M/s. Tanvir Collections Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 2421/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86526 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 12-01-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SIDHU
• Keywords: Search and seizure; Assessment record; Block assessment; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NOS.2421/DEL/2014 ASSESSMENT YEARS : 2003-04 TANVIR COLLECTIONS PVT. LTD., (NOW KNOWN AS RAHAB COLLECTIONS PVT. LTD.), RZ-61, GALI NO.25, INDIRA PARK, PALAM COLONY, NEW DELHI. PAN : AACCT6679D VS. ACIT, CENTRAL CIRCLE-21, NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE DEPARTMENT BY : S MT. P.K. SIDHU, CIT, DR ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A) ON 21.3.2014 IN RELATION TO TH E ASSESSMENT YEAR 2003-04. ITA NO.2421/DEL/2014 2 2. THE ASSESSEE, THROUGH THE FIRST GROUND, HAS CHAL LENGED THE JURISDICTION OF THE ASSESSING OFFICER IN FRAMING TH E ASSESSMENT U/S 153C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT I N THE CASES OF SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDA N BUILDCON PVT. LTD. ON 20.10.08. THE AO HAS RECORDED IN THE I NSTANT ASSESSMENT ORDER THAT DURING THE COURSE OF SEARCH O N THE ABOVE THREE PERSONS, CERTAIN DOCUMENTS BELONGING TO THE A SSESSEE WERE SEIZED. PROCEEDINGS WERE INITIATED AGAINST THE ASS ESSEE U/S 153C READ WITH SECTION 153A OF THE ACT ON THE BASIS OF S UCH DOCUMENTS. THE AO COMPUTED TOTAL INCOME AT `22,49,330/-. THE ASSESSEE UNSUCCESSFULLY ARGUED BEFORE THE LD. CIT(A) THAT A PROPER SATISFACTION WAS NOT RECORDED BY THE CORRECT AO BEF ORE TAKING UP THE PROCEEDINGS U/S 153C AGAINST THE ASSESSEE. THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON ALL THE LEG AL ISSUES TAKEN UP BEFORE HIM AND ALSO ON MERITS. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE EM PHASIZED ON THE IMPROPER RECORDING OF SATISFACTION BY THE AO TO CON TEND THAT THE ITA NO.2421/DEL/2014 3 SEARCH ACTION AND THE CONSEQUENTIAL ASSESSMENT BE A NNULLED. THIS WAS STRONGLY COUNTERED BY THE LD. DR. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS APPARENT FROM THE ASSESSM ENT ORDER OF THE ASSESSEE THAT A SEARCH WAS CARRIED OUT U/S 132 OF T HE ACT ON SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDA N BUILDCON PVT. LTD., AND IN SUCH SEARCH PROCEEDINGS SOME INCR IMINATING MATERIAL BELONGING TO THE ASSESSEE WAS FOUND WHICH LED TO THE MAKING OF ASSESSMENT U/S 153C READ WITH SECTION 153 A OF THE ACT. IN ORDER TO APPRECIATE THE CONTENTION MADE BY THE L D. AR ON THE QUESTION OF RECORDING OF PROPER SATISFACTION, IT WO ULD BE APPOSITE TO NOTE DOWN THE PRESCRIPTION OF THE RELEVANT PARTS OF SECTION 153(1) AT THE MATERIAL TIME, AS UNDER:- 153C.ASSESSMENT OF INCOME OF ANY OTHER PERSON. 153C.ASSESSMENT OF INCOME OF ANY OTHER PERSON. 153C.ASSESSMENT OF INCOME OF ANY OTHER PERSON. 153C.ASSESSMENT OF INCOME OF ANY OTHER PERSON.- -- - (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERS ON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH S UCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR RE ASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISI ONS OF SECTION 153A : ITA NO.2421/DEL/2014 4 6. FROM THE ABOVE PROVISION, IT IS CLEAR THAT WHERE THE AO OF THE PERSON SEARCHED IS SATISFIED THAT ANY MONEY, BULLIO N, JEWELLERY, BOOKS OF ACCOUNTS OR OTHER DOCUMENTS ETC., BELONG T O A PERSON OTHER THAN THE PERSON SEARCHED, THEN, SUCH DOCUMENTS OR A SSETS, ETC., SHALL BE HANDED OVER TO THE AO OF THE OTHER PERSON AND THE LATER AO SHALL PROCEED AGAINST SUCH OTHER PERSON TO ASS ESS OR REASSESS HIS INCOME. A BARE PERUSAL OF THE PROVISION INDIC ATES THAT BEFORE HANDING OVER SUCH DOCUMENTS 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, ETC., FOUND FROM THE PERSON SEARCHED BELONG TO THE OTHER PERSON. ONLY WHEN SU CH SATISFACTION IS RECORDED BY THE AO OF THE PERSON SEARCHED AND SU CH DOCUMENTS OR ASSETS SEIZED, ETC., ARE HANDED OVER TO THE AO O F THE OTHER PERSON, THAT THE LATER AO ACQUIRES JURISDICTION TO MAKE ASSESSMENT OR REASSESSMENT OF THE OTHER PERSON. IT IS, THERE FORE, AMPLY VIVID THAT THE AO OF THE OTHER PERSON CAN ACQUIRE JURIS DICTION TO ASSESS OR REASSESS INCOME OF THE OTHER PERSON ONLY WHEN THE AO OF THE PERSON SEARCHED RECORDS SATISFACTION IN HIS CASE BE FORE HANDING OVER MONEY, BULLION, JEWELLERY, ETC. TO HIM. WHAT EMERGES IS THAT ITA NO.2421/DEL/2014 5 THE RECORDING OF SATISFACTION BY THE AO OF THE PERS ON SEARCHED IS A CONDITION PRECEDENT FOR THE AO OF THE OTHER PERSON TO ACQUIRE JURISDICTION. UNLESS SUCH JURISDICTIONAL CONDITION IS SATISFIED, THERE CAN BE NO QUESTION OF MAKING ASSESSMENT OR REASSESS MENT OF THE OTHER PERSON. 7. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO NOTE T HE PROVISIONS OF SECTION 158BD, WHICH IS A PREDECESSOR PROVISION OF SECTION 153C, UNDER THE SCHEME OF BLOCK ASSESSMENT. THE RELEVANT PART OF THIS SECTION IS AS UNDER :- 158BD. 158BD. 158BD. 158BD. UNDISCLOSED INCOME OF ANY OTHER PERSON. UNDISCLOSED INCOME OF ANY OTHER PERSON. UNDISCLOSED INCOME OF ANY OTHER PERSON. UNDISCLOSED INCOME OF ANY OTHER PERSON. WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY U NDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS WERE REQUI SITIONED UNDER SECTION 132A, THEN, THE BOOKS OF ACCOUNT, OTHER DOC UMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHA LL APPLY ACCORDINGLY. 8. IT IS DISCERNIBLE FROM A CAREFUL PERUSAL OF SECT ION 158BD THAT WHERE THE AO OF THE PERSON SEARCHED IS SATISFIED TH AT UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON SEARCHED, THEN, THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS, ETC ., ARE TO BE ITA NO.2421/DEL/2014 6 HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER RECORDING OF PROPER SATISFACTION BY THE AO OF THE PERSON SEARCHED. IT IS ONLY THEREAFTER, THAT THE AO OF TH E OTHER PERSON CAN PROCEED FOR DETERMINING HIS UNDISCLOSED INCOME. 9. THE HONBLE SUPREME COURT IN MANISH MAHESHWARI VS. ACIT & ANR. (2007) 289 ITR 341 (SC) NOTICED THAT THE AO DID NEITHER RECORD SATISFACTION THAT UNDISCLOSED INCOME BELONGED TO AN Y PERSON, OTHER THAN THE PERSON SEARCHED NOR HANDED OVER THE BOOKS OF ACCOUNT, DOCUMENTS, ETC. TO THE AO HAVING JURISDICTION OVER THE MATTER. IN THE LIGHT OF THE ABOVE FACTS, THE HONBLE SUPREME COURT QUASHED THE PROCEEDINGS UNDER S. 158BD. IT HAS BEEN HELD IN THI S CASE THAT SEC. 158BD PROVIDES FOR TAKING RECOURSE TO A BLOCK ASSES SMENT IN TERMS OF S. 158BC IN RESPECT OF ANY OTHER PERSON, THE CON DITIONS PRECEDENT WHEREFOR ARE : (I) SATISFACTION MUST BE RECORDED BY 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 R EQUISITIONED HAD BEEN HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON; AND (III) THE AO HAS PROCEEDED UNDER S. 158 BC AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISIONS ITA NO.2421/DEL/2014 7 OF S. 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEF ORE THE PROVISIONS OF CHAPTER XIV-B ARE APPLIED IN RELATION TO ANY PER SON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DO CUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED UNDER S. 13 2A. 10. ALMOST SIMILAR ISSUE OF RECORDING SATISFACTIO N AND THE FRAMING OF ASSESSMENT U/S 158BD ONCE AGAIN CAME UP FOR CONS IDERATION BEFORE THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS (2014) 362 ITR 673 (SC) . THE HONBLE APEX COURT HAS, INTER ALIA , HELD IN THIS CASE THAT: FOR THE PURPOSE OF SECTI ON 158BD OF THE ACT, A SATISFACTION NOTE IS SINE QUA NON AND MUST BE PRE PARED BY THE AO BEFORE HE TRANSMITS THE RECORDS TO THE OT HER AO WHO HAS JURISDICTION OVER SUCH OTHER PERSON. 11. WHEN WE CONSIDER THE LANGUAGE OF SECTION 158BD AS INTERPRETED BY THE HONBLE SUMMIT COURT IN THE ABOV E CASES, WE FIND IT AS A CLEAR-CUT PROPOSITION THAT THE RECORDI NG OF SATISFACTION BY THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED IS AN ESSENTIAL AND PREREQUISITE CONDITION FOR BESTOWING JURISDICT ION TO THE AO OF THE OTHER PERSON. ON A CLOSE COMPARATIVE STUDY, IT IS OVERT THAT IN SO FAR AS THE QUESTION OF ACQUIRING JURISDICTION BY THE AO OF THE ITA NO.2421/DEL/2014 8 PERSON OTHER THAN THE PERSON SEARCHED IS CONCERNED, THE PROVISIONS OF SECTION 153C ARE IN PARI MATERIA WITH SECTION 158BD. SINCE THE RELEVANT PART OF SECTION 158BD IS SIMILAR TO THAT O F SECTION 153C, THE RATIO DECIDENDI OF THE JUDGMENTS OF THE HONBLE SUMMIT COURT TO TH IS EXTENT WILL APPLY WITH FULL FORCE IN THE CONTEXT OF SEC. 153C AS WELL. 12. LET US EXAMINE THE FACTS OF THE INSTANT CASE MO RE ELABORATELY. IT IS SEEN THAT SOME SATISFACTION WAS RECORDED, A C OPY OF WHICH IS AVAILABLE ON PAGE 4 OF THE PAPER BOOK, AS UNDER :- SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF THE I.T. ACT, 1961 IN THE CASE OF M/S TANVEER COLLECTION PVT. LTD., RZ -126, WEST SAGAR PUR, SHANKAR PARK, NEW DELHI, PAN: AACCT6679D FOR A.Y. 2003-04 TO 2008-09. 08.09.2010 IN THE CASE OF SH. B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD., SEARCH & SEIZURE TOOK PLACE U/S 132 ON 20.10.2008. THE UNDERSIGNED IS THE JURISDICTIONAL AO OF THIS CASE. DURING THE COURSE OF SEARCH & SEIZURE DOCUMENTS/PAPERS AT PAGES 101 TO 132 OF ANNEXURE A-30, PAGE 144 OF ANNEXURE 7 AND PAGES 33 TO 48 OF ANNEXURE 22 SEIZED BY PARTY R- 2, ARE FOUND TO BELONG TO M/S TANVEER COLLECTION PVT. LTD., RZ-126, WEST SAGAR PUR, SHANKAR PARK, 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 TANVEER COLLECTION PVT. LTD., RZ-126, WEST SAGAR PUR, SHANKAR PARK, NEW DELHI. THIS SATISFACTION NOTE IS RECORDED AND IS PLACED IN THE FILE BEFORE ISSUING NOTICE U/S 153C. ACIT, CENTRAL CIRCLE 17, NEW DELHI ITA NO.2421/DEL/2014 9 13. IT CAN BE SEEN FROM THE ASSESSMENT ORDER THA T NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE BY THE ACIT, CENTRAL CIR CLE-17 ON 08.09.2010, BEING THE SAME DATE ON WHICH THE ABOVE SATISFACTION WAS RECORDED. IT IS APPARENT THAT IT WAS : SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF THE I.T. ACT, 1961 IN TH E CASE OF M/S TANVEER COLLECTION PVT. LTD. 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 LEAVE NOTHING TO DOUBT THAT IT WA S RECORDED BY THE AO OF THE ASSESSEE BEFORE TAKING UP THE ASSESSMENT U/S 153C OF THE ACT PURSUANT TO THE SEARCH CONDUCTED ON SHRI B.K. D HINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD . PAGES 5-7 OF THE PAPER BOOK ARE THE COPIES OF THE REPLY FURNI SHED BY THE DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-17, NEW DELHI TO SHRI B.K. DHINGRA, SMT. POONAM DHINGRA AND M/S MADHUSUDA N BUILDCON PVT. LTD., UNDER THE PROVISIONS OF RTI ACT, 2005. THE RELEVANT PART OF THE REPLY DATED 10.6.2013 GIVEN TO SH. B.K. DHIN GRA, IS AS UNDER:- 2. FROM THE ASSESSMENT RECORDS OF SH. BHUPESH KUM AR DHINGRA, WHICH IS COVERED UNDER SECTION 153A, FOR T HE ASST. YEARS FROM 2003-04 TO 2008-09 (BLOCK PERIOD) IT IS NOTICE D THAT THERE IS NO SATISFACTION NOTE AVAILABLE/RECORDED IN RESPEC T OF OTHER ENTITIES. ITA NO.2421/DEL/2014 10 14. SIMILAR REPLIES HAVE BEEN GIVEN TO SMT. POO NAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD. ON A CONSIDERATION OF THE ABOVE REPLIES GIVEN BY THE DEP ARTMENT TO THE PERSONS 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 GIVEN BY THE DEPARTMENT TO THE PERSONS SEAR CHED UNDER THE RTI ACT, IT CLEARLY EMERGES THAT NO SATIS FACTION WAS RECORDED BY THE AO IN THE CASES OF THE PERSONS SEAR CHED U/S 132(1) OF THE ACT (I.E. SHRI B.K. DHINGRA, SMT. POO NAM DHINGRA AND M/S MADHUSUDAN BUILDCON PVT. LTD.) THAT SOME BO OKS OF ACCOUNT OR DOCUMENTS ETC. BELONGING TO THE ASSESSEE WERE FOUND WHICH WERE HANDED OVER TO THE AO OF THE OTHE R PERSON (I.E. THE ASSESSEE). THE SATISFACTION NOTE AS REPR ODUCED ABOVE HAS BEEN PREPARED BY THE AO OF THE ASSESSEE. 15. THE LD. DR VEHEMENTLY ACCENTUATED ON THE PO INT THAT SINCE THE AO OF THE PERSONS SEARCHED AND THE ASSESS EE IS SAME, IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE SATISFACTION IS RECORDED IN THE CASE OF THE PERSONS SEARCHED OR OTHER PERSON. SHE EMPHASIZED ON THE FACTUM OF RECOR DING ITA NO.2421/DEL/2014 11 SATISFACTION BY THE AO, WHICH CONDITION IN HER OPIN ION STOOD SATISFIED, BY VIRTUE OF IT HAVING BEEN RECORDED BY THE COMMON AO. 16. IN OUR CONSIDERED OPINION, THIS CONTENTION ADVANCED ON BEHALF OF THE REVENUE IS DEVOID OF MERIT. WE FAIL T O 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. THER E IS 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 DOCUMENTS ETC. ALWAYS COME TO THE POSSESSION OF THE AO OF THE PERSON SEAR CHED WHO HAS TO FRAME ASSESSMENT, IT IS ONLY HE WHO CAN FIND OUT THAT WHICH OF SUCH DOCUMENTS ETC. DO NOT BELONG TO THE P ERSON SEARCHED AND ARE RELEVANT FOR THE ASSESSMENT OF THE OTHER PERSON. IT IS NOT AS IF ALL THE BOOKS OF ACCOUNT AN D DOCUMENTS ETC. FOUND DURING THE COURSE OF A SEARCH ARE EVALUA TED BY A SEPARATE AUTHORITY TO FIGURE OUT THAT WHICH OF THES E DOCUMENTS BELONG TO THE PERSON SEARCHED AND TO THE OTHERS AND THUS HANDED OVER TO THE CONCERNED AOS OF THE PE RSON ITA NO.2421/DEL/2014 12 SEARCHED AND OTHERS FOR MAKING ASSESSMENT. AS IT IS ONLY THE AO OF THE PERSON SEARCHED WHO CAN REACH A CONCLUSIO N THAT SOME OF THE DOCUMENTS ETC. DO NOT BELONG TO THE PER SON SEARCHED BUT TO SOME OTHER PERSON, THE LEGISLATURE HAS PROVIDED FOR RECORDING OF SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED. IT IS NOT PERMISSIBLE UNDER THE LA W TO REQUIRE THE AO OF THE OTHER PERSON TO RECORD SUCH SATISFACT ION BY THE AO. 17. AS REGARDS THE OTHER ARGUMENT OF THE LD. D R THAT SINCE THE AO OF BOTH THE PERSONS SEARCHED AND THE ASSESSE E IS THE SAME PERSON, HENCE THE REQUIREMENT OF RECORDING SAT ISFACTION BY THE AO OF THE PERSONS SEARCHED SHOULD BE DEEMED TO HAVE BEEN FULFILLED WITH THE RECORDING OF SATISFACTION B Y THE AO OF THE ASSESSEE. WE ARE AGAIN UNABLE TO APPRECIATE TH IS CONTENTION THAT THE COMMONNESS OF THE AO WOULD MAKE NO DIFFERENCE IN SO FAR AS THE RECORDING OF SATISFACTI ON IN THE CASE OF THE PERSONS SEARCHED IS CONCERNED. WHAT IS RELEV ANT FOR THIS PURPOSE IS NOT THE IDENTITY OF THE PERSON ASSE SSING BUT HIS POSITION AND THE CAPACITY. WHEN THE LAW REQUIRES TH E AO OF THE PERSON SEARCHED TO RECORD THE NECESSARY SATISFA CTION, IT IS ITA NO.2421/DEL/2014 13 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. TH E MERE FACT THAT THE AO OF THE PERSON SEARCHED AND THE ASS ESSEE IS THE SAME PERSON, DOES NOT, IN ANY MANNER, OBLITERAT E THE REQUIREMENT OF LAW NECESSITATING THE RECORDING OF S ATISFACTION IN THE CASE OF THE PERSON SEARCHED THAT MONEY, BULL ION, JEWELLERY, ETC., FOUND FROM THE PERSON SEARCHED BEL ONGS TO THE OTHER PERSON. WHAT IS CRUCIAL TO NOTE IS CAPACIT Y OF THE AO AND NOT HIS IDENTITY. IN VIEW OF THE FACT THAT WHEN THE STATUTORY STIPULATION IS FOR RECORDING THE SATISFAC TION BY THE AO OF THE PERSON SEARCHED, THEN, IT CANNOT BE SUBSTITU TED WITH THE SATISFACTION OF THE AO OF THE OTHER PERSON. T HIS 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 T HE FINANCE (NO.2) ACT, 2014 W.E.F. 1.10.2014. THE HITHERTO PART OF S UB-SECTION (1) : AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST E ACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE ITA NO.2421/DEL/2014 14 OTHER PERSON REFERRED TO IN SUB-SECTION (1) OF S ECTION 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 ACCORDA NCE 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 OF THE TOTAL INCOME O F SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB-SECTION (1) OF SECTION. 19. THE ABOVE SUBSTITUTION HAS THE EFFECT OF NOW MAKING 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 INCOME OF SUCH OTHER PERSON BEFORE EMBARKING UPON THE EXERCISE OF HIS A SSESSMENT OR REASSESSMENT. THEREFORE, NOW UNDER THE LAW, W.E.F. 1.10.2014 IT HAS BECOME OBLIGATORY NOT ONLY FOR THE AO OF THE PE RSON SEARCHED TO RECORD SATISFACTION BEFORE HANDING OVER BOOKS OF AC COUNT OR DOCUMENTS, ETC., TO THE AO OF THE OTHER PERSON, B UT, SUCH AO OF THE OTHER PERSON IS ALSO REQUIRED TO RECORD SATISFACT ION THAT THE BOOKS ITA NO.2421/DEL/2014 15 OF ACCOUNT OR DOCUMENTS, ETC. HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON. IN THE P RE-SUBSTITUTION ERA OF THE RELEVANT PART OF SUB-SECTION (1) OF SECTION 153C COVERING THE PERIOD UNDER CONSIDERATION, THE JURISDICTIONAL COND ITION REMAINS THAT THE SATISFACTION IS REQUIRED TO BE RECORDED BY AND IN THE CASE OF THE PERSON SEARCHED SO AS TO ENABLE THE AO OF THE OTHE R PERSON TO START WITH THE PROCEEDINGS FOR MAKING ASSESSMENT OR REASSESSMENT. 20. THE LD. DR CONTENDED THAT RECORDING OF SATIS FACTION BY THE AO OF THE ASSESSEE AT THE MOST CAN BE TREATED AS A TEC HNICAL MISTAKE AND HENCE SHOULD NOT ECLIPSE THE ASSESSMENT. RELYIN G ON CERTAIN JUDGMENTS, THE LD. DR SUBMITTED THAT THE TECHNICALI TIES CANNOT BE ALLOWED TO PREVAIL IN THE COURSE OF INDULGENCE OF J USTICE. 21. WE AGREE IN PRINCIPLE THAT TECHNICALITIES C ANNOT COME IN THE WAY OF DISPENSATION OF JUSTICE. HOWEVER, IT IS IMP ORTANT TO NOTE THAT THE LACK OF JURISDICTION BY THE AO CANNOT BE PUT UN DER THE CARPET IN THE GUISE OF A TECHNICAL DEFECT. IT GOES WITHOUT S AYING THAT NO ASSESSMENT OR OTHER PROCEEDINGS CAN BE LAWFULLY TAK EN UP AND COMPLETED UNLESS THE CONCERNED AUTHORITY HAS JURISD ICTION TO DO SO. LACK OF JURISDICTION GOES TO THE VERY ROOT OF THE M ATTER AND CUTS THE TREE OF ASSESSMENT IF THE FOUNDATION OF JURISDICTIO N IS MISSING. ITA NO.2421/DEL/2014 16 22. THE LD. AR HAS BROUGHT TO OUR NOTICE TWO OR DERS PASSED BY THE DELHI BENCHES OF THE TRIBUNAL, NAMELY, ACIT VS. INLAY MARKETING PVT. LTD. (ITA NO.4200/DEL/2012), ETC. AND DCIT VS. AAKA SH AROGYA MANDIR PVT. LTD. (ITA NO.5437/DEL/2013), ETC., IN WHICH THE NOTICES AND THE CONSEQUENTIAL ASSESSMENTS U/S 153C, UNDER I DENTICAL 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 TRI BUNAL ORDERS AS PER INCURIUM WAS THE NON-CONSIDERATION OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN JUDGMENT IN TH E 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 ASSESSME NT BE DECLARED AS PER LAW. THE HONBLE HIGH COURT IN THAT CASE HAS HELD THAT THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEAR CHED PERSON SHOULD BE SATISFIED THAT THE VALUABLE ARTICLE OR BO OKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PERS ON OTHER THAN THE SEARCHED PERSON AND 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 ITA NO.2421/DEL/2014 17 OTHER PERSON MUST CONCLUSIVELY REFLECT OR DISCLOSE ANY UNDISCLOSED INCOME. WE FIND THAT THERE IS NO SUCH CONTROVERSY BEFORE US AS WAS THERE BEFORE THE HONBLE HIGH COURT. IT IS NOT THE CASE OF THE ASSESSEE BEFORE US IN THIS GROUND THAT THE DOCUMENT S ETC. FOUND FROM THE PERSONS SEARCHED DID NOT POSITIVELY INDICA TE THE EXISTENCE OF SOME INCOME IN THE HANDS OF THE ASSESSEE. THE AR GUMENT IS SIMPLY CONFINED TO NON-RECORDING OF SATISFACTION BY THE AO OF THE PERSONS SEARCHED. INSTEAD OF SUPPORTING THE DEPARTM ENTS CASE, WE FIND THAT THIS JUDGMENT STRENGTHENS THE ASSESASEES CASE BY MAKING IT CLEAR IN NO UNCERTAIN TERMS THAT THE AO OF THE P ERSON SEARCHED IS OBLIGED TO RECORD THE SATISFACTION. THE RELEVANT OB SERVATIONS OF THE HONBLE HIGH COURT CONTAINED IN PARA 15 MERIT REPRO DUCTION AS UNDER: - IT NEEDS TO BE APPRECIATED THAT THE SATISFACTION THAT IS REQUIRED TO BE REACHED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER THE SEARCHED PERSON IS THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELON G TO A PERSON OTHER THAN THE SEARCHED PERSON. THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING O FFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLE S OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST BE SHOWN TO SHOW TO CONCLUSIVELY REFLECT OR DISCLOSE A NY UNDISCLOSED INCOME. ITA NO.2421/DEL/2014 18 24. IT IS PRETTY CLEAR FROM THE ABOVE EXTRACTION THAT THE SATISFACTION AS REFERRED TO IT IN THIS CASE IS THAT OF THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSO N. AS SUCH, WE ARE OF THE CONSIDERED OPINION THAT THIS JUDGMENT DO ES NOT SUPPORT THE REVENUES CASE. RESULTANTLY, THE CHARACTERIZATI ON OF THE ABOVE TRIBUNAL ORDERS AS PER INCURIUM BY THE LD. DR, IS ABSOLUTELY WITHOUT ANY LEGALLY SUSTAINABLE BASIS. 25. EVEN OTHERWISE, THE JUDICIAL DISCIPLINE RE QUIRES A SUBSEQUENT BENCH TO THE FOLLOW AN EARLIER ORDER OF A CO-ORDINA TE BENCH ON THE POINT. IT IS ONLY IF THE SUBSEQUENT BENCH FEELS ITS ELF UNABLE TO CONCUR WITH THE VIEW TAKEN EARLIER THAT IT IS REQUIRED TO REFER THE CASE FOR CONSIDERATION BY A SPECIAL BENCH. IN OUR CONSIDERED OPINION, THESE 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. POONAM DHINGRA AND M/ S MADHUSUDAN BUILDCON PVT. LTD., DID NOT RECORD ANY SATISFACTIO N THAT SOME MONEY, BULLION, JEWELLERY OR BOOKS OF ACCOUNTS OR OTHER DO CUMENTS FOUND FROM THESE PERSONS BELONGED TO THE ASSESSEE. THE AB SENCE OF SUCH SATISFACTION, IN OUR CONSIDERED OPINION, FAILED TO CONFER ANY VALID AND ITA NO.2421/DEL/2014 19 LAWFUL JURISDICTION ON THE AO OF THE ASSESSEE TO PR OCEED WITH THE MATTER OF THE ASSESSMENT U/S 153C OF THE ACT. WE, E RGO, SET ASIDE THE INITIATION AND THE ENSUING ASSESSMENT ON THE AS SESSEE AS VOID AB INITIO . 27. THE RELIANCE OF THE LD. DR ON SOME DECISIONS ON OTHER LEGAL ISSUES OR MERITS IS OF NO CONSEQUENCE IN VIEW OF TH E LACK OF JURISDICTION OF THE AO TO PROCEED WITH THE ASSESSME NTS U/S 153C OF THE ACT. IN VIEW OF OUR DECISION ON THE FIRST LEGA L ISSUE, THERE IS NO NEED TO ESPOUSE THE OTHER GROUNDS TAKEN BY THE ASSE SSEE DEALING WITH OTHER LEGAL ISSUES OR MERITS. 28. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.201 5. SD/- SD/- [ A.T. VARKEY ] [ R.S. SYAL ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 16 TH JANUARY, 2015. DK ITA NO.2421/DEL/2014 20 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.