M/s. Nau Nidh Overseas Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6627/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7032 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Invalid notice; Search and seizure; Document seized; Period of limitation; Assessment record; Documents seized
• Section: 143(3); 153A; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. KULDIP SINGH , JM ITA NO. 6572 /DEL/2013 : ASSTT. YEAR : 200 8 - 0 9 ITA NO. 6573/DEL/2013 : ASSTT. YEAR : 2009 - 10 ITA NO. 6574 /DEL/201 3 : ASSTT. YEAR : 2010 - 1 1 ITA NO. 6575/DEL/2013 : ASSTT. YEAR : 2011 - 12 A SSTT. C OMMISSIONER OF I NCOME T AX , CENTRAL CIRCLE - 09 , NEW DELHI VS M/S NA U NIDH OVERSEAS PVT. LTD., D - 6/13, VASANT VIHAR, NEW DELHI - 11006 7 (APPELLANT) (RESPONDENT) PAN NO. AA BCN3865G ITA NO. 6627 /DEL/2013 : ASSTT. YEAR : 2011 - 12 M/S NA U NIDH OVERSEAS PVT. LTD., D - 6/13, VASANT VIHAR, NEW DELHI - 110067 VS ASSTT. COMMISSIONER OF INCOME TAX, CE NTRAL CIRCLE - 09, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AA BCN3865G ASSESSEE BY : DR. RAKESH GUPTA, ADV. REVENUE BY : SH. SANJAY KUMAR , CIT DR DATE OF HEARING : 04 .0 7 .201 6 DATE OF PRONOUNCE MENT : 12 .07 .201 6 ORDER PER N. K. SAINI, AM : THESE APPEAL S BY THE DEPARTMENT FOR THE ASSESSMENT YEARS 2008 - 09 TO 2010 - 11 AND THE CROSS APPEALS BY THE DEPARTMENT A ND THE ASSESSEE FOR THE ASSESSMENT YEAR 2011 - 12 ARE DIRECTED AGAINST THE SEPARATE ORDER S EACH DATED 29.09 .2013 OF LD. CIT(A) - X X X I I , NEW DELHI . ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 2 2. SINCE THE ISSUE S INVOLVED IN ALL THESE APPEALS ARE COMMON WHICH WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. AT THE FIRST INSTANCE, WE WILL DEAL WITH THE APPEAL IN ITA NO. 6572/DEL/2013 FOR THE ASSESSMENT YEAR 2008 - 09. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWAN CE MADE BY THE AO U/S 37 AMOUNTING TO RS.38,83,148/ - . 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THE I SSUANCE OF NOTICE U/S 153C IS BA D IN LAW. 3. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE AP PELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 4. FROM THE AFORESAID GROUNDS IT WOULD BE CLEAR THAT T HE MAIN GRIEVANCE OF THE D EPARTMENT IN THIS APPEAL RELATES TO AC TION OF THE LD. CIT(A) IN HOLDING THE NOTICE ISSUED U/S 153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) AS BAD IN LAW . ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 3 5. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS ENGAGED IN THE BUSI NESS OF PROVIDING BUSINESS AUXILIARY SERVICES AND ALSO EARNED INCOME BY WAY OF COMMISSION AND BROKERAGE. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2008 DECLARING AN INCOME OF RS.1,85,52,489/ - . SUBSEQUENTLY, A SEARCH OPERATION WAS UNDERTAKEN BY THE C BI AT THE RESIDENTIAL PREMISES OF THE DIRECTOR OF THE ASSESSEE, NAMELY, SH. JATINDER PAL SINGH ON 22.04.2010 AND A CASH OF RS. 2 CRORES WAS SEIZED. THEREAFTER, ON THE BASIS OF INFORMATION PROVIDED BY THE CBI A SEARCH OPERATION U/S 132 OF THE ACT WAS CARRIE D OUT AT THE RESIDENTIAL PREMISES OF THE SAID DIRECTOR OF THE ASSESSEE COMPANY AND A CASH OF RS.15,74,000/ - WAS FOUND, OUT OF WHICH RS.15,00,000/ - WERE SEIZED INCLUDING A SUM OF RS.10,00,000/ - BELONGING TO THE ASSESSEE COMPANY. T HE AO RECORDED A SATISFACTI ON NOTE AND ISSUED A NOTICE U/S 153C OF THE ACT AND SERV ED THE SAME ON THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A LETTER DATED 19.02.2013 STATING THAT THE RETURN FILED U/S 139(1) OF THE ACT FOR THE ASSESSMENT YEAR 2008 - 09 ON 30.09.2 008 BE TREATED AS RETURN FILED U/S 153C OF THE ACT. THEREAFTER, THE AO COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153C OF THE ACT, AT A TOTAL INCOME OF RS.2,24,35,997/ - AS AGAINST THE RETURNED INCOME OF RS.1,85,52,849/ - BY MAKING THE DISALLOWANCE U/S 37 OF ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 4 THE ACT AMOUNTING TO RS.38,83,148/ - WHICH WERE THE EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT. 6. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'THE SUBJECT APPEAL FIXED BEFORE YOUR HONOR FOR TODAY THE 1 1 - 09 - 2013 IS AGAINST ORDER U/S. 143(3) RED WITH SECTION 153C OF I .T. ACT, 1961 DTD. 28/03/2013 PASSED BY DCIT, CENTRAL CIRCLE - 9, NEW DELHI. THE ABOVE SAID ASSESSMENT WAS ON THE BASIS OF SATISFACTION NOTE RECORDED ON 07/02/2013 BY DCIT, CENTRAL CIRCLE - 9, NE W DELHI AS A CONSEQUENCE OF SEARCH PROCEEDINGS IN THE CASE OF SH.J.P. SINGH. THERE WAS SEARCH OPERATION U/S. 132 OF THE INCOME TAX ACT, 1961 ON 22/4/10 AT THE RESIDENCE OF SH. JITENDER PAL SINGH, DIRECTOR OF THE COMPANY. ON THE BASIS OF THE SAID SEARCH, D CIT, CENTRAL CIRCLE - 9, NEW DELHI WHO WAS THE ASSESSING OFFICER OF SH. J.P. SINGH RECORDED SATISFACTION ON 7/2/13 IN THE CONTEXT OF PROVISIONS OF SEC. 153C AND ON THE BASIS OF THE SAID SATISFACTION NOTE, NOTICE U/S. 153C WAS ISSUED ON 8/2/13. THE CONTENTS O F SATISFACTION NOTE ARE REPRODUCED HEREUNDER: SATISFACTION NOTE U/S. 153COFTHE INCOME TAX ACT. 1961 IN THE CASE OF M/S. NAV NIDH OVERSEAS PVT . LTD. PAN NO. AABCN3865G M/S. NAV NIDH MOTELS PVT . LTD. PAN NO. AAACN4560B D - 6/1, VASANT VIHAR, NEW DELHI. ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 5 1. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF SH. JATINDER PAL SINGH PAN: AIPPS9874G FOR THE ASSESSMENT YEAR 2011 - 12, IT WAS NOTICED THAT DURING THE SEARCH AND SEIZURE OPERATION U/S. 132 OF THE INCOME TAX ACT, 1961, UNDERTAKEN ON 22.4.2010 PURSU ANT TO AUTHORIZATION U/S. 132 IN THE CASE OF SRI JATINDER PAL SINGH, R/O D - 6/13, VASANT VIHAR, NEW D ELHI, CASH OF RS. 15,75,000 / - WAS FOUND OUT OF WHICH CASH OF RS. 15,00,000/ - WAS SEIZED FROM THE ABOVE PREMISES. 2. STATEMENT OF SH. JATINDER PAL SINGH WAS RECORDED U/S. 132(4) OF THE INCOME TAX ACT, 1961. IN REPLY TO QUESTION NO. 7, IT IS STATED AS UNDER: ABOUT RS. 15 LACS IS AT MY RESIDENCE AND RS. 2 CRORES IN MY OFFICE WHICH IS LOCATED IN THE SAME PLOT ON GROUND FLOOR. OUT OF RS. 15 LACS, A SUM OF RS. 10 LACS BELONGS TO COMPANY NAMELY NAVNIDH OVERSEAS PVT . LTD. AND RS. 5 LACS IS MY PERSONAL RS. 2 CRORES I HAVE RECEIVED AS ADVANCE WITH REGARD TO MY AGRICULTURAL LAND AT FARIDABAD WHERE I INTENDED TO SELL THE LAND IN SMALL PLOTS' 2.1 IN ANSWER TO QUESTION N O. 27, SH. JATINDER PAL SINGH STATES AS UNDER: 'THE CASH BELONGS TO BOTH THE COMPANIES AND MY PERSONAL CASH BUT THE COMPUTER ON WHICH BOOKS OF ACCOUNTS ARE MAINTAINED HAVE BEEN SEIZED BY THE CBI AND PHYSICAL PRIN T OUT HAVE NOT BEEN TAKEN HENCE I AM NOT IN A POSITION TO EXPLAIN THE SAME' ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 6 3. THE CASE OF M/S. NAV NIDH OVERSEAS PVT . L TD. AND M/S. NAV NIDH MOTELS PVT . L T D. HAVE BEEN, CENTRALIZED TO THIS CIRCLE VIDE LETTER F.NO. CI T - V/CENTRALIZATION/2010 - 11/1067 DATED 17.08.2010. 4. I AM, THEREFORE, SATISFIED THAT THE CASH SEIZED FROM SH, JATINDER PAL SINGH FROM HIS RESIDENCE BELONGS TO M/S. NAV NIDH MOTELS PVT . L TD., AS STATED BY HIM IN THE STATEMENT RECORDED U/S. 132(4) OF THE ACT, WARRANTING ACTION U/S. 153C IN THE CASES M/S. NAV NIDH OVERSEAS PVT . LTD. AND M/S. NAV NIDH MOTELS PVT . L T D. SH. JATINDER PAL SINGH ONE OF THE DIRECTORS IN BOTH THESE COMPANIES. 07.02.2013 (SUMESH SWANI) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 9, NEW DELHI NOTICES U/S. 153C OF THE INCOME TAX ACT, 1961, ARE HEREBY ISSUED FOR THE ASSESSMENT YEARS 2005 - 06 TO 2010 - 11 AT THE OUTSET, WE MAY SUBMIT THAT THE SAID SATISFACTION NOTE IS NOT RELEVANT FOR THE YEAR UNDER REFERENCE AS THE SATISFACTION NOTE WAS ONLY IN RESPECT OF SEIZURE OF CASH FROM SH . JITENDER PAL SINGH. THE ISSUE OF SEIZED CASH IS RELEVANT FOR ASSESSMENT YEAR 2011 - 12 AND SAME HAS BEEN CONSIDERED BY ASSESSING OFFICER ALSO IN ASSESSMENT YEAR 2011 - 12. EVEN OTHERWISE, SUCH SATISFACTION WAS NOT ON THE BASIS OF ANY MONEY, BULLION, JEWELLER Y OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO THE ASSESSEE ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 7 COMPANY, BUT ONLY ON THE BASIS OF STATEMENT OF SH. J.P. SINGH, WHICH HE HIMSELF HAS RETRACTED LATER ON AND AS SUCH THERE IS NO F ACTUAL OR LEGAL BASIS FOR RECORDING OF SATISFACTION IN THE ABSENCE OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED AND BELONGING TO THE ASSESSEE. IN ANY CASE, THE SATISFACTION NOTE REFERRED TO IN THE ASSESSMENT ORDER U/S. 153 BEING NOT RELEVANT FOR THE YEAR UNDER REFERENCE, THE ISSUE OF NOTICE U/S. 153C IS ILLEGAL AND WITHOUT JURISDICTION. 7. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: JAI STEEL (INDIA) VS ACIT 259 CTR 281 (RAJ.) ACIT V S ASHA KATARIA (ITAT, NEW DELHI ITA NO. 3105, 3106, 3107/DEL/2011 ) . DINESH TOBACCO INDUSTRIES VS DCIT 88 DTR 329 (JD.) SH. VIKRAM KHANDELWAL VS DCIT, ITA NO. 1976/MUM/2009 8. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADD ITION MADE BY THE AO BY OBSERVING IN PARA 7.1 TO 7.1.7 OF THE IMPUGNED ORDER WHICH READ AS UNDER: 7.1 BEFORE ADDRESSING THE GRIEVANCE OF THE APPELLANT COMPANY REGARDING THE INITIATION OF PROCEEDINGS U/S 153C OF THE I . T. ACT, 1961 IT IS APPROPRIATE TO UND ERSTAND THE PROVISIONS OF SECTION 153C AND ITS APPLICABILITY TO THE ISSUE ON ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 8 HAND. FOR APPLICABILITY OF THE PROVISIONS OF SECTION 153C, THE FOLLOWING CONDITIONS ARE REQUIRED TO BE FULFILLED: (I ) THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY, OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENT SEIZED OR REQUISITIONED BELONG TO A PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS INITIATED. (II) THE BOOKS OF ACCOUNT, DOCUMENT OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH PERSON. (III) THE ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON IN THE SAME MANNER AS THE PERSON SEARCHED, TO MAKE ASSESSMENT OR RE ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. I T IS IMPLIED THAT SUCH OTHER PERSON SHALL ALSO BE ASSESSED OR REASSESSED FOR THAT YEAR OF SEARCH AND THE PRECEDING SIX YEARS. 7.1.2 THE REFERENCE TO THE 'ASSESSING OFFICER' IN THIS SECTION 153C IS THE 'ASSESSING OFFICER' WHO IS MAKING THE ASSESSMENT OF THE PERSON SEARCHED UNDER SECTION 153A. THE SATISFACTION REGARDING THE BOOKS OF ACCOUNT, DOCUMENTS OR ASSETS SEIZED BELONGING TO SOME OTHER PERSON IS REQUIRED TO BE FORMED BY SUCH ASSESSING OFFICER. IT IS THE ASSESSING OFFIC ER OF THE SEARCHED PERSON WHILE APPRAISING OR SCRUTINIZING ALL THE SEIZED MATERIAL OF THE PERSON HAS TO BE SATISFIED THAT A PART OF THE SEIZED MATERIAL DID NOT BELONG TO THE PERSON ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 9 SEARCHED BUT TO SOME OTHER PERSON. IN THE PRESENT CASE, I.E. IN THE CASE OF THE APPELLANT NO SEARCH U/S 132 OF THE IT ACT 1961 WAS CARRIED OUT BY THE DIRECTORATE OF INCOME TAX(LNV.) ON PREMISES SPECIFICALLY OCCUPIED BY THE APPELLANT COMPANY IN THE RESIDENCE OF ITS DIRECTOR SH. JATINDER PAL SINGH AND NO MONEY JEWELLERY OR BOOKS OF ACCOUNT OR DOCUMENT OR VALUABLE ARTICLE OR THING PERTAINING OR BELONGING TO THE APPELLANT COMPANY WAS SEIZED .A CASH OF RS.2CR WAS