ACIT, New Delhi V. M/s. Victory Structures Pvt. Ltd., New Delhi

ITA 6225/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6449 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: ASHISH CHADHA; RANO JAIN ADV SH ASHISH GOYAL
• Keywords: Search and seizure; Document seized; Principle of natural justice; Opportunity of cross examination; Deemed to accrue or arise in india; Third party statement; Assessment record; Block assessment; Documents seized
• Section: 143(3); 133A; 153A; 32; 68; 132; 144; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA PILLAI , JM ITA NO S . 6208 & 6209 /DEL/2014 : ASSTT. YEAR S : 2009 - 10 & 2010 - 11 VICTORY DWELLINGS PVT. L TD. , 208, GUPTA TOWER, AZADPUR COMMERCIAL COMPLEX, AZADPUR, NEW DELHI - 110033 VS ACIT, CENTRAL CIRCLE - 09, NEW DELHI (APPELLANT) (RESPONDENT) ITA NOS. 6228, 6230 & 6231/DEL/2014 : ASSTT. YEARS : 2007 - 08 , 2009 - 10 & 2010 - 11 ACIT, CENTRAL CIRCLE - 09, NEW DELHI VS VICTORY DWELLINGS PVT. LTD., 208, GUPTA TOWER, AZADPUR COMMERCIAL COMPLEX, AZADPUR, NEW DELHI - 110033 (APPELLANT) (RESPONDENT) PAN NO. AACCV2862N ITA NOS. 6210 & 6211 /DEL/2014 : ASSTT. YEARS : 2009 - 10 & 2010 - 11 VICTORY APARTMENRTS PVT. LTD., 208, GUPTA TOWER, AZADPUR COMMERCIAL COMPLEX, AZADPUR, NEW DELHI - 110033 VS ACIT, CENTRAL CIRCLE - 09, NEW DELHI (APPELLANT) (RESPONDENT) ITA NOS. 6232 TO 6234/DEL/2014 : ASSTT. YEARS : 2007 - 08, 2009 - 10 & 2010 - 11 ACIT, CENTRAL CIRCLE - 09, NEW DELHI VS VICTORY APARTMENRTS PVT. LTD., 208, GUPTA TOWER, AZADPUR COMMERCIAL COMPLEX, AZADPUR, NEW DELHI - 110033 (APPELLANT) (RESPONDENT) PAN NO. AAC CV2794F ITA NOS. 6212 & 6213 /DEL/2014 : ASSTT. YEARS : 2009 - 10 & 2010 - 11 VICTORY STRUCTURES PVT. LTD., 208, GUPTA TOWER, AZADPUR COMMERCIAL COMPLEX, AZADPUR, NEW DELHI - 110033 VS ACIT, CENTRAL CIRCL E - 09, NEW DELHI (APPELLANT) (RESPONDENT) ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 2 ITA NOS. 6225 TO 6227 /DEL/2014 : ASSTT. YEARS : 200 8 - 09 TO 2010 - 11 ACIT, CENTRAL CIRCLE - 09, NEW DELHI VS VICTORY STRUCTURES PVT. LTD., 208, GUPTA TOWER, AZADPUR COMME RCIAL COMPLEX, AZADPUR, NEW DELHI - 110033 (APPELLANT) (RESPONDENT) PAN NO. AAC CV4180D ITA NOS. 621 4 & 621 5 /DEL/2014 : ASSTT. YEARS : 2009 - 10 & 2010 - 11 VICTORY TOWNSHIP PVT. LTD., 208, GUPTA TOWER, AZADPUR C OMMERCIAL COMPLEX, AZADPUR, NEW DELHI - 110033 VS ACIT, CENTRAL CIRCLE - 09, NEW DELHI (APPELLANT) (RESPONDENT) ITA NOS. 6235 TO 6237 /DEL/2014 : ASSTT. YEARS : 200 8 - 09 TO 2010 - 11 ACIT, CENTRAL CIRCLE - 09, NEW DE LHI VS VICTORY TOWNSHIP PVT. LTD., 208, GUPTA TOWER, AZADPUR COMMERCIAL COMPLEX, AZADPUR, NEW DELHI - 110033 (APPELLANT) (RESPONDENT) PAN NO. AAC CV3922D ASSESSEE BY : SH. RANO JAIN, ADV., SH. ASHISH GOYAL, CA & SH. ASHISH C HADHA, CA REVENUE BY : SH. S. S. RANA, CIT DR DATE OF HEARING : 01 .02 .201 7 DATE OF PRONOUNCEMENT : 24 . 03 .201 7 ORDER PER BENCH : THE CROSS APPEALS BY THE ASSESSEE AND THE DEPARTMENT AND THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 3 ORDERS OF THE OF LD. CIT (A) - XXXII , NEW DELHI AS PER FOLLOWING DETAILS: S.N O. ASSESSEE A.Y. APPEAL NO. ASSESSEE APPEAL NO. DEPARTMENT ORDER OF THE CIT(A) DATED 1 VICTORY DWELLINGS PVT. LTD. 2007 - 08 - IT - 6228 /DEL - 2014 20.08.2014 2 VICTORY DWELLINGS PVT. LTD. 2009 - 10 IT - 6208/DEL - 2014 IT - 6230/DEL - 2014 20.08.2014 3 VICTORY DWELLINGS PVT. LTD. 2010 - 11 IT - 6209/DEL - 2014 IT - 6231/DEL - 2014 20.08.2014 4 VICTORY APARTMENTS PVT. LTD. 2007 - 08 - IT - 6232/DEL - 2014 19.08.20 14 5 VICTORY APARTMENTS PVT. LTD. 2009 - 10 IT - 6210/DEL - 2014 IT - 6233/DEL - 2014 19.08.2014 6 VICTORY APARTMENTS PVT. LTD. 2010 - 11 IT - 6211/DEL - 2014 IT - 6234/DEL - 2014 19.08.2014 7 VICTORY STRUCTURES PVT. LTD. 2008 - 09 - IT - 6225/DEL - 2014 21.08.2014 8 VICTORY ST RUCTURES PVT. LTD. 2009 - 10 IT - 6212/DEL - 2014 IT - 6226/DEL - 2014 18.08.2014 9 VICTORY STRUCTURES PVT. LTD. 2010 - 11 IT - 6213/DEL - 2014 IT - 6227/DEL - 2014 18.08.2014 10 VICTORY TOWNSHIP PVT. LTD. 2008 - 09 - IT - 6235/DEL - 2014 22.08.2014 11 VICTORY TOWNSHIP PVT. LTD. 2009 - 10 IT - 6214/DEL - 2014 IT - 6236/DEL - 2014 18.08.2014 12 VICTORY TOWNSHIP PVT. LTD. 2010 - 11 IT - 6215/DEL - 2014 IT - 6237/DEL - 2014 18.08.2014 2 . AT THE FIRST INSTANCE WE WILL DEAL WITH THE CROSS APPEALS IN THE CASE OF M/S VICTORY DWELLINGS PVT. LTD. FOR THE ASSESSMENT YEAR 2009 - 10. THE GROUNDS RAISED IN ITA NO. 6208/DEL/2014 BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 3,20,00,000/ - MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION MONEY UNDER SECTION 68 OF THE ACT. ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 4 3(I) ON THE F ACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ABOVE ADDITION REJECTING THE EXPLANATION AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE TO PROVE THE IDENTITY, CREDITWORTHINESS OF THE SHAREHOLDER AND GENUINENESS OF THE TRANSACTION. (II) THAT THE ADDITION HAD BEEN MADE WITHOUT POINTING OUT ANY DEFECT OR IRREGULARITY IN THE EVIDENCES FILED BY THE ASSESSEE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE SAID ADDITION DESPITE THE FACT THAT THE SAME HAS BEEN MADE ON THE BASIS OF MATERIAL AND EVIDENCES COLLECTED AT THE BACK OF THE ASSESSEE WITHOUT GIVING IT AN OPPORTUNITY TO REBUT THE SAME IN CLEAR VIOLATION OF THE PRINCIPLE OF NATURAL JUST ICE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION DESPITE THE SAME BEING MADE ON THE BASIS OF STATEMENTS OF SOME PERSON WITHOUT GIVING ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE IN CLEAR VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN ADJUDICATING THE ISSUE ON MERITS, HAVING ONCE HELD THE ASSESSMENT ORDER TO BE ILLEGAL AND BAD IN LAW FO R LACK OF JURISDICTION. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 5 3. T HE GROUNDS RAISED BY THE DEPARTMENT IN ITS APPEAL IN ITA NO. 6230/DEL/2014 READ AS UNDER: (1) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN UPHOLDING THE GROUND OF THE ASSESSEE THAT PROVISIONS OF SECTION 153C OF THE ACT COULD NOT BE APPLIED IN THIS CASE AND INITIATION OF PROCEEDINGS U/S 153C WAS NOT PROPER AND BAD IN LAW. (2) THE COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN LAW AND ON FACTS IN HOLDING THAT FOR INITIATING VALID JURISDICTION U/S 153C, EVEN IF THE AO OF THE SEARCHED PERSON AND THE AO OF SUCH OTHER PERSON IS SAME, IT IS MANDATORY THAT HE HAS TO FIRST RECORD SATISFACTION NOTE IN THE FILE OF THE PERSON SEARCH ED AND THEREAFTER SUCH SATISFACTION NOTE ALONG WITH THE SEIZED DOCUMENTS OR BOOKS OF ACCOUNT TO BE PLACED IN THE FILE OF SUCH OTHER PERSON. (3) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT NO FAIR OPPORTUNITY OF HEARI NG U/S 143(2) OF THE ACT WAS GIVEN TO THE ASSESSEE BEFORE COMPLETING THE ASSESSMENT U/S 153C OF THE IT ACT. (4) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 70,00,000/ - ON ACCOUNT OF DEEMED INCOME UNDE R SECTION 68 OF THE INCOME TAX ACT, 1961. (5) (A) THE ORDER OF THE CIT(APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HE ARING OF THE APPEAL. 4. FROM THE ABOVE GROUNDS OF THE ASSESSEE S APPEAL, IT WOULD BE CLEAR THAT THE MAIN GRIEVANCE OF THE ASSESSEE RELATES TO THE VALIDITY OF THE NOTICE DATED 27.02.2012 ISSUED TO THE ASSESSEE AND THE ASSESSMENT ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 6 FRAMED THEREAFTER U/S 143( 3) R.W.S. 153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 5. FACTS OF THE CASE AS APPEARING IN THE ORDERS OF THE AUTHORITIES BELOW IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF A BUILDER AND DEVELOPER OF REAL ESTATE. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT IN VICTORY GROUP OF CASES (MAIN JAGAT GROUP) ITS DIRECTORS, OTHER INDIVIDUALS AND CONNECTED ASSOCIATES AT BUSINESS & RESIDENTIAL PREMISES ON 14.09. 2010. A SURVEY OPERATION U/S 133A OF THE ACT WAS ALSO CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 14.09 .2010. THE AO ISSUED THE NOTICE U/S 153A OF THE ACT ON 04.11.2011 FOR THE ASSESSMENT YEARS 2005 - 06 TO 2010 - 11. THE ASSESSEE INFORMED THE AO THA T NO ACTION U/S 132 OF THE ACT WAS INITIATED AGAINST THE ASSESSEE. THE AO VERIFIED THE SAME AND FOUND THE SAID VERSION OF THE ASSESSEE AS CORRECT. ACCORDINGLY, THE AFORESAID NOTICE S ISSUED U/S 153A OF THE ACT WERE WITHDRAWN VIDE LETTER DATED 26.06.2013 AND THE ASSESSEE WAS INFORMED ACCORDINGLY. THEREAFTER, A SATISFACTION NOTE U/S 153C OF THE ACT WAS DRAWN ON 27.02.2013 AND THE NOTICE S U/S 153C OF THE ACT WERE ISSUED FOR THE ASSESSMENT YEARS 2005 - 06 TO 2010 - 11. IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 05. 03.2013 STATED THAT RETURN OF INCOME ALREADY FILED U/S 139(1) OF THE ACT ON 25.09.2009 MAY BE TREATED IN RESPONSE TO THE NOTICE U/S 153C OF THE ACT. THE AO IN THE BODY OF THE ASSESSMENT ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 7 ORDER DATED 28.03.2013 OBSERVED THAT DURING THE COURSE OF ASSESSMENT P ROCEEDINGS U/S 153C OF THE ACT IN THE CASE OF SH. PRAMOD GOEL, I T WAS NOTICED THAT THE SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS UNDERTAKEN ON 14.09.2010 IN THE CASE S OF SH. PRAMOD GOEL, SMT. SAVITA GOEL AND SH. ASHISH GOEL AT BN - 33, EAST SHALIMA R BAGH, DELHI AND THE DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED FROM THE ABOVE PREMISES. THE AO THEREAFTER FRAMED THE ASSESSMENT U/S 143(3) R.W.S. 153C OF THE ACT ON 28.03.2013, ASSESSING THE I NCOME OF THE ASSESSEE AT RS.3.20 CRORES FOR THE ASSESSMENT YEAR 2009 - 10 BY MAKING THE ADDITIONS U/S 68 OF THE ACT ON ACCOUNT OF SHARE CAPITAL/PREMIUM RECEIVED BY THE ASSESSEE DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. 6. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND CHALLENGED THE JURISDICTION OF THE AO ASSUMED U/S 153C OF THE ACT AND SUBMITTED AS UNDER: 1. FIRST THE LD AO PRESUMED THAT SEARCH HAS TAKEN PLACE ON APPELLANT AND ACCORDINGLY ISSUED NOTICE U/S 153A OF IT. ACT. 2. THEREAFTER NOTICE U/S 1 53A OF IT ACT WAS WITHDRAWN ON APPELLANT'S OBJECTION ON 26.2.2013. 3. ON REALIZING THAT NO SEARCH TOOK PLACE ON THE APPELLANT COMPANY T HEN HE TOOK REFUGE U/S 153C OF I. T. ACT AND ISSUED NOTICE U/S 153C ON 27.02.2013 ON THE GROUND THAT COPY OF AUDIT ED BA LANCE SHEETS OF APPELLANT WERE FOUND IN SEIZED RECORDS AT PAGE NO 102 & 103 OF 'APPELLANT COMPANY ' AT THE PREMISES OF ONE OF ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 8 DIRECTOR'S RESIDENCE WHO WAS SEARCHED IN CONNECTION TO SOME JAGAT GROUP OF CASES. 4. THE LD AO WAS AGAIN REMINDED BY OBJECTIONS F ILED THAT EVEN SECTION 153C IS ALSO NOT APPLICABLE BECAUSE EVEN AUDITED BALANCE SHEETS OF APPELLANT COMPANY CANNOT BE REGARDED AS DOCUMEN T IN TERM OF SECTION 153C OF I. T. ACT. AS SUCH BALANCE SHEET ARE ADOPTED ACCOUNTS OF APPELLANT COMPANY AND ARE IN PUBLI C DOMAIN & NOTHING INCR IMINATING WAS FOUND IN SUCH DOCUMENTS . 5. THE LD AO WAS ALSO REMINDED THAT SPIRIT OF SECTION 153C OF IT. ACT MUST BE RESPECTED TO AS NOTICE U/S 153C READ WITH SECTION 153A SHOULD BE ISSUED WHERE SOME UNDISCLOSED INCOME ARE UNEARTHE D BY EXAMINATION OF CERTAIN DOCUMENTS FOUND FROM PERSON WHO IS SEARCHED WHICH WERE NOT PART OF REGULAR ASSESSMENTS. 6. THE LD AO DISREGARDED THE ALL PRINCIPLES OF NATURAL JUSTICE & JUST BRUSHED A SIDE ALL OBJECTIONS/CASE LAWS AND WENT AHEAD IN MAKING ASSES SMENTS. 7. NOW COMES THE MOST BIZARRE PART OF TOTAL DISREGARD OF PRINCIPLES OF NATURAL JUSTICE, WHICH WAS ITSELF EVIDENT FROM THE QUESTIONNAIRE ISSUED ON 5.3.2013 (EVEN WITHOUT WAITING TO RECEIVE RETURN OF INCOME U/S 153C OF I.T. ACT WHICH WAS 6 TH M ARCH 2 013 AS THE DATE GIVEN TO/F I L E RETURN OF INCOME IN PURSUANCE TO NOTICE U/S 153C OF I.T. ACT ON 27.02.2013. 8. THE LD AO WENT AHEAD AND FRAMED THE ASSESSMENT WHERE ADDITIONS WERE MADE U/S 68 OF I.T. ACT ON A/C OF SHARE APPLICATION MONEY RECEIVED FROM ONE AN D ALL TREATING THE SAME AS BOGUS BY GIVING REFERENCE TO SOME THIRD PARTY STATEMENT, REFERENCES & NO SUCH STATEMENTS/ENQUIRIES REPORTS WERE EVER SHOWN OR CONFRONTED TO APPELLANT COMPANY AND SURPRISINGLY ONE EXCEL SHEET WHICH IS NOTHING BUT DETAIL OF INVESTM ENTS RECEIVED BY APPELLANT COMPANY HAS BEEN MADE PART OF ORDER AS BASE FOR MAKING ADDITION U/S 68 OF I.T. ACT. THE LD AO SERIOUSLY MISUNDERSTOOD THE CONTENTS OF SUCH ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 9 STATEMENTS AND IS RELYING ON THOSE DOCUMENTS/COMPILATION & STATEMENTS WHICH WERE NEVER EVE R SHOWN TO APPELLANT COMPANY TO GIVE REPLIES. THE LD AO WAS SEEMS TO BE IN JIFFY TO CLOSE THE ASSESSMENT IN MOST ARBITRARY MANNER WITHOUT EVEN APPLICATION OF JUDICIOUS MIND. NO MATERIAL NO EFFECTIVE HEARING THEREFORE PRESENT ASSESSMENT FRAMED IS SURE MISCA RRIAGE OF OUR NATURAL JUSTICE & WE RELY ON FOLLOWING JUDGMENTS OF APEX AND HIGH COURTS & ITAT'S BENCHES WHICH ONE AFTER ANOTHER RULED AGAINST SUCH APPROACH OF THE LD AO, EVEN THE PRESENT CASE HAS BEEN WORSE THAN EX - PARTE ASSESSMENTS U/S 144 OF IT ACT. 9. NOW WE SUBMIT BEFORE YOUR HONORS THAT ACTIONS OF THE LD AO IN THE PRESENT CASE BE EXAMINED W.R.T TO USE OF SECTION 153C OF IT. ACT AS WELL AS ON THE GROUND OF APPLICATION OF PRINCIPLES OF NATURAL JUSTICE BY TAKING CUE FROM THE HELD JUDGMENTS OF SUPERIOR COURTS. 10. OUR FIRST RELIANCE IS BASED ON LEADING JUDGMENT OF HON'BLE MUMBAI SPECIAL BENCH IN THE MATTER OF ALL CARGO GLOBAL LOGISTICS LTD. VS DCIT 181 ITR (TRIB.) 106 . 7. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: SINHGAD TECHNICAL EDUCATION S OCIETY V. ASSTT. CIT LMJ INTERNATIONAL LTD V. DY CIT SUNCITY ALLOYS P LTD VS ACIT ANIL KUMAR BHATIA VS ACIT ACIT VS MRS ULTARA S SHOREWALA ACIT VS ASHA KATARIA SHRI VIKRAM KHANDELWAL VS DCIT ACIT VS GAMBHIR SILK MILLS VIJAYBHAI N. CHANDRANI V. ASSTT CIT ME GHMANI ORGANICS LTD. V. DY. CIT P. SRINIVAS NAIK V. ASSTT. CIT ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 10 8. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSMENT FOLDER OF SH. PRAMOD GOEL REVEALED THAT THE EXERCISE OF RECORDING THE SATISFACTION NOTE DURING THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT WAS NOT CARRIED OUT AND THERE WAS NO SATISFACTION NOTE FOUND ON THE RECORD. ON THE OTHER HAND, THE AO RECORDED THE SATISFACTION NOTE IN THE FILE OF SUCH OTHER PERSON I.E. THE ASSESSEE COMPANY AND THOSE FACTS W ERE CONTRARY TO THE PROVISION AND DOES NOT SATISFY THE CONDITION FOR ASSUMING THE JURISDICTION U/S 153C OF THE ACT. THE LD. CIT(A) CATEGORICALLY STATED THAT NO SATISFACTION NOTE WAS FOUND, RECORDED IN THE FILE OF SH. PRAMOD GOEL, THE PERSON WHO WAS SEARCHE D U/S 132 AND ASSESSED U/S 153A OF THE ACT. THEREFORE, THE SATISFACTION NOTE WHICH WAS RECORDED IN THE FILE OF THE ASSESSEE COMPANY COULD NOT BE SAID TO BE VALID WITHIN THE MEANING OF SECTION 153C OF THE ACT. THE LD. CIT(A) HELD THAT THE AO DID NOT APPRECI ATE THE LEGAL FRAME OF THE CONDITION LAID DOWN U/S 153C OF THE ACT AND HE DID NOT CARRY OUT ANY SUCH EXERCISE AS MENTIONED IN SECT ION 153C(1) OF THE A CT WITH PROPER APPLICATION OF MIND, T HEREFORE, INITIATION OF PROCEEDINGS U/S 153C OF THE ACT WAS NOT PROPE R AND WAS BAD - I N - LAW. THE RELEVANT FINDINGS HAD BEEN GIVEN BY THE LD. CIT(A) IN PARAS 8 TO 8.1.12 OF THE IMPUGNED ORDER WHICH READ AS UNDER: 8. I HAVE GONE THROUGH THE FACTS OF THE CASE AND CONSIDERED THE WRITTEN SUBMISSIONS, DETAILS FILED IN THE PAPER BO OK OF THE APPELLANT. I HAVE ALSO PERUSED THE CITATION OF VARIOUS CASE LAWS RELIED UPON BY THE APPELLANT IN SUPPORT OF THE CONTENTIONS RAISED IN ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 11 GROUNDS OF APPEAL. SECTION 153C OF THE I T ACT, 1961 READS AS UNDER: '153C. 1(1)] NOTWITHSTANDING ANYTHING CONTA INED 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 THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS 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 REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASS ESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A:].' FROM THE SIMPLE INTERPRETATION OF THE ABOVE SECTION, IT IS EVIDENT THAT ACTION UNDER SECTION 153C CAN BE TAKEN IN RESPECT OF ANY OTHER PERSON OTHER THAN THE PERSON SEARCHED, IF THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY, OR OTHER VALUABLE ARTICLE OR THING OR BO OKS OF ACCOUNT SEIZED RE QUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED U/S 153A. IN SUCH CIRCUMSTANCES THE ASSESSING OFFICER SHALL HAND OVER TO THE ASSESSING OFFICER OF SUCH OTHER PERSON MONEY, JEWELLERY, BULLION OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENT, AND THEREAFTER THE ASSESSING OFFICER OF SUCH OTHER PERSON SHALL PROCEED AGAINST THE SAID PERSON TO ASSESS OR RE - ASSESS HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTI ON 153A. 8.1 THEREFORE, RECORDIN G OF SATISFACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED THAT ANY MONEY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED BELONG TO THE PERSON OTHER THAN THE PERSON SEARCHED IS A SINE QUA NON FOR INITIAT ING ACTION U/S 153C OF THE IT ACT, 1961. THIS INTERPRETATION OF SECTION 153C IS SUPPORTED BY THE DECISION OF ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 12 HON'BLE APEX COURT IN THE CASE OF MANISH MAHESWARI VS. ACIT & ANOTHER (2007) 289 ITR 341 (SC) WHERE THE LORDSHIPS AT PAGE 348 HELD AS UNDER: 'THE CONDITION PRECEDENT FOR INVOKING A BLOCK ASSESSMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132, OR DOCUMENTS 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 DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158BD, HOWEVER, PROVIDES FOR TAKING RECOURSE TO A BLOCK ASSESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERSON, THE CONDITIONS PRECEDENT WHEREFOR ARE; (I) SATISFACTION MUST BE RECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OF THE ACT; (II) THE BOOKS OF ACCOUNT OR OTHE R DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTIO N OVER SUCH OTHER PERSON; AND (III ) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT F OR INVOKING THE PROVISIONS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD B EEN REQUISITIONED UNDER SECTION 132A OF THE ACT.' 8.1.1 THE LANGUAGE OF SECTION 158BD AND SECTION 153C NEEDS TO BE ELABORATED AND APPRECIATED WHILE ADDRESSING THE LEGAL POSITION OF SECTION 153C OF THE IT ACT, 1961. SECTION 158BD READS AS UNDER: '158BD. W HERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM DOCUMENTS OR ANY ASSETS WERE ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 13 REQUISITIONED UNDER SECTION 132 A, THEN, THE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS SEIZE D OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED [UNDER SECTION 158BC] AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHALL APPLY ACCORDINGLY. ' 8.1.2 REFERENCE IS MADE TO THE JUDICIAL PRECEDENT IN THE CASE OF CIT VS MEGHAMANI ORGANICS LTD. WHERE THE HON'BLE GUJARAT HIGH COURT COMPARED THE LANGUAGE OF 153C AND 158BD AT PAGE NO. 6 OF THEIR ORDER AND AS UNDER: 'SECTION 153C WHICH IS SIMILARLY WOR DED TO SECTION 158BD OF THE ACT, PROVIDES THAT WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153 - A HE SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON. HOWEVER, THERE IS A DISTINCTION BETWEEN THE TWO PROVISIONS INASMUCH AS UNDER SECT ION 153C NOTICE CAN BE ISSUED ONLY WHERE THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG TO SUCH OTHER PERSON, WHEREAS UNDER SECTION 158BD IF THE ASSESSING OFFICER IS SATISFIE D THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS WERE REQUISITIONED UNDER SECTION 132A, HE SHALL PROCEED AGAINST SUCH OT HER PERSON UNDER SECTION 158BC . ' 8.1.3 FROM THE ABOVE CITATIONS AND ALSO FROM THE COMPARISON OF LANGUAGE OF SECTIONS 153C AND 158BD, IT IS EVIDENT THAT THE CONDITION FOR RECORDING SATISFACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED IS PRESENT IN BOTH THE SECTIONS. IN SECTION 158BD, THE ASSESSING OFFICER OF THE PERSON SEARCHED IS TO BE SATISFIED THAT ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 14 ANY UNDISCLOSED INCOME BELONG TO ANY OTHER PERSON OTHER THAN THE PERSON SEARCHED, WHILE IN THE SECTION 153C, THE AO OF THE PERSON SEARCHED IS TO BE SA TISFIED THAT ANY MONEY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO A PERSON OTHER THAN THE PERSON OF SEARCHED. THE SUBSEQUENT PROCEDURE IN SECTION 158BD AND SECTION 153C IS SAME WHEREIN THE ASSESSING OFF ICER OF THE PERSON SEARCHED HAS TO HANDOVER THE DOCUMENTS OR ASSETS SEIZED TO THE AO HAVING JURISDICTION OVER THE SUCH OTHER PERSON AND THEREAFTER, THE AO OF SUCH OTHER PERSON WOULD ASSESS OR RE - ASSESS SUCH OTHER PERSON. THUS THE BASIC CONDITION OF RECORDI NG THE SATISFACTION BY THE AO OF THE PERSON SEARCHED AS WELL AS HANDING OVER THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS SEIZED TO THE AO OF SUCH OTHER PERSON IS PRESENT IN BOTH THE SECTIONS. TO THIS EXTENT THE DECISION OF THE HON'BLE APEX COURT IN T HE CASE OF MANISH MAHESWARI IS APPLICABLE WHILE INTERPRETING THE PROVISIONS OF SECTION 153C. 8. 1.4 IN THE BACKDROP OF THE ABOVE LEGAL POSITION , DURING THE COURSE OF APPEAL P RO CEEDINGS I HAVE CALLED FOR THE ASSESSMENT RECORD OF THE APPELLANT COMPANY AND FO UND THAT THE AO RECORDED THE SATISFACTION NOTE IN THE FILE OF THE APPELLANT COMPANY AS UNDER: 'SATISFACTION U/S 153C OF THE INCOME TAX ACT 1961 IN THE CASE M/S VICTORY DWELLINGS PVT . LTD. PAN - AACCV2862N 208. GUPTA TOWER. AZADPUR COMMERCIAL COMPLEX. AZADPU R. DELHI - 110033. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS U/S 153A IN THE CASE OF SH. PRAMOD GAEL, IT IS NOTICED THAT SEARCH AND SEIZURE OPERATION U/S 132 WAS UNDERTAKEN ON 14.09.2010 IN THE CASE OF SH. PRAMOD GOEL, SMT SAVITA GOEL, AND SH . ASHISH GAEL AT EN - 33, EAST SHALIMAR BAGH, DELHI. UNDER MENTIONED DOCUMENTS BELONGING TO M/S VICTORY DWELLINGS PVT. LTD. WERE FOUND AND SEIZED FROM THE ABOVE PREMISES. PAGE NO. 96 TO 98 OF ANNEXURE A - L OF PARTY V - 2 IS A COPY OF THE BALANCE SHEET, PROFIT LOSS ACCOUNT, SCHEDULE - A (ADVANCE ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 15 AGAINST SUPPLIERS) PERTAINING TO M/S VICTORY DWELLINGS PVT . LTD. FOR THE F INANCIAL YEAR ENDING 31.03.2010. THE CASE OF M/S VICTORY DWELLINGS PVT. LTD. WAS CENTRALIZ ED WITH THIS OFFICE VIDE F.NO;. C1T - DELHI - VI/CENTRALIZATION/2011 - 12/64 8 DATED 22.06.2011 ISSUED BY THE CIT, DELHI - VI, NEW DELHI. I AM THEREFORE SATISFIED THAT THE DOCUMENTS SEIZED, AS REFERRED TO ABOVE, BELONG TO M/S VICTORY DWELLINGS PVT. LTD. WARRANTING ACTION U/S 153C IN THIS CASE. 27. 02.2013 (SUMESH SWANI) DEPUTY CO MMIS SIONER OF INCOME TAX CENTRAL CIRCLE - 09, NEW DELHI NOTICES U/S 153C OF THE INCOME - TAX ACT, 1961 ARE HEREBY ISSUED FOR THE ASSESSMENT YEARS 2005 - 06 TO 2010 - 11. (SUMESH SWANI) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 09, NEW DELHI' 8.1.5 THE LAST LINE OF SATISFACTION NOTE READ AS UNDER: 'I AM THEREFORE SATISFIED THAT THE DOCUMENTS SEIZED AS REFERRED TO ABOVE BELONG TO M/S VICTORY DWELLINGS PVT. LTD. WARRANTING ACTION U/S 153CIN THIS CASE.' 8.1.6 A PLAIN READING ABOVE INDICATED THAT THE SATISFACT ION NOTE WAS RECORDED BY THE ASSESSING OFFICER WHO WAS TAKING ACTION U/S 153C OF THE I T ACT 1961, I.E. THE ASSESSING OFFICER OF THE APPELLANT COMPANY. THIS INFERENCE IS DRAWN AND STRENGTHENED FROM THE FACT THAT SUCH SATISFACTION NOTE WAS RECORDED ON 27.02 .2013 AND ALSO THE NOTICE U/S 1 53C WAS ISSUED ON THE SAME DATE, THE ASSES SING OFFICER WHO RECORDED THE SA TISFACTION NOTE IN THE FILE OF THE APPELLANT COMPANY AND ALSO THE ASSESSING OFFICER WHO ISSUED THE NOTICE U/S 153C IS SAME I.E. ASSESSING OFFICER CENTR AL CIRCLE - 9, ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 16 NEW DELHI. THIS COULD BE DUE TO THE FACT THAT THE SAID CASE WAS CENTRALIZED WITH THE OFFICE OF CENTRAL CIRCLE - 9 NEW DELHI VIDE FILE NO. CIT - D - VI/CENTRALIZATION/2011 - 12/648 DATED 22.06.2011 ISSUED BY THE CIT DELHI - VI NEW DELHI. 8.1.7 IN THE CO URSE OF THE APPEAL PROCEEDINGS I HAVE ALSO CALLED FOR THE ASSESSMENT RECORD OF SH. PRAMOD GOEL WHO WAS SEARCHED U/S 132 ON 14.09.2010. SH. PRAMOD GOEL IS THE DIRECTOR OF THE APPELLANT COMPANY I.E. M/S VICTORY DWELLINGS PVT. LTD. 8.1.8 THE ASSESSING OFFICE R OF THE SEARCHED PERSON I.E. SH. PRAMOD GOEL AND THE ASSESSING OFFICER OF SUCH OTHER PERSON I.E. THE APPELLANT COMPANY I.E. M/S VICTORY DWELLINGS PVT. LTD. MAYBE SAME, BUT THE ABOVE TWO ENTITIES ARE TWO DIFFERENT PERSONS AND THE ASSESSING OFFICER IS DUTY BOUND TO CARRY OUT THE EXERCISE, AS UNDER: 'A. AS AN ASSESSING OFFICER OF THE PERSON SEARCHED HE SHOULD HAVE RECORDED A SATISFACTION NOTE DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A IN THE CASE OF SH. PRAMOD GOEL IN HIS FILE. B. AFTER RECORDING SUCH SATISFACTION NOTE IN THE FILE OF SH. PRAMOD GOEL I.E. (THE PERSON SEARCHED) THE SAME SHOULD HAVE BEEN PLACED IN THE FILE OF SUCH OTHER PERSON I.E . THE APPELLANT COMPANY M/S VICTORY DWELLINGS PVT. LTD. C. THEN IN THE CAPACITY AS AN ASSESSING OFFICER O F SUCH OTHER PERSON, HE SHOULD HAVE TAKEN COGNIZANCE OF THE SATISFACTION NOTE AND THEREAFTER ISSUED A NOTICE U/S 153C OF THE IT ACT, 1961.' 8.1.9 ON PERUSAL OF THE ASSESSMENT FOLDER OF SH. PRAMOD GOEL, I FIND THAT SUCH AN EXERCISE OF RECORDING THE SATISFA CTION NOTE DURING THE ASSESSMENT PROCEEDINGS U/S 153A WAS NOT CARRIED OUT AND THERE IS NO SATISFACTION NOTE FOUND ON RECORD. ON THE OTHER HAND THE ASSESSING OFFICER RECORDED THE SATISFACTION NOTE IN THE FILE OF SUCH OTHER PERSON, I.E. THE APPELLANT COMPANY M/S VICTORY ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 17 DWELLINGS PVT. LTD. THIS FACT IS CONTRARY TO THE PROVISIONS AND DOES NOT SATISFY THE CONDITION FOR ASSUMING THE JURISDICTION U/S 153C OF THE IT ACT, 1961. NO SATISFACTION NOTE WAS FOUND RECORDED IN THE FILE OF SH. PRAMOD GOEL, THE PERSON WHO W AS SEARCHED U/S 132 AND ASSESSED U/S 153A OF THE IT ACT, 1961. THEREFORE, THE ABOVE SATISFACTION NOTE WHICH IS RECORDED IN THE FILE OF THE APPELLANT COMPANY I.E. M/S. VICTORY DWELLINGS PVT. LTD. CANNOT BE SAID TO BE VALID WITHIN TH E MEANING OF SECTION 153C OF THE IT ACT, 1961. 8.1.10 IN THE COURSE OF APPEAL PROCEEDINGS, THE AR OF THE APPELLANT VEHEMENTLY ARGUED THAT SH. PRAMOD GOEL WAS THE DIRECTOR OF THE APPELLANT COMPANY AND THE DOCUMENT FOUND AND SEIZED FROM HIS RESIDENTIAL PREMISES BELONGED TO HIM IN T HE CAPACITY OF A DIRECTOR TO EXAMINE THE FINANCIAL STATEMENTS OF THE APPELLANT COMPANY FOR THE YEAR ENDED ON 31.03.2010 AND NOT TO THE APPELLANT COMPANY. HE ALSO ARGUED THAT THE FINANCIAL STATEMENTS (BALANCE SHEET, PROFIT & LOSS ACCOUNT AND SCHEDULE A) ARE THE DOCUMENTS IN PUBLIC DOMAIN AND HENCE ARE NOT INCRIMINATING IN NATURE. THE CONTENTS OF PAGE NOS. 96 TO 98 OF ANNEXURE A - 1 FOUND AND SEIZED BY THE SEARCHED PARTY V - 2 FROM THE RESIDENTIAL PREMISES OF SH. PRAMOD GOEL WAS SUBJECTED ONLY AS A TOOL IN INVOKI NG THE PROVISIONS U/S 153C OF THE IT ACT, 1961 BUT THE SAME WAS NEVER EXAMINED IN THE COURSE OF ASSESSMENT PROCEEDINGS OF THE APPELLANT COMPANY NOR ANY TRANSACTION INCRIMINATING IN NATURE WAS DETECTED BY THE ASSESSING OFFICER. IN THE COURSE OF THE ENTIRE A SSESSMENT PROCEEDINGS NO QUERIES WERE ASKED BY THE ASSESSING OFFICER PERTAINING THE ANY ITEM FROM THE FINANCIAL STATEMENTS. HOWEVER, ONLY THAT MATERIAL I.E. 51 - 55 OF ANNEXURE A - 5 FOUND AND IMPOUNDED, IN THE COURSE OF THE SURVEY PROCEEDINGS U/S 133A ON 14.0 9.2010 WERE TAKEN INTO ACCOUNT FOR FRAMING THE ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 153C OF THE I T ACT, 1961. 8.1.11 IT IS ALSO PERTINENTLY MENTIONED HERE THAT THE DOCUMENT WHICH WAS FOUND AND SEIZED FROM THE RESIDENTIAL PREMISES OF SH. PRAMOD GOEL, SEARCHED U/S 132 OF THE I T ACT WAS USED BY THE ASSESSING OFFICER OF THE APPELLANT COMPANY TO INVOKE PROCEEDINGS ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 18 U/S 153C WITHOUT RECORDING THE SATISFACTION NOTE IN THE CASE OF SH. GOEL IN THE COURSE OF THE ASSESSMENT PROCEEDINGS U/S 153A OF THE I T ACT, 1961, CONTRARY TO THE PROVISIONS OF SECTION 153C. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS U/S 153C, THE ASSESSING OFFICER DID NOT RAISE ANY QUERY PERTAINING TO ANY OF THE TRANSACTIONS FOUND RECORDED IN THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT OR SCHEDULE A FOR THE YEAR ENDED 31.03.2010 AND NO INCOME WAS DETECTED AS UNDISCLOSED / UNACCOUNTED FOR THE YEAR UNDER CONSIDERATION FROM THIS DOCUMENT. THEREFORE, THIS DOCUMENT CANNOT BE SAID TO BE INCRIMINATING ON THE BASIS OF WHICH ACTION U/S 153C WAS TAK EN BY THE ASSESSING OFFICER. IN SUPPORT OF THIS INFERENCE, I RELY UPON THE DECISION OF THE HON'BLE ITAT IN THE CASE OF SINGHAD TECHNICAL EDUCATION SOCIETY VS ACIT IN ITA NO. 114 TO 117/PN/10. 8.1.12 REFERENCE IS ALSO MADE HERE TO THE PROVISO TO SECTION 15 3C WHICH STIPULATES AS UNDER: 'PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO [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 HAVING JURISDICTION OVER SUCH OTHER PERSON:].' 20. THE ABOVE PROVISO REFERS TO SECOND PROVISO TO SUB - SECTION ( 1) OF SECTION 153A, THAT SECTION 153A(1) AND ITS FIRST AND SECOND PROVISOS READ AS UNDER: - '153A. [(1 )] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL - ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 19 (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SU CH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER P ARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATE LY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH S IX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS [SUB - SECTION] PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTIO N 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE;.' AS PER CLAUSE (B), SUB SECTION (1) OF SECTION 153A AND SECOND PROVISO, THE ASSESSING OFFICER CAN ISSUE A NOTICE FOR THE ASSESSMENT OR REASSESSMENT OF TOTAL SIX YEARS IMM EDIATELY PRECEDING THE ASSESSMENT YEARS RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED. AS PER THE PROVISO TO SECTION 153C, THE DATE OF SEARCH IS TO BE SUBSTITUTED BY THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED B Y THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. FOR LEGAL APPRECIATION OF SECTION 153C(1) AND ITS PROVISO, HAVE TO BE READ TOGETHER IN THE HARMONIOUS MANNER. FOR PROPER INTERPRETATION OF SECTION 153C FOR INITIATING VALID JURISDICTION U NDER SECTION 153C, EVEN IF THE ASSESSING OFFICER OF THE SEARCHED PERSON AND THE ASSESSING OFFICER OF SUCH OTHER PERSON IS SAME, IT IS MANDATORY THAT ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 20 HE HAS TO FIRST RECORD THE SATISFACTION NOTE IN THE FILE OF THE PERSON SEARCHED AND THEREAFTER SUCH SATISFA CTION NOTE ALONG WITH THE SEIZED DOCUMENT OR BOOKS OF ACCOUNT IS TO BE PLACED IN THE FILE OF SUCH OTHER PERSON. THE DATE ON WHICH THIS EXERCISE IS COMPLETED WOULD BE CONSIDERED AS THE DATE OF RECEIVING BOOKS/DOCUMENTS BY THE ASSESSING OFFICER HAVING JURISD ICTION OVER SUCH OTHER PERSON. AFTER CONSIDERING AND EXAMINING THE FACTS OF THE INSTANT CASE, I AM OF THE OPINION THAT THE ASSESSING OFFICER DID NOT APPRECIATE THE LEGAL FRAME AND THE CONDITIONS LAID DOWN U/S 153C AND HE DID NOT CARRY OUT ANY SUCH EXERCISE AS MENTIONED ABOVE AS MANDATED BY THE SAID SEC TION WITH PROPER APPLICATION OF MIND AN D THEREFORE INITIATION OF PROCEEDINGS U/S 153C ARE NOT PROPER AND BAD IN LAW. 9. THE LD. CIT(A) ALTHOUGH CONSIDERED THE INITIATION OF ASSESSMENT PROCEEDINGS U/S 153C OF THE ACT AS BAD IN LAW, H OWEVER, ON THE MERIT OF THE CASE THE LD. CIT(A) SUSTAINED THE ADDITION OF RS.2,50,00,000/ - REPRESENTING THE SHARE CAPITAL SHOWN IN THE NAME OF 7 COMPANIES, NAMELY, M/S ANG FINVEST P. LTD., M/S BHAVANI VANIJYA P. LTD., M/S BHAVANI P ORTFOLIO P. LTD., M/S GANADHIPATI TRADERS & CREDITS P. LTD., M/S JAJODIA FINANCE P. LTD., M/S JEMTEC ENGINEERING P. LTD., M/S KANHA FATS & OIL P. LTD. AND M/S SUSHIL ELECTRONICS P. LTD. AND DELETED THE ADDITION OF RS.70,00,000/ - RECEIVED FROM M/S BHAVANI V ANIJYA P. LTD. BY OBSERVING THAT THE SAID COMPANY WAS NOT SUBJECTED TO ANY KIND OF INDEPENDENT INQUIRY OR ANY INFORMATION WAS RECEIVED FROM OTHER WINGS OF DEPARTMENT. NOW BOTH THE PARTIES ARE IN APPEAL. THE ASSESSEE IS IN APPEAL AGAINST THE SUSTENANCE OF A DDITION AND THE DEPARTMENT IS IN APPEAL AGAINST THE RELIEF ALLOWED TO THE ASSESSEE. ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 21 10 . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WENT INTO APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE LEGALITY OF NOTICE U/S 153C OF THE ACT AS WELL AS THE ORDER PASSED IN CONSEQUENCE THERETO. THE ADDITION MADE BY THE AO ON ACCOUNT OF SHARE CAPITAL/PREMIUM WAS ALSO CHALLENGED BY THE ASSESSEE ON MERIT AND THE LD. CIT(A) ALLOWED ALL THE GROUNDS RELATING TO LEGAL ISSUE IN FAVOUR OF THE ASSESSEE WHILE ON MERI TS, SHE PREFERRED TO CONFIRM THE ADDITION. IT WAS STATED THAT T HE FIRST ISSUE ON WHICH THE LD. CIT(A) HAD GIVEN RELIEF TO THE ASSESSEE WAS THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND DURING THE COURSE OF SEARCH, NO ADDITION WAS CALLED FOR . A REFERENCE WAS MADE TO PAGE NO. 21 OF THE ASSESSEE S PAPER BOOK WHICH IS THE COPY OF THE SATISFACTION NOTE AND IT WAS SUBMITTED THAT IN THE SAID SATISFACTION NOTE THE AO REFERRED TO THE SEIZED MATERIAL AS UNDER: PAGE NO. 96 AND 9 8 OF ANNEXURE A - 1 OF PA RTY V - 2 IS A COPY OF THE BALANCE SHEET, PROFIT LOSS ACCOUNT, PERTAINING TO M/S VICTORY DWELLINGS PVT. LTD. FOR THE FINANCIAL YEAR ENDING 31.3.3010. 1 1 . IT WAS FURTHER SUBMITTED THAT THE AO RECORDED THE SATISFACTION IN THE CASE OF THE ASSESSEE AND NOT IN THE CASE OF THE SEARCHED PERSON. THEREFORE, THE ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT BY THE AO WAS NOT VALID . IT WAS ALSO SUBMITTED THAT THE AFORESAID REFERRED TO PAGE NOS. 96 & 9 8 BY THE AO WERE THE COPIES OF B ALANCE S HEET, PROFIT AND LOSS A CC OUNT AND SCHEDULE OF A DVANCES AGAINST SUPPLIES PERTAINING TO THE ASSESSEE. THEREFORE, THE SAID DOCUMENTS BY NO STRETCH OF IMAGINATION CAN BE SAID TO BE INCRIMINATING AS THOSE WERE THE DOCUMENTS WHICH WERE ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 22 MADE OUT OF THE REGULAR BOOKS OF ACCOUNTS OF THE A SSESSEE AND THE RETURN OF INCOME WAS FILED ON THE BASIS OF THOSE DOCUMENTS ONLY. IT WAS CONTENDED THAT DURING THE COURSE OF ENTIRE ASSESSMENT PROCEEDINGS NO QUERY WITH REGARDS TO THOSE DOCUMENTS WAS RAISED BY THE AO . THEREFORE, IN THE ABSENCE OF ANY INCRIM INATING MATERIAL FOUND DURING THE COURSE OF SEARCH NO ADDITION COULD HAVE BEEN MADE IN THE ASSESSMENT COMPLETED U/S 153C OF THE ACT. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS RRJ SECURITIES LTD. (2016) 380 ITR 612 (DEL.) CIT VS KABUL CHAWL A IN ITA NO. 709 & 713/2014 ORDER DATED 28.08.2015 (DEL. H.C.) DCIT VS SMT. GEETA DEVI AGGARWAL IN ITA NO. 1906/DEL/2013 ORDER DATED 03.10.2016 (ITAT, DEL.) ACIT VS SH. DEVENDER KUMAR AGGARWAL IN ITA NOS. 3554 & 3555/DEL/2012 ORDER DATED 30.09.2016 (ITAT, DEL.) ACIT VS SUNKAN TRAVELS PVT. LTD. IN ITA NOS. 559 TO 564/DEL/2012 ORDER DATED 27.07.2016 (ITAT, DEL.) NARSI CREATIONS VS DCIT IN ITA NO. 3186, 3188 TO 3194 OF 2013 ORDER DATED 10.05.2016 (ITAT, DEL.) NAGESHWAR INVESTMENT LTD. IN ITA NO. 5393/DEL/2012 (ITAT, DEL.) NATURAL PRODUCTS BIO TECH LTD. VS DCIT (2015) 153 ITD 58 (DEL. TRIB.) ANDAMAN TIMBER INDUSTRIES VS CCE IN CIVIL APPEAL NO. 4228 OF 2006 ORDER DATED 02.09.2015 (HON BLE SC) PRAKASH CHAND NAHATA VS UNION OF INDIA 163 CTR 310 (SC) KISHAN CHAND CH ELLARAM VS CIT 125 ITR 713 (SC) CIT VS SMC SHARE BROKERS LTD. 288 ITR 345 (DEL.) ALOK AGGARWAL VS DCIT (2000) 67 TTJ 109 (DEL.) 1 2 . IT WAS FURTHER SUBMITTED THAT THE CBDT VIDE CIRCULAR NO. 24/2014 ISSUED ON 31.12.2015 CLARIFIED THAT EVEN IF THE AO OF THE SEARCHED PERSON AND THE OTHER PERSON IS ONE AND THE SAME, THEN ALSO THE AO IS REQUIRED TO RECORD HIS SATISFACTION AND THAT IN THE PRESENT CASE, NO SATISFACTION HAS ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 23 BEEN RECORDED BY THE AO IN THE CASE OF THE SEARCHED PERSON. THEREFORE, ASSUMPTION OF JURISDI CTION IN THE CASE OF THE ASSESSEE WAS BAD - IN - LAW AND THUS, THE CONSEQUENT ASSESSMENT FRAMED BY THE AO WAS RIGHTLY QUASHED BY THE LD. CIT(A) AND WHEN THE LD. CIT(A) HAD DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, THE ADDITION SUSTAINED WAS NOT JUSTIF IED . 1 3 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ASSESSMENT ORDER PASSED BY THE AO AND FURTHER SUBMITTED THAT EVEN IF THE AO/ ASSESSING AUTHORITY RECEIVING SATISFACTION NOTE HAD NOT FOUND ANYTHING ADVERSE AGAINST ASSESSEE O N EXAMINATION OF ACCOUNTS BOOKS, T HE NOTICE U/S 153C OF THE ACT STILL COULD HAVE BEEN ISSUED TO THE ASSESSEE TO FILE THE RETURN OF INCOME. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: SSP AVIATION LTD. VS DCIT 20 TAXMAN.COM 214 (DEL.) CIT VS CLASSIC ENTERPRISES 3 58 ITR 465 (ALL.) SAVESH KUMAR AGGARWAL VS U.O.I 353 ITR 26 (ALL.) CIT VS NIPUN BUILDERS & DEVELOPERS (P.) LTD. 350 ITR 407 (DEL.) CIT VS NOVA PROMOTERS & FINLEASE P. LTD. 342 ITR 169 (DEL.) CIT VS ULTRA MODERN EXPORTS P. LTD. 40 TAXMANN.COM 458 (DEL.) CIT VS FROSTAIR P. LTD. 210 TAXMAN 221 (DEL.) CIT VS N R PORTFOLIO PVT. LTD. 29 TAXMANN.COM 291 (DEL.) CIT VS EMPIRE BUILTECH P. LTD.366 ITR 110 (DEL.) CIT VS MAF ACADEMY P. LTD. 361 ITR 258 (DEL.) CIT VS FOCUS EXPORTS (P.) LTD. 228 TAXMAN 88 (DEL.) IT WAS F URTHER SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 24 1 4 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMIT TED FACT THAT THE SEARCH DID NOT TAKE PLACE AT THE BUSINESS PREMISES OF THE ASSESSEE RATHER IT TOOK PLACE AT THE PREMISES OF SH. PRAMOD GOEL, SMT. SAVIT GOEL AND SH. ASHISH GOEL U/S 132 OF THE ACT ON 14.09.2010 AND THE NOTICES WERE ISSUE D TO THOSE PARTIES U/S 153A OF THE ACT. THE AO ALSO ISSUED NOTICE U/S 153A OF THE ACT TO THE ASSESSEE BUT LATER ON BEING SATISFIED THAT NO SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS INITIATED AGAINST THE ASSESSEE , HE WITHDREW THE NOTICE ISSUED U/S 153A OF THE ACT. T HEREAFTER, THE AO ISSUED THE NOTICE U/S 153C OF THE ACT ON THE BASIS THAT THE DOCUMENTS PERTAINING TO THE ASSESSEE WERE FUND FROM THE PREMISES OF THE SEARCHED PERSON. THE SAID DOCUMENTS WERE THE COPIES OF BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND SCHEDULE A (ADVANCES AGAINST SUPPLIER). IN THE PRESENT CASE, T HE AO ASSUMED THE JURISDICTION U/S 153C(1) OF THE ACT , THE PROVISION S CONTAINED IN THE SAID SECTION READ AS UNDER: NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 1 49, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REF ERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PER SON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 25 [PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 1 32 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO 91 [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 OFFICE R HAVING JURISDICTION OVER SUCH OTHER PERSON :] - [PROVIDED FURTHER THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE, SPECIFY THE CLASS OR CLASSES OF CASES IN RESPECT OF SUCH OTHER PERSON, IN WHICH THE ASSESSING OFF ICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YE ARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT T O THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE EXCEPT IN CASES WH ERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED.] 1 5 . ON PERUSAL OF THE AFORESAID PROVISIONS , IT WOULD BE CLEAR THAT THOSE PROVISIONS START WITH THE NON - OBSTANTE CLAUSE , SO THESE PROVISIONS OVER RIDE THE PROVISIONS CONTAINED IN SECTIONS 139, 147, 148, 149, 151 AND 153 OF THE ACT. IT IS ALSO CLEAR FROM THE SAID PROVISIONS THAT THE SATISFACTION OF THE AO OF THE SEARCHED PERSON IS MUST FOR ASSUMING THE JURISDICTION U/S 153C OF THE ACT IN CASE OF A PERSON OTHER THAN THE SEARCHED PERSON. IN THE PRESENT CASE, THE LD. CIT(A) CATEGORICALLY STATED IN THE IMPUGNED ORDER (A RELEVANT PORTION OF THE SAID ORDER HAS BEEN REPRODUCED IN THE FORMER PART OF THIS ORDER) THAT THE AO DID NOT RECORD ANY SATISFACTION DURING THE ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT IN THE CASE OF THE SEARCHED PERSON I.E. SH. PRAMOD GOEL. ON THE CONTRARY, THE AO RECORDED THE SATISFACTION NOTE IN THE FILE OF THE OTHER PERSON I.E. THE ASSESSEE COMPANY. WE HAVE ALSO PERUSED THE COPY OF SATISFACTION NOTE RECORDED BY THE AO WHICH IS PLACED AT PAGE NO . 21 OF THE ASSESSEE S PAPER BOOK AND READ AS UNDER: ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 26 DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A IN THE CASE OF SH. PRAMOD GOEL, IT IS NOTICED THAT SEARCH AND SEIZURE OPERATION U/S 132 WAS UNDERTAKEN ON 14.09.201 0 IN THE CASE OF SH. PRAMOD GOEL, SMT. SAVITA GOEL, AND SH. ASHISH GOEL AT BN - 33, EAST SHALIMAR BAGH, DELHI. UNDER MENTIONED DOCUMENTS BELONGING TO M/S VICTORY DWELLINGS PVT. LTD. WERE FOUND AND SEIZED FROM THE ABOVE PREMISES. P AGE NO. 96 TO 98 OF ANNEXURE A - 1 OF PARTY V - 2 IS A COPY OF TH E BALANCE SHEET, PROFI LE LOSS ACCOUNT, SCHEDULE - A (ADVANCE AGAINST SUPPLIERS) PERTAINING TO M/S VICTORY DWELLINGS PVT. LTD, FOR THE FINANCIAL YEAR ENDING 31.3.2010. THE CASE OF M/S VICTORY DWELLINGS PVT. LTD. WAS CENTRALIZED WITH THIS OFFICE VIDE F. NO. C IT - DELHI - VI/ CENTRALIZATION /2011 - 12/648 DATED 22.6. 2011 ISSUED BY THE CIT, DELHI - VI , NEW DELHI. I AM THEREFORE SATISFIED THAT THE DOCUMENTS SEIZED,, AS REFERRED TO ABOVE, BELONG TO M/S VICTORY DWELLINGS PVT. LTD. WARRANTING ACTION U/S 153C IN THIS CASE. ON PERUSAL OF THE AFORESAID SATISFACTION NOTE, IT IS CRYSTAL CLEAR THAT THE SAID SATISFACTION WAS RECORDED BY THE AO IN THE PROCEEDINGS RELATING TO THE ASSESSEE I.E. M/S VICTORY DWELLINGS PVT. LTD. AND NOT IN THE CASE OF SH. PRAMOD GOEL IN WHOSE CASE SEA RCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS UNDERTAKEN ON 14.09.2010. THEREFORE, THE JURISDICTION ASSUMED BY THE AO WITHOUT RECORDING THE SATISFACTION IN THE CASE OF THE SEARCHED PERSON WAS NOT VALID. 1 6 . NOW THE CBDT VIDE CIRCULAR NO. 24/2015 DATED 31.12.2015 CLARIFY THIS POSITION , THE SAID CIRCULAR READ AS UNDER: THE ISSUE OF RECORDING OF SATISFACTION FOR THE PURPOSES OF SECTION 158BD/153C HAS BEEN SUBJECT MATTER OF LITIGATION. 2. THE HON'BLE SUPREME COURT IN THE CASE OF M/S CALCUTTA KNITWEARS IN ITS DETAILED JUDGMENT IN CIVIL APPEAL NO. 3958 OF 2014 DATED 12 - 3 - 2014 ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 27 [2014] 43 TAXMANN.COM 446 (SC) (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 PREPARED BY THE AO BEFORE HE TRANSMITS THE RECORD TO THE OTHER AO WHO HAS JURISDICTION 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 ACT; OR (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE CO MPLETED UNDER SECTION 158BC OF THE ACT OF THE SEARCHED PERSON. ' 3. SEVERAL HIGH COURTS HAVE HELD THAT THE PROVISIONS OF SECTION 153C OF THE ACT ARE SUBSTANTIALLY SIMILAR/ PARI - MATERIA TO THE PROVISIONS OF SECTION 158BD OF THE ACT AND THEREFORE, THE ABOVE GUIDELINES OF THE HON'BLE SC, APPLY TO PROCEEDINGS U/S 153C OF THE IT ACT, FOR THE PURPOSES OF ASSESSMENT OF INCOME OF OTHER THAN THE SEARCHED PERSON. THIS VIEW HAS BEEN ACCEPTED BY CBDT. 4. THE GUIDELINES OF THE HON'BLE SUPREME COURT AS REFERRED TO IN P ARA 2 ABOVE, WITH REGARD TO RECORDING OF SATISFACTION NOTE, 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 AND THE SAME, THEN ALSO HE IS REQUIRED T O RECORD HIS SATISFACTION AS HAS BEEN HELD BY THE COURTS. 5. IN VIEW OF THE ABOVE, FILING OF APPEALS ON THE ISSUE OF RECORDING OF SATISFACTION NOTE SHOULD ALSO BE DECIDED IN THE LIGHT OF THE ABOVE JUDGMENT. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT PENDI NG LITIGATION WITH REGARD TO RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C SHOULD BE WITHDRAWN/NOT PRESSED IF IT DOES NOT MEET THE GUIDELINES LAID DOWN BY THE APEX COURT. 1 7 . FROM THE PLAIN READING OF THE AFORESAID CIRCULAR NO. 24/2015 DATED 31 .12.2015 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, IT IS CRYSTAL CLEAR THAT ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 28 EVEN IF THE AO OF THE SEARCHED PERSON AND OF THE OTHER PERSON IS ONE AND THE SAME THEN HE IS REQUIRED TO RECORD HIS SATISFACTION IN THE CASE OF SEARCHED PERSON . IN THE PRESENT C ASE, IT IS AN ADMITTED FACT THAT THE AO OF THE SEARCHED PERSON HAS NOT RECORDED ANY SATISFACTION RATHER THE SATISFACTION IS RECORDED BY THE AO OF THE OTHER PERSON I.E. THE ASSESSEE WHICH IS EVIDENT FROM THE SATISFACTION NOTE, COPY OF WHICH IS PLACED AT PAG E NO. 21 OF THE ASSESSEE S PAPER BOOK . THEREFORE, THE ASSESSMENT FRAMED IN THE HAND S OF THE ASSESSEE WAS NOT VALID. MOREOVER, FROM THE OBSERVATION OF THE AO IN THE SATISFACTION NOTE ALSO IT IS CRYSTAL CLEAR THAT NO INCRIMINATING MATERIAL WAS FOUND, THE ADD ITION WAS MADE ONLY ON THE BASIS OF THE COPY OF BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND SCHEDULE OF ADVANCES AGAINST SUPPLIES PERTAINING TO THE ASSESSEE , THOSE DOCUMENTS WERE ALREADY IN THE KNOWLEDGE OF THE DEPARTMENT AS THE SAME WERE FURNISHED ALONGWIT H THE REGULAR RETURN OF INCOME. THEREFORE, THOSE DOCUMENTS BY NO STRETCH OF IMAGINATION CAN BE SAID TO BE INCRIMINATING AS THOSE WERE MADE OUT OF THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE RETURN OF INCOME WAS FILED ON THE BASIS OF THOSE DOCUMEN TS ONLY. 1 8 . ON A SIMILAR ISSUE THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED AT (2016) 380 ITR 573 HELD AS UNDER: ''THE LEGAL POSITION THAT EMERGES ON A PERUSAL OF SECTION 153A AND SECTION 132 OF THE INCOME - TAX ACT, 1 961, IS AS UNDER : (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON IN RESPECT OF WHOM ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 29 SEARCH WAS CONDUCTED REQUIRING HIM TO FILE RETURNS FOR SIX ASSESSMENT YEARS IMME DIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE, (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH ASSESSMENT YEARS WILL HAVE TO BE COM PUTED BY T HE ASSESSING OFFICERS AS AFRESH EXERCISE. (HI) THE ASSESSING OFFICER WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT ASSESSMENT YEAR IN WHICH THE SEARCH TAKES PLACE. THE ASSESSING OFFICER HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS, THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. (IV) ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE ASSESSING OFFICER WH ICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY, AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF THE SEIZED MATE RIAL (V) IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153A IS RELATABLE TO ABATED PROCEEDINGS (I.E., THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS ' TO COMPLETED ASSESSMENT PROCEEDINGS, (VI) IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH ASSESSMENT YEAR ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 30 BROUGHT ON THE RECORD OF THE ASSESS ING OFFICER, (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESS ING OFFICER WHILE MA KING THE ASSESSMENT UNDER SECTION 153A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT AL READY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. IT HAS FURTHER BEEN HELD THAT ON THE DATE OF THE SEARCH THE ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCRIMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAV E BEEN MADE TO THE INCOME ALREADY ASSESSED.' 1 9 . IN VIEW OF THE AFORESAID DISCUSSION, WE ARE OF THE CONFIRMED VIEW THAT THE ADDITIONS MADE BY THE AO IN THE ABSENCE OF INCRIMINATING MATERIAL WHILE FRAMING THE ASSESSMENT U/S 153A OF THE ACT WAS NOT VALID AN D ALSO IN THE ABSENCE OF THE SATISFACTION RECORDED BY THE AO OF THE SEARCHED PERSON, THE ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT IN THE CASE OF PERSONS OTHER THAN SEARCHED PERSON WAS ALSO NOT VALID. IN THAT VIEW OF THE MATTER, WE DO NOT SEE MERIT IN THE APPEALS FILED BY THE DEPARTMENT AND THE ASSESSEE SUCCEEDS IN ITS APPEAL. IDENTICAL FACTS ARE INVOLVED IN THE ASSESSEE S APPEAL FOR THE A.Y. 2010 - 11 AND THE DEPARTMENTAL APPEALS FOR THE ASSESSMENT YEARS 2007 - 08 AND 2010 - 11, THEREFORE, FINDINGS GIVEN FO R THE ASSESSMENT YEAR 2009 - 10 IN THE FORMER PART OF THIS ORDER SHALL APPLY WITH THE SAME FORCE. ITA NOS. 6208 TO 6213 /DEL /201 4 ITA NOS. 622 5 TO 6228 & 6230 TO 6235/DEL/2014 VICTORY STRUCTURES, DWELLINGS, APARTMENTS, TOWNSIP & ACCOMMODATIONS PVT. LTD. 31 2 0 . THE FACTS RELATED TO THE CASES OF THE OTHER ASSESSEES IN THE ASSESSEE S APPEAL AS WELL AS THE DEPARTMENTAL APPEAL ARE IDENTICAL, THEREFORE, OUR FINDINGS GIV EN IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTANDIS. 21 . IN THE RESULT, THE APPEAL S OF THE ASSESSEES ARE ALLOWED AND THAT OF THE DEPARTMENT ARE DISMISSED. (ORDER P RONOUNCED IN THE COURT ON 24 /03 /2017 ) SD/ - SD/ - (BEENA PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 24 /03 /201 7 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR