NO. A1 ETC I.E. DOCU MENTS FOUND IN SEARCH CONTAIN DETAILS OF TRANSACTIONS IN IMMOVABLE PROPERTY MADE BY THE ASSESSEE. THIS IS NOT THE CASE OF AO OF THE ASSESSEE IN THE REASON RECORDED THAT DOCUMENTS FOUND DURING SEARCH BELONGED TO THE ASSESSEE. DOCUMENTS BELONGING TO A PERSON AND TRANSACTIONS CONTAINED IN SOME DOCUMENTS MADE BY A PERSON ARE T WO DIFFERENT THINGS. SECTION 153C CAN BE INVOKED ONLY IF THE FIN DING IS THERE THAT DOCUMENTS ETC. FOUND DURING SEARCH BELONGED TO THE THIRD PERSON WHICH IS NOT THE CASE MADE OUT BY AO IN THE PRESENT CASE. THEREFORE, AFTER CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES AND THE POSITION OF LAW AS EXPLAINED ABOVE, WE HOLD THAT THE JURISDICTION ASSUMED U/S 153C WAS LACKING IN THE IN STANT CASE AND THEREFORE THE NOTICE ISSUED U/S 153C IS HELD NOT IN ACCORDANCE WITH LAW AND THE ASSESSMENT MADE IS QUASHED. SINCE WE HA VE HELD THAT ASSUMPTION OF JURISDICTION U/S 153C ITSELF IS BAD, WE DO NOT PROPOSE TO DISPOSE THE OTHER GROUNDS OF APPEAL. IN THE RESU LT, APPEAL IS ALLOWED IN ABOVE TERMS. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . 14 10. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ORDER IN THE CASE OF SHRI PAWAN MANGLA (SUPRA), IT IS CLE AR THAT THE SEARCH WAS CONDUCTED IN THE CASE OF SHRI P.L.MI DHA IN WHICH CERTAIN DOCUMENTS I.E. AGREEMENT TO SELL DA TED 01.03.2008 AND MOU DATED 09.07.2008 WERE RECOVERED. THIS AGREEMENT TO SELL AND MOU ARE ALLEGED TO HAV E BELONG TO THE ASSESSEE. THEREFORE, ASSESSING OFFIC ER OF THE PERSON SEARCHED I.E. SHRI P.L.MIDHA SHALL HAVE TO R ECORD SATISFACTION THAT THE DOCUMENTS FOUND DURING THE CO URSE OF SEARCH BELONG TO THE ASSESSEE AND SUCH DOCUMENT SHALL HAVE TO BE HANDED OVER TO THE ASSESSING OFFICER OF THE ASSESSEE. HOWEVER, IN THIS CASE, NO SATISFACTION H AS BEEN RECORDED BY THE ASSESSING OFFICER OF THE PERSON SEA RCHED I.E. SHRI P.L.MIDHA, THEREFORE, THERE IS NO QUESTIO N OF HANDING OVER THE DOCUMENT BY THE ASSESSING OFFICER OF SHRI P.L.MIDHA TO THE ASSESSING OFFICER OF THE ASSE SSEE. IN RTI REPLY, REVENUE DEPARTMENT HAS SUPPLIED COPY OF THE SATISFACTION NOTE RECORDED UNDER SECTION 153C I N THE CASE OF THE ASSESSEE DATED 26.08.2010. THEREFORE, THERE IS A CLEAR VIOLATION OF PROVISIONS OF SECTION 153C OF THE ACT. IT IS ADMITTED FACT THAT NO SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEE AND ASSESSMENTS HAVE BEEN FRAM ED ON THE BASIS OF NOTICE ISSUED UNDER SECTION 153C OF TH E ACT IN THE CASE OF THE ASSESSEE. IN THE PRESENT CASE, NO SATISFACTION RECORDED UNDER SECTION 153C OF THE ACT IN THE CASE OF THE PERSON SEARCHED I.E. SHRI P.L.MIDHA, TH ERE IS TOTAL NON-COMPLIANCE OF PROVISIONS OF SECTION 153C OF THE ACT. THEREFORE, THE ASSESSING OFFICER IN THE CASE O F THE 15 ASSESSEE HAS NOT VALIDLY ASSUMED THE JURISDICTION U NDER SECTION 153C OF THE ACT. THEREFORE, CONSIDERING TOT ALITY OF FACTS AND CIRCUMSTANCES AND POSITION OF LAW, AS EXP LAINED IN THE CASE OF SHRI PAWAN MANGLA (SUPRA), WE HOLD T HAT THE JURISDICTION ASSUMED UNDER SECTION 153C OF THE ACT WAS LACKING IN THE INSTANT CASES AND THEREFORE, THE NOT ICES ISSUED UNDER SECTION 153C OF THE ACT ARE HELD NOT I N ACCORDANCE WITH LAW AND ASSESSMENTS MADE UNDER SECT ION 153C ARE QUASHED. THE ORDERS OF AUTHORITIES BELOW A RE, ACCORDINGLY, SET ASIDE AND QUASHED. RESULTANTLY, AL L ADDITIONS MADE IN ASSESSMENT ORDERS UNDER SECTION 1 53C R.W.S. 143(3) ARE DELETED. IN VIEW OF THESE FINDING S THAT ASSUMPTION OF JURISDICTION UNDER SECTION 153C OF TH E ACT ITSELF IS BAD IN LAW, THE ISSUES OF ADDITIONS ARE L EFT FOR ACADEMIC DISCUSSION ONLY. THE APPEALS OF THE ASSES SEE ARE, THEREFORE, ALLOWED. 12. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARSHI) ( B HAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND AUGUST,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD