The Asstt. Commissioner of Income-tax, Jalandhar V. M/s Lakhanpal Design Pvt Ltd, Gajiabad

ITA 661/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0487 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BHAWANI SHANKER
• Keywords: Search and seizure; Document seized; Block assessment; Documents seized
• Section: 143(3); 234B; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.624 & 625(ASR)/2014 ASSESSMENT YEARS:2009-10 & 2010-11 PAN: AABCL1305K M/S.LAKHANPAL DESIGN PVT. LTD. VS. ASSTT. COMMR. OF INCOME TAX, 110-IST FLOOR, SHIVAM ANSAL BLDG. CENTRAL CIRCLE-1 , RAJ NAGAR, DISTRICT CENTRE, JALANDHAR. GHAZIABAD. (APPELLANT) (RESPONDENT) ITA NOS.661 & 662(ASR)/2014 ASSESSMENT YEARS:2009-10 & 2010-11 PAN: AABCL1305K ASSTT. COMMR. OF INCOME TAX, VS. M/S.LAKHANPAL DESI GN PVT. LTD. CENTRAL CIRCLE-1, 110-IST FLOOR, SHIVAM ANSAL BL DG. JALANDHAR. RAJ NAGAR, DISTRICT CENTRE, GHAZIABAD. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH.SALIL KAPOOR, ADV., NIRMAL MAHAJ AN, CA & SUMIT LALCHANDANI, ADV. RESPONDENT BY: SH. BHAWANI SHANKER, DR DATE OF HEARING: 15/06/2016 DATE OF PRONOUNCEMENT: 25/07/2016 ORDER PER A.D. JAIN, JM: THESE ARE CROSS APPEALS TWO BY THE ASSESSEE AND TWO BY THE REVENUE FOR THE ASSESSMENT YEARS 2009-10 & 2010-11, AGAINST THE ORDERS, EACH DATED 12.08.2014, PASSED BY THE LD. CI T(A)-1, LUDHIANA. ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 2 SINCE THE ISSUE INVOLVED IN ALL THE APPEALS IS COMM ON, THEY ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER, FOR THE SAK E OF CONVENIENCE. 2. FIRST, WE WILL DEAL WITH THE APPEALS OF THE ASSE SSEE. THE ASSESSEE, IN ITA NO.624(ASR)/2014, FOR THE A.Y. 2009-10, HAS RAISED THE FOLLOWING GROUNDS OF APPEAL, WHICH, MUTATIS MUTANDIS, ARE IDE NTICAL IN ITA NO.625(ASR)/2014: 1. THAT THE NOTICE ISSUED AND ASSESSMENT ORDER PASSE D U/S153CTS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICT ION. 2. THAT NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER OF SEARCHED PERSON THAT ANY MONEY , BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITION ED BELONG TO THE APPELLANT. 3. THAT NO SEARCH MATERIAL MUCH LESS ANY INCRIMINA TING MATERIAL FOUND DURING THE COURSE OF SEARCH. HENCE ASSESSMENT ORDER PASSED BY ASSESSING OFFICER U/S 153C/143(3) AND THE ADDITIONS/DISALLOWANCES MADE SANS INCRIMINATING MATERIAL ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 4. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE. CIT(A) HAS ERRED IN LAW IN UPHOLDING ADDITION U/S 1 53A READ WITH S.153C AS NO INCRIMINATING EVIDENCES WAS FOUND AT THE PREMISES OF THE ASSESSEE DURING THE CO URSE OF SEARCH. 5. THAT THE ASSESSING OFFICER HAS IN VIEW OF THE F ACTS AND CIRCUMSTANCES, ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF RS. 13.50.000/- TO THE INCOME OF THE APPELLANT COMPANY U/S 68 OF THE ACT ON ACCOUNT OF UNSECURED LOAN AND CIT(A) HAS ERRED IN LAW IN UPHOLDING THE SAME. 6. THAT CIT(A) HAS FAILED TO APPRECIATE THAT APPEL LANT HAS BEEN ABLE TO ESTABLISH THE IDENTITY AND CREDITWORTH INESS OF THE PERSON AND GENUINENESS OF THE TRANSACTION. T HE AO HAS MADE ADDITION WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD. ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 3 7. THE INFORMATION FILED AND AVAILABLE ON RECORD H AS NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED . THE DISALLOWANCES UPHELD BY THE CIT(A) ARE UNJUST, ILLE GAL, ARBITRARY AND ARE AGAINST THE FACTS OF THE EASE AND ARE NOT JUSTIFIED BY ANY MATERIAL ON RECORD. 8. THAT THE SUBMISSIONS FILED HAVE NOT BEEN CONSID ERED JUDICIOUSLY. THE IMPUGNED ORDER IS PASSED WITHOUT A NY APPLICATION OF JUDICIOUS MIND AND WITHOUT CONSIDERI NG THE FACT THAT AS PER VARIOUS JUDICIAL DECISIONS, NO ADDITION SHOULD HAVE BEEN MADE IN THIS CASE. 9. THAT THE VARIOUS OBSERVATIONS AND ALLEGATIONS M ADE AGAINST THE ASSESSEE IN THE IMPUGNED ORDER ARE ILLE GAL. BAD IN LAW AND CONTRARY TO FACTS ON RECORD. 10. THAT THE ADDITION / DISALLOWANCE MADE ARE ILLE GAL, UNJUST AND BAD IN LAW AND ARE BASED ON MERE SURMISE S AND CONJUNCTURES AND THE SAME CANNOT BE JUSTIFIED B Y ANY MATERIAL ON RECORD. 11. THAT INTEREST U/S 234B AND 234D OF THE INCOME TAX ACT. 1961 HAS BEEN WRONGLY AND ILLEGALLY CHARGED AN D HAS BEEN WRONGLY WORKED OUT. 12. THE APPELLANT CRAVES LEAVE TO ADD. AMEND, ALTE R AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEF ORE THE TIME OF HEARING. 2. THE LD. DR, AT THE OUTSET, FILED AN APPLICATION DATED 15.06.2016, REQUESTING FOR ADJOURNMENT OF THE CASE TO SOME OTHER DATE, AS CONVENIENT TO THE BENCH. THE REQUEST OF TH E LD. DR IS REJECTED AND WE PROCEED TO HEAR THE CASE ON MERITS. 3. THE ASSESSEE HAS FILED THE FOLLOWING ADDITIONAL GROUND: THAT NOTICE ISSUED U/S 153C AND THE ASSESSMENT ORDE R PASSED IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICT ION AS ADMITTEDLY NO SATISFACTION WAS RECORDED IN THE CASE OF SEARCHED PERSON. HENCE, SAME ARE LIABLE TO BE QUASH ED. ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 4 4. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE GOE S TO THE ROOT OF THE MATTER. THEREFORE, THE SAME IS ADMITTED IN V IEW OF THE DECISION OF THE HONBLE SUPREME COURT, IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT, 229 ITR 383 (SC). 5. THE GROUNDS OF APPEAL AT SL. NO. 1 TO 4 RELATE T O THE CLAIM OF THE ASSESSEE THAT THE A.O. HAS ASSUMED JURISDICTIO N U/S 153C OF THE INCOME TAX ACT, 1961 WITHOUT FOLLOWING THE MAND ATORY PROCEDURE AS LAID DOWN U/S 153C AND AS SUCH, THE AS SESSMENT FRAMED IN CONSEQUENCE THEREOF WAS NULL AND VOID. TH E PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAD BROUGH T ON RECORD THE ISSUE OF FRAMING OF SATISFACTION NOTE AND THE C HALLENGE THEREOF BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. IT IS SEEN THAT THE ASSESSEE HAD RAISED THE ISSUE OF LACK OF SATISF ACTION UNDER SECTION 153C. THE AO, IN RESPONSE TO THE SAME, RECO RDED THAT THE AO HAD RELIED UPON THE EXAMINATION OF DOCUMENTS AND SEIZED RECORDS AS WELL AS ISSUE RAISED IN THE APPRAISAL RE PORT IN ORDER TO ARRIVE AT THE SATISFACTION FOR THE PURPOSES OF SECT ION 153C. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE REQUEST OF TH E ASSESSEE FOR COPY OF APPRAISAL REPORT WAS REJECTED. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE SUBMITTED HIS ARGUMENTS ON THE ISSUE OF LEGALITY OF PROCEEDINGS U/S 153C AS UNDER:- ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 5 ' I) A SEARCH WAS CONDUCTED BY THE DEPARTMENT IN TH E CASE OF PUNJAB IRON & STEEL COMPANY LIMITED ALONG WITH PERSONS REL ATED TO PISCO AND ALSO IN THE CASE OF PRITAM SINGH, ONE OF THE DI RECTORS OF THE APPELLANT COMPANY. SOME DOCUMENTS RELATING TO THE A PPELLANT WERE RECOVERED FROM THE PERSONS SEARCHED AND PROCEEDINGS UNDER SECTION 153C WERE INITIATED IN THE CASE OF THE ASSESSEE AND SATISFACTION NOTE DATED 08.02.2013 WAS PREPARED IN THE NAME OF THE LA KHANPAL DESIGN PRIVATE LIMITED. (COPY ENCLOSED, PAGE 52-56) . NO SEARCH WAS CARRIED JN THE CASE OF APPELLANT. THE NOTICE UNDER SECTION 153C WAS DULY COMPLIED, RETURNS FILED AND DOCUMENTS EXPLAINE D AS THEY WERE ALREADY RECORDED IN THE BOOKS OF ACCOUNTS. BOOKS OF ACCOUNTS WERE PRODUCED; SAME WERE VERIFIED BY THE AO AND ACCEPTED . THE SAME IS MENTIONED IN PARA-2 OF THE ASSESSMENT ORDER. NO COG NIZANCE OF THOSE DOCUMENTS HAS BEEN TAKEN. II) FURTHER IT CAN BE SEEN FROM THE SATISFACTION NO TE DATED 8.2.2013 THAT, IT HAS 2 PARTS. ONE PERTAINS TO DOCUMENTS SEI ZED DURING SEARCH ON DIFFERENT PERSONS AND QUERY ABOUT THE SAME WAS D ULY RAISED INITIALLY AND DOCUMENTS WERE DULY EXPLAINED AND EXP LANATION WAS DULY ACCEPTED BY THE AO. THE SECOND PART OF THE APP RAISAL REPORT IS BASED ON ASSUMPTIONS OF THE ADI AND IS NOT BASED ON ANY DOCUMENT PERTAINING TO APPELLANT. IT IS A PRECONDITION FOR I NITIATION OF PROCEEDINGS UNDER S. 153C THAT THE DOCUMENT IN QUES TION SHOULD PERTAIN TO ASSESSEE. HENCE IT SHOULD NOT BE BASED O N ASSUMPTIONS OR SURMISES. THE APPRAISAL REPORT CANNOT BE BASIS FOR RAISING ANY QUERY ON ASSUMPTION/SURMISES UNDER S. 153C. IN CASE IT IS MADE BASIS FOR SAME, IT BECOMES PUBLIC DOCUMENT AND ASSESSEE IS DU LY ENTITLED FOR COPY OF THE SAME. . FIRSTLY THE COPY OF THE APPRAIS AL REPORT WAS NEVER SUPPLIED TO APPELLANT ALTHOUGH SAME WAS DULY ASKED BY LETTER DATED. 12.03.2014 & 18.03.2014 (COPY ENCLOSED P 57- 59 & 64-65). SECONDLY, THE APPRAISAL REPORT CANNOT BE THE BASIS OF ISSUANCE OF NOTICE U/S 153C. THIRDLY, IT IS ADMITTED BY THE REV ENUE THAT NOTICE U/S 153C IS ISSUED ON THE BASIS OF ALLEGATION IN RE SPECT OF SEIZED DOCUMENTS BELONGING TO PISCO. HENCE NOTICE ISSUED U /S 153 C IS ILLEGAL AND BAD IN LAW. III) THE SATISFACTION HAS BEEN RECORDED IN THE CASE OF LAKHANPAL DESIGN PVT. LTD. WHEREAS MANDATE OF LAW IS TO RECOR D THE SATISFACTION IN CASE OF PERSON SEARCHED. THE AO HAS NO JURISDICTION TO ISSUE NOTICE U/S 153C AS NO SATISFACTION HAS BEE N RECORDED IN CASE OF PERSON SEARCHED. THE NOTICE U/S 153C IS ILL EGAL, BAD IN LAW AND WITHOUT JURISDICTION. IN THE CASE OF DSL PROPER TIES (P.) LTD. \/. DCIT [2013] 60 SOT 88 (DELHI - TRIB.)(URO) 'THE ASSESSING OFFICER OF THE PERSON SEARCHED AND S UCH OTHER PERSON MAY BE THE SAME, BUT THESE ARE TWO DIFFERENT ASSESSEE ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 6 AND, THEREFORE, THE ASSESSING OFFICER HAS TO CARRY OUT THE DUAL EXERCISE, FIRST THE ASSESSING OFFICER OF THE PERSON SEARCHED, IN WHICH HE HAS TO RECORD THE SATISFACTION DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE PERSON SEARCHED. AFTE R RECORDING SUCH SATISFACTION NOTE IN THE FILE OF THE PERSON SEARCHED, THE SAME IS TO BE PLACED IN THE FILE OF S UCH SON. THEN IN HIS CAPACITY AS THE ASSESSING OFFICER OF SU CH OTHER PERSON, HE SHOULD TAKE COGNIZANCE OF SUCH SATISFACT ION NOTE AND THEREAFTER ISSUE NOTICE UNDER SECTION 158BC. IN THE INSTANT CASE THIS EXERCISE OF RECORDING THE SATISFA CTION DURING THE ASSESSMENT PROCEEDINGS OF THE PERSON SEARCHED H AS NOT BEEN CARRIED OUT. ON THE OTHER HAND, THE ASSESSING OFFICER RECORDED THE SATISFACTION IN THE CASE OF SUCH OTHER PERSON WHICH DOES NOT SATISFY THE CONDITION OF ASSUMING JU RISDICTION UNDER SECTION 153C. THEREFORE, THE ABOVE SATISFACTI ON NOTE CANNOT BE SAID TO BE A VALID SATISFACTION NOTE WITH IN THE MEANING OF SECTION 153C. IV) THAT THE ADDITIONS MADE BY THE AO ARE NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH. THE ADDITION HAS BEEN MADE ON ASSUMPTIONS AND SURMISES. THE ADDITION S MADE ARE BEYOND THE SCOPE OF SECTION 153A/153C AS NO INCRIMI NATING MATERIAL BELONGING TO ASSESSEE WAS FOUND DURING THE SEARCH WHICH HAS RESULTED INTO ADDITIONS. IN V.K. FISCAL SERVICE S PVT. LTD. VS. DCIT I.T.A. NO. 5460- 65/DEL/12 IT WAS HELD BY THE HON'B LE DELHI TRIBUNAL THAT IN THE ABSENCE OF INCRIMINATING MATERIAL THE A O SHALL DROP PROCEEDINGS U/S 153 OF THE ACT.' 7. THE AR HAD CHALLENGED THE ASSUMPTION OF JURISDI CTION BY THE ASSESSING OFFICER OF THE ASSESSEE UNDER SECTION 153 C ON THE GROUND THAT THE REQUISITE SATISFACTION HAD TO BE RECORDED BY TH E ASSESSING OFFICER OF THE PERSON SEARCHED AND NOT BY THE ASSESSING OFFICE R OF THE ASSESSEE. IT WAS CONTENDED THAT THE ASSESSING OFFICER HAD RECORD ED THE SATISFACTION IN THE CASE OF THE ASSESSEE, BUT NOT IN THE CASE OF TH E PERSON FROM WHOM THE ALLEGED INCRIMINATING DOCUMENTS HAD BEEN SEIZED. TH E ASSESSING OFFICER SENT A COPY OF THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE, TO THE CIT(A), IN ORDER TO SEEK HIS COMMENTS ON THIS LEGAL ISSUE RAISED. THE ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 7 ASSESSING OFFICER, VIDE LETTER DATED 25.07.2014, SU BMITTED HIS COMMENTS ON THE ISSUE AS UNDER:- 'IN THIS CONNECTION, IT IS SUBMITTED THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF IT ACT, 1961 WAS CONDUCTED IN THE CASE OF PROMINENT PLAYERS IN PUNJAB IRON AND STEEL CO. LTD. (PISCO) LAND DEALS AT G.T ROAD, JALANDHAR ON 03.08.2011 AND SEAR CHES WERE CONDUCTED ON THE RESIDENTIAL PREMISES AS WELL AS BU SINESS PREMISES OF DIRECTORS OF PISCO AND OTHER INDIVIDUALS, COLONI ZERS/ REAL ESTATE DEVELOPERS WHO ENTERED INTO TRANSACTIONS REGARDING PURCHASE OF LAND OF PISCO. SUBSEQUENTLY, SEARCHES WERE CONDUCTE D ON THE VARIOUS LOCKERS FOUND DURING SEARCH OPERATIONS. IN SUCH SEARCHES, CERTAIN ORIGINAL DOCUMENTS BELONGING TO M/S LAKHANP AL DESIGNS PVT. LTD. WERE FOUND FROM THE RESIDENCE OF SH. RAVNEET T AKHAR, M.D PISCO/ SH. RAMESH INDER SINGH DIRECTOR, PISCO, SH.V INAY SHARMA, EMPLOYEE OF PISCO AND SH. PRITAM SINGH, DIRECTOR OF M/S LAKHANPAL DESIGNS PVT. LTD AND HIS LOCKER. AS REGARDS, FIRST POINT ABOUT SATISFACTION NOTE UND ER SECTION 153C OF THE I.T. ACT, 1961, THE SATISFACTION NOTE WAS DULY MADE IN THE CASE OF M/S LAKHANPAL DESIGN (P) LTD., AND THE COPY WAS DUL Y PROVIDED TO THE ASSESSEE.. 8. THE ASSESSEE, WITH REFERENCE TO THE ASSESSING OF FICER'S REMAND REPORT, SUBMITTED THE FOLLOWING REJOINDER :- THE AO HAS HIMSELF ADMITTED THAT THE DOCUMENTS WER E SEIZED FROM THE RESIDENCE OF SH. RAVNEET TAKHAR, SH. RAMESH IND ER SINGH, SH. VINEY SHARMA AND PRITAM SINGH. AS PER SECTION 153 C , THE SATISFACTION SHOULD HAVE BEEN RECORDED IN THE FILES OF THESE PERSONS BEFORE TRANSFERRING RECORD TO THE AO OF THE ASSESSE E. WE HAVE RAISED APPREHENSIONS THAT THE SATISFACTION WAS RECORDED IN OUR NAME INSTEAD OF BEING RECORDED IN THE NAME OF THE PERSON S SEARCHED. THE AO WAS ASKED TO CONFIRM THE SAME. HOWEVER IN HIS RE PLY, THE AO HAS ADOPTED SILENCE ON OUR QUERY AND CONFIRMED HAVI NG RECORDED SATISFACTION IN OUR NAME. FROM HIS EVASIVE REPLY, I T IS CRYSTAL CLEAR THAT THE AO HAS NOTHING TO SAY ON THIS BECAUSE HE H AS FAILED TO COMPLY WITH THE REQUIREMENTS OF S.153C BY NOT RECOR DING SATISFACTION IN THE NAME OF 4 PERSONS FROM WHOM THE DOCUMENTS HAVE BEEN SEIZED. THE AO HAS MADE PRESUMPTIVE ADDITION ON THE PRESUMP TION THAT THE KHASRA NOS OF THE LAND PURCHASED BY THE ASSESSEE A RE SAME AS IN SO CALLED PHOTOCOPY OF THE AGREEMENT AND HENCE CARR Y THE SAME ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 8 PRICE. WE HAVE OBJECTED TO IT AND HAVE CONFIRMED TH AT THE KHASRA ' NUMBERS IN 3 DEEDS ARE DIFFERENT FROM THE AGREEMEN T. IN REPLY TO OUR QUERY, THE AO HAS REPLIED AS UNDER: ' FURTHER, KHASRA NO. MENTIONED IN THE AGREEMENT WHIC H IS FOUND FROM THE RESIDENTIAL PREMISES OF VINAY KUMAR ACCOUNTANT OF PISCO IN WHICH THE VALUE OF PISCO LAN D IS RS.11.05 CRORE PER ACRE IS PROPERLY MENTIONED IN TH E ASSESSMENT ORDER AT PAGE NO. 10 PASSED BY THE AO AN D THE AGREEMENT AS CONFIRMED BY ADIT IN APPRAISAL REPORT AND DULY MENTIONED IN THE SATISFACTION NOTE. THUS, IN VIEW OF THE ABOVE FACTS, THE AO HAS NOT F OLLOWED EVEN THE DIRECTIONS OF ADIT AND HAS NOT MADE ANY FURTHER INV ESTIGATION AS DIRECTED BY THE A.O. 9. ON APPEAL, THE LD. CIT(A) DID NOT AGREE WITH THE CONTENTIONS MADE BY THE ASSESSEE. 10. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE ISSUE RELATING TO ASSUMPTION OF JURISDICTION IN THIS CASE U/S 153C IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE ITAT, AMRITSAR BENCH, IN THE CASE OF RIPANDEEP THAKHAR VS. ACIT, CC-1, JALANDHAR, IN ITA NO. 665(ASR)/2014)/2014 & CO. NO.02(ASR)/2015, DATED 13.06.2016, FOR THE A.Y. 2009-10. 11. THE LD. DR, ON THE OTHER HAND, RELIED ON THE IM PUGNED ORDER. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE CONCUR WITH THE SUBMISSIONS OF THE ASSESSEES COUNSEL THAT THE ISSUE CONCERNING THE ASSUMPTION O F JURISDICTION STANDS ALREADY DECIDED BY THIS BENCH OF THE TRIBUNAL, IN THE CASE OF RIPANDEEP THAKHAR VS. ACIT, CC-1, JALANDHAR, IN ITA NO. 665( ASR)/2014 & CO. ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 9 NO.02(ASR)/2015, VIDE ORDER DATED 13.06.2016, FOR T HE A.Y. 2009-10, WHERE THE APPEAL OF THE DEPARTMENT HAS BEEN DISMISS ED AND THE C.O. OF THE ASSESSEE ON THE ISSUE HAS BEEN ALLOWED. WE CON SIDER IT APPROPRIATE TO REPRODUCE HEREUNDER, THE RELEVANT PORTION OF THE SAID TRIBUNAL ORDER DATED 13.06.2016 FOR READY REFERENCE: 2. THE CROSS OBJECTION FILED BY THE ASSESSEE INVOL VES LEGAL ISSUE AND AS SUCH, IT IS BEING TAKEN UP FOR DECISIO N FIRST. AS PER THIS CROSS OBJECTION, ABSENCE OF SATISFACTION OF THE AO IN THE CASE OF THE PERSON SEARCHED IS NOT A CURABLE DEFECT WHEN CONSI DERING THE PROVISIONS OF SECTION 153C OF THE INCOME TAX ACT, 1 961 AND THE LD. CIT(A)S ORDER HOLDING OTHERWISE HAS BEEN CHALLENG ED BY THE ASSESSEE. 3. THE FACTS ARE THAT A SEARCH WAS CARRIED OUT IN T HE CASE OF M/S. PUNJAB IRON & STEEL COMPANY LTD. AND ALSO IN THE CA SE OF ONE OF ITS DIRECTORS SH. RAMESH INDER SINGH, WHO IS THE FATHER OF THE ASSESSEE . IT IS AN UNDISPUTED POSITION THAT THERE WAS NO SE ARCH WARRANT IN THE CASE OF THIS ASSESSEE AND THE ASSESSMENT HAS AL SO BEEN FRAMED U/S 153C. 4. THE ASSESSEE TOOK THE FOLLOWING GROUND BEFORE TH E LD. CIT(A): THAT THE ORDER UNDER SECTION 153C READ WITH SECTIO N 143(3) IS BAD IN LAW. 5. THE LD. CIT(A) DECIDED THE ISSUE HOLDING AS FOLL OWS: 6.I HAVE CONSIDERED THE FACTS OF THE CASE, THE BAS IS OF JURISDICTION ASSUMED BY THE ASSESSING OFFICER UNDER SECTION 153C AND ARGUMENTS OF THE AR DURING ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS ON THE ISSUE. THE COMMENTS OF THE ASSESSING OFFICER DURING REMAND PROCEEDINGS HAVE ALSO BEEN CONSIDERED. THE PROVISIONS OF SECTION 153C WHICH GOVERN 'ASSESSMENT OF INCOME OF ANY OTHER PERSON' READ AS UNDER:- 'NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 10 VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED -OR REQUISITIONED BELONGS OR BELON G TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECT ION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING QFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGA INST 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.' 7. THE PERUSAL OF THE ABOVE DETAILED PROVISION SHOWS THAT THE SATISFACTION HAS TO BE ARRIVED AT BY THE ASSESSING OFFICER OF THE PERSON SEARCHED FROM WHOM RELEVANT VALUABLES OR INCRIMINATING DOCUMENTS ARE SEIZED AND THEREAFTER SUCH DOCUMENTS OR ASSETS ARE TO BE HANDED OVER TO THE ASSESSING OFFICER OF SUCH OTHER PERSON AND THE SAID ASSESSING OFFICER SHOULD PROCEED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. IT IS SEEN THA T THE ASSESSING OFFICER OF SEARCHED PERSON AS WELL AS THE ASSESSING OFFICER OF THE APPELLANT ARE THE SAME . SATISFACTION RECORDED BY THE ASSESSING OFFICER OF THE APPELLANT AMOUNTS TO RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF THE SEARCH PERSON FROM WHOM IMPUGNED DOCUMENTS HAD BEEN SEIZED. 