M/s Ishar Overseas (P) Ltd., Indore V. The Addl.CIT Range-3, Indore

ITSSA 126/IND/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2386 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 11-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 28-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHNEY; R A VERMA DRS
• Assessee Lawyers: ARPIT GAUR CAS
• Keywords: Bogus Share capital; Loose papers; Document seized; Opportunity of being heard; Question of law; Validity of assessment; Accommodation entries; Reason to believe; Documents seized
• Section: 143(3); 142(1); 153A; 68; 132; 15

Judgement Text

ISHAR OVERSEAS (SS)126 AND 127/IND/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER IT(SS)A NOS.126 & 127/IND/2011 A.YS. 2003-04 & 2005-06 ISHAR OVERSEAS (P) LTD., INDORE PAN AABCI 0353 A :: ASSESSEE VS ADDL. CIT, RANGE-3, INDORE :: RESPONDENT IT(SS)A NOS.107/IND/2011 A.Y. 2002-03 BHATIA COAL SALES LTD. (MERGED WITH BHATIA INTERNATIONAL LTD.) INDORE PAN AABCB 4183 B :: ASSESSEE VS ADDL. CIT, RANGE-3, INDORE :: RESPONDENT ASSESSEES BY SHRI ANIL KAMAL GARG AND SHRI ARPIT GAUR, CAS RESPONDENT BY SHRI RAJEEV VARSHNEY AND SHRI R.A. VERMA, DRS DATE OF HEARING 18.5.2016 DATE OF PRONOUNCEMENT 18.5.2016 O R D E R ISHAR OVERSEAS (SS)126 AND 127/IND/2011 2 PER SHRI D.T. GARASIA, JM THE ABOVE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE DIFFERENT ORDERS OF LD. CIT(A)-I, INDORE, DATED 16. 9.2011. BOTH THE PARTIES SUBMITTED THAT THE SIMILAR GROUNDS HAVE BEEN TAKEN IN THE APPEALS OF BOTH THE ABOVE ASSESSEES AND THE LEAD CASE IS ISHAR OVERSEAS (P) LTD. (A.Y. 2003-04). THUS, WE ARE DECIDING THE ABOVE APP EALS OF BOTH THE ASSESSEES SIMULTANEOUSLY AND THE FACTS ARE BEING TA KEN FROM THE LEAD CASE OF ISHAR OVERSEAS (P) LTD. (A.Y. 2003-04). THE GROUNDS RELATING TO APPLICABILITY OF SECTION 15 3C 2. THROUGH GROUND NO.1.1 FOR BOTH THE ASSESSMENT YE ARS, TAKEN IN THE ORIGINAL APPEAL MEMO ITSELF, THE ASSESSEES HAVE AGITATED THE ACTION OF THE CIT(A) IN UPHOLDING THE VALIDITY OF ISSUANCE OF NOTICE UNDER S.153C OF THE INCOME-TAX ACT,1961 EVEN WHEN NO INCRIMINATI NG DOCUMENT WAS FOUND AND SEIZED FROM THE PERSON SEARCHED UNDER S.1 32 OF THE ACT. 3. SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY DULY INCORPORATED AND REGISTERED UNDER THE COMPANIES ACT, 1956, ON 13-10-1997. IT IS ONE OF THE VARIOUS COMPA NIES OF WELL KNOWN BHATIA GROUP [ALSO KNOWN AS BCC GROUP] OF INDOR E. THE ASSESSEE COMPANY IS REGULARLY ASSESSED TO INCOME-TAX SINCE I TS INCEPTION. THE ASSESSEE COMPANY FURNISHED ITS ORIGINAL RETURN OF I NCOME, PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION, U/S. 139(1 ) OF THE INCOME-TAX ACT, 1961, ON 19-11-2003 WITH THE THEN ITO-3(2), IN DORE, DECLARING AN INCOME OF RS.2640/-. A COPY OF THE ACKNOWLEDGEMENT OF THE ORIGINAL RETURN AND A COPY OF COMPUTATION OF TOTAL INCOME AR E FILED AT PAGE NO. 29 & 30 OF PAPER BOOK. ALONG WITH THE RETURN OF INCOME , THE ASSESSEE ISHAR OVERSEAS (SS)126 AND 127/IND/2011 3 FURNISHED ALL THE NECESSARY DOCUMENTS SUCH AS COPY OF THE AUDITORS REPORT, COPY OF THE AUDITED BALANCE-SHEET, AUDITED PROFIT & LOSS ACCOUNT AND SCHEDULES ETC. COPIES OF SUCH DOCUMENTS ARE FILED AT PAGE NO. 33 TO 42 OF PAPER BOOK. IN RESPONSE TO THE RETU RN OF INCOME, FURNISHED BY THE ASSESSEE U/S. 139(1) OF THE INCOME -TAX ACT, 1961, NO ACTION WAS TAKEN BY THE ASSESSING OFFICER AND AS SU CH THE ASSESSMENT WAS DEEMED TO HAVE BEEN COMPLETED U/S. 143(1)(A) OF THE INCOME-TAX ACT, 1961. A SEARCH U/S. 132(1) OF THE INCOME-TAX A CT, 1961 WAS CARRIED OUT BY THE ASSISTANT DIRECTOR OF INCOME-TAX (INV.)- II, INDORE, ON 25-09- 2007, IN THE BUSINESS PREMISES OF THE BHATIA GROUP COMPANIES AS ALSO IN THE RESIDENTIAL PREMISES OF THE DIRECTORS OF THE AS SESSEE COMPANY. HOWEVER, IT IS AN UNDISPUTED FACT THAT NEITHER ANY WARRANT OF AUTHORIZATION WAS EXECUTED NOR ANY SEARCH WAS CARRI ED OUT IN THE ASSESSEE'S CASE UNDER THE PROVISIONS OF SECTION 132 OF THE INCOME-TAX ACT, 1961. DURING THE COURSE OF THE SEARCH, THE BHA TIA GROUP HAD ADMITTED ADDITIONAL INCOME AGGREGATING TO RS.26,15, 24,529/- AND AS AGAINST SUCH ADMITTED INCOME OF RS.26,15,24,529/-, THE GROUP, AS A WHOLE, HAD SHOWN AN ADDITIONAL INCOME OF RS.27,33,7 3,087/- IN THE RETURNS OF INCOME FURNISHED UNDER S.153A OF THE ACT . HOWEVER, THE ASSESSEE NEITHER ADMITTED NOR DECLARED ANY ADDITION AL INCOME IN ITS RETURN OF INCOME. SUCH FACTS ARE EVIDENT FROM THE F INDINGS GIVEN BY THE CIT(A) AT PARA 2 & 2.1 AT PAGE NO. 2 & 3 OF HIS ORD ER. DURING THE COURSE OF THE SEARCH, NO UNDISCLOSED OR UNEXPLAINED MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS PERTAINING TO THE ASSES SEE WERE FOUND OR SEIZED FROM THE PREMISES OF ANY PERSON IN WHOSE CAS E SEARCH UNDER S.132 WAS INITIATED. SUBSEQUENTLY, A NOTICE DATED 0 3-03-2008 WAS ISSUED BY THE ADDL. COMMISSIONER OF INCOME-TAX, RAN GE-3, INDORE, U/S. 153C OF THE INCOME-TAX ACT, 1961. UNDER SUCH NOTICE , THE ASSESSEE WAS REQUIRED TO FURNISH ITS RETURN OF TOTAL INCOME PERTAINING TO THE ISHAR OVERSEAS (SS)126 AND 127/IND/2011 4 ASSESSMENT YEAR UNDER REVIEW, WITHIN A PERIOD OF 15 DAYS FROM THE DATE OF SERVICE OF THE NOTICE. A COPY OF THE NOTICE UNDE R S. 153C IS FILED BEFORE US AT PAGE NO. 1 OF PAPER BOOK. IN RESPONSE TO THE NOTICE U/S. 153C, THE ASSESSEE, FURNISHED ITS RETURN OF TOTAL I NCOME ON 28-05-2008 VIDE ACK. NO. 0030100111 DECLARING THE SAME INCOME OF RS.2640/- AS WAS DECLARED BY IT IN THE ORIGINAL RETURN FURNISHED U/S. 139(1) (PB-31 TO 32). THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRU TINY AND NOTICES U/S. 143(2) & 142(1) ALONG WITH QUESTIONNAIRES WERE ISSUED FROM TIME TO TIME. IN RESPONSE TO SUCH NOTICES, THE ASSESSEE COM PANY THROUGH ITS AUTHORIZED REPRESENTATIVE ATTENDED THE HEARINGS BEF ORE THE LEARNED ASSESSING OFFICER FROM TIME TO TIME AND MADE WRITTE N SUBMISSIONS ALONG WITH NECESSARY DOCUMENTARY EVIDENCES. FINALLY, THE ASSESSING OFFICER FRAMED THE ASSESSMENT ON 29-12-2009, U/S. 153C READ WITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.26,33,640/- AS AGAINST THE RETURNED INCOME OF RS.2640/- THEREBY MAKING ADDITION OF RS.26,31,000/-. THE ENTI RE ADDITION OF RS.26,31,000/- HAS BEEN MADE BY THE AO, UNDER THE P ROVISIONS OF SECTION 68 OF THE INCOME-TAX ACT, 1961, BY HOLDING THAT THE SHARE APPLICATION MONEY/ SHARE CAPITAL CLAIMED TO HAVE BE EN RECEIVED BY THE ASSESSEE COMPANY ARE NOT GENUINE. THE AO AT PARA 2 OF PAGE NO.2 OF HIS ORDER HAS GIVEN A SHORT FINDING TO THE EFFECT T HAT A NOTICE U/S. 153C OF THE IT ACT WAS ISSUED ON 03-03-2008 ASKING THE ASSE SSEE COMPANY TO FILE ITS RETURN OF INCOME FOR THE RELEVANT ASSESSME NT YEAR AFTER RECORDING THE SATISFACTION FOR ISSUANCE OF NOTICE U/S. 153C. EXCEPT SUCH FINDING IN THE ENTIRE BODY OF THE ASSESSMENT ORDER, THE AO HAS NOT UTTERED ANY SINGLE WORD AS REGARD TO RECORDING OF SATISFACTION EITHER BY HIMSELF OR BY THE AO OF THE PERSON SEARCHED. ISHAR OVERSEAS (SS)126 AND 127/IND/2011 5 4. MATTER CARRIED TO LD. CIT(A) WHO DISMISSED THE A PPEALS OF THE ASSESSEES BY UPHOLDING THE VALIDITY OF THE ASSESSME NT PROCEEDINGS UNDER S. 153C AND AS ALSO BY UPHOLDING THE ADDITION MADE BY THE AO UNDER S. 68 OF THE INCOME-TAX ACT, 1961. THE CIT(A ) HAS DEALT WITH THE SUBJECT ISSUE, TO A LIMITED EXTENT. AT PARA 4.1 AT PAGE NO.15 OF THE ORDER, THE CIT(A) HAS HELD THAT ENABLING SECTION OF 153C M ERELY REQUIRES THE OWNERSHIP/BELONGINGNESS OVER THE ASSETS, BOOKS OF A CCOUNT AND DOCUMENTS OF THE PERSON OTHER THAN SEARCHED PERSON FOR INITIATING THE SEARCH LIKE PROCEEDING UNDER S. 153A AGAINST SUCH P ERSON AND WHETHER SUCH ASSETS/DOCUMENTS FOUND AND SEIZED REPRESENT UN DISCLOSED INCOME AND/OR THE BOOKS OF ACCOUNTS AND DOCUMENTS FOUND AN D SEIZED ARE INCRIMINATING OR NOT WOULD NOT BE THE SUBJECT MATTE R OF INVESTIGATION WHICH CAN BE DONE/VERIFIED ONLY ONCE THE PROCEEDING S ARE INITIATED UNDER S. 153A (IN PURSUANCE OF S. 153C) AGAINST SUCH PERS ON. FURTHER, THE CIT(A) AT PARA 4.1.1 AT PAGE NO.16 OF HIS ORDER, HA S HELD THAT THE APPRAISAL REPORT ACTS AS A GUIDE TO THE ASSESSING O FFICER AND THE ADIT (INV.) PREPARES SUCH REPORT IN THE CAPACITY OF THE ASSESSING OFFICER ONLY. ACCORDING TO THE CIT(A) ONCE THE ADIT HAS REFERRED THE DOCUMENTS WHICH BELONG TO THE ASSESSEE, IT HAS TO BE HELD THA T THE CONDITION OF RECORDING SATISFACTION WAS DULY COMPLIED WITH. 5. THE LD. AR FOR THE ASSESSEES HAS MADE ORAL AS WE LL AS WRITTEN SUBMISSION AS UNDER: 13.01 IT IS SUBMITTED THAT THE DOCUMENTS REFERRED TO BY THE LEARNED AO IN THE SATISFACTION NOTE ARE NOT IN THE NATURE OF INCRIMIN ATING AS CONTEMPLATED EITHER U/S. 132(1) OR SECTION 153C OF THE ACT. IT IS SUBMI TTED THAT ALL SUCH DOCUMENTS ARE EITHER IN THE NATURE OF KYC DOCUMENTS OR IN THE NATURE OF SHARE APPLICATIONS ETC. WHICH WERE DULY OBTAINED BY THE A SSESSEE COMPANY WHILE RECEIVING SHARE APPLICATION MONEY FROM THE VARIOUS COMPANIES AND FURTHER, THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSE E COMPANY, WAS DULY ACCOUNTED FOR IN ITS REGULAR BOOKS OF ACCOUNT, MUCH PRIOR TO THE DATE OF THE SUBJECT SEARCH ON 25-09-2007. IT IS FURTHER SUBMITT ED THAT A COPY OF THE ISHAR OVERSEAS (SS)126 AND 127/IND/2011 6 AUDITED BALANCE-SHEET OF THE ASSESSEE COMPANY CONTA INING THE DETAILS OF SUCH SHARE APPLICATION MONEY, WERE DULY FURNISHED B Y THE ASSESSEE ALONG WITH ITS RETURN OF INCOME FOR THE RELEVANT ASSESSME NT YEARS FILED U/S. 139(1) OF THE ACT AND THEREFORE, THE NECESSARY INFORMATION EM ANATING FROM SUCH DOCUMENTS WERE VERY WELL WITHIN THE KNOWLEDGE AND P OSSESSION OF THE DEPARTMENT EVEN BEFORE THE DATE OF SEARCH. IN SUCH CIRCUMSTANCES, THE DOCUMENTS REFERRED TO BY THE AO IN THE NOTE OF SATI SFACTION CANNOT BE REGARDED AS INCRIMINATING IN THE NATURE SO AS TO WA RRANT THE INITIATION OF NOTICE AND ASSESSMENT PROCEEDINGS UNDER S.153C OF THE ACT AGAINST THE ASSESSEE. FOR SUCH PROPOSITION, RELIANCE IS PLACED ON THE DEC ISION OF THE HONBLE CHENNAI BENCH OF THE ITAT IN THE CASE OF ACIT VS. M.N. RAJARAMAN AS REPORTED IN (2010) 5 ITR (TRIB.) 261. 13.02 IT IS SUBMITTED THAT SEIZURE OF CERTAIN DOCUM ENTS WHICH ARE ALREADY IN THE KNOWLEDGE AND POSSESSION OF THE DEPARTMENT CANN OT LEAD TO AN ACTION AGAINST AN ASSESSEE U/S. 153C OF THE ACT. THE HON'B LE HIGH COURT OF DELHI IN CASE OF S.R. BATLIBOI & CO. VS. DIT (INV.) (2009) 315 ITR 137 (D EL) HAS HELD THAT PROVISIONS OF SECTION 153C DOES NOT ENTITLE AN D EMPOWER THE DDIT TO SEIZE ANY OR ALL THE ARTICLES, VALUABLES OR DOCUMEN TS FOUND DURING THE COURSE OF SEARCH REGARDLESS OF WHETHER THEY ARE RELEVANT F OR THE PURPOSE OF ASSESSMENT OF THE ASSESSEE ON WHOM SEARCH AND SEIZU RE IS CONDUCTED. 13.03 IN THE CASE OF DCIT VS. C.S.L. SECURITIES (P) LTD. (2008) 15 DTR ( DEL) (TRIB) 318, THE PROCEEDINGS U/S. 158BD WERE HELD TO BE UNJUSTI FIED SINCE IT WAS BASED UPON THE CONTRACT NOTES, BILLS ETC. FOUND DUR ING THE COURSE OF SEARCH FROM PREMISES OF SOME OTHER PERSONS AND SUCH CONTRA CT NOTES, BILLS WERE FOUND RECORDED IN THE BOOKS OF THE ASSESSEE. 13.04 OUR SUBMISSION TO THE ABOVE EFFECT GETS FULL FORCE FROM A JUDGMENT PRONOUNCED BY THIS HON'BLE BENCH OF ITAT IN THE CAS E OF S.K. JAIN VS. ACIT AS REPORTED IN (2010) 14 ITJ 434 (TRIB) . THE HON'BLE BENCH AT PARA (15) HAS OBSERVED AS UNDER: 'THEREFORE, IN OUR OPINION EVEN U/S. 153A COMPLETED ASSESSMENT CAN BE REOPENED ONLY IN RESPECT OF SUCH YEARS WHERE THERE IS SOME MATERIAL INDICATING UNDISCLOSED INCOME. THUS, IN OUR OPINION , THIS IS WHY THE LEGISLATURE HAS FURTHER PROVIDED THAT NOTICE SHALL BE ISSUED FO R EACH YEAR AND ASSESSMENT SHALL ALSO BE COMPLETED FOR EACH YEAR SEPARATELY.' 13.05 THE HON'BLE INDORE BENCH, IN THE CASE OF S.K. JAIN SUPRA , HAS FOLLOWED THE DECISION OF HON'BLE KOLKATA BENCH OF I TAT IN THE CASE OF LMJ INTERNATIONAL LTD. VS. DCIT 22 SOT 315 [119 ITJ 214 ] AND ALSO THE DECISION OF HON'BLE JHARKHAND HIGH COURT IN THE CASE OF ABHAY KUMAR SHROFF VS. CIT (2007) 290 ITR 114 . THE BENCH HAS ALSO MADE A REFERENCE OF CBDT CIRCU LAR NO. 7 OF 2003 DATED 05-09-2003 EXPLAINING THE SCOPE AND EFFECT OF NEW ASSESSMENT PROCEDURES IN SEARCH CASES I.E. SECTIONS 153A TO 153C. THE HON'BLE BENCH FINALLY QUASHED THE ASSESSMENT ORDER FRAMED UNDER SECTION 153C IN RESPECT OF THOSE ASSESSMENT YEARS FOR WHICH NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. 13.06 THE HONBLE PUNE B BENCH OF THE ITAT IN THE CASE OF SINHGAD TECHNICAL EDUCATION SOCIETY VS. ACIT (2011) 140 TTJ (PUNE) 233 , ALSO HELD THAT UNLESS AND UNTIL ANY INCRIMINATING DOCUMENT IS FOUND NO ASSESSMENT CAN ISHAR OVERSEAS (SS)126 AND 127/IND/2011 7 BE FRAMED UNDER THE PROVISIONS OF SECTION 153C OF T HE ACT. THE HONBLE BENCH AT PARA (10) OBSERVED AS UNDER: THOUGH THE S. 153C ONLY REQUIRES THE SATISFACTION TO THE EFFECT THAT DOCUMENTS ETC., SEIZED BELONG TO THE CONNECTED PERS ON NONETHELESS IT IS NECESSARY THAT SEIZURE OR REQUISITION MUST BE OF SU CH A CHARACTER AS TO PERSUADE THE AO TO EVEN REOPEN THE CLOSED ASSESSMEN TS. REFER DELHI HIGH COURT JUDGMENT IN THE CASE OF SARAYA INDUSTRIES LTD . VS. UNION OF INDIA & ORS. (2008) 216 CTR (DEL) 257 : 2008 6 DTR (DEL) 256. AL SO REFER THE SUPREME COURT JUDGMENT IN THE CASE OF MANISH MAHESHWARI VS. ASSTT. CIT (2007) 208 CTR (SC) 97 : (2007) 289 ITR 341 (SC) WHERE THE APE X COURT HAS HELD THAT FISCAL LAW SHOULD BE CONSTRUED STRICTLY. 13.07 RELIANCE IS ALSO PLACED ON FOLLOWING JUDICIAL PRONOUNCEMENTS: I) LMJ INTERNATIONAL LTD. VS. DCIT (2008) 119 TTJ (KOL) 214 II) MEGHMANI ORGANICS LTD. VS. DCIT (2010) 129 TTJ (AHD) 255 14.01 IT IS FURTHER SUBMITTED THAT IN THE SATISFACTION NO TE, THE AO HAS NOWHERE STATED THAT THE BS 1 TO 285 OF PANCHNAMA DA TED 29-08-2007 ARE EITHER IN THE NATURE OF INCRIMINATING DOCUMENTS OR THEY, IN ANY MANNER, REPRESENT UNDISCLOSED INCOME OF THE ASSESSEE. IT WA S ONLY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THAT THE LEARNED AO FORMED AN ADVERSE OPINION ON THE IMPUGNED LOOSE PAPERS. 14.02 THE HON'BLE HIGH COURT OF DELHI IN CASE OF AMITY HOTELS (P) LTD. & ORS. VS. CIT ORS. (2004) 192 CTR (DEL) 607 HAS LAID DOWN THE RATIO THAT THE SATISFACTION IS REQUIRED TO BE PRECEDED BY THE INVE STIGATION AND NOT THAT THE INVESTIGATION IS REQUIRED TO BE PRECEDED BY THE SAT ISFACTION. THE RATIO OF AMITY HOTELS (SUPRA) WAS FOLLOWED IN THE CASE OF ACIT VS. HARI SINGH (2008) 8 DTR (DEL) (TRIB) 201 AND ACIT VS. R.P. SINGH (2007) 111 TTJ (DEL) 880 15.00 IT IS SUBMITTED THAT IN THE CASE OF THE ASSES SEE COMPANY, THE AO ISSUED THE NOTICES FOR AS MANY AS SIX ASSESSMENT YE ARS COMMENCING FROM A.Y. 2002-03 TO A.Y. 2007-08, WITHOUT CONSIDERING T HE MATERIAL FACT THAT FOR A.Y. 2002-03, A.Y. 2004-05, A.Y. 2006-07 & A.Y. 200 7-08, NOT A SINGLE PAPER BELONGING TO THE ASSESSEE WAS FOUND AND SEIZED. THE AO ALSO ISSUED THE NOTICE UNDER S. 153C FOR A.Y. 2005-06 TO THE ASSESS EE WITHOUT CONSIDERING A VERY VITAL ASPECT THAT AN ASSESSMENT UNDER S. 143(3 ) OF THE ACT WAS DULY FRAMED BY THE DCIT-1(1), INDORE, FOR SUCH ASSESSMEN T YEAR AFTER CONDUCTING IN DEPTH ENQUIRIES AND SCRUTINIZES. IN EVIDENCE OF OUR SUCH ASSERTION, A COPY OF THE ORDER OF ASSESSMENT PASSED UNDER S. 143(3) F OR A.Y. 2005-06 IS PLACED AT PAGE NO. 45 & 46 OF OUR COMPILATION. 16.01 THE CIT (A), IN THE PRESENT CASE, AT PARA 4.1 .1 [PAGE NO.16], HAS STATED THAT THE ASSISTANT DIRECTOR PREPARES THE APP RAISAL REPORT OF A SEARCH, IN THE CAPACITY OF THE ASSESSING OFFICER ONLY AND SINC E THE UNDER THE INCOME-TAX ACT, 1961, AN ASSESSING OFFICER INCLUDES AN ADIT, T HE FINDING RECORDED BY THE ADIT AS REGARD TO BELONGINGNESS OF CERTAIN DOCUMENT S WITH THAT OF THE ASSESSEE ARE ALIKE AN ENQUIRY REPORT OF THE ASSESSI NG OFFICER. 16.02 IT IS SUBMITTED THAT UNDER THE SCHEME OF THE LAW, ALTHOUGH ASSESSING OFFICER INCLUDES AN ASSISTANT DIRECTOR BUT THE ROLE S, RESPONSIBILITIES, POWERS AND DUTIES OF AN ASSESSING OFFICER DULY ENTRUSTED W ITH THE ASSIGNMENT OF ISHAR OVERSEAS (SS)126 AND 127/IND/2011 8 MAKING THE ASSESSMENT ARE NOT INTERCHANGEABLE OR SU BSTITUTABLE WITH THAT OF AN ASSISTANT DIRECTOR. IT IS, THEREFORE, THE SATISF ACTION WHICH IS REQUIRED TO BE RECORDED BY AN ASSESSING OFFICER, CANNOT BE RECORDE D BY AN ASSISTANT DIRECTOR. HAD THE INTENTION OF THE LEGISLATURE WAS TO EMPOWER AN ASSISTANT DIRECTOR TO RECORD THE SATISFACTION AND INITIATE TH E ASSESSMENT PROCEEDINGS U/S 153C, THEN THERE WAS NO REQUIREMENT OF FIRST HANDIN G OVER THE MATERIAL SEIZED DURING THE COURSE OF SEARCH TO THE CONCERNING ASSES SING OFFICER OF THE PERSON SEARCHED AND THEREAFTER REQUIRING THE ASSESSING OFF ICER OF THE PERSON SEARCHED TO HAND OVER THE MATERIAL TO THE ASSESSING OFFICER OF THE OTHER PERSON AND, INSTEAD, THE MATERIAL COULD HAVE BEEN H ANDED OVER BY THE ASSISTANT DIRECTOR DIRECTLY TO THE ASSESSING OFFICE R OF THE OTHER PERSON WHO HAS NOT BEEN SEARCHED. IT THUS BECOME EVIDENT THAT IN T HE SCHEME OF SECTION 153C, THE SATISFACTION IS TO BE ARRIVED AT BY THE A SSESSING OFFICER HIMSELF AND NOT BY THE ASSISTANT DIRECTOR, AS HELD BY THE LEARN ED CIT (A). 17.01 THIS HONBLE BENCH, IN THE CASE OF ACIT VS. CHIRCHIND HYDRO LIMITED (2011) 17 ITJ 197 (TRIB.) , HAS QUASHED THE ASSESSMENT ORDER FRAMED BY THE AO UNDER S. 153C FOR THE WANT OF PROPER SATISFACTIO N BY THE ASSESSING OFFICER. THE HONBLE BENCH AT PARA 81 OF THE ORDER HAS HELD AS UNDER: 81. WE HAVE DELIBERATED UPON THE CONTENTIONS OF TH E LEARNED CIT DR, SHRI K.K. SINGH AND LEARNED COUNSEL FOR THE ASSESSEE, SH RI H.P. VERMA, WITH REGARD TO INTERPRETATION OF RECORDING OF SATISFACTI ON WHILE ASSUMING JURISDICTION U/S 153C OF THE ACT. EVEN IN THE NEW SCHEME OF FRAM ING OF ASSESSMENT IN CASE OF SEARCH CASES, THE LEGISLATURE HAS CLEARLY S TIPULATED THE REQUIREMENT FOR RECORDING OF SATISFACTION WHILE ASSUMING JURISDICTI ON TO ISSUENOTICE AND FRAME ASSESSMENT U/S 153C OF THE ACT WHICH REQUIRES THAT SATISFACTION TO BE RECORDED WITH REFERENCE TO THE DOCUMENTS AND OTHER MATERIALS FOUND DURING THE COURSE OF SEARCH BELONGING TO A PERSON OTHER TH AN THE SEARCHED PERSON. PRIMA FACIE, ASSESSING OFFICER OF SEARCHED PERSON S HOULD FORM AN OPINION WITH REGARD TO ANY DOCUMENT, VALUABLE, ETC. AS FOUN D DURING THE COURSE OF SEARCH THAT SUCH DOCUMENT, WHICH IS DECLINED BY THE SEARCHED PERSON, ACTUALLY BELONGS TO SOME OTHER PERSON AGAINST WHOM PROCEEDINGS U/S 153C ARE REQUIRED TO PUT INTO OPERATION. AFTER SUCH RECO RDING OF SATISFACTION, THE DOCUMENTS SO SEIZED SHOULD BE HANDED OVER TO THE AS SESSING OFFICER OF SUCH OTHER PERSON. THE LEGAL REQUIREMENT OF RECORDING OF SUCH SATISFACTION CANNOT BE SUBSTITUTED BY APPRAISAL NOTE WHICH IS PREPARED BY THE SEARCH PARTY AFTER COMPLETION OF SEARCH INSOFAR AS SUCH APPRAISAL NOTE IS A SECRET DOCUMENT PREPARED BY THE DEPARTMENT FOR THEIR INTERNAL USE, CONTENTS OF WHICH ARE NOT CONVEYED TO THE ASSESSEE NOR ITS COPY IS SUPPLIED T O THE ASSESSEE EVEN ON MAKING A WRITTEN REQUEST. THE APPRAISAL NOTE SO PRE PARED BY THE DEPARTMENT IS MEANT TO MONITOR AFTER THE SEARCH PROCEEDINGS AR E OVER SO AS TO ENSURE EXHAUSTIVE ASSESSMENT OF ALL SEARCHED PERSON WITH R ESPECT TO THEIR CORRECT INCOME AND TO PLAN A STRATEGY FOR FURTHER DEEP INQU IRY AND INVESTIGATION OF DOCUMENTS FOUND DURING THE COURSE OF SEARCH. SINCE COPY OF SUCH APPRAISAL NOTE IS NOT SUPPLIED TO THE ASSESSEE, IT CANNOT BE TAKEN AT PAR WITH THE REQUIREMENT OF RECORDING OF SATISFACTION NOTE AS ST IPULATED U/S 153C OF THE ACT, WHICH IS A MANDATORY REQUIREMENT. WHAT IS THE LEGIS LATIVE INTENT OF SUCH SATISFACTION AND IN WHAT MANNER IT SHOULD BE RECORD ED HAS BEEN DEALT WITH IN THE JUDICIAL PRONOUNCEMENTS IN THE CASES OF MANISH MAHESHWARI AND G.K.N. DRIVE SHAFT BY THE HONBLE SUPREME COURT. ACCORDINGLY, WE ARE NOT INCLINED TO AGREE WITH THE PROPOSITION THAT THE APPRAISAL NO TE PREPARED BY THE DEPARTMENT SHOULD BE TREATED AS A SATISFACTION NOTE AS REQUIRED TO BE RECORDED IN TERMS OF SECTION 153C OF THE ACT SO AS TO EMPOWER THE ISHAR OVERSEAS (SS)126 AND 127/IND/2011 9 ASSESSING OFFICER TO ASSUME JURISDICTION TO ISSUE N OTICE AND THEREAFTER FRAME ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT . [EMPHASIS SUPPLIED] 18.00 FINALLY, IT IS SUBMITTED THAT IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT-III VS. CALCUTTA KNITWEARS (2014) 362 ITR 0673 (SC) AND AS ALSO IN VIEW OF THE CBDT CIRCULAR NO. 24/201 5 DATED 31-12- 2015, IT IS SUBMITTED THAT IN ABSENCE OF THE RECORD ING OF PROPER SATISFACTION IN THE CASE OF THE ASSESSEE, THE ENTIRE ASSESSMENT PRO CEEDINGS AND THE CONSEQUENT ASSESSMENT ORDER DESERVES TO BE ANNULLED . RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE ASSESSEE IS PLACING RELIANCE FOR THIS GROUND PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 4 9 COPY OF THE PANCHNAMA DRAWN IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. AND COPY OF THE INVENTORY OF THE DOCUMENTS PERTAINING TO THE ASSESSEE SEIZED. ESTABLISHING THAT THE DOCUMENTS WERE MERELY IN THE NATURE OF SHARE APPLICATION FILED AND THESE WERE NOT IN THE NATURE OF INCRIMINATING DOCUMENTS. 21 21 COPY OF THE HANDING OVER LETTER DATED 14-03- 2008 ISSUED BY THE ADIT(INV.)-II, INDORE TO THE AO ESTABLISHING THAT THE SEIZED MATERIAL WAS RECEIVED BY THE AO AFTER ISSUANCE OF NOTICE UNDER S.153C ON 03-03-2008. 43 43 COPY OF SATISFACTION NOTE RECORDED IN THE CASE OF THE ASSESSEE ON 29-02-2008 ESTABLISHING THE VARIOUS ANOMALIES IN THE RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE. 44 44 COPY OF THE NOTICE DATED 03-03-2008 ISSUED UNDER S.153A OF THE ACT IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. ESTABLISHING THE FACT THAT SIMULTANEOUS NOTICES, ON THE SAME DAY, WERE ISSUED UNDER S.153A AND 153C OF THE ACT BY THE AO. 47 52 COPY OF ABSTRACT OF THE WRITTEN SUBMISSION MADE BEFORE CIT(A) ESTABLISHING THE FACT THAT EVEN BEFORE THE CIT(A), IT WAS CONTENDED THAT DURING THE COURSE OF SEARCH IN CASE OF M/S. BHATIA INTERNATIONAL LTD., NO INCRIMINATING MATERIAL WAS SEIZED AND SUCH FACT WAS NOT CONTRAVENED EVEN BY THE ISHAR OVERSEAS (SS)126 AND 127/IND/2011 10 CIT(A). 6. BEFORE US, IN THE ADDITIONAL GROUND NOS.1, 2 & 3 TAKEN IN THE APPEALS OF BOTH THE ASSESSEES , THE ASSESSEES HAVE TAKEN LEGAL GROUNDS VIDE A SEPARATE APPLICATION UNDER RULE 11 O F THE INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963. THROUGH THESE GRO UNDS, THE ASSESSEES HAVE CHALLENGED THE VALIDITY OF ENTIRE ASSESSMENT P ROCEEDINGS CARRIED OUT U/S. 153C OF THE INCOME-TAX ACT, 1961 ON THE GR OUND THAT IN THE ASSESSEES CASE NO SATISFACTION WAS RECORDED BY THE AO OF THE PERSON SEARCHED. THE ASSESSEES ARE ALSO AGITATING THAT EVE N IN ITS OWN CASE NO SATISFACTION WAS RECORDED AS REGARD TO ITS BELONGIN GNESS TO CERTAIN INCRIMINATING DOCUMENTS SEIZED FROM THE PREMISES OF M/S. BHATIA INTERNATIONAL LTD. THE ASSESSEES FURTHER AGITATED T HAT EVEN THE SATISFACTION MUST HAVE BEEN FORMED AS REGARD TO THE UNDISCLOSED INCOME OF THE ASSESSEE WHICH HAS NOT BEEN SO FORMED. THESE ADDITIONAL GROUNDS WERE ADMITTED FOR HEARING IN VIEW OF THE FA CT THAT THESE ARE PURE QUESTION OF LAW NOT REQUIRING ANY FURTHER INVESTIGA TION OF FACTS AND ALSO IN VIEW OF THE DECISIONS IN CASES OF NATIONAL THERMAL POWER CO. LTD. VS. CIT;229 ITR 383 (SC) AND NATIONAL NEWS PRINT & PAPE R MILLS LTD. VS. CIT (MP). THE AO AT PARA 2 OF PAGE NO.2 OF HIS ORDE R HAS GIVEN A SHORT FINDING TO THE EFFECT THAT A NOTICE U/S. 153C OF TH E IT ACT WAS ISSUED ON 03-03-2008 ASKING THE ASSESSEES COMPANY TO FILE IT S RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR AFTER RECORDING TH E SATISFACTION FOR ISSUANCE OF NOTICE U/S. 153C. EXCEPT SUCH FINDING IN THE ENTIRE BODY OF THE ASSESSMENT ORDERS, THE AO HAS NOT UTTERED ANY S INGLE WORD AS REGARD TO RECORDING OF SATISFACTION EITHER BY HIMSE LF OR BY THE AO OF THE PERSON SEARCHED. THE CIT(A) HAS DEALT WITH THE SUBJ ECT ISSUE, TO A LIMITED EXTENT. AT PARA 4.1 AT PAGE NO.15 OF THE OR DER, THE CIT(A) HAS HELD THAT ENABLING SECTION OF 153C MERELY REQUIRES THE ISHAR OVERSEAS (SS)126 AND 127/IND/2011 11 OWNERSHIP/BELONGINGNESS OVER THE ASSETS, BOOKS OF A CCOUNT AND DOCUMENTS OF THE PERSON OTHER THAN SEARCHED PERSON FOR INITIATING THE SEARCH LIKE PROCEEDING UNDER S. 153A AGAINST SUCH P ERSON AND WHETHER SUCH ASSETS/DOCUMENTS FOUND AND SEIZED REPRESENT UN DISCLOSED INCOME AND/OR THE BOOKS OF ACCOUNTS AND DOCUMENTS FOUND AN D SEIZED ARE INCRIMINATING OR NOT WOULD NOT BE THE SUBJECT MATTE R OF INVESTIGATION WHICH CAN BE DONE/VERIFIED ONLY ONCE THE PROCEEDING S ARE INITIATED UNDER S. 153A (IN PURSUANCE OF S. 153C) AGAINST SUCH PERS ON. FURTHER, THE CIT(A) AT PARA 4.1.1 AT PAGE NO.16 OF HIS ORDER, HA S HELD THAT THE APPRAISAL REPORT ACTS AS A GUIDE TO THE ASSESSING O FFICER AND THE ADIT (INV.) PREPARES SUCH REPORT IN THE CAPACITY OF THE ASSESSING OFFICER ONLY. ACCORDING TO THE CIT(A) ONCE THE ADIT HAS REFERRED THE DOCUMENTS WHICH BELONG TO THE ASSESSEE, IT HAS TO BE HELD THA T THE CONDITION OF RECORDING SATISFACTION WAS DULY COMPLIED WITH. 7. THE LD. AR FOR THE ASSESSEES HAS MADE ORAL AS WE LL AS WRITTEN SUBMISSION WITH REGARD TO ADDITIONAL GROUNDS AS UND ER: A. NO SATISFACTION WAS RECORDED IN THE CASE OF THE PERSON SEARCHED 1.00 THE ASSESSEE COMPANY HAD FURNISHED ITS ORIGINA L RETURN OF INCOME U/S. 139(1) OF THE INCOME-TAX ACT, 1961 ON 19-11-20 03 WITH THE THEN ITO- 3(2), INDORE, DECLARING AN INCOME OF RS.2640/-. [KI NDLY REFER PB PAGE NO.29 & 30]. SINCE, IN RESPONSE TO SUCH RETURN, NO ACTION W AS TAKEN BY THE REVENUE AND THEREFORE THE RETURN SO FILED BY THE ASSESSEE H AD ATTAINED FINALITY. 2.00 THAT, UNDISPUTEDLY NO SEARCH WAS CARRIED OUT I N THE CASE OF THE ASSESSEE AND THE SAME WAS CARRIED OUT ONLY IN THE C ASE OF M/S. BHATIA INTERNATIONAL LTD., OTHER GROUP COMPANIES AND DIREC TORS OF THE ASSESSEE COMPANY. 3.00 IT IS FURTHER SUBMITTED THAT THE ASSESSEE COMP ANY WAS NOT ASSESSED UNDER THE JURISDICTION OF THE ASSESSING OFFICER FRA MING THE ASSESSMENT U/S. 153C BUT IT WAS ASSESSED TO INCOME-TAX UNDER THE JU RISDICTION OF DCIT-1(1), INDORE ONLY. IT IS SUBMITTED THAT THE IMPUGNED NOTI CE U/S. 153C WAS ISSUED TO THE ASSESSEE AS EARLY AS ON 03-03-2008 [KINDLY REFE R PB PAGE NO. 1] I.E. SIMULTANEOUSLY WITH THE ISSUANCE OF NOTICES U/S. 15 3A TO THE PERSON SEARCHED NAMELY M/S. BHATIA INTERNATIONAL LTD.. IT SHALL BE APPRECIATED THAT THE FIRST ISHAR OVERSEAS (SS)126 AND 127/IND/2011 12 NOTICE UNDER S. 153A WAS ISSUED TO M/S. BHATIA INTE RNATIONAL LTD. ON THE SAME DAY I.E. ON 03-03-2008 [KINDLY REFER PB PAGE NO.44] . IT IS SUBMITTED THAT IN VIEW OF THE PROVISIONS OF SECTION 292C PRIMA FACIE ALL THE ASSETS OR DOCUMENTS OR BOOKS OF ACCOUNT FOUND FROM THE POSSESSION OF A PERSON SEARCHED SHOULD BE PRESUMED TO BE BELONGING TO SUCH PERSON ONLY UNL ESS OTHERWISE PROVED. ACCORDINGLY, IN THE INSTANT CASE, WITHOUT FIRST SEE KING THE EXPLANATION OF THE PERSONS SEARCHED, FROM WHOM THE DOCUMENT REFERRED T O IN THE SATISFACTION NOTE WERE ALLEGEDLY SEIZED, THE AO COULD NOT HAVE A RRIVED TO A SATISFACTION THAT THE SAID DOCUMENTS WERE BELONGING TO THE ASSES SEE. 3.01 YOUR HONOURS, IN THE GROUP CASES, THE AO HAS I SSUED NOTICES UNDER S.153A/ 153C OF THE ACT MUCH PRIOR TO THE RECEIPT O F COMPLETE RECORDS OF PANCHNAMA AND SEIZED MATERIAL FROM THE INVESTIGATIO N WING. IT IS SUBMITTED THAT FROM A COPY OF THE LETTER DATED 14-03-2008 ISS UED BY THE ADIT (INV.)-II, INDORE TO THE ASSESSING OFFICER, A COPY WHEREOF IS PLACED AT PAGE NO. 21 OF OUR COMPILATION, IT IS EVIDENT THAT IN THE GROUP CA SE, THE PANCHNAMA FOLDERS AND SEIZED MATERIAL WAS HANDED OVER TO THE AO ON 14 -03-2008 ONLY. IT IS SUBMITTED THAT ALTHOUGH THE MATERIAL WAS RECEIVED B Y THE AO ON 14-03-2008 BUT HE ISSUED NOTICES UNDER S.153A/ 153C TO THE GRO UP ASSESSEES ON 03-03- 2008 ITSELF. THIS FACT SPEAKS IN VOLUME THAT THE LE ARNED AO HAD NOT RECORDED ANY SATISFACTION AS REGARD TO THE BELONGINGNESS OF THE INCRIMINATING DOCUMENTS BEFORE ISSUANCE OF THE NOTICE UNDER S.153 C TO THE ASSESSEE. 3.02 IT IS SUBMITTED THAT ALTHOUGH IN THE HANDING O VER NOTE, AS REFERRED TO IN THE PRECEDING PARA AND PLACED AT PAGE NO. 21 OF OUR PAPER BOOK, THE DETAILS OF THE PANCHNAMA DRAWN IN THE CASE OF M/S. BHATIA I NTERNATIONAL LTD. HAVE NOT BEEN SPECIFICALLY GIVEN BUT FROM THE CAPTION GIVEN IN THE HANDING OVER LETTER, IT IS EVIDENT THAT SUCH HANDING OVER WAS IN RESPECT OF THE ENTIRE SEIZED MATERIALS AND PANCHNAMAS RELATING TO THE GROUP. THEREFORE, IT CAN SAFELY BE CONCLUDED THAT THE RELEVANT MATERIAL WERE HANDED OVER BY THE INVESTIGATION WING TO THE AO ONLY ON 14-03-2008. IT IS PRAYED THAT IF THE REV ENUE REBUTS SUCH STAND OF THE ASSESSEE, THEN THE NECESSARY RECORD MAY KINDLY BE CALLED BY THIS HONBLE BENCH FOR REACHING TO THE FACTS OF THE CASE. IT IS SUBMITTED THAT RECEIPT OF THE SEIZED MATERIAL MUST BE PRIOR TO THE DATE OF ISSUAN CE OF NOTICE AND THEREFORE, THIS BEING AN ISSUE WHICH GOES TO THE ROOT OF THE J URISDICTION OF THE AO TO INVOKE THE PROVISIONS OF SECTION 153C OF THE CASE, THE DEPARTMENT MAY BE DIRECTED TO BRING ALL THE RELEVANT FACTS AND RECORD S BEFORE THIS HONBLE BENCH. 4.00 IN THE INSTANT CASE, THE AO OF THE ASSESSEE IS SUED A NOTICE U/S. 153C OF THE ACT TO THE ASSESSEE MERELY ON THE PREMISES T HAT A SEARCH U/S. 132(1) WAS CARRIED OUT IN THE CASE OF M/S. BHATIA INTERNAT IONAL LTD., A COMPANY BELONGING TO THE BHATIA GROUP AND DURING THE COURSE OF SUCH SEARCH, CERTAIN DOCUMENTS CONTAINING THE DETAILS OF THE ASSESSEE CO MPANY WERE FOUND. THE AO MADE A RECORDING OF THIS FACT IN A NOTE ON 29-02 -2008. A COPY OF THE NOTE CONTAINING THE SO-CALLED RECORDING OF SATISFACTION FOR INITIATING PROCEEDINGS U/S. 153C OF THE ACT IS PLACED AT PAGE NO.43 OF THE PAPE R BOOK. FOR A READY REFERENCE, THE PURPORTED NOTE OF SATISFACTION RECOR DED IN THE CASE OF THE ASSESSEE COMPANY IS REPRODUCED AS UNDER: DATE :-29/02/2008 NAME :- ISHHAR OVERSEAS PVT. LTD., PAN :- AABCI0353A ISHAR OVERSEAS (SS)126 AND 127/IND/2011 13 SATISFACTION FOR PROCEEDINGS U/S. 153C THE CASE OF THE M/S. BHATIA INTERNATIONAL LTD., (B IL) WAS COVERED U/S. 153A IN A CONSEQUENT TO THE SEARCH MOUNTED IN THE CASE OF B HATIA GROUP OF COMPANIES. DURING THE COURSE OF SEARCH PROCEEDINGS IN THE OFFICE OF THE BIL AS PER BS 1 TO 285 OF PANCHNAMA DATED 29-08-2007 AT BCC HOUSE, CONTAINS THE DETAILS PERTAINING TO THE ABOVE COMPANY IN BS 7 5 TO 94 AND BS 265 TO 284. ACCORDINGLY, IN VIEW OF THE PROVISIONS OF THE S. 1 53C OF THE IT ACT, I HAVE REASON TO BELIEVE THAT THE CASE OF M/S. ISHHAR OVER SEAS PVT. LTD., COVER UNDER S. 153C R.W.S. 153A OF THE IT ACT. ACCORDINGLY, NOTICE U/S. 153C IS BEING ISSUED FOR A.Y. 2003-04. SD/- (MANOJ KUMAR) ADDL. COMMISSIONER OF INCOME-TAX RANGE 3, INDORE 5.00 ON A PERUSAL OF THE PURPORTED SATISFACTION NOT E RECORDED IN THE CASE OF THE ASSESSEE COMPANY, AS REPRODUCED HEREINABOVE, IT CAN BE OBSERVED THAT THE AO HAS NOWHERE STATED THAT ANY SATISFACTION, AS REGARD TO BELONGINGNESS OF ANY DOCUMENT TO THE ASSESSEE COMPANY, WAS EVER R ECORDED IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. (BIL). THE PURPORTED SATISFACTION NOTE MERELY STATES THAT DURING THE COURSE OF THE SEARCH IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. (BIL) AS PER BS1 TO 285 OF PANCH NAMA DATED 29-08-2007, AT BCC HOUSE, CERTAIN DETAILS PERTAINING TO THE ASSESS EE COMPANY WERE FOUND MENTIONED IN BS75 TO 94 AND BS265 TO 284. 6.00 IT IS SUBMITTED THAT IN THE CASE OF THE PERSON SEARCHED U/S. 132 I.E. M/S. BHATIA INTERNATIONAL LIMITED (BIL), THE ASSESS MENT PROCEEDINGS U/S. 153A OF THE INCOME-TAX ACT, 1961 WERE CARRIED OUT BY THE SAME ASSESSING OFFICER WHO PASSED THE ASSESSMENT ORDERS IN THE CASE OF THE ASSESSEE. THE ASSESSEE HAS PROCURED THE COPY OF THE ASSESSMENT PR OCEEDING SHEETS PREPARED IN THE CASE OF BIL. COPY OF SUCH PROCEEDIN G SHEET IS BEING SUBMITTED HEREWITH. 6.01 ON A PERUSAL OF THE COPY OF THE PROCEEDING SHE ETS PREPARED IN THE CASE OF THE PERSON SEARCHED I.E. BIL, IT CAN BE OBS ERVED THAT IN THE CASE OF THE BIL, NO SATISFACTION AS REGARD TO BELONGINGNESS OF ANY DOCUMENT SEIZED DURING THE COURSE OF SEARCH U/S. 132 WITH THE ASSES SEE COMPANY HAS BEEN RECORDED. 7.01 THE HON'BLE ITAT CHANDIGARH BENCH IN THE CASE OF ACIT VS. KISHORELAL BALWANTRAI & ORS. (2007) 17 SOT 380 (CHD ) HAS HELD THAT REQUIREMENT OF SECTION 158BD IS NOT DILUTED WITH RE SPECT TO RECORDING OF SATISFACTION EVEN IN CASE WHERE THE AO OF THE PERSO N SEARCHED AND THE OTHER PERSON IS COMMON. 7.02 THE HONBLE ITAT, INDORE BENCH IN THE CASE OF ACIT VS. CHIRCHIND HYDRO LIMITED (2011) 17 ITJ 197 (TRIB.) AT PARA 81 HAS CLEARLY LAID DOWN THE RATIO THAT PRIMA FACIE, ASSESSING OFFICER OF SEARCH ED PERSON SHOULD FORM AN OPINION WITH REGARD TO ANY DOCUMENT, VALUABLE, ETC. AS FOUND DURING THE ISHAR OVERSEAS (SS)126 AND 127/IND/2011 14 COURSE OF SEARCH THAT SUCH DOCUMENT WHICH IS DECLIN ED BY THE SEARCHED PERSON, ACTUALLY BELONGS TO SOME OTHER PERSON AGAIN ST WHOM PROCEEDINGS U/S 153C ARE REQUIRED TO PUT INTO OPERATION AND AFTER S UCH RECORDING OF SATISFACTION, THE DOCUMENTS SO SEIZED SHOULD BE HAN DED OVER TO THE ASSESSING OFFICER OF SUCH OTHER PERSON. 8.01 IT IS SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT-III VS. CALCUTTA KNITWEARS (2014) 362 ITR 0673 (SC) HAS HELD THAT THE STATUTORY REQUIREMENT OF RECORDING THE SATISFACTION IN THE CA SE OF THE PERSON SEARCHED, UNDER S. 153C OF THE ACT, CANNOT BE DISPENSED WITH. THE HONBLE APEX COURT AT PARA 44 HAS LAID DOWN THE RATIO THAT A SATISFACT ION NOTE IS SINE-QUA-NON AND MUST BE PREPARED BY THE ASSESSING OFFICER BEFORE HE TRANSMITS THE RECORDS TO THE OTHER ASSESSING OFFICER WHO HAS JURISDICTION OV ER SUCH OTHER PERSON. 8.02 IT IS FURTHER SUBMITTED THAT THE CBDT ACCEPTIN G THE RATIO OF THE APEX COURT IN THE CASE OF CALCUTTA KNITWEARS SUPRA HAS ISSUED ONE CIRCULAR NO. 24/2015 DATED 31-12-2015 IN WHICH, AT PARA 4, IT HA S 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 AS HAS BEEN HELD BY THE COURTS. A COPY OF THE CIRCULAR IS BEING ENCLOSED HE REWITH FOR A READY REFERENCE. THE CBDT HAS EVEN WENT TO THE EXTENT OF DIRECTING THE REVENUE THAT PENDING LITIGATION WITH REGARD TO RECORDING OF SATISFACTION NOTE UNDER S.158BD/ 153C SHOULD BE WITHDRAWN/ NOT PRESSED IF I T DOES NOT MEET THE GUIDELINES LAID DOWN BY THE APEX COURT. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT SINCE IN THE ASSESSEES CASE, NO SATISFACTION WAS RECORDED BY THE AO OF THE PERSON S EARCHED AND THEREFORE, IN VIEW OF THE CIRCULAR NO. 24/2015 DATED 31-12-2015, THE ENTIRE ASSESSMENT PROCEEDINGS UNDER S.153C AND THE CONSEQUENT ASSESSM ENT ORDER DESERVES TO BE HELD AS NULLITY. B. NO SATISFACTION AS REGARD TO BELONGINGNESS OF THE DOCUMENTS WAS RECORDED BY THE LEARNED AO 9.00 IT IS SUBMITTED THAT THE PURPORTED SATISFACTIO N NOTE, PREPARED IN THE CASE OF THE ASSESSEE, AS IS PLACED AT PAGE NO. 43 O F THE PAPER BOOK, IS ALSO NOT IN CONFORMITY WITH THE STATUTORY REQUIREMENT OF THE PROVISIONS OF SECTION 153C OF THE ACT. 10.00 YOUR HONOURS, FOR A READY REFERENCE, THE RELE VANT PROVISIONS OF SECTION 153C ARE REPRODUCED AS UNDER: ASSESSMENT OF INCOME OF ANY OTHER PERSON. 153C.[1] NOTWITHSTANDING ANYTHING CONTAINED IN SECT ION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A , THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SE IZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVIN G JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCE EDS 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. ISHAR OVERSEAS (SS)126 AND 127/IND/2011 15 PROVIDED THAT [2] . 11.00 IT IS SUBMITTED THAT THE PROVISIONS OF SECTIO N 153C CAN BE INVOKED ONLY AFTER RECORDING A SATISFACTION QUA THE ASSETS OR BO OKS OR DOCUMENTS SEIZED DURING THE COURSE OF A SEARCH IN CASE OF SOME OTHER PERSONS. IN THE INSTANT CASE, ON A PERUSAL OF THE SATISFACTION NOTE, AS REP RODUCED IN THE PRECEDING PARAS, IT SHALL BE APPRECIATED THAT THE AO HAS NOT UTTERED A SINGLE WORD REGARDING BELONGINGNESS OF THE ASSESSEE COMPANY WIT H THE DOCUMENTS REFERRED TO IN THE SATISFACTION NOTE. IN THE INSTAN T CASE, LEAVING ASIDE FORMING OF ANY SATISFACTION, THE AO HAS NOT RECORDED ANY FI NDING TO THE EFFECT THAT THE DOCUMENTS REFERRED TO IN THE PANCHNAMA DATED 29-08- 2007 WERE DULY SEIZED FROM THE PREMISES OF THE PERSONS SEARCHED I.E. M/S. BHATIA INTERNATIONAL LTD. (BIL) THE SATISFACTION SO RECORDED CANNOT BE SAID T O BE A SATISFACTION AS CONTEMPLATED UNDER THE LAW. IN SUCH A SITUATION, TH E INVOKING OF PROVISIONS U/S. 153C CANNOT BY ANY STRETCH OF IMAGINATION BE S AID TO BE JUSTIFIED. [ MANISH MAHESHWARI VS. ACIT (2007) 289 ITR 341 (SC) ]. 11.01 IT IS SUBMITTED THAT ACCORDING TO THE PURPORT ED SATISFACTION NOTE RECORDED BY THE AO OF THE ASSESSEE, CERTAIN DOCUMEN TS CONTAINING CERTAIN DETAILS PERTAINING TO THE ASSESSEE COMPANY WERE FOU ND IN THE PREMISES OF M/S. BHATIA INTERNATIONAL LTD. HOWEVER, IT HAS NOWH ERE BEEN STATED THAT THESE DOCUMENTS (I) BELONGED TO THE ASSESSEE; AND (II) WE RE SEIZED FROM THE PREMISES OF THE PERSON SEARCHED. IT IS SUBMITTED TH AT FULFILLMENT OF BOTH THESE CONDITIONS ARE SINE-QUA-NON BEFORE INVOKING THE PRO VISIONS OF SECTION 153C AGAINST ANY THIRD PERSON. 11.02 IT IS SUBMITTED THAT EVEN IF IT IS PRESUMED T HAT THE PURPORTED SATISFACTION NOTE TALKS ABOUT CERTAIN DOCUMENTS PER TAINING TO THE ASSESSEE COMPANY FOUND/ SEIZED FROM THE PREMISES OF M/S. BHA TIA INTERNATIONAL LTD., IT IS SUBMITTED THAT IN THE INSTANT CASE, THE PROVISIO NS OF SECTION 153C WERE INVOKED IN THE YEAR 2008 AND AT THAT TIME, THE REQU IREMENT OF THE LAW WAS THAT THE BOOKS OF ACCOUNT OR THE DOCUMENTS MUST BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED. IT IS SUBMITTED THAT THE NECES SARY AMENDMENT IN THE PROVISIONS OF SECTION 153C, ENABLING AN ASSESSING O FFICER TO INVOKE THE PROVISIONS OF SECTION 153C, AGAINST AN OTHER PERSON , ON THE BASIS OF MERELY PERTAINING OF BOOKS OF ACCOUNT OR DOCUMENTS TO SUCH OTHER PERSON, HAVE BEEN BROUGHT TO THE STATUTE ONLY BY THE FINANCE ACT, 201 5 W.E.F. 1-6-2015 AND BEFORE SUCH AMENDMENT, THE REQUIREMENT OF THE LAW W AS THAT THE SATISFACTION OUGHT TO HAVE BEEN RECORDED AS REGARD TO BELONGING NESS OF SUCH OTHER BOOKS OF ACCOUNT AND DOCUMENTS WITH THE PERSON OTHER THAN THE PERSON SEARCHED. 12.00 IT IS SUBMITTED THAT THE TERM BELONGS OR BEL ONG TO IS DIFFERENT FROM THE TERM RELATES TO OR PERTAINS TO AND UNLESS & UNT IL, A CLEAR FINDING IS GIVEN BY THE AO OF THE PERSON SEARCHED/ OTHER PERSON THAT CE RTAIN BOOKS OF ACCOUNT OR DOCUMENTS BELONG TO THE OTHER PERSON, THE PROVISION S OF SECTION 153C CANNOT BE INVOKED AGAINST SUCH OTHER PERSON. IT IS SUBMITT ED THAT IN THE SIMILAR CIRCUMSTANCES, THE HONBLE DELHI HIGH COURT IN TH E CASE OF PR. CIT VS. NIKKI DRUGS & CHEMICALS PVT. LTD. (2015) 12 TMI 304 (DEL. ) HAS SET ASIDE THE ENTIRE ASSESSMENT PROCEEDINGS CARRIED OUT UNDER S.153C OF THE ACT. ISHAR OVERSEAS (SS)126 AND 127/IND/2011 16 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE IT IS SUBMITTED THAT SINCE IN THE INSTANT CASE, NO SATISFACTION WAS NOT RECORDED BY THE AO OF THE PERSON SEARCHED AND FURTHER, EVEN THE SO CALLED SAT ISFACTION NOTE PREPARED BY THE AO OF THE ASSESSEE WAS NOT IN ACCORDANCE WITH T HE LAW, THE ENTIRE ASSESSMENT PROCEEDINGS INITIATED UNDER S.153C OF TH E ACT DESERVE TO BE KNOCKED DOWN. RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE ASSESSEE IS PLACING RELIANCE FOR THESE GROUNDS PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 1 1 COPY OF NOTICE DATED 03-03-2008 ISSUED UNDER S.153C OF THE ACT ESTABLISHING THAT IN THE CASE OF THE ASSESSEE, THE NOTICE WAS ISSUED ON THE SAME DAY WHEN THE NOTICE UNDER S.153A WAS ISSUED IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. I.E. THE PERSON SEARCHED. 4 9 COPY OF THE PANCHNAMA DRAWN IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. AND COPY OF THE INVENTORY OF THE DOCUMENTS PERTAINING TO THE ASSESSEE SEIZED. ESTABLISHING THAT THE DOCUMENTS WERE MERELY IN THE NATURE OF SHARE APPLICATION FILED AND THESE WERE NOT IN THE NATURE OF INCRIMINATING DOCUMENTS. 21 21 COPY OF THE HANDING OVER LETTER DATED 14- 03-2008 ISSUED BY THE ADIT(INV.)-II, INDORE TO THE AO ESTABLISHING THAT THE SEIZED MATERIAL WAS RECEIVED BY THE AO AFTER ISSUANCE OF NOTICE UNDER S.153C ON 03-03-2008. 43 43 COPY OF SATISFACTION NOTE RECORDED IN THE CASE OF THE ASSESSEE ON 29-02-2008 ESTABLISHING THE VARIOUS ANOMALIES IN THE RECORDING OF SATISFACTION BY THE AO OF THE ASSESSEE. 44 44 COPY OF THE NOTICE DATED 03-03-2008 ISSUED UNDER S.153A OF THE ACT IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. ESTABLISHING THE FACT THAT SIMULTANEOUS NOTICES, ON THE SAME DAY, WERE ISSUED UNDER S.153A AND 153C OF THE ACT BY THE AO. ISHAR OVERSEAS (SS)126 AND 127/IND/2011 17 102 103 COPY OF APPLICATION MADE BEFORE THE AO FOR PROCURING THE COPIES OF ORDER SHEETS -- 8. ON THE OTHER HAND, LD. DRS DEFENDED THE ORDERS O F THE LD. CIT(A) SUBMITTING THAT LD. CIT(A) HAS DISCUSSED THE ISSUE AT PARA 4.1 RELYING ON CERTAIN JUDICIAL PRONOUNCEMENTS AND REACHED TO THE CONCLUSION THAT THE ASSESSING OFFICER HAS VALIDLY MADE ASSESSMENT U/S 1 53C. THEREFORE, ORDERS OF THE LD. CIT(A) ON THIS ISSUE MAY BE UPHEL D. LD. DRS FURTHER SUBMITTED AS UNDER: ASSESSEE CHALLENGED THE VALIDITY OF ORDER U/S 153 (C)/143(3) MAINLY ON THE BASIS OF FOLLOWING POINTS:- (I) NO INCRIMINATING DOCUMENTS WERE FOUND. (II) NO ADDITION IN ABSENCE OF INCRIMINATING DOCUME NTS FOUND DURING THE SEARCH. (III) NO SATISFACTION WAS RECORDED BY THE AO OF THE PERSON SEARCHED IN VIEW OF THE DECISION OF CALCUTTA KNITWEARS (2014) 3 62 ITR 673 (SC) AS WELL AS THE CBDT CIRCULAR NO. 24/2015 DATED 31.12.2015 ( ADDITIONAL GROUND). IN REGARD TO FIRST ISSUE I MAY REFER PARA- 4 ON PA GE-15 ONWARDS OF CIT (A) ORDER IN CASE OF M/S ISHHAR OVERSEAS (P) LTD. I N WHICH IN PARA 4.1 IT HAS BEEN CLEARLY STATED THAT AS PER SATISFACTION NOTE T HE DOCUMENTS SUCH AS BS-2 TO 4, BS-8 TO 15, BS-17 TO 18, BS-20 TO 22, BS-26 T O 27, BS-32 TO 37, BS-39 TO 40 AND BS-141 FOUND AND SEIZED DURING THE SEARCH WERE BELONGING TO M/S BHATIA COAL SALES LTD. AND BS-75 TO 94 AND BS-265 T O 284 WERE BELONGING TO M/S ISHHAR OVERSEAS PVT. LTD. THUS, ASSESSEE'S CONT ENTIONS THAT NO INCRIMINATING DOCUMENTS BELONGING TO THE ASSESSEE W ERE FOUND DURING THE SEARCH ARE PRIMA FACIE NOT CORRECT. REGARDING TO TH E SECOND ISSUE THERE IS NO REQUIREMENT AS PER PROVISIONS U/S 153(A)/153(C) THA T ASSESSMENT HAS TO BE MADE ONLY WITH REFERENCE TO THE MATERIAL SEIZED AT THE TIME OF SEARCH. DETAILED DISCUSSION HAS BEEN MADE BY THE CIT(A) IN PARA 4 ON PAGE 15 OF ITS ORDER IN CASE OF ISHHAR OVERSEAS PVT. LTD. ON WHICH I RELIED UPON I ALSO RELIED UPON ON THE DECISION IN CASE OF HARVEY HEART HOSPIT AL LTD., REPORTED IN 130 TTJ 0700 (CHENNAI TRIBUNAL) IN WHICH SAME ISSUE WAS DISCUSSED AND DECIDED IN FAVOUR OF THE REVENUE. BESIDES THIS, HON ABLE THIS BENCH HAS ALSO TAKEN THE SAME VIEW IN ITS EARLIER DECISIONS THAT A S FAR AS CONCERNED TO INVOKING SECTION 153 (C) ONLY REQUIREMENT IS THAT D OCUMENTS SHOULD BE FOUND BELONGING TO ASSESSEE DURING THE SEARCH AND NOTHING MORE. THUS, CONTENTION OF THE ASSESSEE IS NOT JUSTIFIED AND CANNOT BE ACCE PTED. AS REGARD TO THE THIRLD CONTENTION OF THE ASSESSEE I WOULD LIKE TO REFER PA RA 4 ON PAGE 15 OF CIT(A) ORDER IN CASE OF ISHHAR OVERSEAS PVT. LTD. IN WHICH IN PARA 4.1 IT HAS BEEN ISHAR OVERSEAS (SS)126 AND 127/IND/2011 18 CLEARLY STATED THAT SATISFACTION NOTE PRIOR TO ISS UE OF NOTICE U/S 153(C) WAS DULY RECORDED ON DATED 29.02.2008 BY THE AO OF SEAR CHED PERSON CONTAINING THE DETAILS OF DOCUMENTS BELONGING TO THE ASSESSEE. IT IS ALSO RELEVANT TO MENTION HERE THAT IN BHATIA GROUP OF CASES THE AO I S SAME IN CASE OF SEARCHED PERSON AS WELL AS IN OTHER PERSON THEREFOR E, SATISFACTION IS ONLY REQUIRED BY A.O. OF SEARCHED PERSON PRIOR TO THE IS SUE OF NOTICE U/S 153(C) WHICH IS THEREON 29.02.2008. THUS, ADDITIONAL GROUN DS TAKEN BY THE ASSESSEE ON THIS POINT IS PRIMAFACIE FACTUALLY INCORRECT AND THEREFORE, SAME MAY KINDLY BE REJECTED. IN VIEW OF THE ABOVE THE LEGAL GROUND TAKEN BY THE ASSESSEE IN REGARD TO VALIDITY OF ASSESSMENT U/S 153(C)/143(3) IS NOT JUSTIFIED AND SAME KIND BE REJECTED. 9. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAS ISSUED NOTICES U/S 153C OF THE ACT ON THE BASIS OF SEARCH U/S 132(1) WHICH WAS CARRIED OUT IN THE CASE OF OTHER ASSESSEE S. THE ASSESSING OFFICER ISSUED NOTICES U/S 153C AND REOPENED ASSESS MENTS FOR THE YEARS UNDER CONSIDERATION. THE PROVISIONS OF SEC. 153C CA N BE INVOKED ONLY AFTER RECORDING A SATISFACTION IN THE CASE OF PERSO NS SEARCHED QUA THE ASSETS OR BOOKS OR DOCUMENTS SEIZED DURING THE COUR SE OF SEARCH BELONG TO SOME OTHER PERSON. IN THE INSTANT CASE, THE ASSE SSING OFFICER OF OTHER CONCERNED ASSESSEES HAS NOT RECORDED ANY SATISFACTI ON QUA THE BELONGINGNESS OF THE SEIZED DOCUMENTS WITH THE ASSE SSEE AND THERE WAS NO SATISFACTION RECORDED, THEREFORE, THE ASSESSMENT S ARE BAD IN LAW. THE SIMILAR ISSUE HAD COME UP BEFORE THE HONBLE JURISD ICTIONAL HIGH COURT OF M.P. IN THE CASE OF CIT VS. MECHMEN [2015] 60 TAXMA NN.COM 484 (M.P.), WHEREIN HON'BLE HIGH COURT DISCUSSING THE VARIOUS J UDGMENTS HAS HELD THAT THE AO IS OBLIGED TO RECORD SATISFACTION (IN C ASE OF THE SEARCHED PERSON) THAT THE ASSETS OR DOCUMENTS DO NOT BELONG TO THE SEARCHED PERSON AND THESE IN-FACT BELONG TO SOME OTHER PERSO N OTHER THAN THE SEARCHED PERSON. THIS IS SINE QUA NON DESPITE THE F ACT THAT THE AO OF SEARCHED AND NON-SEARCHED PERSON IS SAME. THEREAFTE R, HE HAS TO HANDOVER THE MATERIAL TO THE AO OF NON SEARCHED PER SON HAVING ISHAR OVERSEAS (SS)126 AND 127/IND/2011 19 JURISDICTION OVER HIM (MAY BE THE SAME AO). AFTER R ECEIPT OF THE MATERIAL AND DUE VERIFICATION, THE AO OF NON SEARCHED PERSON HAS TO ISSUE NOTICE U/S 153C AND TO PROCEED IN THE MATTER. THE RELEVANT OBSERVATIONS OF HON'BLE M.P. HIGH COURT ARE AS UNDER : 14. THUS, AS ENVISAGED BY SECTION 158BD, 'SATISFACT ION' OF THE ASSESSING OFFICER BEFORE HE TRANSMITS THE MATERIAL/ RECORDS TO OTHER ASSESSING OFFICER HAVING JURISDICTION OVER SU CH OTHER PERSON IS SINE QUA NON. SANS SUCH SATISFACTION, THE ASSESS ING OFFICER CANNOT VALIDLY TAKE RECOURSE TO THE MACHINERY PROVI SION. 15. WE MAY NOW TURN TO SECTION 153C. NO DOUBT, THE FORM OF SECTION 153C IS DISSIMILAR TO THAT OF SECTION 158BD . IT IS ALSO TRUE THAT THE TWO PROVISIONS ARE EMBEDDED UNDER DIFFEREN T CHAPTERS. FOR, SECTION 153C IS IN CHAPTER XIV PROVIDING FOR P ROCEDURE FOR ASSESSMENT, WHEREAS SECTION 158BD IS FOUND IN CHAPT ER XIV-B PROVIDING FOR SPECIAL PROCEDURE FOR ASSESSMENT OF S EARCH CASES. FURTHER, SECTION 153C OPENS WITH NON-OBSTANTE CLAUS E. HOWEVER, THE NON-OBSTANTE CLAUSE IN SECTION 153C IS NECESSIT ATED TO GIVE POWER TO THE ASSESSING OFFICER HAVING JURISDICTION TO PROCEED AGAINST THE PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A, INSPITE OF THE ACTION UNDER SECTION 139, 147, 148, 149, 151 AND 153 OF THE I.T. ACT. HOWEVER, ON CLOSER SCRUTIN Y OF THE TWO PROVISIONS, IT IS INDISPUTABLE THAT, THESE PROVISIO NS ARE MACHINERY PROVISIONS AND HAVE BEEN PROVIDED FOR IN THE STATUT E BOOK FOR THE PURPOSE OF CARRYING OUT ASSESSMENT OF A PERSON OTHE R THAN THE SEARCHED PERSON UNDER SECTION 132 OR 132A OF THE I. T. ACT IN RELATION TO SECTION 158BD; AND SECTION 153A IN RELA TION TO SECTION 153C. NOTABLY, THE PURPOSE UNDERLYING BOTH THESE PR OVISIONS IS SIMILAR, EVEN THOUGH SECTION 153C DOES NOT SPECIFIC ALLY REFER TO THE EXPRESSION 'UNDISCLOSED' INCOME. HOWEVER, IN BO TH THE SITUATIONS, THE ASSESSING OFFICER ENGAGED IN CARRYI NG ON SEARCH OF THE ASSESSEE WITHIN HIS JURISDICTION, IF SEIZES OR REQUISITIONS THE ITEMS (BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY A SSETS FOR SECTION 158BD; AND MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS F OR SECTION 153C), IS EXPECTED TO HANDOVER THOSE ITEMS TO THE A SSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THEREAFTER THE ASSESSING OFFICER HAVING JURISDICTION HAS TO PR OCEED AGAINST SUCH OTHER PERSON WITHIN HIS JURISDICTION. EVEN FOR THE PURPOSE OF SECTION 153C, THE ASSESSING OFFICER BEFORE HANDING OVER THE ITEMS TO THE ASSESSING OFFICER HAVING JURISDICTION MUST BE 'SATISFIED' THAT THE ITEMS BELONGS OR BELONG TO THE PERSON OTHER ISHAR OVERSEAS (SS)126 AND 127/IND/2011 20 THAN THE PERSON REFERRED TO IN SECTION 153A. THAT S ATISFACTION OF THE CONCERNED ASSESSING OFFICER IS A SINE QUA NON. THE CONSEQUENCES FLOWING FROM THE ACTION TO BE TAKEN ON THE BASIS OF SUCH INFORMATION HANDED OVER TO THE ASSESSING OFFIC ER HAVING JURISDICTION, FOR THE ASSESSEE, WHO IS A PERSON OTH ER THAN THE PERSON REFERRED TO IN SECTION 153A, IS DRASTIC OF A SSESSMENT OR REASSESSMENT OF HIS INCOME FALLING WITHIN SIX ASSES SMENT YEARS. 16. SUFFICE IT TO OBSERVE THAT THE DISSIMILARITY OF THE FORM OF TWO PROVISIONS WOULD MAKE NO DIFFERENCE TO THE PURPOSE UNDERLYING. THE POWER BESTOWED ON THE ASSESSING OFFICER HAVING JURISDICTION BE IT UNDER SECTION 153C OR SECTION 158BD IS IDENTI CAL. 17. WE ARE NOT INCLINED TO ACCEPT THE ARGUMENT OF T HE DEPARTMENT THAT THE PURPOSE UNDERLYING THE TWO PROVISIONS IS D IFFERENT. WE ALSO FIND THAT EVEN THE PROCEDURE IS NOT DIFFERENT. THE SUBJECT MATTER OF THE ACTION WOULD DIFFER IN THE CONTEXT OF THE MACHINERY PROVISION INVOKED, IN THE GIVEN CASE. THAT, HOWEVER , CANNOT BE THE BASIS TO EXTRICATE THE ASSESSING OFFICER, WHO R ESORTS TO POWER UNDER SECTION 153C OF HANDING OVER THE ITEMS REFERR ED TO IN SECTION 153C TO THE ASSESSING OFFICER HAVING JURISD ICTION, OF HIS DUTY TO BE SATISFIED ABOUT THE JURISDICTIONAL FACT THAT THE ITEMS BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A. 18. THE CONCOMITANT OF THIS CONCLUSION, IS THAT, TH E LEGAL POSITION AS APPLICABLE TO SECTION 158BD REGARDING SATISFACTI ON IN THE FIRST INSTANCE OF THE FIRST ASSESSING OFFICER FORWARDING THE ITEMS TO THE ASSESSING OFFICER HAVING JURISDICTION; AND IN THE S ECOND INSTANCE OF THE ASSESSING OFFICER HAVING JURISDICTION WHILST SENDING NOTICE TO SUCH OTHER PERSON (OTHER THAN THE PERSON REFERRE D TO IN SECTION 153A), MUST APPLY PROPRIOVIGORE. THE FACT THAT INCI DENTALLY THE ASSESSING OFFICER IS COMMON AT BOTH THE STAGES WOUL D NOT EXTRICATE HIM FROM RECORDING SATISFACTION AT THE RE SPECTIVE STAGES. IN THAT, THE ASSESSING OFFICER IS SATISFIED THAT TH E ITEMS REFERRED TO IN SECTION 153C BELONGS OR BELONG TO A PERSON (OTHE R THAN THE PERSON REFERRED TO IN SECTION 153A), BEING SINE QUA NON. HE CANNOT ASSUME JURISDICTION TO TRANSMIT THOSE ITEMS TO ANOTHER FILE WHICH INCIDENTALLY IS PENDING BEFORE HIM CONCERNING OTHER PERSON (PERSON OTHER THAN THE PERSON REFERRED TO IN SECTIO N 153A). THE QUESTION AS TO WHETHER THAT MAY INFLUENCE THE OPINI ON OF THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON, ALSO CANNOT BE THE BASIS TO TAKE ANY OTHER VIEW. AS A MA TTER OF FACT, THE OTHER ASSESSING OFFICER TO WHOM THE ITEMS ARE H ANDED OVER, BEFORE ISSUING NOTICE MUST HIMSELF BE SATISFIED AFT ER DUE VERIFICATION OF THE ITEMS RECEIVED AND THE DISCLOSU RES MADE BY THE ISHAR OVERSEAS (SS)126 AND 127/IND/2011 21 OTHER PERSON IN THE RETURNS FOR THE RELEVANT PERIOD ALREADY FILED BY THE OTHER PERSON BEFORE HIM. FOR THE SAME REASON, W E MUST REJECT THE ARGUMENT OF THE DEPARTMENT THAT THE DISCRETION OF THE ASSESSING OFFICER HAVING JURISDICTION WILL BE IMPAI RED IN ANY MANNER, IF HE WERE TO HOLD A DIFFERENT VIEW. SIMILA RLY, AS THERE IS NO PROVISION EITHER EXPRESS OR IMPLIED (IN THE ACT) TO DISPENSE WITH THE REQUIREMENT OF SATISFACTION, IF THE ASSESSING O FFICER HAPPENS TO BE THE SAME, AS IN THIS CASE, THE ARGUMENT OF TH E DEPARTMENT MUST BE NEGATIVED. 19. AFTER RECEIPT OF THE MATERIALS, THE ASSESSING O FFICER HAVING JURISDICTION IS EXPECTED TO CONDUCT ENQUIRY AND DUE VERIFICATION OF THE RELEVANT FACTS; BEFORE FORMING HIS PRIMA FACIE SATISFACTION. THE ASSESSING OFFICER HAVING JURISDICTION WILL BE WELL WITHIN HIS RIGHTS TO FORM AN INDEPENDENT VIEW BEFORE ISSUING NOTICE T O THE OTHER PERSON (PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A) UNDER HIS JURISDICTION ON THE BASIS OF HIS OWN ENQU IRY. IN OUR OPINION, THE VIEW FORMED BY THE ASSESSING OFFICER A FTER HIS OWN ENQUIRY DOES NOT ENTAIL IN SEATING IN APPEAL OVER T HE SATISFACTION OF THE FIRST ASSESSING OFFICER, WHO HAD HANDED OVER THE ITEMS TO HIM. 10. IN THE ABOVE DECISION, IT HAS BEEN HELD THAT EV EN WHEN THE ASSESSING OFFICER OF THE PERSON SEARCHED AND THE OT HER PERSON IS COMMON, THE ASSESSING OFFICER OF THE PERSON SEARCHE D HAS TO NECESSARILY FORM A SATISFACTION THAT THE ITEM REFER RED TO IN SEC. 153C BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED. APPARENTLY, IN THE PRESENT APPEALS, NO SUCH SATISFA CTION BY THE ASSESSING OFFICER HAS BEEN FOUND RECORDED. BEFORE U S, THE LD. DRS VEHEMENTLY ARGUED THAT THE APPRAISAL REPORT IS PREP ARED BY ADIT WHO IS AN ASSESSING OFFICER AND IF IN THE APPRAISAL REPORT , A RECORDING REGARDING A PARTICULAR DOCUMENT BELONGING TO A THIRD PERSON O THER THAN PERSON SEARCHED IS GIVEN THEN IT SHOULD TANTAMOUNT TO RECO RDING OF THE SATISFACTION BY THE PERSON SEARCHED. THE LD. DRS HA VE NOT CONTROVERTED THE SUBMISSION OF THE LD. AR OF THE ASSESSEE THAT I N THE CASE OF THE PERSONS SEARCHED, NO SATISFACTION AS REGARD TO THE BELONGINGNESS OF ANY DOCUMENT TO THE PRESENT ASSESSEES WAS RECORDED. IN OUR CONSIDERED ISHAR OVERSEAS (SS)126 AND 127/IND/2011 22 VIEW, ANY RECORDING IN AN APPRAISAL REPORT CANNOT S UBSTITUTE THE LEGAL REQUIREMENT OF RECORDING OF SATISFACTION IN THE CAS E OF PERSONS SEARCHED. SUCH VIEW WAS ALSO HELD BY INDORE BENCH IN THE CASE OF ACIT VS. CHIRCHIND HYDRO LTD. (2011) 17 ITJ 197 (INDORE). WE HAVE ALSO TAKEN NOTE OF A CIRCULAR NO.24/2015 DATED 31.12.2015, ISS UED BY THE CBDT, IN WHICH, THE BOARD, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN CASE OF M/S. CALCUTTA KNITWEARS (CIVIL APPEAL NO. 3 958 OF 2014 DATED 12.3.2014), HAS DIRECTED THAT WHERE THE SATISFACTIO N BY THE ASSESSING OFFICER OF THE PERSON SEARCHED AND OTHER PERSON IS NOT FOUND RECORDED, THE DEPARTMENT SHOULD NOT PRESS THAT MATTER IN APPE AL. THUS, KEEPING IN VIEW RIVAL SUBMISSIONS IN LIGHT OF JUDICIAL PRONOUN CEMENTS AND PARTICULARLY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF M.P. (SUPRA) AND CBDT CIRCULAR (SUPRA), ASSESSMENTS IN T HE CASES OF BOTH THE PRESENT ASSESSEES ARE HELD AS ILLEGAL AND VOID-AB-I NITIO. ACCORDINGLY, FOR ASSESSMENT YEARS 2003-04 & 2005-06 IN THE CASE OF I SHAR OVERSEAS (P) LTD. AND FOR THE ASSESSMENT YEAR 2002-03 IN THE CAS E OF BHATIA COAL SALES LTD., THE GROUNDS RAISED BY THE ASSESSEES REL ATING TO APPLICABILITY OF SECTION 153C ARE ALLOWED. GROUND NOS. 1.2 & 1.3 11. THESE GROUNDS ARE DIRECTED AGAINST THE AOS ACT ION OF MAKING ADDITIONS ON THOSE ISSUES IN RESPECT OF WHICH NO IN CRIMINATING MATERIAL WAS FOUND OR SEIZED DURING THE COURSE OF SEARCH. TH E AO HAS NOT GIVEN ANY SPECIFIC FINDING ON THE ISSUE. IN THE INSTANT C ASE, THE AO HAS MADE ONLY ONE ADDITION OF RS.26,31,000/- ON ACCOUNT OF A LLEGED UNEXPLAINED SHARE CAPITAL. FOR MAKING THE ADDITION, THE AO HAS TAKEN THE LEAD FROM THE AUDITED BALANCE SHEET OF THE ASSESSEE COMPANY W HICH IS EVIDENT FROM THE FIRST PARA ON PAGE NO. 3 OF THE ASSESSMEN T ORDER AT WHICH THE AO HAS STATED THAT ON VERIFICATION OF THE BALANCE SHEET, IT IS NOTICE D THAT ISHAR OVERSEAS (SS)126 AND 127/IND/2011 23 DURING THE YEAR UNDER CONSIDERATION THE AUTHORIZED CAPITAL OF THE COMPANY WAS RS.1 CRORE, ISSUED AND SUBSCRIBED CAPIT AL WAS RS.52.08 LAKHS WHICH WAS RS. 25.77 LAKHS JUST ONE YEAR BACK. THE ASSESSEE COMPANY MADE INVESTMENTS OF RS.26.31 LAKHS IN FLAGS HIP COMPANY I.E. M/S. BHATIA INTERNATIONAL LTD. FROM THE SHARE CAPIT AL RECEIVED DURING THE YEAR . THE CIT(A) HAS REPRODUCED THE WRITTEN SUBMISSION OF THE ASSESSEE MADE ON THIS LEGAL ISSUE AT PAGE NO. 9 TO 14 OF HIS ORDER. THE CIT(A) HAS DEALT WITH THE ISSUE AT PARA 4.1, PAGE N O. 15 & 16 OF THE ORDER. THE CIT(A) HAS GIVEN HIS FINDING AT PARA 5. 1, P. 17 OF THE ORDER THAT ADDITIONS AND DISALLOWANCES IN RESPECT OF VARI OUS ITEMS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND DULY D ISCLOSED BEFORE THE DEPARTMENT CAN ALSO BE MADE EVEN WHEN NO INCRIMINAT ING DOCUMENT WAS FOUND OR SEIZED DURING THE COURSE OF THE SEARCH . 12. BEFORE US, BOTH THE PARTIES SUBMITTED THAT THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN THE CASE OF AMANDEEP SINGH BHATIA, THEREFORE, SUBMISSIONS MADE IN THE CASE OF AMANDEEP SINGH BHATIA [IT(SS)A NO.112/IND/2011] MAY BE TAKEN INTO CONSIDE RATION IN THE PRESENT CASE TOO. LD. AR FOR THE ASSESSEE PLACED RE LIANCE ON THE FOLLOWING DOCUMENTS OF PAPER BOOK: PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 4 9 COPY OF THE PANCHNAMA DRAWN IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. AND COPY OF THE INVENTORY OF THE DOCUMENTS PERTAINING TO THE ASSESSEE SEIZED. ESTABLISHING THAT THE DOCUMENTS WERE MERELY IN THE NATURE OF SHARE APPLICATION FILED AND THESE WERE NOT IN THE NATURE OF INCRIMINATING DOCUMENTS. 31 31 COPY OF ACKNOWLEDGMENT OF RETURN FILED UNDER S.139 ESTABLISHING THAT MUCH PRIOR TO THE DATE OF SEARCH, THE ASSESSEE HAD FURNISHED ITS RETURN OF INCOME UNDER ISHAR OVERSEAS (SS)126 AND 127/IND/2011 24 OF THE ACT FOR A.Y. 2003-04 S.139 33 42 COPY OF AUDITED FINANCIAL STATEMENTS OF THE ASSESSEE FOR THE FINANCIAL YEAR ENDED ON 31-03-2003 ESTABLISHING THAT THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WAS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND THE SAME WAS ALSO DISCLOSED TO THE DEPARTMENT BY WAY OF FILING AUDITED BALANCE SHEET ALONG WITH THE RETURN OF INCOME AND THEREFORE, THE SHARE CAPITAL AND SHARE PREMIUM CANNOT BE HELD TO BE A NEW ITEM DISCOVERED DURING THE COURSE OF SEARCH. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOT H THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON THE FILE. ON CONSIDERATION OF ABOVE FACTS AND SUBMISSIONS THEREOF, WE FIND THAT I N THE CASE OF AMANDEEP SINGH BHATIA [IT(SS)A NO.112/IND/2011], WE HAVE HELD THAT THAT IN ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUN D AND SEIZED DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITIONS IN NON-ABATED ASSESSMENT ORDERS WHILE PAS SING THE ORDERS U/S 153A R.W.S. 143(3) OF THE ACT. THUS, FOLLOWING THE SAME REASONING, WE ALLOW THIS ISSUE INVOLVED IN THE APPEALS OF BOTH TH E PRESENT ASSESSEES. GROUND NO.2 14. THIS GROUND IS DIRECTED AGAINST THE CIT(A)S FI NDING OF UPHOLDING AOS ACTION OF PASSING THE ASSESSMENT ORDER ARBITRA RILY WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE CIT(A) HAS DEALT WITH THIS GROUND AT PARA 5.2 OF PAGE NO. 18 OF HIS ORDER. ACCORDING TO THE CIT(A), THE ASSESSEE WAS GIVEN DUE OPPORTUNITY BY T HE AO. THIS GROUND WAS NOT PRESSED BEFORE US, THEREFORE, SAME IS DISMI SSED BEING NOT PRESSED IN THE APPEALS OF BOTH THE ASSESSEES. GROUND NO. 3 ISHAR OVERSEAS (SS)126 AND 127/IND/2011 25 15. THIS GROUND OF APPEAL IS DIRECTED AGAINST UPHOL DING THE ADDITIONS MADE BY THE AO AT RS.26,31,000/-, RS.6,55,00,000/- AND RS.5,18,75,000/- ON ACCOUNT OF SHARE CAPITAL/SHARE APPLICATION/SHARE PREMIUM, RESPECTIVELY, IN THE ABOVE APPEALS OF BOTH THE PRESENT ASSESSEES. 16. SHORT FACTS OF THE CASE ARE THAT THE AO HAS DEA LT WITH THIS ISSUE AT PAGE NO. 3 TO 50 OF HIS ORDER. THE AO, AT PAGE NO. 49 OF THE ORDER, HAS HELD THE CAPITAL INTRODUCED BY THE ASSESSEE COMPANY THROUGH PARTLY CONVERTIBLE SHARES WERE NOT GENUINE AS THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPL ICANT COMPANIES. THE AO MADE THE ADDITION BY INVOKING PROVISIONS OF SECT ION 68 OF THE ACT. THE MAIN GROUNDS TAKEN BY THE AO WERE : (I) HUGE SH ARE CAPITAL AND SHARE PREMIUM MONEY WERE RECEIVED BY THE ASSESSEE A ND OTHER GROUP COMPANIES DURING THE PERIODS UNDER ASSESSMENT; (II) IN RECENT YEARS, THE FIELD OFFICERS OF THE INCOME-TAX DEPARTMENT HAVE CO ME ACROSS TO A SITUATION IN WHICH CALCUTTA, MUMBAI AND SURAT BASED COMPANIES ARE PROVIDING ACCOMMODATION ENTRIES TO INDORE BASED COM PANIES; (III) SHARE APPLICANT COMPANIES ARE VERY SYSTEMATICALLY ISSUING HUGE AMOUNTS OF CHEQUES TO EACH OTHER WITHOUT ANY COMMERCIAL SENSE; (IV) SHARE APPLICANT COMPANIES WERE INDULGED IN MONEY LAUNDERI NG ACTIVITIES; (V) BALANCE SHEET OF SOME SHARE APPLICANT COMPANIES WER E NOT AVAILABLE; (VI) IN THE BANK ACCOUNTS OF THE SHARE APPLICANT CO MPANIES CALLED UNDER S.133(6) OF THE ACT, TRANSFER OF HUGE AMOUNT IN OTH ER ACCOUNTS THROUGH CHEQUES WERE FOUND AND IN SOME CASES, CASH DEPOSITS WERE MADE IN THE ACCOUNT OF THIRD PARTIES FROM WHOM CHEQUES WERE TAKEN; (VII) THE COPIES OF MEMORANDUM & ARTICLES OF ASSOCIATION, CER TIFICATE OF INCORPORATION, BOARD RESOLUTION OF THE SHARE APPLIC ANT COMPANIES WERE FOUND IN THE PREMISES OF THE GROUP; (VIII) MOST OF THE NOTICES ISSUED ISHAR OVERSEAS (SS)126 AND 127/IND/2011 26 UNDER S.133(6) RETURNED UNSERVED; AND (IX) THE SHAR ES WERE ULTIMATELY REPURCHASED FROM THE SHARE APPLICANT COMPANIES BY T HIRD PARTIES/ GROUP ASSESSEES AT THE NOMINAL PRICE. 17. MATTER CARRIED TO LD. CIT(A), WHO HAS DEALT WIT H THE ISSUE AT PARA 4.2, PAGE NO. 17 OF THE ORDER. THE CIT(A) HAS RELI ED UPON HIS OWN FINDINGS GIVEN IN THE CASE OF OTHER GROUP ASSESSEE NAMELY M/S. BHATIA INTERNATIONAL LTD. FOR A.Y. 2002-03. THE CIT(A) REL YING UPON SUCH FINDING HELD THAT THE AO HAD RIGHTLY MADE THE ADDITION UNDE R S.68 AS REGARD TO THE SHARE CAPITAL/ SHARE PREMIUM IN VARIOUS CASES O F THE BHATIA GROUP. THE DETAILS OF THE ADDITIONS CONFIRMED, ON THIS GRO UND, HAVE BEEN GIVEN BY THE CIT(A) IN THE TABULAR FORM BELOW THE PARA 4. 2. 18. THE LD. AR FOR THE ASSESSEE HAS MADE ORAL AS WE LL AS WRITTEN SUBMISSION AS UNDER: IT IS SUBMITTED THAT FOR THESE GROUNDS, A DETAILE D SUBMISSION HAS BEEN MADE IN THE CASE OF THE ANOTHER GROUP ASSESSEE NAME LY M/S. BHATIA INTERNATIONAL LTD. IN APPEAL NO. IT(SS)A-104/IND/20 11 FOR A.Y. 2002-03. SINCE, WHILE ADJUDICATING THE GROUNDS OF APPEAL RAI SED BEFORE THE CIT(A), THE CIT(A) HAS RELIED UPON HIS OWN FINDINGS GIVEN IN TH E AFORESAID CASE OF M/S. BHATIA INTERNATIONAL LTD., OUR SUBMISSIONS MADE BEF ORE THIS HONBLE BENCH IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. MAY KIND LY BE TAKEN INTO CONSIDERATION. RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE ASSESSEE IS PLACING RELIANCE FOR THIS GROUND PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 33 42 COPY OF AUDITED FINANCIAL STATEMENTS OF THE ASSESSEE FOR THE FINANCIAL YEAR ENDED ON 31-03- 2003 ESTABLISHING THAT THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WAS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND THE SAME WAS ALSO DISCLOSED TO THE DEPARTMENT BY WAY OF FILING AUDITED BALANCE SHEET ALONG WITH THE RETURN OF INCOME AND ISHAR OVERSEAS (SS)126 AND 127/IND/2011 27 THEREFORE, THE SHARE CAPITAL AND SHARE PREMIUM CANNOT BE HELD TO BE A NEW ITEM DISCOVERED DURING THE COURSE OF SEARCH. 45 46 COPY OF THE ASSESSMENT ORDER UNDER S.143(3) OF THE ACT PASSED IN THE CASE OF THE ASSESSEE FOR A.Y. 2005-06 ESTABLISHING THAT THE ISSUE OF SHARE CAPITAL WAS DULY EXAMINED IN THE REGULAR ASSESSMENT UNDER S.143(3) OF THE ACT AND NO ADVERSITY WAS FOUND IN THE SHARE CAPITAL TRANSACTIONS. 53 53 STATEMENT OF FRESH SHARE CAPITAL RECEIVED DURING THE RELEVANT YEAR FOR GIVING THE NECESSARY DETAILS OF THE SHARE APPLICANT COMPANIES. 54 101 COPIES OF MEMORANDUM & ARTICLES OF ASSOCIATION OF SHARE APPLICANT COMPANIES, COPIES OF SHARE APPLICATION FORMS, COPIES OF BOARD RESOLUTIONS, COPIES OF CERTIFICATE OF INCORPORATION, COPIES OF MASTER DATA OF SHARE APPLICANT COMPANIES, COPIES OF AUDITED FINANCIAL STATEMENTS, COPIES OF BANK STATEMENTS ETC. OF THE SHARE APPLICANT FOR ESTABLISHING IDENTITY OF THE SHARE APPLICANT COMPANIES, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE SHARE APPLICANT COMPANIES. ISHAR OVERSEAS (SS)126 AND 127/IND/2011 28 COMPANIES 19. LD. DR RELIED ON THE ORDERS OF THE REVENUE AUTH ORITIES AND SUBMITTED THAT SUBMISSIONS MADE IN THE CASE OF M/S. BHATIA INTERNATIONAL LTD. MAY KINDLY BE TAKEN INTO CONSIDERATION IN THE PRESENT CASE TOO. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOT H THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON THE FILE. WE FIND THAT WHILE ADJUDICATING THE SAME ISSUE IN CASE OF ANOTHER GROU P ASSESSEE NAMELY M/S. BHATIA INTERNATIONAL LTD. IN APPEAL NO. IT(SS) A NO.104/IND/2011 FOR A.Y. 2002-03, WE HAVE HELD THAT THE ASSESSEE COULD BE ABLE TO DISCHARGE THE BURDEN OF PROVING THE CASH CREDIT AS CONTEMPLATED U/S 68 OF THE ACT AND HAVE DIRECTED TO DELETE THE ENTIRE A DDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL/SHARE PREMIUM/ SHARE APPLICATION MONEY. WE FIND THAT THE FACTS AND CIRCU MSTANCES OF THE PRESENT APPEAL OF THE ASSESSEE ARE THE SAME WITH TH AT OF THE APPEAL FOR ASSESSMENT YEAR 2002-03 (SUPRA). THE ARGUMENT OF BO TH THE PARTIES ARE ALSO THE SAME AND THEREFORE, FOLLOWING OUR OWN FIND ING GIVEN IN THE CASE OF ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 (SUPRA) , WE DIRECT TO DELETE THE ADDITIONS OF RS.26,31,000/-, RS.6,55,00, 000/- AND RS.5,18,75,000/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF SHARE CAPITAL/SHARE PREMIUM/ SHARE APPLICATION MONEY AND ALLOW THE GROUND NO.3 OF THE PRESENT APPEALS OF BOTH THE ASSESSEES. GROUND NO. 4 OR 5 21. THIS GROUND OF APPEALS TAKEN IN THE APPEALS OF BOTH THE PRESENT ASSESSEE IS DIRECTED AGAINST CHARGING OF INTEREST U NDER S. 234A AND ISHAR OVERSEAS (SS)126 AND 127/IND/2011 29 234B. THIS GROUND IS CONSEQUENTIAL IN NATURE, THERE FORE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. 22. FINALLY, APPEALS OF THE ASSESSEES ARE PARTLY AL LOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18.5.201 6. SD/- (B.C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T. GARASIA) JUDICIAL MEMBER DATED : 17.8.2016 COPY TO: ASSESSEE/RESPONDENT/CIT(A)/CIT/DR, INDORE