FOUND AND SEIZED BY THE CBI FROM THE BEDROOM OF SH. JATINDER PAL SINGH AND ON THE BASIS OF THE INFORMATION BY CBI A CASH OF RS. 15,74,000/ - WAS F OUND OUT OF WHICH RS .15,00,000/ - WAS SEIZED BY THE DEPARTMENT. ON THE BASIS OF THE REPLIES GIVEN BY THE DIRECTOR SH. JATINDER PAL SINGH IN HIS STATEMENT RECORDED U/S 132(4) ON THE DATE OF SEARCH I.E. 22.4.2010, THE ASSESSING OFFICER O PINED AND WAS SATISFIED THAT RS.10,00,000/ - 'BELONGED' TO THE APPELLANT COMPANY. HOWEVER, ON PERUSAL OF THE ASSESSMENT RECORD OF SH. JATINDER PAL SINGH, I.E. THE PERSON WHO WAS SEARCHED AND ASSESSED U/S 153A, I FIND THAT THE AO IGNORED THE LEGAL PRE - REQUIS ITE TO DRAWN THE SATISFACTION OF SUCH SEIZED MONEY AS PERTAINING TO THE APPELLANT COMPANY WHILE ASSESSING THE CASE OF SH. JATINDER PAL SINGH AS NO SATISFACTION NOTE WAS FOUND RECORDED IN THE FILE. MOREOVER THE FACT T HAT SUCH SEIZED MONEY OF RS. 10 LAKH BEL ONGED TO THE APPELLANT COMPANY COULD NOT BE CORROBORATED WITH THE BOOKS OF ACCOUNT OF THE APPELLANT OR THE DATA ON THE COMPUTER TO ASSESS THE NATURE OF SEIZURE WHETHER DISCLOSED OR UNDISCLOSED IN THE HANDS OF THE APPELLANT AND IS MERELY BASED ONLY ON THE S TATEMENT OF THE DIRECTOR OF THE COMPANY WHICH HE SUBSEQUENTLY RETRACTED ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 10 ON THE GROUND THAT IT WAS HIS PERSONAL MONEY. THEREFORE, THE PRE - REQUISITE OF RECORDING OR DRAWING A SATISFACTION FOR INITIATION OF PROCEEDINGS U/S 153C OF THE I . T. AC T, 1961 WAS NOT A DHERED TO BY THE AO. IT IS ALSO SEEN THAT THE AO DID NOT CONFRONT THE DIRECTOR OF THE APPELLANT COMPANY REGARDING THE CONTRADICTORY STATEMENT GIVEN. IN THESE CIRCUMSTANCES THE OWNERSHIP OF THE CASH CANNOT BE SAID TO BE ASCERTAINED TO BE 'BELONGED' TO THE A PPELLANT THE SATISFACTION NOTE WHICH IS RECORDED BY THE AO IN THE CASE OF THE APPELLANT COMPANY IGNORING THE SAME IN THE CASE OF THE SEARCHED PERSON I.E. SH. JATINDER PAL SINGH, WHICH IS A PRE - REQUISITE CONDITION FOR INITIATION OF PROCEEDINGS UNDER SECTION 153C DOES NOT HOLD ANY LEGAL SANCTITY EVEN OTHERWISE WHEN THE OWNERSHIP OF THE SEIZED MONEY BY THE DEPARTMENT SEEMED DOUBTFUL. 7.1.3 THE SECOND PART OF THE SECTION DEALS WITH THE HANDING OVER OF THE SEIZED MATERIAL AND ASSUMING THE JURISDICTION OF THE AS SESSING OFFICER ON SUCH OTHER PERSON, OTHER THAN THE PERSON SEARCHED. FROM THE MATERIAL ON RECORD IT IS SEEN THAT NO DOCUMENT OR BOOKS OF ACCOUNT WERE SEIZED FROM THE DIRECTOR'S RESIDENCE 'BELONGING' TO THE APPELLANT COMPANY. IT WAS STATED IN THE ASSESSMEN T ORDER THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE APPELLANT COMPANY WAS ASKED TO PRODUCE THE COPIES OF THE ITRS AND BOOKS OF ACCOUNT WHICH HE FAILED. SUBSEQUENTLY, DURING POST SEARCH ENQUIRIES AGAIN THE APPELLANT WAS ASKED TO FURNISH THE COPIES OF I TRS AND FINAL ACCOUNTS WHICH THE AR OF THE APPELLANT SUBMITTED. FROM THESE FACTS IT IS EVIDENT THAT NO DOCUMENT ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 11 WAS SEIZED FROM THE OTHER PERSON SEARCHED, PERTAINING TO THE APPELLANT COMPANY FOR THE ASSESSING OFFICER OF THE APPELLANT COMPANY TO TAKE OVER F ROM THE ASSESSING OFFICER OF THE PERSON SEARCHED. 7.1.4 JURISDICTION WAS ASSUMED BY THE PRESENT ASSESSING OFFICER WHEN THE CASE WAS CENTRALIZED VIDE ORDER F. NO. CIT - V/CENTRALIZATION/2010 - 11/1067 DATED 17.8.2010 BY THE CIT - DELHI - V, NEW - DELHI. THEREFORE T HE JURISDICTION OF THE APPELLANT CASE WAS CONFERRED/TRANSFERRED ON THE DCIT - CENTRAL CIRCLE - 9, NEW DELHI ON 17.8.2010.THE JURISDICTION TO INITIATE PROCEEDINGS U/S 153C WOULD OPERATE ONLY WHEN THE SEIZED MATERIAL WAS HANDED OVER TO THE PRESENT ASSESSING OFF ICER WHO WAS ASSIGNED THE JURISDICTION OF THE APPELLANT COMPANY. FROM THE MATERIAL ON RECORD, I FIND THAT THE SEIZED MATERIAL WAS HANDED OVER TO THE DCIT CENTRAL CIRCLE - 9 ON 07.12.2010. PRECISELY, THE SEIZED MATERIAL IS NOTHING OTHER THAN AN APPRAISAL REPO RT CONTAINING DETAILED ACCOUNT OF THE SEARCH PROCEEDINGS REGARDING THE SEIZURE OF RS. 15 LAKH, STATEMENT OF SH. JATINDER PAL SINGH AND A DETAILED ACCOUNT OF POST SEARCH ENQUIRIES. THEREFORE, THERE IS NO MATERIAL THAT CAN BE DEFINED AS 'SEIZED MATERIAL' OR 'ASSETS SEIZED' BELONGING TO THE APPELLANT COMPANY FROM THE PREMISES OF SH. JATINDER PAL SINGH. 7.1.5 THERE IS NO TIME LIMIT FOR ISSUANCE OF NOTICE U/S 153C, BUT THERE IS TIME LIMIT FOR COMPLETION OF ASSESSMENT OR REASSESSMENT U/S 153C AS PRESCRIBED UNDER 153B. PERIOD OF LIMITATION HAS BEEN PROVIDED IN THIS SECTION WITH REFERENCE TO THE ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 12 DATE ON WHICH THE BOOKS OF ACCOUNT, OR DOCUMENT OR ASSET SEIZED ARE HANDED OVER UNDER THE FIRST PROVISO TO SECTION 153B. THEREFORE IN THE PRESENT CASE THE TIME LIMIT FOR CO MPLETION OF PROCEEDINGS U/S 153C WOULD COMMENCE FROM THE END OF THE FINANCIAL YEAR I.E. AFTER 31.3.2011 IN WHICH SUCH MONEY, WHICH BELONGED TO THE APPELLANT COMPANY SHALL BE HANDED OVER UPTO THE END OF 31.12.2013. 7.1.6 THEREFORE, IN VIEW OF THE ABOVE DIS CUSSION, IN MY OPINION, PROVISIONS OF SECTION 153C CAN BE INVOKED WITH RESPECT TO THE OTHER PERSON WHEN THE SEIZED MATERIAL BELONGED TO OTHER PERSON AND THE ASSESSING OFFICER OF THE PERSON SEARCHED RECORDS HIS SATISFACTION TO THIS EFFECT. IN - THE PRESENT C ASE THE FOLLOWING FACTS EMERGED TO SUM UP WHERE THE PROVISIONS OF THE APPLICABILITY OF SECTION 153C HAS BEEN IGNORED. (A) NO MATERIAL WAS SEIZED FROM THE RESIDENCE OF THE DIRECTOR OF THE APPELLANT COMPANY, PERTAINING TO THE APPELLANT COMPANY. (B) NO WARR ANT OF AUTHORIZATION WAS ISSUED IN THE NAME OF THE APPELLANT COMPANY TO INITIATE SEARCH OPERATION U/S 132 AGAINST THE APPELLANT COMPANY WITH ITS ADDRESS. (C) THE OWNERSHIP OF CASH OF RS. 10,00,000 / - BELONGING TO THE APPELLANT IS DOUBTFUL AS IT IS BASED ON THE CO NTRADICTORY STATEMENTS OF THE DI RECTOR OF THE APPELLANT COMPANY AND SUCH STATEMENT IS NOT CORROBORATED WITH ANY FINDING ON RECORD. MOREOVER THIS CASH WAS SEIZED FROM THE ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 13 BEDROOM OF SH. JATINDER PAL SINGH FROM THE FIRST FLOOR. (D) EVEN, IF THE ASSES SING OFFICER IS COMMON IN THE CASE OF THE PERSON SEARCHED AND THAT OF THE OTHER PERSON, THE ASSESSING OFFICER SHOULD HAVE DRAWN A SATISFACTION NOTE WHILE ASSESSING THE CASE OF SH. JATINDER PAL SINGH U/S 153A AND THEN TRANSFERRED SUCH NOTE TO THE FILE OF TH E APPELLANT COMPANY. THIS IS NOT THE CASE HERE AS NO SATISFACTION WAS DRAWN BY THE AO WHILE ASSESSING SH. JATINDER PAL SINGH U/S 153A REGARDING THE APPELLANT'S CASE AS NO SUCH SATISFACTION NOTE WAS FOUND ON RECORD OF SH. JATINDER PAL SINGH. HOWEVER, SATISF ACTION NOTE WAS DRAWN IN THE CASE OF THE APPELLANT IN ITS ASSESSMENT RECORD. ALTHOUGH THE AO IS COMMON IN BOTH THE CASES, YET THERE IS NO TRANSFER OF SUCH NOTE FROM THE FILE OF THE SEARCHED PERSON TO THE FILE OF THE OTHER PERSON. THEREFORE, THE PRE - REQUISI TE CONDITION FOR ISSUE OF NOTICE U/S 153C IS NOT ADHERED TO LEGALLY. PROCEEDINGS U/S 153C WAS INITIATED IN THE CASE OF THE APPELLANT COMPANY ON THE BASIS OF THE 'STATEMENT' OF THE DIRECTOR OF THE APPELLANT COMPANY I.E. SH. JATINDER PAL SINGH, BUT NOT ON TH E BASIS OF ANY SIZED DOCUMENT OR ASSET SEIZED BELONGING TO IT. INITIATION OF PROCEEDINGS U/S 153C OF THE I.T. ACT ON THE BASIS OF A 'STATEMENT' IS NOT CORRECT. (E) THE DATE 07.12.2010 IS CRUCIAL AS THE ASSESSING OFFICER HAD JURISDICTION OVER THE CASE AS W ELL THE SEIZED MATERIAL. THE ASSESSING OFFICER WAS IN POSSESSION OF THE STATEMENT RECORDED REGARDING THE INITIAL OWNE RSHIP OF A CASH OF RS.10,00,000/ - AS STATED BY THE DIRECTOR OF THE ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 14 APPELLANT COMPANY ON 22.4.2010 WHICH HE SUBSEQUENTLY RETRACTED DURING PO ST SEARCH ENQUIRY ON 18.5.2010.THERE NO TIME LIMIT FOR ISSUE OF NOTICE U/S 153C AND IN THIS CASE NOTICE WAS ISSUED ON 8.2.2013 AFTER 20 MONTHS, WHILE ASSESSING THE CASE OF .SH. JATINDER PAL SINGH U/S 153A. THEREFORE, THE TIME LIMIT FOR COMPLETION OF THIS A SSESSMENT COMMENCED U/S 153C AFTER 31.03.2011, I.E. THE END OF THE FINANCIAL YEAR IN WHICH SUCH SEIZED DOCUMENT/ASSET WAS HANDED OVER UPTO THE DATE OF 31.03.2013. THE ASSESSMENT ORDER WAS PASSED ON 28.03.2013. (F) IN THIS CASE, SATISFACTION NOTE WAS DRAWN ON 7.02.2013 IN THE CASE OF THE APPELLANT AND NOTICE WAS ISSUED ON 8.02.2013 U/S 153C AND THE ASSESSMENT WAS COMPLETED ON 28.03.2013 I.E. WITHIN ONE AND A HALF MONTH APPROXIMATELY WITHOUT AFFORDING A MEANINGFUL OPPORTUNITY AND SUFFICIENT TIME TO PRESENT I TS CASE WITHOUT CONDUCTING ANY INDEPENDENT ENQUIRY BY THE ASSESSING OFFICER. (G) THE ADDITIONS MADE WERE THE DISALLOWANCE OF THE ENTIRE EXPENSES U/S 37 OF THE IT. ACT, 1961 WITHOUT BEING SUPPORTED BY ANY INCRIMINATING DOCUMENT FOUND AT THE TIME OF SEARCH AT THE RESIDENTIAL PREMISES OF SH. JATINDER PAL SINGH BELONGING TO THE APPELLANT. 7.1.7 IN VIEW OF THE ABOVE DISCUSSION, AND ALSO RELYING ON VARIOUS CASE LAWS REFERRED BY THE AR OF THE APPELLANT, IN MY OPINION THE ISSUANCE OF NOTICE U/S 153C OF IT ACT 196 1 IS BAD IN LAW. ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 15 9. NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE AO AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER. 10. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). IT WAS FURTHER SUBMITTED THAT NO SATISFACTION WAS RECORDED IN THE CASE OF THE SEARCHED PERSON. THEREFORE, THE ISSUANCE OF NOTICE U/S 153C OF THE ACT WAS RIGHTLY HELD BY THE LD. CIT(A) AS ILLEGAL AND WITHOUT JURISDICTION. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT & ORS. VS NIKKI DRUGS & CHEMICALS PVT. LTD. & ORS. (2016) 236 TAXMAN 305. 11. WE HA VE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT A SEARCH TOOK PLACE AT THE RESIDENTIAL PREMISES OF ONE OF THE DIRECTOR OF THE ASSESSEE, NAME LY, SH. JATINDER PAL SINGH ON 22.04.2010 AND ON THE BASIS OF THE SAID SEARCH, THE AO INITIATED THE PROCEEDINGS IN THE HANDS OF THE ASSESSEE U/S 153C OF THE ACT. IN THE INSTANT CASE, THE REQUISITE CONDITION ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 16 FOR TAKING FIRST STEP FOR INITIATION OF THE PROCEE DINGS U/S 153C OF THE ACT WAS NOT FULFILLED SINCE THE AO OF THE SEARCHED PERSON DID NOT RECORD THE SATISFACTION THAT THE ASSETS OR DOCUMENTS SEIZED DID NOT BELONG TO THE SEARCHED PERSON BUT TO THE ASSESSEE. 12. ON A SIMILAR ISSUE THE HON BLE JURISDICTION AL HIGH COURT IN THE CASE OF PR. CIT & ORS. VS NIKKI DRUGS & CHEMICALS PVT. LTD. & ORS. (SUPRA) HELD AS UNDER: THE FIRST STEP FOR INITIATION OF PROCEEDINGS UNDER SECTION 153C OF THE ACT IS FOR THE ASSESSING OFFICER OF THE SEARCHED PERSON TO BE SATISFIED THAT THE ASSETS OR DOCUMENTS SEIZED DO NOT BELONG TO THE SEARCHED PERSON BUT TO THE ASSESSEE SOUGHT TO BE ASSESSED UNDER SECTION 153C OF THE ACT. ONCE THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SO SATISFIED, HE IS REQUIRED TO TRANSFER THE ASSETS OR DO CUMENTS, WHICH HE BELIEVES BELONGS TO THE ASSESSEE, TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THAT ASSESSEE. THE ASSESSING OFFICER OF THE ASSESSEE ON RECEIPT OF SUCH ASSET OR DOCUMENT SEIZED WOULD HAVE JURISDICTION TO COMMENCE PROCEEDINGS UNDER SEC TION 153C OF THE ACT. THE ASSESSING OFFICER HAS, THEREAFTER, TO APPLY HIS MIND AS TO WHETHER THE ASSETS AND DOCUMENTS RECEIVED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF THE ASSESSEE AND IF HE IS SO SATISFIED THAT THE SAME HAVE A BEARING ON THE DETERMINATION OF THE INCOME OF THE ASSESSEE, HE HAS TO ISSUE NOTICE AND ASSESS OR REASSESS THE ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 17 INCOME OF THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF THE ACT. SECTION 153A OF THE ACT REQUIRES THAT A NOTICE BE ISSUED TO THE PERSON SOUGHT TO BE ASSESSED, CALLING UPON THE SAID ASSESSEE TO FILE HIS RETURN OF INCOME IN RESPECT OF EACH YEAR FALLING WITHIN THE SPECIFIED SIX AYS. IN PRESENT CASE, THE ITAT SPECIFICALLY RECORDED THAT, ADMITTEDLY, A SATISFACTION NOTE HAD NOT BEEN RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON. IT WAS CONTENDED BY THE 'REV ENUE BEFORE THE ITAT THAT THE A SSESSING OFFICER OF THE SEARCHED I.E. SVP GROUP WAS NOT REQUI RED TO RECORD SUCH SATISFACTION AS BOTH THE ASSESSEE AND THE SVP GROUP WERE BEING ASSESSE D BY THE SAME OFFICER. AFTER RECEIPT OF THE MATERIALS, THE ASSESSING OFFICER HAVING JURISDICTION IS EXPECTED TO CONDUCT ENQUIRY AND DUE VERIFICATION OF THE RELEVANT FACTS; BEFORE FORMING HIS PRIMA FACIE SATISFACTION. THE ASSESSING OFFICER HAVING JURISDICT ION WILL BE WELL WITHIN HIS RIGHTS TO FORM AN INDEPENDENT VIEW BEFORE ISSUING NOTICE TO THE OTHER PERSON (PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A) UNDER HIS JURISDICTION ON THE BASIS OF HIS OWN ENQUIRY. IN HIGH COURT OPINION, THE VIEW FORM ED BY THE ASSESSING OFFICER AFTER HIS OWN ENQUIRY DOES NOT ENTAIL IN SEATING IN APPEAL OVER THE SATISFACTION OF THE FIRST ASSESSING OFFICER, WHO HAD HANDED OVER THE ITEMS TO HIM. IT IS SETTLED THAT RECORDING OF SUCH SATISFACTION IS SINE QUA NON FOR COMMEN CING ANY PROCEEDINGS UNDER SECTION 153C OF THE ACT. THUS, THE DECISION ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 18 OF THE ITAT IN THIS REGARD CANNOT BE FAULTED. IT WAS SOUGHT TO BE CONTENDED THAT THE ASSESSING OFFICER OF THE SEARCHED PERSONS HAD, IN FACT, RECORDED THE NECESSARY SATISFACTION NOTE. HO WEVER, THE LEARNED COUNSEL FOR THE REVENUE COULD NOT CONFIRM WHETHER SUCH NOTE WAS PREPARED PRIOR TO THE INITIATION OF THE PROCEEDINGS UNDER SECTION 153C OF THE ACT. THE ASSESSEE'S CONTENTION THAT DESPITE ITS REQUEST SUCH NOTE HAD NOT BEEN DISCLOSED DURING THE ASSESSMENT PROCEEDINGS HAS ALSO NOT BEEN CONTROVERTED. IN THE CIRCUMSTANCES, THE CATEGORICAL FINDING OF THE ITAT THAT IT WAS AN ADMITTED FACT THAT THE ASSESSING OFFICER OF THE SEARCHED PERSONS HAD NOT RECORDED A SATISFACTION NOTE, CANNOT BE INTERFERED WITH. 13 . A SIMILAR VIEW HAS BEEN TAKEN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PEPSI FOODS PVT. LTD. VS ACIT (2014) 367 ITR 112 WHEREIN IT HAS BEEN HELD AS UNDER: THAT IT WAS EVIDENT FROM THE SATISFACTION NOTE THAT APART FROM SAYING THA T THE DOCUMENTS BELONGED TO THE ASSESSEE AND THAT THE ASSESSING OFFICER WAS SATISFIED THAT IT WAS A FIT CASE FOR ISSUANCE OF A NOTICE UNDER SECTION 153C, THERE WAS NOTHING WHICH WOULD INDICATE HOW THE PRESUMPTIONS WHICH WERE TO BE NORMALLY RAISED HAD B EEN REBUTTED BY THE ASSESSING OFFICER. MERE USE OR MENTION OF THE WORD 'SATISFACTION' OR THE WORDS 'I AM SATISFIED' IN THE ORDER OR THE NOTE WOULD NOT MEET THE REQUIREMENT OF THE CONCEPT OF SATISFACTION AS USED IN SECTION I53C. THE SATISFACTION NOTE ITSELF MUST ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 19 DISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THAT THE ASSESSING OFFICER OF THE PERSON IN RESPECT OF WHOM THE SEARCH WAS CONDUCTED WAS SATISFIED THAT THE SEIZED DOCUMENTS BELO NGED TO ANOTHER PERSON. ON GOING THE CONTENTS OF THE SATISFACTION NOTE, N O 'SATISFACTION' OF THE KIND REQUIRED UNDER SECTION 153C COULD BE DISCERNED. THUS, THE VERY FIRST STEP PRIOR TO THE ISSUANCE OF A NOTICE UNDER SECT ION 153C HAD NOT BEEN FULFILLED. INASMUCH AS THIS CONDITION PRECEDENT HAD NOT BEEN MET, THE NOTICES UNDER SEC TION 153C WERE LIABLE TO BE QUASHED. 14 . SIMILARLY, IN THE CASE OF PEPS ICO INDIA HOLDINGS PVT. LTD. VS ACIT & ANOTHER (2015) 370 ITR 295, THE HON BLE JURISDICTIONAL HIGH COURT HELD AS UNDER: THAT IN THE SATISFACTION NOTE THERE WAS NOTHING TO INDICATE T HAT THE SEIZED DOCUMENTS DID NOT BELONG TO THE J GROUP. THIS WAS EVEN APART FROM THE FACT THAT THERE WAS NO DISCLAIMER ON THE PART OF THE J GROUP IN SO FAR AS THE DOCUMENTS WERE CONCERNED. SECONDLY, THE FINDING OF PHOTOCOPIES IN THE POSSESSION OF A PERSON IN RESPECT OF WHOM SEARCH WAS CONDUCTED DOES NOT NECESSARILY MEAN AND IMPLY THAT THEY BELONG TO THE PERSON WHO HOLDS THE ORIGINALS. POSSESSION OF DOCUMENTS AND POSSESSION OF PHOTOCOPIES OF DOCUMENTS ARE TWO SEPARATE THINGS. WHILE THE J GROUP MIGHT BE THE OWNER OF THE PHOTOCOPIES OF THE DOCUMENTS IT WAS QUITE POSSIBLE THAT THE ORIGINALS MIGHT BE OWNED BY SOME OTHER PERSON. UNLESS IT WAS ESTABLISHED THAT THE DOCUMENTS IN QUESTION, WHETHER THEY BE PHOTOCOPIES OR ORIGINALS DID NOT BELONG TO THE ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 20 PERSON IN RESP ECT OF WHOM SEARCH WAS CONDUCTED, THE QUESTION OF INVOKING SECTION 153C WOULD NOT ARISE. NONE OF THE THREE SETS OF DOCUMENTS - COPIES OF PREFERENCE SHARES, UNSIGNED LEAVES OF CHEQUE BOOKS AND THE COPY OF THE SUPPLY AND LOAN AGREEMENT - COULD BE SAID TO BELON G TO THE ASSESSEE. THE NOTICE UNDER SECTION 153C WAS NOT VALID. 15 . IN THE PRESENT CASE ALSO NO SATISFACTION WAS DRAWN BY THE AO BEFORE ISSUING THE NOTICE U/S 153C OF THE ACT WHILE MAKING THE ASSESSMENT OF THE SEARCHED SH. JATINDER PAL SINGH, DIRECTOR O F THE ASSESSEE COMPANY AND THE LD. CIT(A) HAD GIVEN A CATEGORICAL FINDING THAT NO SATISFACTION NOTE WAS FOUND ON R ECORD OF SH. JATINDER PAL SINGH, H OWEVER, SATISFACTION NOTE WAS DRAWN IN THE CASE OF THE ASSESSEE IN ITS ASSESSMENT RECORD. THEREFORE, BY RESP ECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID REFERRED TO CASES , THE NO TICE ISSUED U/S 153C OF THE ACT, I N THE PRESENT CASE WAS BED - IN - LAW AND THE ASSESSMENT FRAMED ON THE BASIS OF INVALID NOTICE WAS NOT M AINTAINABLE. 16. IN ALL OTHER APPEAL S OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2009 - 10 TO 2011 - 12, THE ISSUE INVOLVED IS SIMILAR HAVING IDENTICAL FACTS, T HEREFORE, OUR FINDINGS GIVEN IN RESPECT OF ITA NO. 6572/DEL/2013 FOR THE ASSESSMENT YEAR ITA NO S. 6572 TO 6575 & 6627 /DE L/2013 NA U NIDH OVERSEAS PVT. LTD. 21 2008 - 09 SHA LL APPLY MUTATIS M UTANDIS FOR THE SAID ASSESSMENT YEARS I.E. 2009 - 10 TO 2011 - 12. 17 . AS REGARDS TO THE CROSS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2011 - 12, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAS THE INSTRUCTION TO WITHDRAW THIS AP PEAL AND GAVE IN WRITING AS UNDER: NOT PRESSED SD/ - 18 . IN VIEW OF THE ABOVE THE APPEAL OF THE ASSESSEE IS DISMISSED AS NOT PRESSED . 19 . IN THE RESULT, APPEAL S OF THE DEPARTMENT FOR THE ASSESSMENT YEARS 2008 - 09 TO 2011 - 12 AND THAT OF THE ASSESSEE FOR T HE ASSESSMENT YEAR 2011 - 12 ARE DISMISSED. ( ORDER PRON OUNCED IN THE COURT ON 12 /07 / 2016 ) SD/ - SD/ - ( KULDIP SINGH ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 /07 /2016 *S UBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR