M/s. Narsi Creations, New Delhi V. DCIT, New Delhi

ITA 3192/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7968 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Keywords: Search and seizure; Documents seized
• Section: 153A; 15; 139

Judgement Text

1 ITA NOS. 3186 TO 3194/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE P RESIDENT AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO. 3186/D EL/2013 (A.Y 2005-06) I.T.A .NO. 3188/D EL/2013 (A.Y 2006-07) I.T.A .NO. 3189/D EL/2013 (A.Y 2004-05) I.T.A .NO. 3190/D EL/2013 (A.Y 2004-05) I.T.A .NO. 3191/DEL/2013 (A.Y 2005-06) I.T.A .NO. 3192/DEL/2013 (A.Y 2006-07) I.T.A .NO. 3193/DEL/2013 (A.Y 2007-08) I.T.A .NO. 3194/DEL/2013 (A.Y 2005-06 NARSI CREATIONS 12, RING ROAD LAJPAT NAGAR-IV NEW DELHI AAEFN5520G (APPELLANT) VS DCIT CENTRAL CIRCLE-12 ARA CENTRE, E-2, JHANDEWALAN EXTENSION NEW DELHI (RESPONDENT) APPELLANT BY SH. PANKAJ GARGH, ADV RESPONDENT BY MS. SULEKHA VERMA, CIT DR ORDER PER BENCH THESE APPEALS ARE FILED AGAINST THE ORDER DATED 30/ 03/2013 PASSED BY CIT (A) XXXI, NEW DELHI. DATE OF HEARING 18.04.2016 DATE OF PRONOUNCEMENT 10.05.2016 2 ITA NOS. 3186 TO 3194/DEL/2013 2. THE MAIN GROUND CHALLENGED IN THESE APPEALS IS T HAT THE NOTICE ISSUED U/S 153C AND THE ASSESSMENT ORDER PAS SED U/S 153C/143(3) IS ILLEGAL, BAD IN LAW AND WITHOUT JURI SDICTION. FIRST WE WILL TAKE UP THIS GROUND. 3. IN THIS CASE, SEARCH AND SEIZURE ACTION WAS COND UCTED AT ASSESSEES PREMISES ON 30/7/2008 AS PART OF RAJDARB AR GROUP. NOTICE U/S 153C OF INCOME TAX ACT 1961 DATED 23/07/ 2010 WAS ISSUED TO THE ASSESSEE FIRM REQUIRING IT TO FILE TH E RETURN FOR THE VARIOUS ASSESSMENT YEARS. THE SATISFACTION WAS REC ORDED BY THE SAME ASSESSING OFFICER ON 23/7/2010. THE SATISFACTI ON RECORDED IN A.Y. 2005-06 IS AS UNDER:- 23.07.2010 SATISFACTION NOTE FOR PROCEEDINGS U/S. 1 53C OF THE INCOME TAX ACT, 1961 A SEARCH OPERATION WAS CONDUCTED ON RAJ DARBAR GROU P OF CASES ON 31.07.2008. DURING THE COURSE OF SEARCH OP ERATIONS AT THE PREMISES OF (I) PARTY A-7, GLOBAL REALITY VENTURESE PVT. LTD. VARIOUS PAPERS WERE FOUND AND SEIZED BELONGING TO M /S. NARSI CREATIONS. THE ANNEXURE ARE MARKED AS UNDER: PARTY A-7 ANNEXURE A-45, HARD DISC CONTAINING BOOKS OF ACCOUN TS OF M/S. NARSI CREATIONS. 3 ITA NOS. 3186 TO 3194/DEL/2013 THUS THE PROCEEDINGS U/S. 153C R.W. SECTION 153A OF THE INCOME TAX ACT, 1961 ARE BEING INITIATED IN THE ABOVE CASE . DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-12. NEW DELHI. 4. THE LD. AR SUBMITTED THAT THE SATISFACTION NOTE RECORDED IS SIMILAR IN ALL THE ASSESSMENT YEAR AS RELATES TO TH E PREMISES AND THE SEARCH PARTY. THE LD. AR FURTHER POINTED OUT THOUGH THERE WAS SEARCH, HOWEVER, THE SAME TOOK PLACE AT PREMISES WH ICH WAS NOT BELONGING TO ASSESSEE COMPANY. THE ASSESSEE WAS AS KED TO FILE ITS RETURN AND ACCORDINGLY ASSESSEE FILED ITS RETURN DE CLARING INCOME STATED THEREIN. THE SAME WAS FILED ON 05.08.2010 S IMILAR TO THE RETURNS FILED BY THE ASSESSEE FIRM U/S 139 OF THE A CT AT THE RELEVANT DUE DATES OF RESPECTIVE ASSESSMENT YEARS. 5. THE LD. AR SUBMITTED VARIOUS CASE LAWS OF THE HO NBLE DELHI HIGH COURT WHICH WAS IN SUPPORT OF THE ASSESSEES C OMPANY AND RELATED TO THE SAME RAJDARBAR GROUP. THE CASE LAWS CITED ARE AS FOLLOWS: I) M/S. NATURAL PRODUCT BIOTECH LTD. (ITA NO. 3089/ DEL/2013) ITAT NEW DELHI CONFIRMED BY THE HONBLE DELHI HIGH COURT IN ITA NO. 569/2015. II) M/S. NAGESHWAR INVESTMENT LTD. (ITA NO. 5393/DE L/2012) PASSED BY ITAT NEW DELHI CONFIRMED BY THE HONBLE D ELHI HIGH COURT IN ITA NO. 406/2015. 4 ITA NOS. 3186 TO 3194/DEL/2013 6. THE LD. AR SUBMITTED THAT IN CASE OF M/S NAGESH WAR INVESTMENT LTD. THE HONBLE ITAT HAS ALLOWED THE APPEAL ON THE GROUND THAT THE ASSESSING OFFICER WAS NOT HAVING JURISDICTION TO IN ITIATE SECTION 153C PROCEEDINGS AGAINST THE ASSESSEE AND, THEREFOR E, THE ISSUANCE OF NOTICE ITSELF IS NULL AND VOID AND, THEREFORE, T HE SAME MAY BE QUASHED. THE LD. AR SUBMITTED THAT THE SAME A.O ON THE STRENGTH OF IDENTICAL SATISFACTION AND NOT ONLY THAT ON THE VERY SAME DATE RECORDED THE SATISFACTION TO PROCEED U/S 153C AGAIN ST THE ASSESSEE. IN CASE OF NAGESHWAR INVESTMENT LTD ALSO THE SAME A .O ON THE SAME DATE ON WHICH THE SATISFACTION RECORDED U/S 15 3C AGAINST THE ASSESSEE. AND IN THE INSTANT CASE BEFORE US ALSO TH E SAME IS REPEATED I.E ON 23/7/2010 MADE A DITTO COPY OF SATI SFACTION EXCEPT IN THE CHANGE OF NAME OF THE ASSESSEE. THE SATISFA CTION IS ALREADY REPRODUCED HEREINABOVE. THE LD. AR ALSO SUBMITTED T HAT THE ITAT, NEW DELHI BENCH JUDGMENT HAS BEEN CONFIRMED BY THE JURISDICTIONAL HIGH COURT. 7. THE LD. DR TRIED TO DISTINGUISH THE JUDGMENTS BU T WAS NOT ABLE TO ANSWER WHETHER THE ASSESSING OFFICER FOR TH E SEARCH PARTY HAS RECORDED HIS SATISFACTION OR NOT. MERELY RECORD ING SATISFACTION BY THE ASSESSING OFFICER OF THE ASSESSEE IN QUESTIO N WILL NOT AMOUNT IT AS A SATISFACTION. THE LD. DR SUBMITTED THAT SIN CE THE ASSESSING OFFICER OF BOTH THE PERSONS WAS THE SAME, THERE WAS NO QUESTION OF HANDING OVER AND TAKING OVER OF THE DOCUMENTS. 5 ITA NOS. 3186 TO 3194/DEL/2013 8. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. SECTION 153C OF THE INCOME-TAX ACT, 1961 READS AS UNDER:- 153C. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DO CUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERS ON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN T HE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISI TIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVIN G JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESS ING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSO N AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSE SS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A:]. 9. FROM THE ABOVE, IT IS EVIDENT THAT ACTION UNDER SECTION 153C CAN BE TAKEN IN RESPECT OF ANY OTHER PERSON THAN TH E PERSON SEARCHED, IF THE ASSESSING OFFICER OF THE PERSON SE ARCHED IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED. IN SUCH CIRCUMSTANCES, HE SHALL H AND OVER TO THE ASSESSING OFFICER OF SUCH OTHER PERSON MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS. THEREAFTER, THE ASSESSING OFFICER OF SUCH OTHER PER SON SHALL PROCEED 6 ITA NOS. 3186 TO 3194/DEL/2013 AGAINST THE SAID PERSON TO ASSESS OR REASSESS HIS I NCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. TH EREFORE, RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED THAT ANY MONEY, BULLION, JEWELLERY OR OTHE R VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED BE LONG TO THE PERSON OTHER THAN THE PERSON SEARCHED IS A SINE QUA NON FOR INITIATING ACTION UNDER SECTION 153C. 10. THE CONDITION FOR RECORDING SATISFACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED HAS TO BE PRESENT. IN THE CASE OF SECTION 153C, THE ASSESSING OFFICER OF THE PERSON S EARCHED IS TO BE SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED. THEREAFTER, THE ASSESSIN G OFFICER OF THE PERSON SEARCHED HAS TO HAND OVER THE BOOKS OF ACCOU NT, DOCUMENTS OR ASSET SEIZED TO THE ASSESSING OFFICER HAVING JUR ISDICTION OVER SUCH OTHER PERSON AND THEREAFTER, THE ASSESSING OFF ICER OF SUCH OTHER PERSON HAS TO PROCEED TO ASSESS SUCH OTHER PE RSON. THUS, THE BASIC CONDITION OF RECORDING THE SATISFACTION BY TH E ASSESSING OFFICER OF THE PERSON SEARCHED AS WELL AS HANDING OVER OF B OOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS SEIZED TO THE ASSESSING O FFICER OF SUCH OTHER PERSON HAS TO BE PRESENT. BUT IN THE PRESENT CASE THE SAME IS MISSING. 11. FROM A PERUSAL OF THE SAID SATISFACTION NOTE, I T IS EVIDENT THAT THIS PAPER DOES NOT INDICATE IN WHOSE CASE THIS SAT ISFACTION WAS 7 ITA NOS. 3186 TO 3194/DEL/2013 RECORDED AND WHO IS THE OFFICER RECORDING THE SATIS FACTION. THERE IS NO MENTION OF NAME OF THE ASSESSEE. THERE IS NO ME NTION OF THE NAME OF THE ASSESSING OFFICER. DURING THE SEARCH O F WHOSE PREMISES IT WAS FOUND, IS NOT MENTIONED. THE LAST LINE OF THE SATISFACTION NOTE READS THUS THE PROCEEDINGS U/S. 153C R.W. SECTION 153A OF THE INCOME TAX ACT, 1961 ARE BEING INITIATED IN THE ABOVE CASE. A PLAIN READING OF THE ABOVE SENTENCE INDICATES THAT IT IS RECORDED BY THE ASSESSING OFFICER WHO IS TAKING ACTION UNDER SECTION 153C. THUS, IT SEEMS THAT THE SATISFACTION NOTE IS RECORDED BY THE ASSESSING OFFICER OF THE ASSESSEE. IF THE A SSESSING OFFICER IS ASSESSING THE PERSON SEARCHED AS WELL AS OTHER PERS ON WHOSE ASSETS, BOOKS OF ACCOUNT OR DOCUMENTS WERE FOUND AT THE TIME OF SEARCH, THEN ALSO, FIRST WHILE MAKING THE ASSESSMEN T IN THE CASE OF THE PERSON SEARCHED, HE HAS TO RECORD THE SATISFACT ION THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO THE PERSON OTHER THAN THE PERSON SEARCHED. THEN, THE COPY OF THIS SATISFACTI ON NOTE IS TO BE PLACED IN THE FILE OF SUCH OTHER PERSON AND THE REL EVANT DOCUMENT SHOULD ALSO BE TRANSFERRED FROM THE FILE OF PERSON SEARCHED TO THE FILE OF SUCH OTHER PERSON. THEREAFTER, IN THE CAPA CITY OF THE ASSESSING OFFICER OF SUCH OTHER PERSON, HE HAS TO I SSUE THE NOTICE UNDER SECTION 153A READ WITH SECTION 153C. THE ASS ESSING OFFICER OF THE PERSON SEARCHED AND SUCH OTHER PERSON MAY BE THE SAME BUT THESE ARE TWO DIFFERENT ASSESSEES AND, THEREFORE, T HE ASSESSING OFFICER HAS TO CARRY OUT THE DUAL EXERCISE, FIRST A S THE ASSESSING OFFICER OF THE PERSON SEARCHED IN WHICH HE HAS TO R ECORD THE 8 ITA NOS. 3186 TO 3194/DEL/2013 SATISFACTION, DURING THE COURSE OF ASSESSMENT PROCE EDINGS OF THE PERSON SEARCHED. AFTER RECORDING SUCH SATISFACTION NOTE IN THE FILE OF THE PERSON SEARCHED, THE SAME IS TO BE PLACED IN THE FILE OF SUCH OTHER PERSON. THEN, IN HIS CAPACITY AS THE ASSESSI NG OFFICER OF SUCH OTHER PERSON, HE SHOULD TAKE COGNIZANCE OF SUCH SAT ISFACTION NOTE AND THEREAFTER ISSUE NOTICE UNDER SECTION 158BC. I N THIS CASE, THIS EXERCISE OF RECORDING THE SATISFACTION DURING THE A SSESSMENT PROCEEDINGS OF THE PERSON SEARCHED HAS NOT BEEN CAR RIED OUT. ON THE OTHER HAND, THE ASSESSING OFFICER RECORDED THE SATISFACTION IN THE CASE OF SUCH OTHER PERSON WHICH DOES NOT SATISF Y THE CONDITION OF ASSUMING JURISDICTION UNDER SECTION 153C. THERE FORE, THE ABOVE SATISFACTION NOTE CANNOT BE SAID TO BE A VALID SATI SFACTION NOTE WITHIN THE MEANING OF SECTION 153C. 12. APART FROM ABOVE, WE FIND THAT JURISDICTION UND ER SECTION 153C HAS BEEN ASSUMED ONLY ON THE BASIS THAT DURING THE COURSE OF SEARCH OF ONE OF THE PERSONS OF. IT IS NOT IN DISP UTE THAT THE ASSESSEE HAD FILED THE RETURN FOR AY 2004-05 ALONGW ITH THE ORIGINAL COPY OF THE AUDITED PROFIT & LOSS ACCOUNT AND BALAN CE SHEET. SEARCH HAD TAKEN PLACE ON 31.07.2008 WHILE THE RETURN OF I NCOME ALONGWITH THE ORIGINAL PROFIT & LOSS ACCOUNT AND BA LANCE SHEET WAS ALREADY FILED MORE THAN THREE AND A HALF YEARS BEFO RE THE DATE OF SEARCH. IN THE REMAND REPORT DATED 23.07.2010, THE ASSESSING OFFICER HAS ALSO NOT DISPUTED THE ABOVE FACT BUT HE TRIED TO JUSTIFY ACTION UNDER SECTION 153C ON THE GROUND THAT FOR IS SUE OF NOTICE 9 ITA NOS. 3186 TO 3194/DEL/2013 UNDER SECTION 153C, IT IS NOT NECESSARY THAT THE DO CUMENT FOUND AND SEIZED SHOULD BE OF INCRIMINATING NATURE. THER EFORE, WE HOLD THAT THE UNDERLYING CONDITION FOR INVOKING THE JURI SDICTION UNDER SECTION 153C IS NOT SATISFIED IN THE CASE OF THE AS SESSEE. 13. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER ITSE LF, THE ADDITIONAL GROUNDS CHALLENGED BY THE ASSESSEE DOES NOT SURVIVE. 14. IN RESULT, THE APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 TH OF MAY, 2016. SD/- SD/- (G. D. AGRAWAL) (SUC HITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 10/05/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 10 ITA NOS. 3186 TO 3194/DEL/2013 DATE 1. DRAFT DICTATED ON 18/04/2016 PS 2. DRAFT PLACED BEFORE AUTHOR 19/04/2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 10.05.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 0 .05.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.