8. THE AR OF THE APPELLANT HAS RELIED UPON THE JUDGMENT OF HON'BLE ITAT BENCH AT DELHI IN THE CASE OF DSL PROPERTIES (P.) LTD. VS. DCIT [2013] 60 SOT 88 (DELHI- TRIB.)(URO) WHEREIN THE FOLLOWING OBSERVATIONS HAVE BEEN MADE:- 'THE ASSESSING OFFICER OF THE PERSON SEARCHED AND SUCH OTHER PERSON MAY BE THE SAME, BUT THESE ARE TWO DIFFERENT ASSESSEE AND, THEREFORE, THE ASSESSING OFFICER HAS TO CARRY OUT THE DUAL EXERCISE, FIRST AS THE ASSESSING OFFICER OF THE PER SON SEARCHED, IN WHICH HE HAS TO RECORD THE SATISFACTIO N DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF THE PERSON SEARCHED. AFTER RECORDING SUCH SATISFACTION NOTE IN THE FILE OF THE PERSON SEARCHED, THE SAME I S TO BE PLACED IN THE FILE OF SUCH OTHER PERSON. THEN IN HIS CAPACITY AS THE ASSESSING OFFICER OF SUCH OTHER PERSON, HE SHOULD TAKE COGNIZANCE OF SUCH ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 11 SATISFACTION NOTE AND THEREAFTER ISSUE NOTICE UNDER SECTION 158BC. IN THE INSTANT CASE THIS EXERCISE OF RECORDING THE SATISFACTION DURING THE ASSESSMENT PROCEEDINGS OF THE PERSON SEARCHED HAS NOT BEEN CARRIED OUT. ON THE OTHER HAND, THE ASSESSING OFFICER RECORDED THE SATISFACTION IN THE CASE OF SU CH OTHER PERSON WHICH DOES NOT SATISFY THE CONDITION O F ASSUMING JURISDICTION UNDER SECTION 153C. THEREFORE, THE ABOVE SATISFACTION NOTE CAN NOT BE SAID TO BE A VALID SATISFACTION NOTE WITHIN THE MEANING OF SECTION 153C. [PARA 15]' 9. THE APPARENT PROCEDURAL FLAW COULD BE REGULARIZED BY APPLICATION OF PROVISION OF SECTION 292B OF THE INCOME TAX ACT, 1961 WHICH READS AS UNDER: NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDINGS, FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSU ED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID M ERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUC H RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OT HER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NO TICE, SUMMONS OR OTHER PROCEEDINGS IS IN SUBSTANCE AND EF FECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND P URPOSE OF THIS ACT.' IN VIEW OF THE ABOVE DETAILED ANALYSIS OF PROVISION S OF THE STATUTE, I DO NOT AGREE WITH THE CONTENTION OF THE APPELLANT THAT THE PROCEDURAL FLAW POINTED OUT BY H IM AMOUNTS ANNULMENT OF THE IMPUGNED ASSESSMENT ORDER. THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 6. THUS, THE LD. CIT(A) HELD THAT SINCE THE ASSESSI NG OFFICER OF SEARCHED PERSON AS WELL AS THE ASSESSING OFFICER OF THE ASSESSEE (THE OTHER PERSON) ARE THE SAME, THE SAT ISFACTION RECORDED BY THE ASSESSING OFFICER IN THE CASE OF TH E ASSESSEE AMOUNTS TO RECORDING OF SATISFACTION BY THE ASSESSI NG OFFICER OF THE SEARCHED PERSON FROM WHOM, DOCUMENTS HAD BEEN S EIZED; AND THAT THE APPARENT PROCEDURAL FLAW COULD BE REGULARIZED BY APPLICATION OF PROVISIONS OF SECTION 292B OF THE INCOME TAX ACT. 7. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING CASE LAWS: ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 12 I) MANISH MAHESHWARI VS. ACIT, 289 ITR 341 (SC) II) DHAPUBAI JAIN VS. ACIT, (ITAT INDORE) IT(SS)A.NO.78/IND/2008, AY 2003-04, DATED 31.05.201 1. III) TANVIR COLLECTIONS VS. ACIT, ( ITAT DEL) 153 ITD 486 IV) DCIT VS. L.K. INDIA, (ITAT AHMEDABAD) 43 CCH 263 V) VINOD KUMAR CHAURASIYA VS. ACIT, ( ITAT LUCK) 42 CCH 30 VI) DSL PROPERTIES VS. DCIT, ( ITAT DEL.) 60 SOT 88 VII) CIT MECHMEN, (MP ) 380 ITR 591 VIII) PR. CIT VS. NIKKI DRUGS, 236 TAXMAN 305 (DEL.) IX) CENTRAL VS. GOPI APPARTMENT, (ALL.) 46 TAXMAN.COM , 280 X) CIT VS. SHETTYS PHARMACEUTICALS (AP) 90 CCH 517 XI) DCIT VS. LALITKUMAR N PATEL (GUJ.) 222 TAXMAN 8. THE LD. DR, ON THE OTHER HAND, RELIED ON THE IMP UGNED ORDER. NO DECISION CONTRARY TO THE ABOVE CASE LAWS WAS CIT ED. 9. IN MANISH MAHESHWARI VS. ACIT (SUPRA), IT HAS BEEN HELD THAT WHERE THE PREMISES OF A DIRECTOR OF A COMPANY AND HIS WIFE WERE SEARCHED UNDER SECTION 132 OF THE INCOME-TAX A C, 1961, AND A BLOCK ASSESSMENT HAD TO BE DONE IN RELATION TO THE COMPANY, THE ASSESSING OFFICER HAD TO (I) RECORD HIS SATISFACTIO N THAT ANY UNDISCLOSED INCOME BELONGED TO THE COMPANY, AND (II ) HAND OVER THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS AND ASSETS SEI ZED TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE COMP ANY. 10. THEN, THE HONBLE SUPREME COURT IN THE CASE OF M/S. CALCUTTA KNITWEARS IN CIVIL APPEAL NO.3958 OF 2014, VIDE JU DGMENT DATED 12.03.2014, HELD THAT FOR THE PURPOSES OF SECTION 1 58BD, RECORDING OF A SATISFACTION NOTE IS A PRE-REQUISITE AND THE S ATISFACTION NOTE MUST BE PREPARED BY THE AO BEFORE HE TRANSMITS THE RECORD TO THE OTHER AO, WHO HAS JURISDICTION OVER THE PERSON OTHE R THAN THE PERSON SEARCHED UNDER SECTION 158BD OF THE ACT. 11. THE LD. CIT(A) FURTHER OBSERVED THAT THE SEARC H IN THIS CASE WAS CARRIED OUT IN THE CASE OF M/S PUNJAB IRON & ST EEL COMPANY LTD. AND ALSO IN THE CASE OF ONE OF ITS DIRECTORS S H. RAMESH INDER SINGH, WHO IS THE FATHER OF THE ASSESSEE. IT IS AN UNDISPUTED POSITION THAT THERE WAS NO SEARCH WARRANT IN THE CASE OF THI S ASSESSEE. THE ASSESSING OFFICER WAS THUS REQUIRED TO RECORD SATIS FACTION IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF M ANISH MAHERSHWARI VS. ACIT, REPORTED AT 289 ITR 341 (SC) IN THE CASE OF THE PERSON SEARCHED THAT CERTAIN DOCUMENTS HAVING I MPLICATION ON COMPUTATION OF INCOME BELONG TO A PERSON OTHER THAN THE ONE SEARCHED AND ONLY THEREAFTER, THE PROCEEDINGS COULD COMMENCE IN THE CASE OF SUCH OTHER PERSON. IN THE PRESENT CASE, THE SATISFACTION ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 13 HAS ONLY BEEN RECORDED IN THE CASE OF THE ASSESSEE HIMSELF, I.E., THE PERSON NOT SEARCHED OR, THE OTHER PERSON. THE REQ UIREMENT, AS MANDATED BY THE SUPREME COURT IN THE CASE OF MANIS H MAHESHWARI (SUPRA), HAS THUS NOT BEEN COMPLIED WITH AND THE PR OCEEDINGS IN THE CASE OF THIS ASSESSEE ARE BAD IN LAW AND ORDER U/S 153C READ WITH 143(3) SHOULD BE QUASHED ON THIS SCORE ITSELF. 12. FURTHER THE HONBLE SUPREME COURT, VIDE JUDGME NT DATED 12.03.2014, IN CIVIL APPEAL NO. 3958 OF 2014, IN TH E CASE OF M/S. CALCUTTA KNITWEARS, HAS MANDATED THE RECORDING OF SATISFACTION AND PREPARATION OF SATISFACTION NOTE BY THE AO OF THE P ERSON SEARCHED, NOTWITHSTANDING THE FACT THAT THE AO OF THE PERSON SEARCHED IS THE SAME AS THAT OF THE OTHER PERSON. 13. ALL THE OTHER DECISIONS CITED BY THE ASSESSEE A RE TO THE SAME EFFECT. 14. EVEN THE CBDT, KEEPING THE VARIOUS DECISIONS O F JUDICIAL AUTHORITIES, ISSUED CIRCULAR NO. 24 OF 2015, ACCEP TING THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT-III VS. CALCU TTA KNITWEARS AND THOSE OF VARIOUS HIGH COURTS. IT WAS STATED THAT TH E VIEW OF THE COURTS THAT THE PROVISIONS OF SECTION 153C ARE SUBS TANTIALLY SIMILAR/PARI-MATERIA TO THE PROVISIONS OF SECTION 1 58BD OF THE ACT HAD BEEN ACCEPTED. IT WAS CONCEDED THAT SATISFACTIO N HAS TO BE RECORDED EVEN IF THE A.O OF PERSON SEARCHED AND THE OTHER PERSON IS THE SAME. THE CIRCULAR CLARIFIES THAT IT WOULD BE APPLICABLE TO PENDING LITIGATION ALSO. 15. THIS CBDT CIRCULAR HAS BEEN CONSIDERED IN SHIE LD HOME PVT. LTD., BY THE ITAT DELHI, VIDE ORDER DATED 24.2.201 6 (COPY AT APB 237 TO 239) AND HARDEVI KESHWANI, BY THE ITAT CH ANDIGARH BENCH, VIDE ORDER DATED 5.4.2016 (APB 240 TO 243). 16. THE SAID CBDT CIRCULAR HAS BEEN FILED BEFORE US ALSO. IT READS AS FOLLOWS: CBDT 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, 31 ST 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. ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 14 2. THE HONBLE 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(AVAILABLE IN NJRS AT 2014-LL-0312-5 1) HAS LAID DOWN THAT FOR THE PURPOSE OF SECTION 158BD OF THE A CT, RECORDING OF A SATISFACTION NOTE IS A PREREQUISITE AND THE SATISFA CTION NOTE MUST BE PREPARED BY THE AO BEFORE HE TRANSMITS THE RECORD T O THE OTHER AO WHO HAS JURISDICTION OVER SUCH OTHER PERSON U/S 158 BD.J THE HONBLE COURT HELD THAT THE SATISFACTION NOTE COUL D 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 UND ER SECTION 158BC OF THE ACT; OR (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS AR E COMPLETED UNDER SECTION 158BC OF THE ACT OF THE SEARCHED PERS ON. 3. SEVERAL HIGH COURTS HAVE HELD THAT THE PR OVISIONS OF SECTION 153C OF THE ACT ARE SUBSTANTIALLY SIMIIAR/PARI-MATE RIA TO THE PROVISIONS OF SECTION 158BD OF THE ACT AND THEREFOR E, THE ABOVE GUIDELINES OF THE HONBLE 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 CBD T. 4. THE GUIDELINES OF THE HONBLE SUPREME COUR T AS REFERRED TO IN PARA 2 ABOVE, WITH REGARD TO RECORDING OF SATISFACT ION NOTE, MAY BE BROUGHT TO THE NOTICE OF ALL FOR STRICT COMPLIAN CE. IT IS FURTHER CLARIFIED THAT EVEN IF THE AO OF THE SEARCHED PERSO N AND THE OTHER PERSON IS ONE AND THE SAME, THEN ALSO HE IS REQUIR ED TO RECORD HIS SATISFACTION AS HAS BEEN 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 LIGHT OF THE ABOVE JUDGMENT. ACCORDINGLY, THE BOARD HEREBY DIRECTS THA T PENDING LITIGATION WITH REGARD TO RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C SHOULD BE WITHDRAWN /NOT PRESSED IF IT D OES NOT MEET THE GUIDELINES LAID DOWN BY THE APEX COURT. 17. THUS, AS PER PARA 4 OF THE AFORESAID CBDT CIRCU LAR, EVEN IF THE AO OF THE SEARCHED PERSON AND THAT OF THE OTHER PE RSON IS ONE AND THE SAME, IT IS MANDATORY FOR HIM TO RECORD HIS SAT ISFACTION. HENCE, THE LD. CIT(A)S OBSERVATION IN THIS REGARD IS UNS USTAINABLE. FURTHER, ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 15 IN VIEW OF THE AFOREMENTIONED SETTLED LEGAL POSITI ON, THE DEFECT IN QUESTION BEING A JURISDICTIONAL ONE, IT CANNOT GET CURED BY THE PROVISIONS OF SECTION 292B OF THE ACT. 18. ACCORDINGLY, THE ORDER DATED 24.03.2014 PASSED UNDER SECTION 153C IS QUASHED. THE C.O. FILED BY THE ASSESSEE IS ACCEPTED. 13. THEREFORE, FOLLOWING THE ORDER OF THIS BENCH O F THE TRIBUNAL IN THE CASE OF RIPANDEEP THAKHAR VS. ACIT, CC-1, JALANDHA R, IN ITA NO. 665(ASR)/2014)/2014 & CO. NO.02(ASR)/2015 DATED 13. 06.2016, FOR THE A.Y. 2009-10, ORDER PASSED U/S 153C OF THE ACT IS QUASHED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 14. SIMILARLY, APPEAL OF THE ASSESSEE IN ITA NO.62 5(ASR)/2014 FOR THE A.Y. 2010-11 IS ALSO ALLOWED. 15. AS REGARDS THE DEPARTMENTS APPEALS IN ITA NOS. 661 & 662(ASR)/2014, FOR THE A.YS. 2009-10 & 2010-11, TH E SAME ARE DISMISSED, SINCE WE HAVE ALLOWED THE APPEALS OF THE ASSESSEE. 16. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED, WHEREAS BOTH THE APPEALS OF THE DEPARTMENT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/07/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 25/07/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. LAKHANPAL DESIGN PVT. LTD. GHAZIA BAD. 2. THE ACIT, CIRCLE-1, JALANDHAR. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY ITA NOS. 624, 625, 661 & 662/ASR/2014 A.YS. 2009-10 & 2010-11 16 BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.