ACIT CEN CIR-13, MUMBAI V. GIRIRAJ DEVELOPERS, NAVI MUMBAI

ITA 5114/MUM/2009

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3770 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 11-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 08-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHETAN KARIA
• Assessee Lawyers: SUBACHAN RAM
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Period of limitation; Assessment record; Block assessment; Documents seized
• Section: 143(3); 133A; 153A; 147; 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI JASON P. BOAZ (AM) AND SHRI RAM LAL NEG I (JM) ITA NO. 5113 TO 5114 /MUM/2009 ASSESSMENT YEAR: 2006-07 & 2007-08 THE ACIT CENTRAL CIRCLE - 13, 11 TH FLOOR, OLD C.G.O ANNEXE BUILDING, ROOM NO. 1103, M.K. ROAD, MUMBAI- 400020. VS. M/S. GIRIRAJ DEVLOPERS. ROYAL PALACE, SHOP NO. 6,7 & 8, PLOT NO. 11, SECTOR-2, KHARGHAR, NAVI MUMBAI- 410210. PAN : AAFFG4761R (APPELLANT) (RESPONDENT) & ITA NO. 5067 /MUM/2009 ASSESSMENT YEAR: 2007-08 M/S. GIRIRAJ DEVLOPERS . ROYAL PALACE, SHOP NO. 6,7 & 8, PLOT NO. 11, SECTOR-2, KHARGHAR, NAVI MUMBAI- 410210. PAN : AAFFG4761R VS. THE ACIT CENTRAL CIRCLE - 13, 11 TH FLOOR, OLD C.G.O ANNEXE BUILDING, ROOM NO. 1103, M.K. ROAD, MUMBAI- 400020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. CHETAN KARIA RESPONDENT BY : SHRI. SUBACHAN RAM DATE OF HEARING: 12/01/2016 DATE OF PRONOUNCEMENT: 24/02/2016 O R D E R PER BENCH THESE ARE CROSS APPEALS BY REVENUE AND THE ASS ESSEE FOR ASST. YEAR 2007-08 AND AN APPEAL BY REVENUE FOR ASST. YEAR 2006-07, AL L DIRECTED AGAINST THE COMMON ORDER CIT(APPEALS), CENTRAL-VII, MUMBAI DT. 02/07/2 009. SINCE THESE APPEALS 2 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 HAVING INTERCONNECTED ISSUES, WERE HEARD TOGETHER, THEY ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2.1 THE ASSESSEE IS A FIRM IN THE HARESH PATEL GRO UP AND WAS ENGAGED IN THE DEVELOPMENT OF A PROJECT BY THE NAME OF GIRIRAJ HOR IZON, AT KHARGHAR, NAVI MUMBAI. SEARCH ACTION U/S 132 OF THE INCOME TAX ACT , 1961(IN SHORT THE ACT) WAS CARRIED IN THE CASE OF SHRI. HARESH N. PATEL AN D CONNECTED PERSONS ON 10/01/2007. AS SHRI. HARESH PATEL WAS A PARTNER IN THE ASSESSEE FIRM, A SIMULTANEOUS SURVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT AT THE ASSESSEES PREMISES. 2.2 IN THE COURSE OF SURVEY PROCEEDINGS, A DIARY WA S FOUND WHICH CONTAINED EVIDENCE OF ON MONEY COLLECTED THAT WAS NOT RECOR DED IN THE REGULAR BOOKS OF ACCOUNT. AS PER NOTHING IN THE SAID DIARY, SUCH UNA CCOUNTED MONEY RECEIVED BY THE ASSESSEE FIRM WORKED OUT TO RS. 2,09,00,000/-. ON BEING QUERIED IN THIS REGARD, THE PARTNER OF THE ASSESSEE FIRM ADMITTED T O THE CASH RECEIPTS BUT CLAIMED THAT THERE ARE CASH EXPENDITURES ALSO AND ADMITTED AN AMOUNT OF RS. 150 LAKHS AS ADDITIONAL INCOME FOR THE FINANCIAL YEAR RELEVANT T O ASST. YEAR 2007-08. FURTHER, IN THE SURVEY PROCEEDINGS, ANOTHER DI ARY WAS FOUND WHICH CONTAINED EVIDENCE OF CASH TRANSACTION IN THE SALE OF SHOP NO . 3 IN THE RESIDENTIAL BUILDING COMPLEX, WHEREIN THE CASH COMPONENT WAS RS. 21,12,5 00/-. 2.3 THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSE SSEE WAS ISSUED NOTICES U/S 153C OF THE ACT FOR THE RELEVANT ASST. YEARS. THE A SSESSMENT FOR ASST. YEARS 2006- 07 AND 2007-08 WAS COMPLETED U/S 143(3) R.W.S.153C OF THE ACT VIDE ORDERS DT. 3 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 30/12/2008. THE ADDITIONS MADE TO THE RETURNED INCO ME OF THE ASSESSEE WAS ON THE FOLLOWING GROUNDS:- (I) INCOME ADMITTED ON ACCOUNT OF CASH SALES IN FLA TS; (II) INCOME ATTRIBUTED ON ACCOUNT OF CASH SALES IN SHOPS. 2.3.1 INCOME ADMITTED ON ACCOUNT OF CASH SALES IN F LATS BASED ON THE NOTING FOUND IN THE DIARY DURIN G THE SURVEY PROCEEDINGS AND ALSO ON THE DISCLOSURE OF ADDITIONAL INCOME ADMITTE D BY THE ASSESSEE, THE AMOUNT OF RS. 1,50,00,000/-WAS ADDED TO THE INCOME OF THE ASSESSEE FOR ASST. YEAR 2007- 08. 2.3.2 INCOME ATTRIBUTED ON ACCOUNT OF CASH IN SHOP S BASED ON THE NOTING FOUND IN ANOTHER DIAR Y DURING THE SURVEY PROCEEDINGS, EVIDENCING CASH RECEIPTS OF RS. 21,12,500/- FOR SHO P NO. 3, THE ASSESSING OFFICER (AO) ATTRIBUTED AN AMOUNT OF RS. 20 LAKHS OF UNAC COUNTED CASH RECEIPTS FOR EACH OF THE SHOPS SOLD AND WORKED OUT THE UNACCOUNTED IN COME FROM THE SHOPS AS UNDER :- ASST. YEAR 2006-07 RS. 40,00,000/- ASST. YEAR 2007-08 RS. 5,20,00,000/- PLUS + 21,12,500(FOR SHOP NO. 3) 3.1 ON APPEAL, THE LD. CIT(A) UPHELD THE ADDITION OF RS. 1,50,00,000/- MADE TOWARDS CASH RECEIPTS ON SALE OF FLATS AS ADMITTED BY THE ASSESSEE FOR ASST. YEAR 2007-08. AS REGARDS THE ADDITION MADE TOWARDS CASH RECEIPTS IN RESPECT OF SALE OF SHOPS, (I) THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD SOLD ONLY 9 SHOPS IN THE ASST. YEAR 2007-08 AND RESTRICTED THE ADDITION TOWARDS ON MONEY IN RESPECT OF THE SALE THESE 9 SHOPS. 4 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 (II) THE LD. CIT(A) OBSERVED THAT THERE WAS NO EVID ENCE OF ON MONEY RECEIPTS IN THE EARLIER YEAR AND THEREFORE DELETED THE ADDITION OF RS. 40,00,000/- MADE IN RESPECT OF CASH RECEIPTS ON SALE OF 2 SHOPS. (III) THE LD. CIT(A) HELD THAT THERE IS NO BASIS FO R ADOPTING ON MONEY RECEIPTS OF RS. 20 LAKHS PER SHOP AND DIRECTED THAT FOR ASST. Y EAR 2007-08 THE ON MONEY RECEIPTS ON SALE OF THESE 9 SHOPS IS TO BE COMPUTED @ RS. 21,12,500/- PER SHOP, AS PER THE SALE AVAILABLE IN THE DIARY FOR SHOP NO. 3. 4. AGGRIEVED BY THE ORDER OF THE CIT(A) CENTRAL-VI I, MUMBAI FOR ASST. YEAR 2006- 07 AND 2007-08 DT. 02/07/2009, BOTH THE ASSESSEE AN D REVENUE ARE IN APPEAL BEFORE US. 5. ASST. YEAR 2006-07 5.1 THE GROUNDS RAISED BY REVENUE IN ITS APPEAL FO R ASST. YEAR 2006-07 ARE AS UNDER:- I. ON THE FACTS AND CIRCUMSTANCES OF THE LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITIONS AMOUNTING TO RS. 40,00,00 0/- ON ACCOUNT OF UNACCOUNTED INCOME AS ON-MONEY. II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING THE FACT THAT THE EVIDENCE BROUGHT ON RECORD FOR ADDITION ON ACCOUNT OF UNACCO UNTED SALES OF SHOPS FOR A.Y. 2007-08 CAN ALSO BE USED IT FOR ARRI VING AT UNACCOUNTED SALE OF SHOPS FOR A.Y. 2006-07, APPLYIN G THE RATION OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF CST VS. H.M.ESUFALI H.M. ABDUALILI (1973) 90 ITR 271. 