Orbit Commercial Pvt. Ltd., New Delhi V. DCIT, Chandigarh

ITA 393/CHANDI/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8366 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Document seized; Question of law; Assessment record; Block assessment; Documents seized; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 153A; 234B; 69B; 158BC; 113; 13; 153; 158BD; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 393/CHD/2015 ASSESSMENT YEAR: 2008-09 M/S ORBIT COMMERCIAL P.LTD., VS THE DCIT, 28, GULMOHAR ENCLAVE, CENTRAL CIRCLE-II, NEW DELHI. CHANDIGARH. PAN: AAAC0861E & ITA NO. 520/CHD/2015 ASSESSMENT YEAR: 2008-09 THE DCIT, VS M/S ORBIT COMMERCIAL P .LTD. CENTRAL CIRCLE-II, 28, GULMO HAR ENCLAVE, CHANDIGARH. NEW DELHI . PAN: AAAC0861E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.P.RASTOGI RESPONDENT BY : SHRI SUSHIL KUMAR,CIT-DR DATE OF HEARING : 10.01.2017 DATE OF PRONOUNCEMENT : 19.01.2017 O R D E R PER BHAVNESH SAINI,JM BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) GURGAON DATED 12.03.2015 FOR ASSESSMENT YEAR 2008-09. 2 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL ON RECORD. 3. THE ASSESSEE HAS FILED APPEAL ON THE FOLLOWING G ROUNDS : 1. THAT IN THE ABSENCE OF REQUISITE SATISFACTION C ONTEMPLATED U/S 153C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFER RED TO AS THE ACT), THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER OF THE APPELLANT TO MAKE ASSESSMENT IN TERMS OF SECTION 153A/153C OF TH E ACT IS BAD IN LAW AND CONSEQUENTLY THE ASSESSMENT SO FRAMED IN FURTHE RANCE OF SUCH INVALID JURISDICTION IS ALSO BAD IN LAW. 2. THAT THE CIT (APPEALS) HAS ERRED ON FACTS AND UN DER THE LAW IN UPHOLDING THE JURISDICTION OF THE ASSESSING OFFICER TO FRAME ASSESSMENT U/S 153A/153C OF THE ACT MERELY ON THE EXPRESSION O F THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, 'THE PROCEEDING IN TERMS OF SECTION 153C OF THE INCOME-TAX ACT, 1961 WAS INITIATED AFTE R DULY RECORDING REASONS', WITHOUT LOOKING AND ANALYZING THE SATISFA CTION ACTUALLY RECORDED BY THE ASSESSING OFFICER. 3. THAT DR. NARESH MITTAL WAS NOT A DIRECTOR IN THE COMPANY AT THE TIME OF PURCHASE OF LAND AND ACCORDINGLY THE EVIDEN TIARY VALUE OF THE PAPERS/DOCUMENTS SEIZED FROM THE RESIDENCE OF DR. N ARESH MITTAL IN THE COURSE OF SEARCH, CANNOT BE DEEMED AND TREATED AS C ORRECT IN THE ABSENCE OF ANY INDEPENDENT CORROBORATIVE MATERIAL AND ACCOR DINGLY THE ADDITION OF RS.2,01,75,496/- AS SUSTAINED BY CIT (APPEALS) O N ACCOUNT OF ALLEGED EXCESS INVESTMENT IN LAND IS ARBITRARY, UNJUST AND AT ANY RATE VERY EXCESSIVE. 4. THAT THE LOWER AUTHORITIES HAVE ERRED ON FACTS A ND UNDER THE LAW IN HOLDING THAT THE DOCUMENTS/PAPERS SEIZED FROM TH E RESIDENCE OF DR. NARESH MITTAL DURING THE COURSE OF SEARCH, BELONGED TO THE APPELLANT AND ACCORDINGLY THE ADDITION OF RS.2,01,75,496/- AS SUS TAINED BY CIT (APPEALS) IN THE ABSENCE OF ANY INDEPENDENT CORROBO RATIVE MATERIAL, IS ARBITRARY, UNJUST AND AT ANY RATE VERY EXCESSIVE. 5. THAT THE PAPERS/DOCUMENTS AS FOUND AND SEIZED DU RING THE COURSE OF SEARCH ON THE RESIDENCE OF DR. NARESH MITTAL ARE NEITHER SIGNED NOR IN THE HANDWRITING OF THE APPELLANT, HENCE IN THE ABSE NCE OF ANY INDEPENDENT CORROBORATIVE MATERIAL BROUGHT ON RECORD, THE ADDIT ION OF RS.2,01,75,496/- AS SUSTAINED BY CIT (APPEALS) BASE D ON SUCH ALLEGED PAPERS/DOCUMENTS IS ARBITRARY, UNJUST AND AT ANY RA TE VERY EXCESSIVE. 6. THAT THE ASSESSEE DENIES ITS LIABILITY TO CHARGE INTEREST U/S 234B AND 234C OF THE ACT. 3 4. THE REVENUE HAS FILED THE APPEAL ON THE FOLLOWIN G GROUNDS : '1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND AS PER PROVISIONS OF LAW, THE LD. CIT(A)(CENTRAL) IS C ORRECT IN ALLOWING THE RELIEF TO THE ASSESSEE WITH REGARD TO ONE OF THE SE LLERS NAMELY SH. VIRENDER KUMAR DESPITE THE FACT THAT THE ASSESSEE F AILED TO SUBSTANTIATE ITS CLAIM WITH REGARD TO DISCREPANCY REGARDING ACTU AL COST OF LAND SHOWN IN THE SEIZED DOCUMENTS VIZ-A-VIZ SHOWN BY THE A.O. IN THE SHOW CAUSE NOTICE AND CASH PAYMENT OF RS. 46,00,000/- IS MENTI ONED IN THE SEIZED DOCUMENT PAGE 12 OF A-2.' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND AS PER PROVISIONS OF LAW, THE LD. CIT(A)(CENTRAL) IS CORRE CT IN ALLOWING THE RELIEF TO THE ASSESSEE WITH REGARD TO ONE OF THE SE LLERS NAMELY SH. VIRENDER KUMAR BY TAKING THE ACTUAL COST OF THE LAN D AS RS. 57,00,000/- DESPITE THE FACT THAT THE COST OF LAND AS SHOWN IN THE AGREEMENT DEED STOOD AT RS. 95,24,754/-.' '3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND AS PER PROVISIONS OF LAW, THE LD. CIT(A)(CENTRAL) IS CORRE CT IN ALLOWING THE RELIEF TO THE ASSESSEE BY TAKING THE TOTAL COST OF THE LAND AS RS. 7,58,00,000/- DESPITE THE FACT THAT THE COST OF LAN D AS SHOWN IN THE SEIZED DOCUMENTS STOOD AT RS. 8,56,24,754/-.' 5. THE ASSESSEE HAS FILED THE FOLLOWING ADDITIONAL GROUND OF APPEAL : THAT IN THE ABSENCE OF REQUISITE SATISFACTION CONTE MPLATED U/S 153C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT), THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER OF THE APPELLANT TO MAKE ASSESSMENT IN TERMS OF SECTION 153A/ 153C OF T HE ACT IS BAD IN LAW AND CONSEQUENTLY THE ASSESSMENT SO FRAMED IN FURTHE RANCE OF SUCH INVALID JURISDICTION IS ALSO BAD IN LAW.' 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ADDITIONAL GROUND IS SAME AS HAVE BEEN RAISED ON GROUND NO. 1 IN APPEAL OF THE ASSESSEE. HE HAS, HOWEVER, SUBMITTED THAT SINCE THIS ISSUE WAS NOT RA ISED BEFORE LD. CIT(APPEALS), THEREFORE, ASSESSEE FILED AN 4 APPLICATION FOR ADMISSION OF THE ADDITIONAL GROUND OF APPEAL. HE HAS SUBMITTED THAT THE ABOVE ADDITIONAL GROUND RELATES TO VALID ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER WHICH IS CONDITION PRECEDENT FOR VALID ASTT. AND IT GOES TO THE ROOT OF THE MATTER AND DOE S NOT REQUIRE THE ELABORATION OF NEW FACTS OTHER THAN THE FACTS ALREADY ON RECORD. HE HAS SUBMITTED THAT IT IS SET TLED PROPOSITION OF LAW THAT GROUND OF JURISDICTION CAN BE RAISED BY AN ASSESSEE AT ANY TIME EVEN IN THE COLLA TERAL PROCEEDINGS BECAUSE IT GOES TO THE ROOT OF THE MATT ER. HE HAS RELIED UPON DECISION OF THE GUJRAT HIGH COUR T IN THE CASE OF P.V.DOSHI VS CIT 113 ITR 22 AND OF BOMB AY HIGH COURT IN THE CASE OF INVENTORS INDUSTRIAL CORPORATION LTD. VS CIT 194 ITR 548. 7. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH & SEIZURE OPERATION UNDER SECTION 132(1) OF THE ACT W AS CONDUCTED ON 17.11.2010 IN DR. NAREH MITTAL GROUP O F CASES. LATER ON, THE JURISDICTION OF THIS CASE WAS TRANSFERRED TO ACIT, CC-2, CHD. THE DOCUMENTS BELONGING TO THE ASSESSEE COMPANY WERE FOUND AND SEIZED FROM THE RESIDENCE OF SHRI NARESH MITTAL AT HOUSE NO. 212 SECTOR 6, PANCHKULA. THE PROCEEDINGS IN TE RMS OF SECTION 153C OF THE ACT WERE INITIATED AFTER DUL Y RECORDING REASONS. THE ASSESSEE HAD FILED RETURN OF INCOME UNDER SECTION 139 OF THE ACT ON 14.05.2008 SHOWING TOTAL INCOME OF RS. 1,06,750/-. STATUTORY NOTICES WERE ALSO ISSUED UNDER SECTION 153C OF THE ACT 5 CALLING FOR THE RETURN OF INCOME AND ASSESSEE FILED THE RETURN OF INCOME UNDER SECTION 153C OF THE ACT DECLARING THE SAME INCOME AS WAS DECLARED IN THE RE TURN UNDER SECTION 139 OF THE ACT. THE ASSESSING OFFICE R CONSIDERED THE ISSUE WITH REGARD TO PURCHASE OF LAN D AT VILLAGE CHANDI MANDIR, PANCHKULA AND HELD THAT TOTA L CONSIDERATION MONEY PAID BY THE ASSESSEE WAS RS. 8,56,24,754/- FOR THE LAND AT CHANDI MANDIR WHEEAS IN HIS BOOKS OF ACCOUNT, ASSESSEE HAD SHOWN PAYMENT OF CONSIDERATION MONEY ONLY TO THE EXTENT OF RS. 5,56,24,504/-. HENCE THE DIFFERENCE OF RS. 3,00,00,250/- ( RS. 8,56,24,754/- - RS. 5,56,24,504 /-) WAS TREATED AS UNEXPLAINED INVESTMENT OF THE ASSESS EE UNDER SECTION 69B OF THE ACT AND ADDITION WAS ACCORDINGLY MADE. 8. THE ASSESSEE CHALLENGED THIS ADDITION BEFORE LD. CIT(APPEALS) AND THE LD. CIT(APPEALS) RESTRICTED TH E ADDITION TO RS. 2,01,75,496/- ( RS. 7,58,00,000 R S. 5,56,24,504/- ) AND SAME WAS TREATED AS UNEXPLAINED INVESTMENT IN PURCHASE OF LAND BY THE ASSESSEE COMPANY. THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SATISFACTION AS REQUIRED UNDER SECTION 153C OF THE ACT HAVE NOT BEEN RECORDED IN THE CASE OF THE PERSO N SEARCHED I.E. DR. NARESH MITTAL. HE HAS REFERRED T O PB-8 6 WHICH IS SATISFACTION NOTE DATED 17.08.2012 WHICH W AS RECORDED UNDER SECTION 153C OF THE ACT IN THE CASE OF THE ASSESSEE M/S ORBIT COMMERCIAL PVT. LTD. HE HAS SUBMITTED THAT ADDL. GROUND IS PURELY LEGAL GROUND AND RELIED UPON DECISION OF ITAT CHANDIGARH BENCH IN TH E CASE OF SHRI PAWAN MANGLA VS CIT IN ITA 445/2015 DATED 14.06.2016 IN WHICH ON IDENTICAL FACTS, ADDIT IONAL GROUND WAS ADMITTED AND APPEAL WAS DECIDED IN FAVOU R OF THE ASSESSEE. THE LD. DR, HOWEVER, SUBMITTED TH AT ADDITIONAL GROUND NEED NOT TO BE ADMITTED BECAUSE ASSESSING OFFICER WAS SAME IN THE CASE OF THE ASSES SEE AND THE PERSON SEARCHED AND SATISFACTION HAVE BEEN RECORDED BY THE ASSESSING OFFICER IN THE CASE OF TH E ASSESSEE. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS RELATI NG TO ADMISSION OF THE ADDITIONAL GROUND. WE FIND THA T ADDITIONAL GROUND IS IN RELATION TO THE JURISDICTIO N ISSUE IN AS MUCH AS IT MENTIONS THAT NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED P ERSON AND THEREFORE, THE VERY ISSUE OF NOTICE UNDER SECTI ON 153C OF THE ACT WAS BAD. ADDITIONAL GROUND IS PUREL Y LEGAL GROUND AND GOES TO THE ROOT OF THE MATTER AND THEREFORE, SUCH LEGAL ISSUE RAISED IN THE ADDITIONA L GROUND IS ADMITTED. WE RELY UPON DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERM AL POWER CO. LTD. VS CIT 229 ITR 383 IN WHICH IT WAS H ELD THAT PURELY LEGAL QUESTION OF LAW WHICH DOES NOT R EQUIRE 7 FRESH FACTS TO BE INVESTIGATED, SHOULD BE ADMITTED AS ADDITIONAL GROUND. THEREFORE, ADDITIONAL GROUND RA ISED BY THE ASSESSEE IS ADMITTED. 11. THE LD. COUNSEL FOR THE ASSESSEE ON MERITS OF T HE ADDITIONAL GROUND SUBMITTED THAT SEARCH WAS CONDUCT ED IN THE PREMISES OF DR. NARESH MITTAL AND DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS WERE ALLEGED TO HAVE BEEN FOUND. BASED ON THAT, THE ASSESSING OFFI CER OF THE ASSESSEE HAD INITIATED THE PROCEEDINGS UNDER SECTION 153C OF THE ACT THEREBY RECORDING THE REASO NS ON 17.08.2012 FOR ISSUANCE OF THE NOTICE UNDER SECT ION 153C OF THE ACT, COPY OF THE SAME IS PLACED AT PAGE 8 OF THE PAPER BOOK. HE HAS SUBMITTED THAT ON PERUSAL O F SECTION 153C OF THE ACT, IT IS CLEAR THAT WHERE ASS ESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWEL LERY OR OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOU NT OR OTHER DOCUMENTS SEIZED BELONG TO A PERSON OTHER THA N THE PERSON SEARCHED, THEN THE BOOKS OF ACCOUNT ETC. RE TO BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION FOR SUCH OTHER PERSON. IN OTHER WORDS , THE INITIATION OF THE PROCEEDINGS AGAINST SUCH OTHER P ERSON IS DEPENDING UPON SATISFACTION BEING RECORDED BY TH E ASSESSING OFFICER OF THE PERSON SEARCHED. IN THE FOLLOWING CASES, IT HAS BEEN CONSISTENTLY HELD THAT IF THE 8 ASSESSING OFFICER OF THE PERSON SEARCHED FAILS TO R ECORD THE SATISFACTION AS CONTEMPLATED UNDER SECTION 153C OF THE ACT, THEN THE ASSESSING OFFICER OF OTHER PERSO N HAS NO JURISDICTION TO PROCEED AGAINST OTHER PERSON UND ER SECTION 153C OF THE ACT I.E. I) CIT VS GOPI APARTM ENT 365 ITR 411 (II) PEPSI FOODS PVT. LTD. VS ACIT 367 ITR 112 (DEL) (III) CIT VS SMT. NIRMALA KESHWANI 380 IT R 566 (ALL) (IV) CIT VS MECHMEN 380 ITR 591 (MP). TH E LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE ABOV E CASES, IT HAS BEEN CONSISTENTLY HELD THAT EVEN IF THE ASSESSING OFFICER OF THE PERSON SEARCHED AS WELL AS OTHER PERSON IS SAME, THE RECORDING OF SATISFACTI ON NOTE IN THE CASE OF THE PERSON SEARCHED BY HIS ASSESSI NG OFFICER IS A MANDATORY CONDITION TO ASSUMPTION OF JURISDICTION FOR FRAMING ASSESSMENT IN THE CASE OF OTHER PERSON UNDER SECTION 153C OF INCOME TAX ACT. 11(I) HE HAS RELIED UPON CBDT CIRCULAR NO. 24/201 5 DATED 31.12.2015 IN WHICH AFTER CONSIDERING THE JUDGEMENTS OF VARIOUS HIGH COURTS, THIS POSITION HA S BEEN ACCEPTED. THE CBDT IN ITS CIRCULAR CLARIFIED THAT EVEN IF ASSESSING OFFICER OF THE PERSON SEARCHED AND THE OTHER PERSON IS ONE AND THE SAME, THEN ALSO ASSESSING OFFICER IS REQUIRED TO RECORD HIS SATISFA CTION AS HAS BEEN HELD BY THE COURTS. IN THE INSTANT CA SE, THE ASSESSING OFFICER OF DR. NARESH MITTAL PERSO N SEARCHED HAS NOT RECORDED SUCH SATISFACTION AT ALL AS CONTEMPLATED UNDER THE PROVISIONS OF SECTION 153C O F 9 THE ACT. THE SATISFACTION NOTE DATED 17.08.2012 WA S RECORDED BY THE ASSESSING OFFICER OF THE ASSESSEE A T THE TIME OF ISSUANCE OF NOTICE UNDER SECTION 153C OF TH E ACT WHICH IS BAD IN LAW. HE HAS RELIED UPON ORDER OF I TAT CHANDIGARH BENCH IN THE CASE OF SHRI PAWAN MANGLA V S DCIT (SUPRA) IN WHICH TRIBUNAL HAS ACCEPTED SUCH ADDITIONAL GROUND OF APPEAL AND FOUND THAT NO SUCH SATISFACTION NOTE HAS BEEN RECORDED BY THE ASSESSIN G OFFICER OF DR. NARESH MITTAL AS CONTEMPLATED UNDER SECTION 153C AND QUASHED THE ASSESSMENT ON ACCOUNT OF LACKING OF VALID JURISDICTION. COPY OF THE ORDER I S PLACED ON RECORD WITH CBDT CIRCULAR. HE HAS SUBMITTED THA T SINCE IN THIS CASE, NO SATISFACTION NOTE WAS RECORD ED BY THE ASSESSING OFFICER OF THE PERSON SEARCHED I.E. DR. NARESH MITTAL, THEREFORE, ASSESSING OFFICER HAS NOT ASSUMED THE VALID JURISDICTION SO, ASSESSMENT MAY B E QUASHED IN THE MATTER. 11(II) ON THE OTHER HAND, LD. DR FILED HIS WRITTEN SUBMISSION IN WHICH THE CRUX OF THE SUBMISSION OF L D. DR HAS BEEN THAT THERE IS A FACTUAL MISTAKE BY STAT ING THAT SATISFACTION HAS NOT BEEN RECORDED BY THE ASSE SSING OFFICER OF THE PERSON SEARCHED I.E. DR. NARESH MITT AL AS REQUIRED UNDER SECTION 153C OF THE ACT. IT HAS ALR EADY SUBMITTED THAT ASSESSING OFFICER OF DR. NARESH MITT AL AND THE ASSESSEE IS SAME AND THIS ASSESSING OFFICER HAS RECORDED SATISFACTION IN TERMS OF SECTION 153C OF T HE ACT WHICH HAS ALREADY BEEN PLACED ON RECORD AT PAGE 8 O F 10 THE PAPER BOOK OF THE ASSESSEE. THE SUBMISSIONS OF LD. DR ARE SAME AS HAVE BEEN MADE BEFORE THE TRIBUNAL I N CASE OF SHRI PAWAN MANGLA VS DCIT. THE LD. DR ALSO PLACED ON RECORD LETTER DATED 09.01.2017 SENT TO CI T-DR ITAT BY ACIT, CC-2, CHANDIGARH IN WHICH IT WAS INFORMED TO THE LD. DR THAT FROM PERUSAL OF THE AST T. RECORDS OF DR. NARESH MITTAL, THE SEARCHED PERSON , NO SATISFACTION NOTE UNDER SECTION 153C OF THE ACT HAS BEEN FOUND TO BE PLACED IN ASSESSMENT RECORD. HOWEVER, THE ASSESSING OFFICER RECORDED SATISFACTION NOTE/REASON S FOR ISSUANCE OF NOTICE UNDER SECTION 153C OF THE ACT IN THE ASSESSMENT RECORD OF M/S ORBIT COMMERCIAL PVT. LTD. NEW DELHI (ASSESSEE). COPY OF THE SAME IS ALSO PLA CED ON RECORD WHICH IS THE SAME AS HAVE BEEN FILED BY ASSESSEE AT PAGE 8 OF THE PAPER BOOK. 12. THE LD. COUNSEL FOR THE ASSESSEE IN REJOINDER H AS ALSO SUBMITTED THAT ASSESSEE ALSO MOVED TO THE ASSESSING OFFICER FOR PROVIDING SATISFACTION NOTE I F RECORDED IN THE CASE OF PERSON SEARCHED UNDER RTI ACT BUT NO INFORMATION HAVE BEEN SUPPLIED TO THE ASSESS EE. 13. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE LETTER OF ACIT, CC-2, CHANDIGARH DATED 09.01.2017 CLEARLY REVEALED THAT N O SATISFACTION NOTE UNDER SECTION 153C OF THE ACT HAV E BEEN FOUND TO BE PLACED IN THE ASSESSMENT RECORD OF THE PERSON SEARCHED I.E. DR. NARESH MITTAL. THE ASSESSEE ALSO 11 MOVED UNDER RTI ACT TO THE REVENUE DEPARTMENT TO PROVIDE INFORMATION, IF ANY SATISFACTION NOTE HAVE BEEN RECORDED IN THE CASE OF PERSON SEARCHED I.E. DR. NARESH MITTL, HOWEVER, NO INFORMATION HAVE BEEN SUPPLIED T O THE ASSESSEE AS PER SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. THE ACIT, CC-2, CHANDIGARH ALSO PROVIDED COPY OF THE SATISFACTION NOTE UNDER SECTION 153C DA TED 17.08.2012 WHICH IS STATED TO HAVE BEEN RECORDED IN THE CASE OF THE ASSESSEE. COPY OF THE SAME IS ALSO FILE D BY ASSESSEE AT PAGE 8 OF THE PAPER BOOK. WE, THEREFOR E, FIND THAT ISSUE IS IDENTICAL AS HAVE BEEN CONSIDERE D AND DECIDED BY ITAT CHANDIGARH BENCH IN THE CASE OF SHR I PAWAN MANGLA VS DCIT IN ITA 445/2015 FOR ASSESSMENT YEAR 2008-09 DATED 14.06.2016 IN WHICH IT WAS HELD AS UNDER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER OF PRINCIPAL CIT (OSD), GURGAON, DATED 12.03.2015. 2) THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL:- 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TA X (APPEALS) IS BAD AND AGAINST THE FACTS & LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN ALLOWING THE IMPUGNED ASSESSMENT ORDERS U/ S 153C AGAINST THE APPELLANT WHEREAS THE PROVISIONS OF SECTION I53C AR E NOT APPLICABLE OVER THE TRANSACTION ON THE BASIS OF WHICH PROCEEDINGS W ERE INITIATED AGAINST THE APPELLANT. 3. THAT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING THE ADDITIONS IN THE HANDS OF SH. PAW AN MANGLA (INDIVIDUAL) WHEN THE WHOLE TRANSACTION (EXCLUDING THE ALLEGED R ECEIPT OF RS.25,15,173/-) WAS CARRIED OUT BY PAWAN MANGLA & S ONS (HUF). 12 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN SUSTAINING THE ADDITION OF RS.25,15,173/- WHEN T HE PROPERTY IN QUESTION WAS OWNED AND SOLD BY PAWAN MANGLA & SONS (HUF) A ND NOT BY SH. PAWAN MANGLA (INDIVIDUAL). 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN SUSTAINING THE ADDITION WITHOUT ANY DOCUMENTARY EVIDENCE AGAINST THE ASSESSEE ON RECORD. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN ALLOWING THE CHARGING OF INTEREST U/S 234A, 2348 AND 234C OF THE INCOME TAX ACT. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAWN ANY GROUND OF APPEAL BEFORE FINAL HEARING. 3. DURING THE COURSE OF HEARING, LD. COUNSEL FOR THE A SSESSEE VIDE PETITION DATED 04.01.2016 PRAYED FOR ADMISSION FOR ADDITIONA L GROUND, WHICH READS AS UNDER:- YOUR HONOUR IS REQUESTED TO ACCEPT THE FOLLOWING AD DITIONAL GROUND OF APPEAL IN THE ABOVE STATED APPEAL:- THAT THE LEARNED PRINCIPAL C/T (OSD) HAS WRONGLY UP HELD VALIDITY OF NOTICE ISSUED U/S 153C OF THE INCOME TAX ACT, /961 OF THE APPELLANT, WITHOUT APPRECIATING THE FACT THAT NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER OF SEARCHED PERSON REGARDING ANY DOCUMENT BELONGING TO THE APPELLANT THAN THE PERSON SEARCHED .' THIS ISSUE WAS RAISED BEFORE THE LEARNED ASSESSING OFFICER AND THE LEARNED PRINCIPAL C/T (OSDJ 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 JU STICE. FURTHER NO NEW FACTS ARE PLACED BEFORE THE HON'BLE BENCH THROUGH T HIS GROUNDS OF APPEAL. WE MAY LIKE TO RELY ON THE JUDGMENT OF HON'BLE SUPR EME COURT IN THE CASE OF NTPC VS. C/T, 229 /TR 0383 AND THE ORDER OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MANOJ AHUJA VS. / AC 150 /TR 696. 13 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 C/T {A} DUE TO MISTAKE OF THE COUNSEL. 4. AT THE TIME OF HEARING LD, COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ADDITIONAL GROUND IS PURELY LEGAL GROUND WHICH GOES TO THE ROOT OF THE MATTER AND DOES NOT REQUIRE FRESH FACTS TO BE INVES TIGATED AND THEREFORE, IT SHOULD BE ADMITTED. ON THE OTHER HAND, LD CIT DR OP POSED THE PRAYER SO MADE AND SUBMITTED THAT IT IS AN AFTERTHOUGHT AND I T SHOULD NOT BE ADMITTED. 5. HAVING HEARD THE RIVAL SUBMISSIONS RELATING TO THE ADMISSION OF ADDL. GROUND, WE FIND THAT THE ADDITIONAL GROUND IS IN RE LATION 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 ADDITIONAL GROUND I S PURELY LEGAL GROUND AND GOES TO THE ROOT OF THE MATTER AND THEREFORE, S UCH LEGAL ISSUE RAISED IN THE ADDITIONAL GROUND IS ADMITTED. IT GOES WITHOUT SAYING THAT THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. COMMISSIONER OF INCOME TAX (1998) 229 ITR 0383 HAVE HELD THAT PURE LEGAL QUESTION OF LAW WHICH DOES NOT REQUIRE FRESH FACTS TO BE INVESTIGATED SHOULD BE ADMITTED AS ADDITIONAL GROUND. THEREFORE, ADD). GRO UND IS ADMITTED. ADVERTING TO THE MERIT OF THE ADDITIONAL GROUND, LD . COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO SATISFACTION HAS BEEN RECORDED BY THE A.O. OF THE SEARCHED PERSON IN THE FILE OF THE SEARCHED PERSON AND ALL T HAT HAS BEEN RECORDED IS IN THE FILE OF THE APPELLANT VIDE THE ORDER SHEET ENTRY DA TED 17.08.2012 WHICH READS AS UNDER:- REASONS RECORDED FOR ISSUING NOTICE U/S I53C A SEARCH WAS CONDUCTED ON 17.11.2010 AT THE RESIDEN TIAL PREMISES OF DR. NARESH MITTAL AT H. NO. 212, SECTOR-6, PANCHKUL A. DURING THE COURSE OF SEARCH, DOCUMENTS MARKED ASAL,A2 AND A3 W ERE FOUND AND SEIZED. PAGES 21-25,127-136 OF DOCUMENT AL, PAGES 1-14,65-6 9,95-96, 150, 178-251,253 OF DOCUMENT A2 AND PAGES 31-32 OF DOCUM ENT A3 CONTAIN THE DETAILS OF TRANSACTIONS IN IMMOVABLE PROPERTY M ADE BY SH. POWAN MANGLA WHICH NEED TO BE VERIFIED. 14 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 FT 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 HI S ARGUMENT WITH THE DECISION OF DELHI HIGH COURT IN THE CASE RRJ SECURI TIES LTD. ITA NO. 164/2015, DATED 30.10.2015 AND ANOTHER DECISION DCI T 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 SATISFACTION 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. COU NSEL FOR THE ASSESSEE, SINCE THIS JURISDICTIONAL REQUIREMENT WAS NOT MET, THE ASSUMPTION OF JURISDICTION U/S 153C WAS LACKING. 7. ON THE OTHER HAND LD. CIT DR SUBMITTED THAT ACCORDING TO THE COMMUNICATION DATED 27.04.2016 RECEIVED FROM AC IT VS. CENTRAL CIRCLE-LL, CHD., REASON HAS BEEN RECORDED VIDE ORDER SHEET DAT ED 17.08.2012 AND NO OTHER REASON WAS FOUND TO HAVE BEEN RECORDED U/S 15 3C IN THE ASSESSMENT RECORDS AVAILABLE WITH THAT OFFICE. ACCORDING TO LD . CIT DR, SATISFACTION HAS BEEN RECORDED VIDE ORDER SHEET ENTRY DATED 17.08.2 012-AND THAT IS THE SUFFICIENT COMPLIANCE OF REQUIREMENT OF SECTION 1 53C. LD. CIT DR FILED NOTE DATED 25.3.2016 & 27.04.2016 IN WHICH IT WAS SUBMIT TED THAT 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 V ERY A.O. VIDE ORDER SHEET ENTRY DATED 17.08.2012 IS IN TERMS OF THE REQUIREME NT OF LAW. ACCORDING TO LD. CIT DR, HON'BLE SUPREME COURT IN THE CASE OF CIT VS . CALCUTTA KNITWEARS (2014) 362 ITR 673, NOWHERE STATED THAT THE A.O. OF THE SEARCHED PERSON MUST RECORD SATISFACTION IN THE CASE RECORDS OF THE SEAR CHED PERSON ONLY AND NOWHERE ELSE. DECISION OF KOLKATTA BENCH IN THE KPC MEDICAL COLLEGE & HOSPITAL VS. DCIT 59 TAXMANN.COM 393 WAS RELIED EXT ENSIVELY. LD. CIT DR IN THE END SUBMITTED THAT THE ADDL. GROUND MAY BE DISM ISSED ON MERIT ALSO. 15 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND HAVE TAKEN OURSELVES TO T HE MATERIAL PLACED BEFORE US. UNDISPUTEDLY A.O. OF THE SEARCHED PERSON AND TH E A.O. OF THE APPELLANT ASSESSEE IS ONE AND THE SAME A.O. THERE IS NO DISPU TE ON THIS FACT ALSO THAT A.O. OF THE ASSESSEE RECORDED 'REASON' U/S I53C ON 17.08.2012 ON THE ORDER 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 WH ETHER 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 FPUND DURING THE COURSE OF SEA RCH, THE A.O. SHALL HAND OVER SUCH DOCUMENTS, BOOKS OF ACCOUNTS ETC. TO THE A.O. OF SUCH THIRD PERSON AND THEREAFTER THE A.O. OF SUCH THIRD PERSON SHALL PROCEED TO ASSESS OR REASSESS THE TOTAL OF INCOME OF THIRD PERSON IN TER MS THE PROVISION U/S 153A. THE VERY FACT THAT A THIRD PERSON WHO HAS NOT BEEN SEARCHED IS ALSO SOUGHT TO BE PROCEEDED UNDER SECTION 153A UPON THE BOOKS OF A CCOUNT OR DOCUMENTS ETC. BELONGING TO HIM, FOUND DURING SEARCH .SPEAKS THE S ERIOUS CONSEQUENCES OF SECTION 153C QUA THIRD PERSON. THEREFORE THE PROVI SION OF SECTION 153C HAVE TO BE CONSTRUED STRICTLY AND IN CASE IT IS FOUND TH AT JURISDICTIONAL CONDITIONS ARE NOT SATISFIED, THE VERY ASSUMPTION OF JURISDICT ION BY THE A.O. UNDER THAT 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 226 TAXMAN 415(GUJARAT) THAT PROVI SION OF SECTION 158BD AND THOSE OF SECTION 153C ARE IN PARI-MATERIA. 8. IN THE PRESENT CASE A.O. OF THE SEARCHED P ERSON DID NOT RECORD ANY SATISFACTION THAT ANY OF THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH BELONGED TO THE THIRD PERSON I.E. THE APPELLANT ASS ESSEE AS CAN BE SEEN FROM THE PLAIN READING OF THE REASON RECORDED. MOREOVER, SUCH SATISFACTION HAS NOT 16 BEEN RECORDED IN THE CASE RECORDS OF THE SEARCHED P ERSON BY THE A.O. OF THE SEARCHED PERSON IN THAT CAPACITY. A.O. OF THE SEARC HED PERSON AND A.O. OF THE APPELLANT ASSESSEE I.E. THE THIRD PERSON EVEN IF IS ONE AND THE SAME PERSON BUT IT HAS BEEN HELD IN VARIOUS JURIDICAL DECISIONS REL IED UPON BY THE LD. COUNSEL FOR THE ASSESSEE THAT A.O. OF THE SEARCHED PERSON I S REQUIRED IN LAW TO RECORD SATISFACTION IN THE CASE RECORDS OF THE SEARCHED PE RSON AS AN A.O. OF THE SEARCHED PERSON. IT IS NOT OUT OF PLACE TO MENTION THAT THE RECORDING OF SATISFACTION BY THE A.O. EVEN IF ASSESSING OFFICER IS ONE AND THE SAME PERSON IS NO LONGER RES-INTEGRA IN AS MUCH AS HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOPI APARTMENTS 365 ITR 411 (ALL) A ND HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. MECHMEN 3 80 ITR 591 (MP) HAVE SIMILARLY HELD. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOPI APARTMENTS (SUPRA) HELD AS FOLLOWS: 25. A BARE PERUSAL OF THE PROVISION CONTAINED IN SECTIO N 153C OF THE I.J. ACT LEAVES NO DOUBT THAT, AS IS PROVIDED U NDER 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 '13211) OR HAS BEEN PROCE EDED UNDER SECTION 132A, IS SATISFIED THAT ANY MONEY, BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS' OR BELONG TO A PER SON OTHER 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 SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH S UCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESSOR REA SSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THEPROVISIONS OF SECTION 153A. 26. THUS, THERE ARE TWO STAGES: (/) THE FIRST STAGE COMPRISES OF A SEARCH AND SEIZU RE OPERATION UNDER SECTION 132 OR PROCEEDING UNDER SECTION 132A AGAINS T A PERSON, WHO MAY BE REFERRED AS 'THE SEARCHED PERSON'. BASED ON SUCH SEARCH AND SEIZURE, ASSESSMENT PROCEEDINGS ARE INITIATED AGAIN ST THE 'SEARCHED PERSON' UNDER SECTION 153A. AT THE TIME OF INITIATI ON OF SUCH PROCEEDINGS AGAINST THE 'SEARCHED PERSON' OR DURING THE ASSESSMENT PROCEEDINGS AGAINST HIM OR EVEN AFTER THE COMPLETIO N OF THE ASSESSMENT PROCEEDINGS AGAINST HIM, THE ASSESSING OFFICER OF SUCH A 'SEARCHED PERSON', MAY, IF HE IS SATISFIED, THAT AN Y MONEY, DOCUMENT ETC. BELONGS TO A PERSON OTHER THAN THE SEARCHED PE RSON, THEN SUCH MONEY, DOCUMENTS ETC. ARE TO BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER 'SUCH OTHER PERSON'. 17 (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 DOCUMENTS ETC. TO THE ASSESSING OFFICER OF SUCH 'OTHER PERSON', THEREAFTER FOLLOWED BY ISSUANCE OF THE NOTICE OF THE PROCEEDINGS UNDER SECTION 153C READ W ITH SECTION 153A AGAINST SUCH 'OTHER PERSON'. 27. THE INITIATION OF PROCEEDINGS AGAINST 'SUCH OTHER P ERSON' ARE DEPENDANT UPON A SATISFACTION BEING RECORDED. SUCH SATISFACTION MAY BE DURING THE SEARCH OR AT THE TIME OF INITIATION O F ASSESSMENT PROCEEDINGS AGAINST THE 'SEARCHED PERSON', OR EVEN DURING THE ASSESSMENT PROCEEDINGS AGAINST HIM OR EVEN AFTER CO MPLETION OF THE SAME, BUT BEFORE ISSUANCE OF NOTICE TO THE 'SUCH OT HER 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 OVER O F DOCUMENTS IS REQUIRED, THE RECORDING OF 'SATISFACTION' IS A MU ST, AS, THAT IS THE FOUNDATION, UPON WHICH THE SUBSEQUENT PROCEEDINGS A GAINST THE 'OTHER PERSON' ARE INITIATED. THE HANDING OVER OF D OCUMENTS ETC. IN SUCH A CASE MAY OR MAY NOT BE OF MUCH RELEVANCE BUT THE RECORDING OF SATISFACTION IS STILL REQUIRED AND IN FACT IT IS MANDATORY. 29. IN THIS REGARD, THE RATIO OF THE JUDGMENT OF THE SU PREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX-ILL VS. M/S CALCUTTA KNITWEARS, LUDHIANA (SUPRA), AS NOTED ABOVE, CLEARL Y 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 RESPEC T OF THE 'SEARCHED PERSON', IF IT IS SO MENTIONED/ RECORDED OR FROM ANY OTHER ORDER, NOTE OR RECORD MAINTAINED BY THE ASSESSING OFFICER OF T HE 'SEARCHED PERSON'. THE WORD 'SATISFACTION' REFERS TO THE STAT E OF MIND OF THE ASSESSING OFFICER OF THE PERSON SEARCHED, WHICH GET S REFLECTED IN A TANGIBLE SHAPE/ FORM, WHEN IT IS REDUCED INTO WRITI NG. IT IS THE CONCLUSION DRAWN OR THE FINDING RECORDED ON THE FOU NDATION OF THE MATERIAL AVAILABLE. IN THIS REGARD, REFERENCE MAY B E MADE TO THE PRONOUNCEMENTS IN THE CASE OF C.I.T. VS. RADHEY SHY AM BONSAI 12011) 337 ITR 217 (DELHI) AND THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF C.I.T. VS. CLASSIC ENTERPRISES REPORTED IN (2013) 358 ITR 465 (ALLAHABAD/. 31. IN THE CASE OF MANISH MAHESHWARI VS. ASSISTANT COMM ISSIONER OF LNCOME TAX AND ANOTHER, (2007) 289 ITR 341 (SC), TH EIR LORDSHIPS HAD THE OCCASION TO CONSIDER THE PROVISIONS OF SECT IONS 158BC AND T58BD AND HELD THAT THE CONDITIONS PRECEDENT FOR TA KING RECOURSE TO A BLOCK ASSESSMENT IN TERMS OF SECTION 158BC AND 158B D (I) WERE AS UNDER: '(I) SATISFACTION MUST BE RECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME, BELONGS TO ANY PERSON, OTHER TH AN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OF THE ACT: (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON: AND (HI) THE A SSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHER PE RSON. 18 (II) THE CONDITIONS PRECEDENT FOR INVOKING THE PROV ISIONS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE TH E PROVISIONS, OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DO CUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED UNDER SECTION 1 32A OF THE ACT.' 32. THE RATIO OF THE JUDGMENT IN MANISH MAHESHWARI'S C ASE ALSO APPLIES TO THE PROVISIONS OF SECTION 153C AND TO TH E FACTS OF THIS CASE. THE HON'BLE 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 FORWA RDING THE ITEMS TO THE ASSESSING OFFICER HAVING JURISDICTION: AND IN THE S ECOND INSTANCE OF THE ASSESSING OFFICER HAVING JURISDICTION WHILST SE NDING NOTICE TO SUCH OTHER PERSON (OTHER THAN THE PERSON REFERRED T O IN SECTION 153A), MUST APPLY PROPRIO VIGORE. THE FACT THAT INCIDENTAL LY THE ASSESSING OFFICER IS COMMON AT BOTH THE STAGES WOULD NOT EXTR ICATE HIM FROM RECORDING SATISFACTION AT THE RESPECTIVE STAGES. IN THAT, THE ASSESSING OFFICER IS SATISFIED THAT THE ITEMS REFERRED TO IN SECTION 153C BELONGS OR BELONG TO A PERSON (OTHER THAN THE PERSON REFERR ED TO IN SECTION 153A), BEING A SINE QUA NON. HE CANNOT ASSUME JURIS DICTION TO TRANSMIT THOSE ITEMS TO ANOTHER FILE WHICH INCIDENT ALLY IS PENDING BEFORE HIM CONCERNING OTHER PERSON (PERSON OTHER TH AN THE PERSON REFERRED TO IN SECTION 153A). THE QUESTION AS TO WH ETHER THAT MAY INFLUENCE THE OPINION OF THE ASSESSING OFFICER HAVI NG JURISDICTION OVER SUCH OTHER PERSON, ALSO CANNOT BE THE BASIS TO TAKE ANY OTHER VIEW. AS A MATTER OF FACT, THE OTHER ASSESSING OFFICER TO WH OM THE ITEMS ARE HANDED OVER, BEFORE ISSUING NOTICE MUST HIMSELF BE SATISFIED AFTER DUE VERIFICATION OF THE ITEMS RECEIVED AND THE DISCLOSU RES MADE BY THE OTHER PERSON IN THE RETURNS FOR THE RELEVANT PERIOD A/REA DY FILED BY THE OTHER PERSON IN THE RETURNS FOR THE RELEVANT PERIOD ALREA DY FILED BY THE OTHER PERSON BEFORE HIM. FOR THE SAME REASON, WE MUST REJ ECT THE ARGUMENT OF THE DEPARTMENT THAT THE DISCRETION OF THE ASSESS ING OFFICER HAVING JURISDICTION WILL BE IMPAIRED 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 REQUIREME NT OF SATISFACTION, IF THE ASSESSING OFFICER HAPPENS TO BE THE SAME, AS IN THIS CASE, THE ARGUMENT OF THE DEPARTMENT 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 SECTIO N 153AJ UNDER HIS JURISDICTION ON THE BASIS OF HIS OWN ENQUIRY. IN OU R OPINION, THE VIEW FORMED BY THE ASSESSING OFFICER AFTER HIS OWN ENQUI RY DOES NOT ENTAIL IN SEATING IN APPEAL OVER THE SATISFACTION OF THE F IRST ASSESSING OFFICER, WHO HAD HANDED OVER THE ITEMS TO HIM. 20. AS A RESULT, WE HOLD THAT THERE IS NO INFIRMIT Y IN THE VIEW TAKEN BY THE TRIBUNAL ON THE QUESTIONS UNDER CONSIDERATIO N. THE VIEW TAKEN 19 BY US IS REINFORCED FROM THE DECISIONS OF OTHER HIG H COURTS IN THE CASES OF CIT V. GOPI APARTMENT (SUPRA), PEPSI FOODS P.LTD. FSUPRAJ, PEPSICO INDIA HOLDINGS. P. LTD.{SUPRA] AND, LASTLY, CFT V. SMT. MADHU KESHWANI (SUPRA). THE OBSERVATIONS OF THE DEL HI HIGH COURT IN THE CASE OF SSP AVIATION LTD. (SUPRA) HAVE BEEN EXPLAINED IN THE SUBSEQUENT CASE OF PEPSICO INDIA HOLDINGS P. LT D. (SUPRA). 21. WE CONCLUDE THAT THE CONDITION PRECEDENT FOR R ESORTING TO ACTION UNDER SECTION 758BD DELINEATED BY THE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) AND IN THE RECEN T CASE OF CFT V. CALCUTTA KNITWEARS (SUPRA), WOULD APPLY ON ALL FOUR S MANDATING SATISFACTION OF THE ASSESSING OFFICER(S) DEALING WITH THE CASE AT THE REPRESENTATIVE STAGES REFERRED TO IN SECTION 153C. 9. IN VIEW OF THE ABOVE WE HOLD THAT IN THE ABSENCE OF 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 ASSESSEE. RELIANCE OF THE DECISION OF KOLKATA BENCH BY LD. CIT DR IN THE CASE OF KPC M EDICAL COLLEGE & HOSPITAL, SUPRA, DOES NOT HELP THE CAUSE OF REVENUE IN AS MUCH AS THERE ARE DECISIONS OF HIGH COURT OF DELHI, ALLAHA BAD, AND MADHYA PRADESH AS REFERRED ABOVE. MOREOVER, EVEN FROM THE PLAIN READING OF THE REASON RECORDED ON 17.8.2012, THERE IS NOTHING TO S UGGEST THAT ANY DOCUMENT ETC. FOUND IN SEARCH BELONGED TO THE APPEL LANT. ALL THAT IS MENTIONED IS THAT THE PAGE NO. 21-25, 127-136 OF DO CUMENT NO. AL ETC I.E. DOCUMENTS FOUND IN SEARCH CONTAIN DETAILS OF T RANSACTIONS IN IMMOVABLE PROPERTY MADE BY THE ASSESSEE. THIS IS NO T THE CASE OF AO OF THE ASSESSEE IN THE REASON RECORDED THAT DOCUMENTS FOUN D DURING SEARCH BELONGED TO THE ASSESSEE. 'DOCUMENTS BELONGING TO A PERSON' AND 'TRANSACTIONS CONTAINED IN SOME DOCUMENTS MADE BY A PERSON' ARE TWO DIFFERENT THINGS. SECTION 153C CAN BE INVOKED ONLY IF THE FINDING 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 CIRCUM STANCES AND THE POSITION OF LAW AS EXPLAINED ABOVE, WE HOLD THAT THE JURISDICTI ON ASSUMED U/S 153C WAS LACKING IN THE INSTANT CASE AND THEREFORE THE NOTIC E ISSUED U/S 153C IS HELD NOT IN ACCORDANCE WITH LAW AND THE ASSESSMENT MADE IS QUAS HED. SINCE WE HAVE HELD THAT ASSUMPTION OF JURISDICTION U/S 153C ITSELF IS BAD, WE DO NOT PROPOSE TO DISPOSE THE OTHER GROUNDS OF APPEAL. IN THE RESULT, APPEAL IS ALLOWED IN ABOVE TERMS. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. 20 14. THE CBDT ALSO CLARIFIED IN THEIR CIRCULAR NO. 2 4/2015 DATED 31.12.2015 THAT EVEN IF THE ASSESSING OFFICER OF THE SEARCHED PERSON AND THE OTHER PERSON IS ONE AND THE SAME THEN ALSO HE IS REQUIRED TO RECORD HIS SATISFA CTION AS IS HELD BY THE COURTS. 15. IN VIEW OF THE ABOVE, WE HOLD THAT IN THE ABSEN CE OF VALID RECORDING OF SATISFACTION BY THE ASSESSING OF FICER OF THE SEARCHED PERSON I.E. DR. NARESH MITTAL THAT C ERTAIN DOCUMENTS FOUND DURING THE COURSE OF SEARCH BELONGI NG TO THE ASSESSEE, THE ASSUMPTION OF JURISDICTION UNDER SECTION 153C OF THE ACT IN THE CASE OF THE ASSESSEE WAS INV ALID. THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF SHRI PAWAN MANGLA VS DCIT (SUPRA) AND BOARD CIRCULAR. 16. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES AND THE POSITION OF LAW AS CONSIDERED ABOVE, WE HOLD THAT JURISDICTION ASSUMED UNDER SECTION 153 C OF THE ACT WAS LACKING IN THE INSTANT CASE AND THEREFO RE, NOTICE ISSUED UNDER SECTION 153C OF THE ACT IS HELD NOT IN ACCORDANCE WITH LAW AND ASTT. MADE IS QUASHED. SINC E WE HAVE HELD THAT ASSUMPTION OF JURISDICTION UNDER SEC TION 153C ITSELF IS BAD IN LAW,WE DO NOT PROPOSE TO DECI DE THE OTHER GROUNDS OF APPEAL RAISED IN THE CROSS APPEALS BY THE ASSESSEE AS WELL AS BY THE REVENUE. RESULTANTLY, A LL ADDITIONS WOULD STAND DELETED. IN VIEW OF THE ABOV E 21 DISCUSSION, THE APPEAL OF THE ASSESSEE IS ALLOWED A ND DEPARTMENTAL APPEAL IS DISMISSED. 17. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED AND DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA ) ( BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 19 TH JANUARY,2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR ITAT/CHD