5 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 III. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING THE FACT THAT THERE WERE UNACCOUNTED SALES PERTAINING TO SHOP NOS. S-15 AND S-16 FOR A.Y. 2006-07. IV. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING THE FACT THAT ASSESSEE HAS FORMALLY ENTERED INTO AGREEMENT FOR ALL SHOPS SOLD HAS RECEIVED ADVANCES AND HAS ASSIGNED NAMES AGAINST THE SHOPS A ND THIS WAS ESTABLISHED DURING THE ASSESSMENT PROCEEDINGS. V. THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROU NDS STATED ABOVE, THE ORDER OF THE CIT(A), CENTRAL VII, MUMBAI MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. VI. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE GROUNDS OF APPEAL, IF NEED BE. 5.2. EVEN THOUGH THE ASSESSEE HAS GOT THE RELIEF IT SOUGHT ENTIRELY PURSUANT TO THE IMPUGNED ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THE FOLLOWING GROUNDS CHALLENGING THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER WHILE PASSING THE ORDER OF ASSESSMENT U/S 143(3) R.W.S. 1 53C OF THE ACT DT. 30/12/2008:- 1. THE LEARNED ASSESSING OFFICER ERRED IN REOPENING ASSESSMENT BY ISSUE OF NOTICE U/S 153C AND THE SAME IS WITHOUT JU RISDICTION AND BAD A LAW. 2. THE LEARNED ASSESSING OFFICER FAILED TO APPRECIA TE THAT CONDITIONS FOR ISSUE OF NOTICE U/S 153C WERE NOT SA TISFIED AND THAT 6 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 THE ASSESSMENT ORDER U/S 143(3) R.W.S. 153C IS WITH OUT JURISDICTION AND BAD IN LAW, 3. THE ASSESSEE PRAYS THAT THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) MAY BE AFFIRMED. 6. ASST. YEAR 2007-08 6.1 THE GROUNDS OF APPEAL RAISED BY REVENUE ARE AS UNDER:- I . IN THE FACTS AND CIRCUMSTANCES OF THE LAW THE LD. CIT(A) ERRED IN REDUCING THE ADDITION MADE ON ACCOUNT OF UNACCOUNTE D INCOME AS ON MONEY FROM 26 SHOPS TO 9 SHOPS. II . IN THE FACTS AND CIRCUMSTANCES OF THE LAW THE LD. CIT(A) ERRED IN NOT ACCEPTING THE FACT THAT THERE WAS AN UNACCOUNTE D SALE OF 26 SHOPS WHICH WAS ESTABLISHED DURING THE ASSESSMENT P ROCEEDINGS. III . THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER O R DELETE ANY OR ALL THE GROUNDS OF APPEAL, IF NEED BE. IV . THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROUN DS STATED ABOVE, THE ORDER OF THE CIT(A), CENTRAL VII, MUMBAI MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 6.2.1 THE ASSESSEE, IN ITS APPEAL FOR ASST. YEAR 20 07-08, HAS RAISED THE FOLLOWING GROUNDS:- 1. (A) THE LEARNED CIT(APPEALS) ERRED IN LAW AND FACTS IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN ESTI MATING UNDISCLOSED INCOME TO THE EXTENT OF RS. 1,90,12,500/- WITH RESP ECT TO SALE OF SHOPS DURING THE PREVIOUS YEAR. 7 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 (B) THE LEARNED CIT(APPEALS) ERRED IN APPRECIA TING THE FACT THAT NO INCRIMINATING EVIDENCE WAS FOUND IN RESPECT OF S HOPS ON ACCOUNT OF WHICH THE ADDITION OF ALLEGED ON-MONEY RECEIPT I S MADE DURING THE YEAR. (C) THE LEARNED CIT(APPEALS) ERRED IN FACTS BY IGNORING THE FACT THAT THE INCOME OFFERED BY THE APPELLANT DURING THE COURSE OF SURVEY WAS SUFFICIENT ESTIMATE TO COVER ALL THE DISCREPAN CIES INCLUDING THE RECEIPT OF ALLEGED ON MONEY ESPECIALLY IN VIEW OF T HE FACTS THAT NO EVIDENCE OF UNEXPLAINED UNDISCLOSED ASSETS, CASH IN VESTMENTS, EXPENDITURE OR CREDITORS WAS FOUND DURING THE COURS E OF SURVEY ON THE APPELLANT AS SEARCH ON PARTNER. 2. YOUR APPELLANT PRAYS THAT (A) THE SAID ADDITION OF RS. 1,90,12,500/- MADE ON ESTIMATED BASIS BE DELETED. (B) THE INCOME AS RETURNED BY THE APPELLANT BE ACCEPTED. (C) SUCH OTHER RELIEF AS MAY BE DEEMED FIT IN T HE MATTER BE GRANTED. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL GROUNDS OF APPEAL. 6.2.2 THE ASSESSEE HAS ALSO RAISED THE FOLLOWING AD DITIONAL GROUNDS OF APPEAL:- 1. THE LEARNED ASSESSING OFFICER ERRED IN MAKING ASSESSMENT U/S 143(3) AND THE SAME IS WITHOUT JURISDICTION AND BAD IN LAW. 8 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 2. THE LEARNED ASSESSING OFFICER FAILED TO APPREC IATE THAT NOTICE U/S. 143(2) WAS NOT ISSUED WITHIN TIME PERMITTED AN D THAT THE ASSESSMENT ORDER U/S 143(3) IS WITHOUT JURISDICTION AND BAD IN LAW. 3. THE ASSESSEE PRAYS THAT THE ASSESSMENT ORDER MAY BE CANCELLED AS BEING WITHOUT JURISDICTION. 7.1 THE LD. AR FOR THE ASSESSEE WAS HEARD ON THE A DDITIONAL GROUNDS FOR BOTH ASST. YEARS 2006-07 AND 2007-08 (SUPRA). THE ISSUE RAISED THEREIN ARE AS UNDER:- (I) THE NOTICE ISSUED U/S 153C OF THE ACT AND THE ASSESSMENT MADE PURSUANT THERETO IS WITHOUT JURISDICTION. (II) NO INCRIMINATING EVIDENCE RELATING TO THE ASSE SSEE FIRM WAS FOUND DURING THE SEARCH OF THE RESIDENCE OF THE PARTNER OF THE FIRM. THE DIARIES BASED ON WHICH THE ADDITIONS ARE MADE WERE FOUND DURING THE COURSE OF SURVEY ACTION IN THE BUSINESS PREMISES OF THE ASSESSEE FIRM AND THEREFORE, PROCEE DINGS U/S 153C OF THE ACT ARE NOT TENABLE. (III) THE NOTICE U/S 143(2) OF THE ACT WAS NOT ISSU ED IN TIME AND AS THE NOTICE ISSUED WAS BEYOND TIME, THE ORDER OF ASSESSMENT FOR ASST. YEAR 2007-08 PASSED U/S 153C R.W.S 143(3) OF THE ACT IS INVALID. 7.2. IT WAS SUBMITTED BY THE LD.AR FOR THE ASSESSEE THAT THE ADDITIONAL GROUNDS RAISED (SUPRA) ARE LEGAL ISSUES AND THEREFORE CAN B E RAISED AT ANY STAGE OF APPELLATE PROCEEDINGS. IN SUPPORT OF THIS CONTENTIO N, THE LD.AR PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (I) NTPL VS. CIT (1998) 229 ITR 383(SC) (II) AHMADABAD ELECTRICITY CO. LTD., 199 ITR 351(BO M) 9 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 7.3 THE LD. DR OPPOSED THE ADMISSION OF THE ADDITIO NAL GROUNDS RAISED BY THE ASSESSEE. 7.4.1 WE HAVE HEARD THE RIVAL CONTENTION AND PERU SED AND CAREFULLY CONSIDERED THE ISSUES RAISED AND THE MATERIAL ON RECORD; INCLU DING THE JUDICIAL DECISIONS CITED. WE FIND THAT THE ADDITIONAL GROUNDS RAISED B Y THE ASSESSEE ARE PURELY LEGAL GROUNDS AND SINCE THE SAME GO TO THE VERY ROOT OF T HE MATTER, WE ARE INCLINED TO ADMIT THE SAME FOR CONSIDERATION AND ADJUDICATION I N THIS APPEAL. 7.4.2 IT IS A SETTLED PRINCIPLE THAT A LEGAL QUESTI ON/ISSUES CAN BE RAISED AT THE APPELLATE STATE AND SUCH A QUESTION NEED NOT BE RAI SED AS A GROUND. IT IS ALSO A SETTLED PRINCIPLE THAT WHEN A LEGAL QUESTION/ISSUES IS RAISED, THE TRIBUNAL HAS TO CONSIDER THE SAME IN ACCORDANCE WITH LAW AND CANNOT REFUSE TO ENTERTAIN THE SAME. AS ALL THE FACTS RELATING TO THE ADDITIONAL G ROUNDS TAKEN BEFORE US ARE ALREADY ON RECORD, WE ARE INCLINED TO ENTERTAIN THE ADDITIONAL GROUNDS WHICH ARE PURELY LEGAL IN NATURE AND ACCORDINGLY PROCEED TO D ECIDE THE SAME. 7.4.3 NOW COMING TO THE ISSUES ON HAND IN THE CAS E OF THE ASSESSEE, WE FIND THAT THE LEGAL QUESTIONS RAISED GO TO THE ROOT OF THE MA TTER AND THEREFORE REQUIRE TO BE ADDRESSED FIRST. WE, THEREFORE, PROCEED TO EXAMINE, CONSIDER AND ADJUDICATE THE ADDITIONAL GROUNDS RAISED. 8. NOTICE U/S 153C OF THE ACT IS WITHOUT JURISDICTION 8.1 IT IS THE CONTENTION OF THE ASSESSEE THAT NO IN CRIMINATING EVIDENCE RELATING TO THE ASSESSEE FIRM WAS FOUND DURING THE SEARCH ACTIO N U/S 132 OF THE ACT AT THE RESIDENCE OF THE PARTNER OF THE ASSESSEE FIRM. IT W AS SUBMITTED THAT THE TWO DIARIES WHICH WERE USED AS EVIDENCES FOR THE ON MO NEY RECEIPTS FOR FLATS AND SHOPS WERE FOUND AND IMPOUNDED DURING THE SURVEY AC TION U/S 133A OF THE ACT 10 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 IN THE BUSINESS PREMISES OF THE ASSESSEE FIRM. AS T HE INCRIMINATING MATERIALS AGAINST THE ASSESSEE FIRM WAS NOT FOUND IN THE COUR SE OF SEARCH ACTION, THE INITIATION OF PROCEEDINGS U/S 153C OF THE ACT WAS N OT TENABLE. IT WAS ALSO SUBMITTED THAT ANY DECLARATION OR ADMISSION OF INCO ME IN STATEMENTS U/S 132(4) OF THE ACT CANNOT BE CONSIDERED AS MATERIAL FOUND IN THE COURSE OF SEARCH ACTION. 8.2.1 WE HAVE HEARD BOTH THE LD. AR FOR THE ASSESSE E AND THE LD. DR FOR REVENUE IN THE MATTER AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. SECTION 153C OF THE ACT 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 OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A , THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR R EQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVIN G JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER S HALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDAN CE WITH THE PROVISIONS OF SECTION 153A , IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SE IZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION O F THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESS MENT YEAR OR YEARS REFERRED TO IN SUB-SECTION (1) OF SECTION 153A . PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE T O THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO 5 [SUB- SECTION (1) OF] SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HA VING JURISDICTION OVER SUCH OTHER PERSON. 11 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 8.2.2 THE SCOPE OF SECTION 153C OF THE ACT HAS BEE N WELL EXPLAINED IN THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CAS E OF CIT VS. M/S. MECHMEN, ITA NO. 44/2011 AND OTHERS DT. 10/07/2015. ON THE C ITED CASE ALSO, SEARCH ACTION U/S 132 OF THE ACT WAS CONDUCTED AGAINST THE PARTNE RS OF THE FIRM AND SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMI SES OF THE FIRM. THE ASSESSING OFFICER ISSUED NOTICE U/S 153C OF THE ACT AND COMPLETED THE ASSESSMENT U/S 143(3) R.W.S.143 (3) OF THE ACT. THE HONBLE HI GH COURT HELD THAT THE PROCEEDINGS U/S 153C OF THE ACT SHOULD EMANATE FROM SEARCH ACTION U/S 132 OF THE ACT. THE RELEVANT PARAGRAPH DEALING WITH THE SC OPE OF SECTION 153C OF THE ACT ARE EXTRACTED HEREUNDER:- 4. . THE TRIBUNAL, IN TURN, RELIED ON ITS DECISION IN THE CASE OF M/S CHIRCHIND HYDRO POWER LIMITED- IT(SS) A.NO. 171 .172 AND 174/IND/2008 AND ALSO M/S. GWALIOR TANKS & VESSELS LIMITED-IT(SS) A NO. 175 TO 181/IND/2008. PARAGRAPH NOS. 78 TO 82 OF THE SAID DECISION HAS BE EN REPRODUCED BY THE TRIBUNAL FOR DEALING WITH THE QUESTION ABOUT THE SCOPE OF SE CTION 153C OF THE IT ACT AND THE EFFICACY OF NOTICES ISSUED BY THE ASSESSING OFFICER AGAINST THE RESPONDENT THEREIN. THE SAME READS THUS:- '78. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND DEL IBERATED ON THE CASE LAWS REFERRED BY THE LOWER AUTHORITIES IN THEI R RESPECTIVE ORDERS AND BY THE RESPECTIVE COUNSELS DURING THE CO URSE OF HEARING BEFORE US. FROM THE RECORD WE FIND THAT THE SEARCH WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF DIRECTORS/PARTNERS O F THESE CONCERNS AND NOT AT THE PREMISES OF THESE CONCERNS. AFTER TH E SEARCH WAS CARRIED OUT AT THE RESIDENCE OF DIRECTORS/PARTNERS OF THESE ASSOCIATE CONCERNS, ASSESSMENT WAS FRAMED IN RESPEC T OF THESE 12 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 CONCERNS U/S 153C OF THE ACT ON THE PLEA THAT INCRI MINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AT T HE RESIDENCE OF PARTNERS/DIRECTORS. THE ASSUMPTION OF POWER BY THE ASSESSING OFFICER U/S 153C OF THE ACT FOR FRAMING THE ASSESSM ENT IS SUBJECT TO THE CONDITION THAT THE ASSESSING OFFICER ASSESSI NG THE SEARCH PARTY, IS SATISFIED THAT THE JEWELLERY OR OTHER VAL UABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS OR ASSETS, SEIZED OR REQUISITIONED, PERTAIN TO SOME PERSON OTHER THAN TH E PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCO UNTS OR THE DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED, SHALL BE HANDED OVER BY THE ASSESSING OFFICER OF SEARCHED PERSON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT THE ASSESSING OFFICER SHALL PROCEED AGAINST EACH OF SUC H PERSONS AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSE SS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF THE ACT. THE OPENING WORD OF SECTION 153C SPEAKS THAT NOT-WITH-STANDING ANYTHING CONTAINED IN SECTIONS 13 9, 147, 148, 149, 151 AND 153, WHERE THE ASSESSING OFFICER IS 'S ATISFIED' THAT ANY MONEY, JEWELLERY OR BOOKS OF ACCOUNTS OR DOCUME NTS SEIZED OR REQUISITIONED BELONGS TO A PERSON OTHER THAN THE PE RSON REFERRED TO IN SECTION 153A, MEANING THEREBY THE ASSESSING OFFI CER IS TO RECORD A SATISFACTION TO THE EFFECT THAT SUCH JEWEL LERY OR DOCUMENT SO SEIZED DOES NOT BELONG TO THE SEARCHED PERSON BU T TO SOME OTHER PERSON REFERRED TO IN SECTION 153A OF THE ACT . THUS, THE PRE- REQUISITE OF SECTION 153C IS THAT THE ASSESSING OFF ICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO SATISFY HI MSELF THAT SOME MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERS ON. THEN THE ASSESSING OFFICER MAKING THE ASSESSMENT OF SEARCHED PERSON HAS 13 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 TO HAND-OVER THE SAID INCRIMINATING MATERIAL BELONG ING TO SOME PERSON OTHER THAN THE SEARCHED PERSON TO THE ASSESS ING OFFICER HAVING JURISDICTION OVER THE SAID OTHER PERSON. THE REAFTER, THE ASSESSING OFFICER HAVING THE JURISDICTION OVER THE PERSON OTHER THAN THE SEARCHED PERSON SHALL ISSUE A NOTICE U/S 1 53C TO SUCH OTHER PERSON AND ASSESS HIS INCOME IN TERMS OF THE PROVISIONS OF SECTION 153A OF THE ACT. THUS, THE NOTICE U/S 153C OF THE ACT IS TO BE ISSUED ONLY AFTER RECORDING OF SATISFACTION. THE ASSUMPTION OF JURISDICTION TO ISSUE NOTICE AND FRAME ASSESSMENT U NDER SECTION 153C READ WITH SECTION 153A IS ACQUIRED BY THE ASSE SSING OFFICER ONLY AFTER HAVING BEEN SATISFIED AND SUCH SATISFACT ION IS RECORDED IN WRITING. THESE PROVISIONS OF SECTION 153C ARE IN PARI MATER IA WITH THE PROVISIONS OF SECTION 158BD WHICH PROVIDES THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEAR CHED PERSON HAS TO SATISFY HIMSELF THAT SOME UNDISCLOSED INCOME FOUND BY HIM BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERS ON AND THEN HE OR THE ASSESSING OFFICER HAVING JURISDICTION OVE R SUCH OTHER PERSON AFTER RECEIPT OF RECORD FROM THE ASSESSING O FFICER OF THE SEARCHED PERSON HAS TO ISSUE NOTICE U/S 158BD OF TH E ACT AND HAS TO ASSESS INCOME OF SUCH OTHER PERSON. THE PROVISIO NS OF SECTION 158BD OF THE ACT WERE EXAMINED IN DETAIL BY THE HON 'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI; 208 CTR 97. THE SAID HON'BLE SUPREME COURT DECISION WAS FOLLOWED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF NEW DELHI AUTO FINANCE LI MITED; 300 ITR 83. THE HON'BLE SUPREME COURT HAS LAID DOWN A PROPO SITION THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO NECESSARILY RECORD IN WRITING THE SPE CIFIC OBJECTIVE SATISFACTION WHICH IS MANDATORY TO THE EFFECT THAT THE UNDISCLOSED INCOME FOUND BY HIM, ON THE BASIS OF SEIZED MATERIA L, BELONGS TO 14 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 SOME PERSON OTHER THAN THE SEARCHED PERSON. INSOFAR AS THE PROVISIONS OF SECTION 153C OF THE ACT ARE IN PARI M ATERIAL WITH THE PROVISIONS OF SECTION 158BD OF THE ACT WITH REGARD TO THE REQUIREMENTS OF RECORDING NECESSARY SATISFACTION BY THE ASSESSING OFFICER OF SEARCHED PERSON, THE LAW LAID DOWN BY TH E HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI (SUP RA) SHALL APPLY WITH FULL FORCE IN CASE OF INITIATION OF PROC EEDINGS U/S 153C. THE ASSUMPTION OF JURISDICTION AND FRAMING OF ASSES SMENT BY THE ASSESSING OFFICER U/S 153C WITHOUT RECORDING SUCH S ATISFACTION IS VOID AB INITIO. APPLYING THE PROPOSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT, AS DISCUSSED ABOVE, IT IS QU ITE EVIDENT THAT RECORDING OF SATISFACTION BEFORE ISSUE OF NOTI CE U/S 153C IS MANDATORY AND IN CASE WHERE NO SUCH SATISFACTION HA S BEEN RECORDED BY THE ASSESSING OFFICER IN THE CASE OF SE ARCHED PERSON TO THE EFFECT THAT SOME INCRIMINATING MATERIAL SO F OUND BELONGS TO SOME OTHER PERSON, THE ASSESSMENT FRAMED U/S 153C W ILL BE LIABLE TO BE QUASHED. HOWEVER, DETAILED FINDING HAS BEEN RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER EXAMINING THE ASSESSMENT RECORDS OF THE CONCERNED PERSON/PARTIES TO THE EFFECT THAT NO SATISFACTION H AS BEEN RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON. TH IS FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSI TIVE MATERIAL ON RECORD. ACCORDINGLY, APPLYING THIS PROPOSITION OF LAW, THE ASSUMPTION OF JURISDICTION AND FRAMING OF ASSESSMEN T IN THE INSTANT CASES BY THE ASSESSING OFFICER U/S 153C WER E BAD IN LAW. 79&80 81. WE HAVE DELIBERATED UPON THE CONTENTIONS OF TH E LEARNED CIT DR, SHRI K.K. SINGH AND LEARNED COUNSEL FOR THE ASS ESSEE, SHRI 15 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 H.P. VERMA, WITH REGARD TO INTERPRETATION OF RECORD ING OF SATISFACTION WHILE ASSUMING JURISDICTION U/S 153C O F THE ACT. EVEN IN THE NEW SCHEME OF FRAMING OF ASSESSMENT IN CASE OF SEARCH CASES, THE LEGISLATURE HAS CLEARLY STIPULATED THE R EQUIREMENT FOR RECORDING OF SATISFACTION WHILE ASSUMING JURISDICTI ON TO ISSUE NOTICE AND FRAME ASSESSMENT U/S 153C OF THE ACT WHI CH REQUIRES THAT SATISFACTION TO BE RECORDED WITH REFERENCE TO THE DOCUMENTS AND OTHER MATERIALS FOUND DURING THE COURSE OF SEAR CH BELONGING TO A PERSON OTHER THAN THE SEARCHED PERSON. PRIMA F ACIE, ASSESSING OFFICER OF SEARCHED PERSON SHOULD FORM AN OPINION WITH REGARD TO ANY DOCUMENT, VALUABLE, ETC. AS FOUND DUR ING THE COURSE OF SEARCH THAT SUCH DOCUMENT, WHICH IS DECLINED BY THE SEARCHED PERSON, ACTUALLY BELONGS TO SOME OTHER PERSON AGAIN ST WHOM PROCEEDINGS U/S 153C ARE REQUIRED TO PUT INTO OPERA TION. AFTER SUCH RECORDING, OF SATISFACTION, THE DOCUMENTS SO S EIZED SHOULD BE HANDED OVER TO THE ASSESSING OFFICER OF SUCH OTHER PERSON. THE LEGAL REQUIREMENT OF RECORDING OF SUCH SATISFACTION CANNOT BE SUBSTITUTED BY APPRAISAL NOTE WHICH IS PREPARED BY THE SEARCH PARTY AFTER COMPLETION OF SEARCH INSOFAR AS SUCH AP PRAISAL NOTE IS A SECRET DOCUMENT PREPARED BY THE DEPARTMENT FOR TH EIR INTERNAL USE, CONTENTS OF WHICH ARE NOT CONVEYED TO THE ASSE SSEE NOR ITS COPY IS SUPPLIED TO THE ASSESSEE EVEN ON MAKING A W RITTEN REQUEST. THE APPRAISAL NOTE SO PREPARED BY THE DEPARTMENT I S MEANT TO MONITOR AFTER THE SEARCH PROCEEDINGS ARE O VER SO AS TO ENSURE EXHAUSTIVE ASSESSMENT OF ALL SEARCHED PERSON WITH RESPECT TO THEIR CORRECT INCOME AND TO PLAN A STRATEGY FOR FURTHER DEEP INQUIRY AND INVESTIGATION OF DOCUMENTS FOUND DURING THE COURSE OF SEARCH. SINCE COPY OF SUCH APPRAISAL NOTE IS NOT SU PPLIED TO THE ASSESSEE, IT CANNOT BE TAKEN AT PAR WITH THE REQUIR EMENT OF 16 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 RECORDING OF SATISFACTION NOTE AS STIPULATED U/S 15 3C OF THE ACT, WHICH IS A MANDATORY REQUIREMENT.. FURTHER, THE HONBLE HIGH COURT IN ITS ORDE R HAS OBSERVED THAT:- 8. THE RESPONDENT, ON THE OTHER HAND, HAS SUPPORT ED THE OPINION OF THE TRIBUNAL. THAT, THE PRINCIPLE UNDERLYING THE MANDATE OF SECTION 158BD WOULD APPLY ON ALL FOURS TO THE PROCE DURE SPECIFIED IN SECTION 153C OF THE I.T. ACT. BECAUSE, THE PURPO SE OF BOTH THE PROVISIONS IS THE SAME AND THE PERSON AGAINST WHOM SUCH NOTICE IS ISSUED SUFFERS THE SAME CONSEQUENCE. THE RESPONDENT S HAVE THEN INVITED OUR ATTENTION TO THE FINDING OF FACT RECORD ED BY THE FIRST APPELLATE AUTHORITY AND AFFIRMED BY THE TRIBUNAL TH AT NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFF ICER HAVING JURISDICTION BEFORE ISSUING NOTICE UNDER SECTION 15 3C. FURTHER, NONE OF THE MATERIAL ADVERTED TO, BELONG TO THE RESPONDE NT OR CAN BE SAID TO BELONG TO IT. FURTHER, NO ADDITION OR EVEN OBSER VATION HAS BEEN MADE BY THE ASSESSING OFFICER HAVING JURISDICTION I N ANY OF THE ORDERS FOR THE CONCERNED ASSESSMENT YEARS ON THE BA SIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH. EVEN FO R THAT REASON, NO ACTION UNDER SECTION 153C COULD HAVE BEEN INITIATED AGAINST THE RESPONDENT. THE RESPONDENT SUBMITS THAT THE ASSESSI NG OFFICER WHO SEIZED OR REQUISITIONED THE MATERIAL DURING THE SEA RCH OF A PERSON REFERRED TO IN SECTION 153A AS ALSO THE ASSESSING O FFICER HAVING JURISDICTION OVER THE RESPONDENT HAVE ACTED WITHOUT JURISDICTION. 9. RELIANCE WAS PLACED ON THE JUDGMENTS OF THE SUP REME COURT AND OF DIFFERENT HIGH COURTS BY THE COUNSEL APPEARING F OR THE PARTIES TO BUTTRESS THEIR ARGUMENTS. THE TWO DECISIONS OF THE SUPREME COURT 17 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 ARE IN RESPECT OF SCOPE OF SECTION 158BD. IN CASE O F MANISH MAHESHWARI VS. ASSISTANT COMMISSIONER OF INCOME TAX & ANOTHER AND IN THE CASE OF COMMISSIONER OF INCOME TAX-III VS. CALCUTTA KNITWEARS . EVEN THE TRIBUNAL HAS REFERRED TO THE DECISION OF THE SUPREME COURT ON THE SCOPE OF SECTI ON 158BD AS NO DIRECT JUDGMENT OF THE SUPREME COURT ON SECTION 153 C WAS REFERRED TO. BESIDES THE SUPREME COURT DECISIONS ON SECTION 158BD, RELIANCE HAS BEEN PLACED ON THE DECISIONS OF DIFFERENT HIGH COURTS WITH REFERENCE TO THE SAME PROVISIONS ON SECTION 158BD. TO WIT, AMITY HOTELS (P) LTD. AND OTHERS VS. COMMISSIONER OF INCO ME TAX AND OTHERS DATED 5.10.2004, NEW DELHI AUTO FINANCE (P) LTD. VS. JOINT COMMISSIONER OF INCOME TAX DATED 22.2.2008, COMMISSIONER OF INCOME TAX VS. DAWN VIEW FARMS (P) LTD . DATED 16.10.2008, COMMISSIONER OF INCOME TAX VS. PANCHAJANYAM MANAGEMENT AGENCIES AND SERVICES DATED 15.11.2010, COMMISSIONER OF INCOME TAX VS. LATE RAJ PAL BHATIA DATED 29.11.2010, COMMISSIONER OF INCOME TAX VS. BIMBIS CREAMS AND BAKES DATED 29.3.2012, CREATIVE CO- OPERATIVE CREDIT SOCIETY LTD. VS. AMAL GARG, DEPUTY COMMISSIONER OF INCOME-TAX DATED 26.2.2014, ASSTT. COMMISSIONER OF INCOME TAX VS. J.B. ENTERPRISES AND OTHERS DATED 26.6.2014. SINCE THERE IS NO DIRECT JUDGMENT OF THE SUPREME COURT ON SECTION 153C, RELIANCE HAS BEEN PLACED ON THE DECISIONS OF DIFFERENT HIGH COURTS ON SECTION 153C, NAMELY- OF SSP AVIATION LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX DATED 29.3.2012, COMMISSIONER OF INCOME TAX VS. CLASSIC ENTERPRISES CANTT ROAD LUCKNOW DATED 17.4.2013, COMMISSIONER OF INCOME TAX (CENTRAL) VS. GOPI APARTMENT , DATED 1.5.2014, PEPSI FOODS PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX DATED 18 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 7.8.2014, PEPSICO INDIA HOLDINGS PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER DATED 14.8.2014 AND LASTLY COMMISSIONER OF INCOME TAX VS. MADHI KESHWANI DATED 11.3.2015. 10. 11. THE MOOT QUESTION IS: WHETHER THERE IS ANY DIST INCTION OR DISSIMILARITY BETWEEN SECTION 158BD AND SECTION 153 C OF THE I.T. ACT? IF WE ACCEPT THE ARGUMENT OF THE DEPARTMENT, T HAT THE PURPOSE UNDERLYING THE TWO PROVISIONS IS COMPLETELY DIFFERE NT, FURTHER INVESTIGATION INTO THE SCOPE OF SECTION 153C MAY BE COME NECESSARY. 12. AS THE SCOPE OF SECTION 158BD HAS ALREADY BEEN CONSIDERED BY THE SUPREME COURT, WE MAY FIRST ADVERT TO THE DECISION IN THE C ASE OF MANISH MAHESHWARI (SUPRA). AFTER ANALYZING THE RELEVANT PROVISIONS FO R AMPLIFYING THE EFFICACY OF SECTION 158BD, IN PARAGRAPH NO.7, THE COURT OBSERVED THUS:- 7. CONDITION PRECEDENT FOR INVOKING A BLOCK ASSESS MENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132, OR DOC UMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. THE SAID PROVISION WOULD APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT UNDER SECTION 132A OR D OCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158BD, HOWEVER, PROVIDES FOR TAKING RECOURSE TO A BLOCK AS SESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERS ON, THE CONDITIONS PRECEDENTS WHEREFOR ARE: (I) SATISFACTIO N MUST BE RECORDED BY THE AO THAT ANY UNDISCLOSED INCOME BELO NGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OF THE ACT; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAD BEE N HANDED OVER 19 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 TO THE ASSESSING OFFICER HAVING JURISDICTION HTTP://WWW.ITATONLINE.ORG 19 OVER SUCH OTHER PERSON ; AND (III) THE AO HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH O THER PERSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISIO NS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE TH E PROVISIONS OF THE SAID CHAPTER 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 SECTI ON 132A OF THE ACT. 13. IN A RECENT DECISION OF THE SUPREME COURT IN TH E CASE OF COMMISSIONER OF INCOME TAX-III VS. CALCUTTA KNITWEARS (SUPRA), ALTHOUGH THE QUESTION CONSIDERED WAS AT WHAT STAGE THE ASSESSING OFFICER MUST RECORD HIS SATISFACTION AS ENVISAGED IN SECTION 158BD. THE OBSERVED THUS:- 38. HAVING SAID THAT, LET US REVERT TO DISCUSSION OF SECTION 158BD OF THE ACT. THE SAID PROVISION IS A MACHINERY PROVI SION AND INSERTED IN THE STATUTE BOOK FOR THE PURPOSE OF CARRYING OUT ASSESSMENTS OF A PERSON OTHER THAN THE SEARCHED PERSON UNDER SECTION S 132 OR 132A OF THE ACT. UNDER SECTION 158BD OF THE ACT, IF AN O FFICER IS SATISFIED THAT THERE EXISTS ANY UNDISCLOSED INCOME WHICH MAY BELONG TO A OTHER PERSON OTHER THAN THE SEARCHED PERSON UNDER S ECTIONS 132 OR 132 A OF THE ACT, AFTER RECORDING SUCH SATISFACTION , MAY TRANSMIT THE RECORDS/DOCUMENTS/CHITS/PAPERS ETC TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. AFTER RECEIPT OF THE AFORESAID SATISFACTION AND UPON EXAMINATION OF THE SAID OTHER DOCUMENTS RELATING TO SUCH OTHER PERSON, THE JURISDICTIONAL A SSESSING OFFICER MAY PROCEED TO ISSUE A NOTICE FOR THE PURPOSE OF CO MPLETION OF THE ASSESSMENTS UNDER SECTION 158BD OF THE ACT , THE OTHER PROVISIONS OF XIV-B SHALL APPLY. 20 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 39. THE OPENING WORDS OF SECTION 158BD OF THE ACT A RE THAT THE ASSESSING OFFICER MUST BE SATISFIED THAT UNDISCLOS ED INCOME BELONGS TO ANY OTHER PERSON OTHER THAN THE PERSON W ITH RESPECT TO WHOM A SEARCH WAS MADE UNDER SECTION 132 OF THE ACT OR A REQUISITION OF BOOKS WERE MADE UNDER SECTION 132A O F THE ACT AND THEREAFTER, TRANSMIT THE RECORDS FOR ASSESSMENT OF SUCH OTHER PERSON . THEREFORE, THE SHORT QUESTION THAT FALLS FOR OUR CONSIDERATION AND DECISION IS AT WHAT STAGE OF THE PROCEEDINGS SH OULD THE SATISFACTION NOTE BE PREPARED BY THE ASSESSING OFFI CER: WHETHER AT THE TIME OF INITIATING PROCEEDINGS UNDER SECTION 15 8BC FOR THE COMPLETION OF THE ASSESSMENTS OF THE SEARCHED PERSO N UNDER SECTION 132 AND 132A OF THE ACT OR DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE A CT OR AFTER COMPLETION OF THE PROCEEDINGS UNDER SECTION 158BC O F THE ACT. 40 41. WE WOULD CERTAINLY SAY THAT BEFORE INITIATING P ROCEEDINGS UNDER SECTION 158BD OF THE ACT, THE ASSESSING OFFICER WHO HAS INITIATED PROCEEDINGS FOR COMPLETION OF THE ASSESSMENTS UNDER SECTION 158BC OF THE ACT SHOULD BE SATISFIED THAT THERE IS AN UNDISCLOSED INCOME WHICH HAS BEEN TRACED OUT WHEN A PERSON WAS SEARCHED UNDER SECTION 132 OR THE BOOKS OF ACCOUNTS WERE REQ UISITIONED UNDER SECTION 132A OF THE ACT. THIS IS IN CONTRAST TO THE PROVISIONS OF SECTION 148 OF THE ACT WHERE RECORDING OF REASON S IN WRITING ARE A SINE QUA NON. UNDER SECTION 158BD THE EXISTENCE OF COGENT AND DEMONSTRATIVE MATERIAL IS GERMANE TO THE ASSESSING OFFICERS SATISFACTION IN CONCLUDING THAT THE SEIZED DOCUMENT S BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON IS NECESSARY FOR INITIATION OF ACTION UNDER SECTION 158BD . THE BARE READING OF THE PROVISION INDICATES THAT THE SATISFACTION NOTE COULD BE PREPA RED BY THE 21 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 ASSESSING OFFICER EITHER AT THE TIME OF INITIATING PROCEEDINGS FOR COMPLETION OF ASSESSMENT OF A SEARCHED PERSON UNDER SECTION 158BC OF THE ACT OR DURING THE STAGE OF THE ASSESSM ENT PROCEEDINGS. IT DOES NOT MEAN THAT AFTER COMPLETION OF THE ASSESSMENT, THE ASSESSING OFFICER CANNOT PREPARE TH E SATISFACTION NOTE TO THE EFFECT THAT THERE EXISTS INCOME TAX BEL ONGING TO ANY PERSON OTHER THAN THE SEARCHED PERSON IN RESPECT OF WHOM A SEARCH WAS MADE UNDER SECTION 132 OR REQUISITION OF BOOKS OF ACCOUNTS WERE MADE UNDER SECTION 132A OF THE ACT. THE LANGUA GE OF THE PROVISION IS CLEAR AND UNAMBIGUOUS. THE LEGISLATURE HAS NOT IMPOSED ANY EMBARGO ON THE ASSESSING OFFICER IN RES PECT OF THE STAGE OF PROCEEDINGS DURING WHICH THE SATISFACTION IS TO BE REACHED AND RECORDED IN RESPECT OF THE PERSON OTHER THAN TH E SEARCHED PERSON. 42 . 43 . 44. IN THE RESULT, WE HOLD THAT FOR THE PURPOSE OF SECTION 158BD OF THE ACT A SATISFACTION NOTE IS SINE QUA NON AND MUS T BE PREPARED BY THE ASSESSING OFFICER BEFORE HE TRANSMITS THE RECOR DS TO THE OTHER ASSESSING OFFICER WHO HAS JURISDICTION OVER SUCH OT HER PERSON . THE SATISFACTION NOTE COULD BE PREPARED AT EITHER OF TH E FOLLOWING STAGES: (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 158BC OF THE ACT; (B) ALONG WITH THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF T HE ACT; AND (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE CO MPLETED UNDER SECTION 158BC OF THE ACT OF THE SEARCHED PERSON. 14. THUS, AS ENVISAGED BY SECTION 158BD, SATISFACT ION OF THE ASSESSING OFFICER BEFORE HE TRANSMITS THE MATERIAL/RECORDS TO OTHER A SSESSING OFFICER HAVING 22 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 JURISDICTION OVER SUCH OTHER PERSON IS SINE QUA NON . SANS SUCH SATISFACTION, THE ASSESSING OFFICER CANNOT VALIDLY TAKE RECOURSE TO T HE MACHINERY PROVISION. 15. WE MAY NOW TURN TO SECTION 153C. NO DOUBT, THE FORM OF SECTION 153C IS DISSIMILAR TO THAT OF SECTION 158BD. IT IS ALSO TRU E THAT THE TWO PROVISIONS ARE EMBEDDED UNDER DIFFERENT CHAPTERS. FOR, SECTION 153 C IS IN CHAPTER XIV PROVIDING FOR PROCEDURE FOR ASSESSMENT, WHEREAS SECTION 158BD IS FOUND IN CHAPTER XIV-B PROVIDING FOR SPECIAL PROCEDURE FOR ASSESSMENT OF S EARCH CASES. FURTHER, SECTION 153C OPENS WITH NON-OBSTANTE CLAUSE. HOWEVER, THE N ON-OBSTANTE CLAUSE IN SECTION 153C IS NECESSITATED TO GIVE POWER TO THE A SSESSING OFFICER HAVING JURISDICTION TO PROCEED AGAINST THE PERSON OTHER TH AN THE PERSON REFERRED TO IN SECTION 153A, INSPITE OF THE ACTION UNDER SECTION 1 39, 147, 148, 149, 151 AND 153 OF THE I.T. ACT. HOWEVER, ON CLOSER SCRUTINY OF THE TWO PROVISIONS, IT IS INDISPUTABLE THAT, THESE PROVISIONS ARE MACHINERY PROVISIONS AND HAVE BEEN PROVIDED FOR IN THE STATUTE BOOK FOR THE PURPOSE OF CARRYING OUT ASSESS MENT OF A PERSON OTHER THAN THE SEARCHED PERSON UNDER SECTION 132 OR 132A OF THE I. T. ACT IN RELATION TO SECTION 158BD; AND SECTION 153A IN RELATION TO SECTION 153C . NOTABLY, THE PURPOSE UNDERLYING BOTH THESE PROVISIONS IS SIMILAR, EVEN T HOUGH SECTION 153C DOES NOT SPECIFICALLY REFER TO THE EXPRESSION UNDISCLOSED INCOME. HOWEVER, IN BOTH THE SITUATIONS, THE ASSESSING OFFICER ENGAGED IN CARRYI NG ON SEARCH OF THE ASSESSEE WITHIN HIS JURISDICTION, IF SEIZES OR REQUISITIONS THE ITEMS (BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS FOR SECTION 158BD; AND MONE Y, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DO CUMENTS FOR SECTION 153C), IS EXPECTED TO HANDOVER THOSE ITEMS TO THE ASSESSING O FFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THEREAFTER THE ASSESSING OFFI CER HAVING JURISDICTION HAS TO PROCEED AGAINST SUCH OTHER PERSON WITHIN HIS JURISD ICTION. EVEN FOR THE PURPOSE OF SECTION 153C, THE ASSESSING OFFICER BEFORE HANDING OVER THE ITEMS TO THE ASSESSING OFFICER HAVING JURISDICTION MUST BE SATISFIED THA T THE ITEMS BELONGS OR BELONG TO THE PERSON OTHER THAN THE PERSON REFERRED TO IN SEC TION 153A. THAT SATISFACTION OF 23 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 THE CONCERNED ASSESSING OFFICER IS A SINE QUA NON. THE CONSEQUENCES FLOWING FROM THE ACTION TO BE TAKEN ON THE BASIS OF SUCH INFORMA TION HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION, FOR THE ASSE SSEE, WHO IS A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, IS DRASTIC OF ASSESSMENT OR REASSESSMENT OF HIS INCOME FALLING WITHIN SIX ASSESSMENT YEARS. 16. SUFFICE IT TO OBSERVE THAT THE DISSIMILARITY OF THE FORM OF TWO PROVISIONS WOULD MAKE NO DIFFERENCE TO THE PURPOSE UNDERLYING. THE P OWER BESTOWED ON THE ASSESSING OFFICER HAVING JURISDICTION BE IT UNDER SECTION 153C OR SECTION 158BD IS IDENTICAL. 17 ...................... ..... 18. THE CONCOMITANT OF THIS CONCLUSION, IS THAT, TH E LEGAL POSITION AS APPLICABLE TO SECTION 158BD REGARDING SATISFACTION IN THE FIRST I NSTANCE OF THE FIRST ASSESSING OFFICER FORWARDING THE ITEMS TO THE ASSESSING OFFIC ER HAVING JURISDICTION; AND IN THE SECOND INSTANCE OF THE ASSESSING OFFICER HAVING JUR ISDICTION WHILST SENDING NOTICE TO SUCH OTHER PERSON (OTHER THAN THE PERSON REFERRE D TO IN SECTION 153A), MUST APPLY PROPRIO VIGORE. THE FACT THAT INCIDENTALLY TH E ASSESSING OFFICER IS COMMON AT BOTH THE STAGES WOULD NOT EXTRICATE HIM FROM RECORD ING SATISFACTION AT THE RESPECTIVE STAGES. IN THAT, THE ASSESSING OFFICER I S SATISFIED THAT THE ITEMS REFERRED TO IN SECTION 153C BELONGS OR BELONG TO A PERSON (O THER THAN THE PERSON REFERRED TO IN SECTION 153A), BEING SINE QUA NON. HE CANNOT ASS UME JURISDICTION TO TRANSMIT THOSE ITEMS TO ANOTHER FILE WHICH INCIDENTALLY IS P ENDING BEFORE HIM CONCERNING OTHER PERSON (PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A). THE QUESTION AS TO WHETHER THAT MAY INFLUENCE THE OPINI ON OF THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON, ALSO CA NNOT BE THE BASIS TO TAKE ANY OTHER VIEW. AS A MATTER OF FACT, THE OTHER ASSESSIN G OFFICER TO WHOM THE ITEMS ARE HANDED OVER, BEFORE ISSUING NOTICE MUST HIMSELF BE SATISFIED AFTER DUE VERIFICATION OF THE ITEMS RECEIVED AND THE DISCLOSURES MADE BY T HE OTHER PERSON IN THE RETURNS 24 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 FOR THE RELEVANT PERIOD ALREADY FILED BY THE OTHER PERSON BEFORE HIM. FOR THE SAME REASON, WE MUST REJECT THE ARGUMENT OF THE DEPARTME NT 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 PR OVISION EITHER EXPRESS OR IMPLIED (IN THE ACT) TO DISPENSE WITH THE REQUIREMENT OF SA TISFACTION, IF THE ASSESSING OFFICER HAPPENS TO BE THE SAME, AS IN THIS CASE, THE ARGUME NT OF THE DEPARTMENT MUST BE NEGATIVED. 19 20... 21. WE CONCLUDE THAT THE CONDITION PRECEDENT FOR RE SORTING TO ACTION UNDER SECTION 158BD DELINEATED BY THE SUPREME COURT IN THE CASE O F MANISH MAHESHWARI (SUPRA) AND IN THE RECENT CASE OF COMMISSIONER OF INCOME TAX-III VS. CALCUTTA KNITWEARS (SUPRA), WOULD APPLY ON ALL FOURS MANDATING SATISF ACTION OF THE ASSESSING OFFICER(S) DEALING WITH THE CASE AT THE R ESPECTIVE STAGES REFERRED TO IN SECTION 153C. 22. 23 IN THE PRESENT CASE, THE CONCURRENT FINDING OF FACT RECORDED BY THE APPELLATE FORUMS IS THAT, NO SATISFACTION HAS BEEN RECORDED B Y THE ASSESSING OFFICER BEFORE ISSUING OF NOTICE UNDER SECTION 153C. FURTHER, NONE OF THE PAPERS SEIZED BELONGS OR BELONG TO THE ASSESSEE (NOTICEE). THE APPELLATE FOR UMS HAVE FURTHER FOUND THAT NO ADDITION OR EVEN OBSERVATIONS HAVE BEEN MADE BY THE ASSESSING OFFICER IN ANY OF THE ORDERS FOR THE RELEVANT ASSESSMENT YEARS IN CON NECTION WITH ANY MATERIAL FOUND DURING THE COURSE OF SEARCH. EVEN FOR THAT RE ASON NO ACTION UNDER SECTION 153C, IS JUSTIFIED. THESE FINDINGS OF FACT NEED NO INTERFERENCE AND HAVE NOT BEEN QUESTIONED BEFORE US. CONSIDERING THE ABOVE, THESE APPEALS MUST FAIL. 8.2.3 THE HONBLE APEX COURT IN THE CASE OF M/S. CA LCUTTA KNITWEARS IN CA NO. 3958 OF 2014, IN THE CONTEXT OF SECTION158BD HAD AT PARAS 41,42,AND 44 OF ITS ORDER HELD AS UNDER:- 25 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 41. WE WOULD CERTAINLY SAY THAT BEFORE INITIATING PROCEEDINGS UNDER SECTION 158BD OF THE ACT, THE ASSESSING OFFIC ER WHO HAS INITIATED PROCEEDINGS FOR COMPLETION OF THE ASSESSM ENTS UNDER SECTION 158BC OF THE ACT SHOULD BE SATISFIED THAT T HERE IS AN UNDISCLOSED INCOME WHICH HAS BEEN TRACED OUT WHEN A PERSON WAS SEARCHED UNDER SECTION 132 OR THE BOOKS OF ACCO UNTS WERE REQUISITIONED UNDER SECTION 132A OF THE ACT. THIS I S IN CONTRAST TO THE PROVISIONS OF SECTION 148 OF THE ACT WHERE RECO RDING OF REASONS IN WRITING ARE A SINE QUA NON. UNDER SECTIO N 158BD THE EXISTENCE OF COGENT AND DEMONSTRATIVE MATERIAL IS G ERMANE TO THE ASSESSING OFFICERS SATISFACTION IN CONCLUDING THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHE D PERSON IS NECESSARY FOR INITIATION OF ACTION UNDER SECTION 15 8BD. THE BARE READING OF THE PROVISION INDICATES THAT THE SATISFA CTION NOTE COULD BE PREPARED BY THE ASSESSING OFFICER EITHER AT THE TIME OF INITIATING PROCEEDINGS FOR COMPLETION OF ASSESSMENT OF A SEARCHED PERSON UNDER SECTION 158BC OF THE ACT OR D URING THE STAGE OF THE ASSESSMENT PROCEEDINGS. IT DOES NOT ME AN THAT AFTER COMPLETION OF THE ASSESSMENT, THE ASSESSING OFFICER CANNOT PREPARE THE SATISFACTION NOTE TO THE EFFECT THAT TH ERE EXISTS INCOME TAX BELONGING TO ANY PERSON OTHER THAN THE S EARCHED PERSON IN RESPECT OF WHOM A SEARCH WAS MADE UNDER S ECTION 132 OR REQUISITION OF BOOKS OF ACCOUNTS WERE MADE U NDER SECTION 132A OF THE ACT. THE LANGUAGE OF THE PROVISION IS C LEAR AND UNAMBIGUOUS. THE LEGISLATURE HAS NOT IMPOSED ANY EM BARGO ON THE ASSESSING OFFICER IN RESPECT OF THE STAGE OF PR OCEEDINGS DURING WHICH THE SATISFACTION IS TO BE REACHED AND RECORDED IN RESPECT OF THE PERSON OTHER THAN THE SEARCHED PERSO N. 26 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 42. FURTHER, SECTION 158BE(2)(B) ONLY PROVIDES FOR THE PERIOD OF LIMITATION FOR COMPLETION OF BLOCK ASSESSMENT UNDER SECTION 158BD IN CASE OF THE PERSON OTHER THAN THE SEARCHED PERSON AS TWO YEARS FROM THE END OF THE MONTH IN WHICH THE NO TICE UNDER THIS CHAPTER WAS SERVED ON SUCH OTHER PERSON IN RES PECT OF SEARCH CARRIED ON AFTER 01.01.1997. THE SAID SECTIO N DOES NEITHER PROVIDES FOR NOR IMPOSES ANY RESTRICTIONS O R CONDITIONS ON THE PERIOD OF LIMITATION FOR PREPARATION THE SATISF ACTION NOTE UNDER SECTION 158BD AND CONSEQUENT ISSUANCE OF NOTI CE TO THE OTHER PERSON. 43 ...... 44. IN THE RESULT, WE HOLD THAT FOR THE PURPOSE OF SECT ION 158BD OF THE ACT A SATISFACTION NOTE IS SINE QUA NON AND MUST BE PREPARED BY THE ASSESSING OFFICER BEFORE HE TRANSMI TS THE RECORDS TO THE OTHER ASSESSING OFFICER WHO HAS JURI SDICTION OVER SUCH OTHER PERSON. THE SATISFACTION NOTE COULD BE P REPARED AT EITHER OF THE FOLLOWING STAGES: (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERS ON UNDER SECTION 158BC OF THE ACT; (B) ALONG WITH THE ASSESS MENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT; AND (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED UNDE R SECTION 158BC OF THE ACT OF THE SEARCHED PERSON. 8.2.4 THE CBDT HAS ACCEPTED THE ABOVE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CALCUTTA KNITWEARS IN CIVIL APPEAL NO: 3958 OF 2014 DT. 12/03/2014 AND CONSEQUENTLY ISSUED CIRCULAR NO. 24/2015 DT. 30/12/ 2015 (IN F.NO. 279/MISC/140/2015/ITJ) ON THE SUBJECT OF RECORDING OF SATISFACTION NOTE U/S 158BD/153C OF THE ACT. THIS CBDT CIRCULAR READS AS UNDER:- 27 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 CIRCULAR NO. 24/2015 F.NO.279/MISC./140 /2015/ITJ GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NEW DELHI, 31ST DECEMBER, 2015 SUBJECT: RECORDING OF SATISFACTION NOTE UNDER SECTI ON 158BD/153C OF THE ACT - REG.- THE ISSUE OF RECORDING OF SATISFACTION FOR THE PURP OSES OF SECTION 158BD/153C HAS BEEN SUBJECT MATTER OF LITIGATION. 2. THE HON'BLE SUPREME COURT IN THE CASE OF M/S CA LCUTTA KNITWEARS IN ITS DETAILED JUDGMENT IN CIVIL APPEAL NO.3958 OF 2014 D ATED 12.3.2014(AVAILABLE IN NJRS AT 2014-LL-0312-51) HAS LAID DOWN THAT FOR THE PURPOSE OF SECTION 158BD OF THE ACT, RECORDING OF A SATISFACTION NOTE IS A PREREQUISITE AND THE SATISFACTION NOTE MUST BE PR EPARED BY THE AO BEFORE HE TRANSMITS THE RECORD TO THE OTHER AO WHO HAS JUR ISDICTION OVER SUCH OTHER PERSON U/S 158BD. THE HON'BLE COURT HELD THAT 'THE SATISFACTION NOTE COULD BE PREPARED AT ANY OF THE FOLLOWING STAGES: (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 158BC OF THE ACT; OR (B) IN THE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE A CT; OR (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED UNDE R SECTION 158BC OF THE ACT OF THE SEARCHED PERSON.' 28 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 3. SEVERAL HIGH COURTS HAVE HELD THAT THE PROVISIO NS OF SECTION 153C OF THE ACT ARE SUBSTANTIALLY SIMILAR/PARI-MATERIA TO THE P ROVISIONS OF SECTION 158BD OF THE ACT AND THEREFORE, THE ABOVE GUIDELINE S OF THE HON'BLE SC, APPLY TO PROCEEDINGS U/S 153C OF THE IT ACT, FOR TH E PURPOSES OF ASSESSMENT OF INCOME OF OTHER THAN THE SEARCHED PER SON. THIS VIEW HAS BEEN ACCEPTED BY CBDT. 4. THE GUIDELINES OF THE HON'BLE SUPREME COURT AS REFERRED TO IN PARA 2 ABOVE, WITH REGARD TO RECORDING OF SATISFACTION NOT E, MAY BE BROUGHT TO THE NOTICE OF ALL FOR STRICT COMPLIANCE. IT IS FURTHER CLARIFIED THAT EVEN IF THE AO OF THE SEARCHED PERSON AND THE 'OTHER PERSON' IS ONE A ND THE SAME, THEN ALSO HE IS REQUIRED TO RECORD HIS SATISFACTION AS HAS BE EN HELD BY THE COURTS. 5. IN VIEW OF THE ABOVE, FILING OF APPEALS ON THE I SSUE OF RECORDING OF SATISFACTION NOTE SHOULD ALSO BE DECIDED IN THE LIG HT OF THE ABOVE JUDGMENT. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT PENDING LITIGATION WITH REGARD TO RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD /153C SHOULD BE WITHDRAWN/NOT PRESSED IF IT DOES NOT MEET THE GUIDE LINES LAID DOWN BY THE APEX COURT. SD/- (RAMANJIT KAUR SETHI) DCIT (OSD) (ITJ), CBDT, NEW DELHI. 8.2.5 IN THE CASE ON HAND, IT IS AN ADMITTED FACT R ECORDED IN THE ORDERS OF ASSESSMENT THAT THE INCRIMINATING DOCUMENTS IN THE FORM OF DIARIES WERE FOUND DURING THE SURVEY PROCEEDINGS UNDERTAKEN IN THE BUS INESS PREMISES OF THE ASSESSEE FIRM. IT IS THEREFORE CLEAR THAT THE CONCE RNED DOCUMENTS/DIARIES DID NOT EMANATE FROM OUT OF SEIZURES MADE IN THE COURSE OF SEARCH ACTION. IN THIS FACTUAL MATRIX OF THE CASE ON HAND, WE FIND THAT TH E ESSENTIAL CONDITION OF 29 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 SECTION 153C OF THE ACT IS NOT FULFILLED. FURTHER, THE ASSESSING OFFICER VIDE LETTER DT. 16/10/2015 HAS ADMITTED THAT THE SATISFACTION N OTE FOR INITIATING THE PROCEEDINGS U/S 143(3) R.W.S.153C OF THE ACT IS NOT AVAILABLE ON RECORD., BUT HAS STATED THAT IT WAS THE SAME ASSESSING OFFICER F OR INITIATION OF THE PROCEEDINGS U/S 143(3) R.W.S 153C OF THE ACT. THERE FORE, WE FIND THAT THE TWIN CONDITIONS (I) THAT THE INCRIMINATING DOCUMENTS SHO ULD HAVE BEEN FOUND DURING THE COURSE OF SEARCH ACTION U/S132 OF THE ACT AND ( II) THAT THE ASSESSING OFFICER SHOULD HAVE RECORDED HIS SATISFACTION ARE NOT FULFI LLED IN THIS CASE. FURTHER, THE CBDT, CIRCULAR NO: 24/2015 DT. 31/12/2015 HAS MADE ITS APPLICABILITY TO PENDING LITIGATION AS WELL. IN VIEW OF THE ABOVE FA CTUAL AND LEGAL MATRIX OF THE CASE, WE UPHOLD THE GROUND RAISED THAT THE ORDERS O F ASSESSMENTS FOR ASST. YEARS 2006-07 AND 2007-08 PASSED U/S 143(3) R.W.S. 153C OF THE ACT ARE WITHOUT JURISDICTION. 9. NOTICE U/S 143(2) OF THE ACT IS ISSUED BEYOND TIME 9.1 SINCE WE HAVE HELD THAT THE EXERCISE OF JURISDI CTION U/S 153C OF THE ACT BY THE ASSESSING OFFICER WAS NOT CORRECT, WE NEED TO E XAMINE THE APPLICABILITY OF THE PROVISIONS OF SECTION 143(2) OF THE ACT FOR ASS T. YEAR 2007-08; THE YEAR PERTAINING TO THE SURVEY ACTION U/S 133A OF THE AC T. WE FIND, AS PER THE RECORDS OF ASSESSMENT, THAT THE RETURN OF INCOME WA S FILED ON 29/10/2007 AND THE NOTICE U/S 143(3) WAS ISSUED ON 21/11/2008; WHI CH IS AFTER THE EXPIRY OF ONE YEAR AND IS THEREFORE BEYOND THE TIME PERMITTED BY LAW. 10. SINCE THE LEGAL ISSUES, RAISED BY WAY OF ADDIT IONAL GROUNDS HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE, WE DO NOT CONSID ER IT NECESSARY TO ADJUDICATE ON THE OTHER GROUNDS/ISSUES RAISED IN THESE APPEALS , AS IT WOULD ONLY BE AN ACADEMIC EXERCISE. 30 ITA NO. 5113-14 /MUM/2009 ASSESSMENT YEAR: 2006-07 &2007-08 & ITA 5067/MUM/2009 ASSESSMENT YEAR: 2007-08 11. IN THE RESULT, THE ASSESSEE APPEAL FOR ASST. YEAR 2007-08 IS ALLOWED AND REVENUES APPEALS FOR ASST. YEAR 2006-07 AND 2007-08 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2016 SD/- SD/- ( RAM LAL NEGI ) (JASON P.BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 24/02/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA