Shri Shailesh R.Daxini, Ahmedabad V. The ACIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 2/AHD/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1814 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 05-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Search and seizure; Document seized; Transactions in derivatives; Block assessment; Documents seized
• Section: 143(3); 153A; 148; 6; 263; 132; 2

Judgement Text

IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S.S. GODARA , JUDICIAL MEMBER IT (SS) A NO S . 01, 02 & 03 / AHD /201 1 ASSESSMENT YEAR S : 200 5 - 06, 2006 - 07 & 2008 - 09 SHRI SHAILESH R. DAX INI , VS. A.C.I.T. CENTRAL CIRCLE 1(1) 401, SWAGAT COMPLEX, AHMEDABAD. NEAR LAL BUNGALOW, C.G. ROAD, AHMEDABAD 380 006. [PAN A FQPD 0520 F ] IT (SS) A NO S . 89, 90 & 91 /AHD/201 1 ASSESSMENT YEAR S : 200 6 - 07, 2007 - 08 & 2008 - 09 A.C.I.T. CENTRAL CIRCLE 1(1) , VS. SHRI SHAILESH R. DAXINI , AHMEDABAD. 401, SWAGAT COMPLEX, NEAR LAL BUNGALOW, C.G. ROAD, AHMEDABAD 380 006. [PAN A FQPD 0520 F ] C.O. NO S . 56, 57 & 58 /AHD/2011 (IN IT (SS) A NO S . 89, 90 & 91 /AHD/201 0) ASSESSMENT YEAR S : 200 6 - 07, 2007 - 08 & 2008 - 09 RESPECTIVELY SHRI SHAILESH R. DAXINI , VS. A.C.I.T. CENTRAL CIRCLE 1(1) 401, SWAGAT COMPLEX, AHMEDABAD. NEAR LAL BUNGALOW, C.G. R OAD, AHMEDABAD 380 006. [PAN A FQPD 0520 F ] (APPELLANT S) (RESPONDENT S ) A SSESSEE BY : SHRI S.N. SOPARKAR, A.R. RE VENUE BY : S MT. VIBHA BHALLA, CIT (D.R.) IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 2 OF 18 DATE OF HEARING : 10.03.16, 22.03.16 & 01.04. 20 16 DATE OF PRONOUNCEMENT : APRIL 22 ND , 201 6 O R D E R PER S.S. GODARA , J.M. THIS B ATCH OF 9 CASES PERTAINS TO A SINGLE ASSESSEE SHRI SHAILESH R. DA XINI . R ELEVANT ASSESSMENT YEARS ARE FROM 2005 - 06 TO 2008 - 09. THE CIT (A) - I, AHMEDABAD HAS PASSED HIS DIFFERENT ORDERS UNDER CHAL LENGE; ALL DATED 22.11.2010 IN CASES NO S.CIT(A) - I/CC.1(1)/358/2009 - 10, CIT(A) - I/CC.1(1)/359/2009 - 10, CIT(A) - I/CC.1(1)/360/2009 - 10 & CIT(A) - I/CC.1(1)/361/2009 - 10 ; ASSESSMENT YEAR - WISE RESPECTIVELY. FIRST ASSESSMENT YEAR 2005 - 06 INVOLVES ASSESSEE S APPEAL I T ( SS ) A NO.01 /AHD/2011. NEXT ASSESSMENT YEAR 2006 - 07 CONTAINS ASSESSEE S APPEAL IT ( SS ) A NO. 02/AHD/2011 AND C . O . NO. 56/AHD/2011. THE LATTER HAS BEEN FILED IN R EV ENUE S CROSS APPEAL IT ( SS ) A NO. 89/AHD/2011. THIRD ASSESSMENT YEAR 2007 - 08 COMPRISES OF REVENUE S APPEAL IT ( SS ) A NO. 90/AHD/2011 AND ASSESSEE S C . O . NO. 57/AHD/2011 THEREIN. LAST ASSESSMENT YEAR 2008 - 09 HAS GOT ASSESSEE S APPEAL IT ( SS ) A NO. 03/AHD/2011 AND C . O . NO. 58/AHD/2011 AND R EVENUE S CROSS A PPEAL IT ( SS ) A NO. 91/AHD/2011. THE RELEVANT PROCEEDINGS IN ALL THESE CASES ARE UNDER SECTION 153A(1)(B) READ WITH SECTION 153C READ WITH SECTION 143(3) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT ). THIS COMPLETES THE ENTIRE BATCH OF 9 CASES. 2. WE COME TO THE RIVAL PLEADINGS NOW. THE ASSESSEE S APPEAL IT ( SS ) A NO.01/AHD/2011 IN ASSESSMENT YEAR 2005 - 06 RAISES TWO SUBSTANTIVE GROUNDS INTER ALIA CHALLENGING LEGALITY OF SECT I ON 153C PROCEEDINGS FOLLOWED BY THE ONE ON MERITS AGAINST ADDITION OF RS.63,26,507/ - IN THE NATURE OF SUPPRESSED INCOME EARNED IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 3 OF 18 THROUGH M/ S. KUN V ARJI C OMMODITIES P RIVATE LIMITED . NEXT IS ASSESSMENT YEAR 2006 - 07. THE ASSESSEE S A PPE A L IT ( SS ) A NO. 02/AHD/2011 RAISES TWO SIMILAR GROUNDS IN PRECEDING ASSESSMENT YEAR. THE ONLY DIFFERENCE IS IN THE RELEVANT FIGURE OF ALLEGED SU P PRESSED INCOME CO MING TO RS.1,11,30,886/ - . THE REVENUE IN ITS APPEAL IT ( SS ) A NO.89/AHD/2011 PLEADS SOLITARY SUBST AN TIVE GRIEVANCE FOR REVIVING ADDITION OF RS.53,40,40 7 / - ON ACCOUNT OF ALLEGED SUPPRESSED PROFITS BY WAY OF CLIENT CODE MODIFICATIONS. THE ASSESSEE S C ROSS OB JECTION T HEREIN N O.56/AHD/2011 SEEKS TO QUASH SECTION 153C PROCEEDINGS. THIRD ASSESSMENT YEAR IS 2007 - 08. THE R EVENUE S APPEAL IT ( SS ) A NO.90/AHD/2011 CHALLENGES THE LOWER APPELLATE ORDER DELETING ADDITION OF RS.1,17,61,150/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUPPRESSION OF PROFITS AT ASSESSEE S BEHEST AS DERIVED FROM CLIENT CODE MODIFICATION IN COMMODITY TRANSACTIONS. THE ASSESSEE S C . O . N O.57/AHD/2011 SEEKS TO QUASH SECTION 153C INITIATED BY THE ASSESSING OFFICER AND UPHELD IN THE LOWER APPELL ATE ORDER. LAST ASSESSMENT YEAR IS 2008 - 09. FIRST COMES ASSESSEE S APPEAL IT ( SS ) A NO. 0 3/AHD/2011 INTER ALIA ASSAILING LEGALITY OF SECTION 153C PROCEEDINGS AND SEEKING TO DELETE SUPPRESSED PROFITS ADDITION OF RS.38,94,648/ - ON MERITS. THE REVENUE S CROSS APPEAL IT ( SS ) A NO. 91/AHD/2011 IS AGAINST THE LOWER APPELLATE ORDER DELETING SUPPRESSED PROFIT ADDITION OF RS.1,89,43,920/ - . THE ASSESSEE S C.O. NO. 58/AHD/2011 FILED IN R EVENUE S APPEAL AGAIN REITERATES HIS CHALLENGE TO VALIDITY OF SECTION 153C PROCEEDING S. 3. A COMBINED PERUSAL OF THESE CASE FILES REVEALS THAT ASSESSEE S ALL THREE C ROSS O BJECTIONS SUFFER FROM DELAY OF 3 DAYS IN FILING. L EARNED D EPARTMENT R EPRESENTATIVE IS FAIR ENOUGH IN NOT OPPOSING ASSESSEE S CONDONATION PETITION COMPRISING OF HIS SOL EMN AVERMENTS SEEKING TO CONDONE THE IMPUGNED DELAY. WE IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 4 OF 18 ACCORDINGLY ACCEPT THE SAME. ASSESSEE S CROSS OBJECTIONS STAND ADMITTED FOR ADJUDICATION. 4. WE CALLED ALL THESE CASES TOGETHER FOR HEARING. L EARNED R EPRESENTATIVES ARE IN AGREEMENT THAT ASSESSEE S APPAL S / CROSS OBJECTIONS RAISE A COMMON FUNDAMENTAL QUESTION TESTING LEGALITY OF INITIATION OF IMPUGNED SECTION 153C PROCEEDINGS IN THE FOUR IMPUGNED ASSESSMENT YEARS . THEY S T ATE THAT THIS LEGAL QUESTION GOES TO ROOT OF THE MATTER IN ALL CASES. WE T AKE UP ASSE SSEE S APPEAL IT ( SS ) A NO. 0 1/AHD/2011 FOR ASSESSMENT YEAR 2005 - 06 AS THE LEAD CASE IN THESE FACTS AND CIRCUMSTANCES . 5. WE COME TO THE RELEVANT FACTS FIRST. THIS ASSESSEE TRADES IN SHARES AND COMMODITIES. HE CARRIED OUT HIS BUSINESS THROUGH A BR OKER M/S . KUN V ARJI COMMODITIES B ROKERS P VT . L TD. ( IN SHORT M/S KCBP L ). THE DEP ARTMENT C ONDUCTED A SEARCH IN THE LATTER S CASE ON 25. 0 3.2008. I T ALLEGEDLY CAME ACROSS INCRIMINATING MATERIAL IN THE NATURE OF DOCUMENTS , BOOKS OF ACCOUNT AND OTHER VALUABLE ARTICLES. THIS INCLUDED FILE DOCUMENTS A NNEXURES A - 55, 64 & 65 BELONGING TO THE ASSESSEE. THE SAME CULMINATED IN ISSUANCE OF SECTION 153C NOTICE DATED 23.07.2009. THE ASSESSEE FILED RETURN ON 23.08.2009 ST A TING INCOME OF RS.1,32,400/ - . THE ASSESSING O FFICER TOOK UP SCRUTINY. HE INTER ALIA NOTICED ASSESSEE S ACTION OF ALLEGEDLY MISUSING CLIENT CODE FACILITY AND OBSERVED THAT THE SAME RESULTED IN SUPPRESSION OF INCOME / PROFITS OF RS.63,26,507/ - NOT OFFERED IN THE BOOKS OF ACCOUNT. THIS AMOUNT STOOD ADD ED AS ASSESSEE S INCOME IN ASSESSMENT ORDER DATED 29.12.2009. 6. THE ASSESSEE PREFER RED APPEAL . H E INTER A LIA RAISED TWO SUB STANTIVE GR O UNDS. F IRST ONE ASSAILED LEGALITY OF THE IMPUGNED SECTION 153C PROCEEDINGS. LATTER GROUND ON MERITS CHALLENGED COR RECTNESS OF THE ABOVE STATED ADDITION. WE IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 5 OF 18 REITERATE THAT THE INSTANT ADJUDICATION IS CONFINED TO LEGAL ASPECT ONLY. THE ASSESSEE ARGUED IN THE COURSE OF LOWER APPELLATE PROCEEDINGS THAT NONE OF THE SEIZED MATERIAL BELONGED TO HIM AS CONTEMPLATED UNDER SE CTION 153C OF THE ACT . THE CIT(A) CONCUR S WITH THE A SSESSING OFFICER TO HOLD THAT ABOVE STATED INCRIMINATING MATERIAL ANNEXURE - 55 , 64 TO 65 BELONGS TO ASSESS E E ONLY THEREBY REJECTING ASSESSEE S LEGAL PLEA. 7. THIS LEAVES THE ASSESSEE AGGRIEVED. 8. L EA RNED AUTHORISED REPRESENTATIVE OPENS UP ASSESSEE S ARGUMENTS. WE ARE TAKEN TO THE SATISFACTION NOTE RELEVANT FOR INITIATION OF THE IMPUGNED SECTION 153C PROCEEDINGS READING AS UNDER : - SATISFACTION NOTE TO INITIATE PROCEEDING U/S. 153C R .W.S.153A OF THE IT ACT IN THE CASE OF MR. SHAILESH R. DA X INI A SEARCH U/S 132 OF THE IT. ACT 1961 WAS CONDUCTED IN THE CASE OF KUNWAJI COMMODITIES & BROKERS PVT. LTD. AND OTHER PERSONS OF KUNWARJI G R OUP ON 25.03.2008 & SUBSEQUENT DATES AND VARIOUS DOCUMENTS WERE FOUND & SEIZED. ON VERIFICATION OF VARIOUS DOCUMENTS FOUND AND SEIZED FROM THE BUSINESS PREMISES OF KUNWARJI COMMODITIES & BROKERS PVT. LTD. AHMEDABAD, IT IS NOTICED THAT SEIZED FILE ANNEXURE - A - 55 CONTAINS THE FOLLOWING DOCUMENTS BELONG TO MR. SHAILESH R. DAXINI. PAGE 65 TO 73 IS THE CLIENT REGISTRATION FORM OF MR. SAILESH R. DAXINI IN WHICH RELEVANT DETAILS HAVE BEEN PROVIDED BY SAILESH R . DAXINI INCLUDING HIS SIGNED PHOTOGRAPH. THIS DOCUMENT HAS BEEN SIGNED BY SAILESH R. DAXINI AT DIFFERENT PAGES. P AGE 76 TO 8 3 ARE THE COPY OF BANK STATEMENT OF CENTRAL BANK OF INDIA OF SAILESH R . DAXINI . PAGE 85 IS THE COPY OF PAN CARD OF THE ASSESSEE . FROM THE ABOVE IT IS CLEAR THAT THE SAID DOCUMENTS BELONG TO SH RI SHAILESH R. DAXINI, FOR WHICH I AM SATISFIED. FURTHER , ANN EXURE A - 64 AND A - 65 ARE SEIZED DOCUMENT CONTAINING COMPUTER DATA. T H ESE DOCUMENTS ALSO CONTAIN DOCUMENT BEING COMPUTER DATA IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 6 OF 18 BELONGING TO MR . S HAILESH R. DAXINI. BASED ON THE ABOVE SEIZED DA TA, IT HAS BEEN FOUND THAT MR. SHAILESH R. DAXINI HAS SUPPRESSED I NCOME AMOUNTING TO RS.1,29,67,176/ - IN F.Y.2005 - 06 AND INCOME AMOUNTING TO RS.1,35,30,671 IN F.Y.2006 - 07 BY ADOPTING THE METHODOLOGY OF CLIENT CODE MODIFICATION CARRIED OUT WITH THE CONNIVANCE OF THE BROKER KUNWARJI COMMODITIES & BROKERS PVT. LTD. THIS HA S BEEN DONE BY TAKING OVER LOSS OF OTHER PER SONS AS WELL AS TRANSFERRING THEIR PROFIT TO OTHER PERSONS AND THEREBY THE ASSESSEE H AS EVADED PAYMENT OF T AXES. THIS HAS RESULTED IN ESCAPEMENT OF INCOME ASSESSABLE TO TAX. FROM THE ABOVE IT IS CLEAR THAT THE SAID DOCUMENTS BELONG TO MR . SHAILESH R . DAXINI FOR WHICH I AM SATISFIED. THEREFORE, IN VIEW OF THE PROVISION OF SEC.153C (1) R.W.S.153A OF THE I .T. ACT I AM SATISFIED THAT PROCEEDINGS U/S.153C R.W.S, 153A IS REQUIRED TO BE INITIATED IN THIS CASE . ACCO RDINGLY NOTICE U/S.153C R.W.S. 153A OF THE ACT IS ISSUED FOR THE A.Y 2002 - 03 TO 2007 - 08. SD/ - ( GAURAV BATHAM) DY. COMMISSIONER OF IN COME TAX, CENTRA L CIRCLE - 1(1), AH MEDABAD 9. L EARNED AUTHORISED REPRESENTATIVE STRONGLY ARGUES THAT THE ABOVE EXTRACTED SATISFACTION NOTE HAS BEEN MADE IN ASSESSEE S CASE WHO HAPPENS TO BE OTHER THAN THE SEARCHED ASSESSEE AND NO SUCH SATISFACTION HAS BEEN RECORDED IN THE CASE FILE OF M/S. KUN VA RJI (SUPRA) THAT THE INCRIMINATING MATERIAL HEREINABOVE BELONGED TO THE ASSESSEE. IT IS FURTHER STATED THAT THE ASSESSEE FILED RTI APPLICATION AS WELL SEEKING TO CONFIRM AS TO WHETHER THE ASSESSING OFFICER HAD RECORDED AN Y SATISFACTION IN CASE OF THE ABOVE STAT E D SEARCHED ASSESSEE UNDER SECTION 153C. WE ARE INFORMED THAT THE DEPARTMENT HAS FURNISHED THE ABOVE EXTRACTED SATISFACTION ONLY TO HAVE BEEN ENTERED FOR THE PURPOSE OF INITIATING THE IMPUGNED PROCEEDINGS. THE ASSE SSEE ACCORDINGLY CONTEN D S THAT THIS COURSE OF ACTION AD O PT E D BY THE A SSESSING OFFICER IS NOT SUSTAINABLE AS PER THE CASE LAW OF H ON BLE JURI SDICTIONAL H IGH C OURT IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 7 OF 18 (2014) 222 TAXMAN 96 (GUJ) DCIT VS. LALIT KUMAR M. PATEL UPHOLDING T RIBUNAL S ORDER IN I T ( SS ) A NO.61/AHD/2007 PROPOUNDING THIS TWO TIER EXERCISE OF SATISFACTION FIRST IN CASE OF THE SEARCHED PARTY FOLLOWED THE ONE IN CASE OF THE OTHER ASSESSEE AS UNDER : - 7. COPY OF THE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 158BC IS AT PAGE NO.25 OF T HE REVENUE S PAPER BOOK WHICH READS AS UNDER: REASONS FOR ISSUE OF NOTICE U/S.158BD OF THE ACT. ASSESSEE : SHRI UPENDRA N. PATEL, SHRI LALIT M. PATEL & SHRI CHAMPAK M. PATEL A SEARCH AND SEIZURE ACTION IN THE JAYRAJ GROUP WAS CARRIED OUT U/S.132 (1) O N 19 12.2001. CERTAIN INCRIMINATING DOCUMENTS PERTAINING TO SHRI UPENDRA N.PATEL, SHRI LALIT M.PATEL & SHRI CHAMPAK M.PATEL HAS BEEN SEIZED, WHICH HAVE NOT BEEN ACCOUNTED FOR IN HIS REGULAR BOOKS OF ACCOUNTS. THE SEIZED DOCUMENTS SHOW THAT SHRI LALIT M.PAT EL AND SHRI CHAMPAK M.PATEL HAVE ACQUIRED RIGHTS IN THE LANDED PROPERTY OF M/S.HINDUSTAN EARTH MOVERS PVT. LTD, WHICH WAS FINALLY ACQUIRED BY SHRI JAYESH DAVE AND SHRI UPENDRA N.PATEL, ON THE BASIS OF FINAL COMPROMISE AGREEMENT ENTERED INTO BY THE RESPECTI VE PARTIES DATED 30.09.2000, WHICH WAS DULY APPROVED BY THE JURISDICTIONAL CIVIL COURT, BARODA VIDE COMPROMISE DECREE DATED 03.10.2000. AS PER THE MOU DATED 01.11.1996, SHRI LALIT M.PATEL AND SHRI CHAMPAK M.PATEL ACQUIRED THE RIGHT IN THE LAND OF M/S.HEMPL AND THEY HAVE MADE TOTAL CASH PAYMENT OF RS.37 LACS AND UNACCOUNTED DEMAND DRAFT OF RS.1 CRORE TO THE COURT RECEIVER APPOINTED BY THE HON'BLE HIGH COURT OF MUMBAI. SHRI JAYESH DAVE ENTERED INTO A COURT SETTLEMENT DECREE ON 30.09.2000 WITH SHRI UPENDRA N.P ATEL, SHRI LALIT M.PATEL & SHRI CHAMPAK M.PATEL FOR CEDING THEIR RIGHTS IN THE LAND OF M/S.HEMPL AND THEY RECEIVED 1,20,000 SQ.FT OF LAND OF M/S.HEMPL. THE SALE DEED WAS EXECUTED IN THE NAME OF SHRI UPENDRA N.PATEL ONLY FOR RS.5.60 LACS ONLY, WHICH WAS MUC H BELOW THE MARKET RATE. HENCE, LONG TERM CAPITAL GAIN HAD ACCRUED TO SHRI UPENDRA N.PATEL, WHICH HAS NOT BEEN OFFERED FOR TAXATION. SINCE, THESE FACTS COULD BE DISCOVERED FROM THE VARIOUS MOUS SEIZED DURING THE COURSE OF SEARCH IN THE JAYRAJ GROUP, THE NO TICES U/S.158BD ARE ISSUED TO THE ASSESSEES. THE INCRIMINATING PAPERS REFERRED TO ARE A - 15, PAGES 99 - 95, A - 41 PAGES 36 - 39, A - 3/5 PAGES 138 TO 146, A - 57 PAGES 122 TO 158, A - 35 PAGES 66 - 87J A - 2 PAGES - 1, A - 15 PAGES 75&76 AND OTHERS OF THE APPRAISAL REPORT. IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 8 OF 18 SD/ - (A.K. SINHA) DY. COMMISSIONER OF INCOME TAX CENTRAL CIR.1, BARODA. DATE : 23.02.2004 8. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE INITIATION OF THE PROCEEDINGS UNDER SECTION 158BD MAINLY ON TWO COUNTS (I) THAT T HE PROCEEDINGS WERE INITIATED AFTER COMPLETION OF THE ASSESSMENT IN THE CASE OF JAYARAJ GROUP OF CASES AND (II) DURING THE ASSESSMENT PROCEEDINGS OF JAYRAJ GROUP NO SATISFACTION WAS RECORDED BY THE AO OF JAYARAJ GROUP BUT REASONS WAS RECORDED BY THE AO OF THE ASSESSEE FOR ISSUING OF NOTICE UNDER SECTION 158BD. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT, 289 ITR 341 AND SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGARWAL VS . DCIT, 113 ITD 377. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT THE SATISFACTION RECORDED BY THE AO UNDER SECTION 158BC IS A VALID SATISFACTION BECAUSE THE PERSONS WHO RECORDED THE SATISFACTION WAS TH E AO FOR JAYARAJ GROUP OF CASES AS WELL AS THE ASSESSEE. HE ALSO SUBMITTED THAT NOTICE UNDER SECTION 158BD WAS DULY ISSUED BEFORE THE COMPLETION OF THE ASSESSMENT UNDER SECTION 158BC READ WITH SECTION 263, IN THE JAYRAJ GROUP OF CASES. 9. WE HAVE HEARD B OTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. THE PROVISIONS OF SECTION 158BD HAS BEEN CONSIDERED BY THE HON BLE APEX COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA). AT PAGE NO.348 OF THE REPORT, THEIR LORDSHIPS HELD AS UNDER: THE CONDITION PRECEDENT FOR INVOKING A BLOCK ASSESSMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132, OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. THE SAID PROVISION WOULD APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT UNDER SECTION 132A OR DOCUMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158BD, HOWEVER, PROVIDES FOR TAKING RECOURSE TO A BLOCK ASSESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERSON, THE CONDITIONS PRECEDENT WHEREFOR ARE : (I) SATISFACTION MUST BE RECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OF THE ACT ; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUME NTS OR ASSETS SEIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 9 OF 18 ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON ; AND (III) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON. THE CONDITIONS PRECEDENT FOR INVO KING THE PROVISIONS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVISIONS OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD BEEN REQ UISITIONED UNDER SECTION 132A OF THE ACT. 10. THAT THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGGARWAL (SUPRA) HAS CONSIDERED THE ABOVE DECISION OF THE HON BLE APEX COURT AND ALSO OTHER DECISIONS OF VARIOUS COURTS AND EXAMINED IN DETAIL THE CONDI TIONS WHICH ARE TO BE SATISFIED BEFORE THE ISSUE OF NOTICE UNDER SECTION 158BD. THE SPECIAL BENCH HELD AS UNDER: SECTION 158BD PROVIDES FOR ASSUMPTION OF JURISDICTION TO MAKE A BLOCK ASSESSMENT IN THE CASE OF A PERSON NOT SEARCHED AND AGAINST WHOM NO PRO CEEDINGS HAVE BEEN INITIATED. IT CANNOT BE SAID THAT SUCH JURISDICTION CAN BE ASSUMED WITHOUT RECORDING SATISFACTION. IT HAS TOTE NOTED THAT THE PROCEEDINGS UNDER SECTION 158BC ARE AGAINST THE PERSON SEARCHED AND IF IN THE COURSE OF SUCH PROCEEDING THE ASS ESSING OFFICER ASSESSING THE PERSON SEARCHED COMES ACROSS MATERIAL INDICATING THE PRESENCE OF UNDISCLOSED INCOME IN THE HANDS OF THE PERSON NOT SEARCHED, THERE HAS TO BE A PROVISION FOR MAKING A SIMILAR ASSESSMENT IN THE CASE OF THE OTHER PERSON. AS SECTIO N 158BC RELATES TO A PERSON SEARCHED THERE HAS TO BE DIFFERENT PROVISION FOR MAKING A SIMILAR ASSESSMENT IN THE CASE OF THE OTHER PERSON AND HENCE SECTION 158BD HAS BEEN ENACTED. SO, THE SAID SECTION STATES THAT IF THE ASSESSING OFFICER IS SATISFIED THAT T HE UNDISCLOSED INCOME BELONGS TO THE OTHER PERSON, THEN HE SHALL HAND OVER THE SEIZED MATERIAL SO AS TO ENABLE THE SECOND ASSESSING OFFICER TO MAKE A BLOCK ASSESSMENT IN A SIMILAR MANNER AND THAT IS NOT POSSIBLE IF THE SATISFACTION IS NOT RECORDED. AND THI S CAN BE RECORDED ONLY AND ONLY IN THE COURSE OF THE SECTION 158BC PROCEEDING AND NOWHERE ELSE. IT IS THE ASSESSING OFFICER ASSESSING THE PERSON SEARCHED WHO GOES, THROUGH THE SEIZED MATERIAL AND COMES TO A DECISION AS TO WHETHER THERE IS ANY UNDISCLOSED I NCOME UNEARTHED AS A RESULT OF SEARCH, IF SO ITS NATURE AND TO WHOM IT BELONGS. IF THE SAID UNDISCLOSED INCOME BELONGS TO THE PERSON SEARCHED THAT IS THE END OF THE MATTER. IF, ON THE OTHER HAND, THE MATERIAL EXAMINED SHOWS THAT THE UNDISCLOSED INCOME PERT AINS TO SOME OTHER PERSON HE HAS TO GIVE A FINDING TO THIS EFFECT AND THEREUPON TRANSMIT THE RELATED SEIZED MATERIAL TO THE ASSESSING IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 10 OF 18 OFFICER HAVING JURISDICTION OVER THE OTHER PERSON. ALL THESE FINDINGS HAVE TO BE RECORDED AFTER AN HONEST APPRECIATION OF THE SEIZED MATERIAL WITH AN OBJECTIVE MIND AND THERE HAS TO BE A RECORD REFLECTING SUCH FINDINGS ON THE BASIS OF WHICH ALONE THE OTHER ASSESSING OFFICER CAN ASSUME JURISDICTION TO PROCEED AGAINST THE OTHER PERSON AND IT IS THIS RECORD WHICH FORMS THE 'NOTE OF SATISFACTION' OR THE 'RECORD OF SATISFACTION . IN SUCH CIRCUMSTANCE, THE RECORDING OF SUCH SATISFACTION IS IMPLIEDLY TO BE DONE IN THE COURSE OF THE SECTION 158BC PROCEEDING AS THE SATISFACTION HAS TO BE RECORDED ONLY BY THE ASSESSING OFFICER MAKING TH E BLOCK ASSESSMENT IN THE CASE OF THE PERSON SEARCHED WHICH IN TURN MEANS THE SECTION 158BC PROCEEDINGS SUCH SATISFACTION CANNOT BE RECORDED BEYOND THE DATE OF THE BLOCK ASSESSMENT IN THE SECTION 158BC PROCEEDING AND THE DATE OF THE BLOCK ASSESSMENT IS THE OUTER LIMIT FOR RECORDING SUCH SATISFACTION. THIS IS FOR THE REASON THAT THE SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OFFICER EXAMINING THE MATERIAL IN THE CASE OF THE PERSON SEARCHED AND HE WILL HAVE TO FIND OUT WHETHER THERE IS ANY UNDISCLOSED I NCOME AT ALL UNEARTHED WHICH AGAIN CAN ONLY BE IN THE COURSE OF SUCH PROCEEDING. AFTER FINDING THAT THERE IS UNDISCLOSED INCOME, HE WILL HAVE TO GIVE A FINDING AS TO WHETHER SUCH INCOME BELONGS TO THE PERSON SEARCHED AND THIS TOO HAS TO BE IN THE COURSE OF THE SAID PROCEEDING ONLY. IF HE FINDS THAT ANY OR ALL OF SUCH INCOME BELONGS TO A PERSON NOT SEARCHED, THEN HE HAS TO RECORD SUCH FINDING IN THIS BEHALF AND TAKES FOLLOW - UP ACTION AS ENVISAGED IN SECTION 158BD WHICH AGAIN HAS TO BE ONLY IN THE COURSE OF S ECTION 158BC PROCEEDING AND, HENCE, IF NO SUCH SATISFACTION IS RECORDED IN COURSE OF SECTION 158BC PROCEEDING, THEN ASSUMPTION OF JURISDICTION UNDER SECTION 158BD IS NOT POSSIBLE. IN THE CIRCUMSTANCES, THE ABSENCE OF THE WORDS 'IN THE COURSE OF THE PROCEED ING IN THE SECTION IS NO MATERIAL TO THE ISSUE IN THE CONTEXT OF THE SAID SECTION ITSELF. 11. LET US EXAMINE THE FACTS OF THE ASSESSEE S CASE IN THE LIGHT OF THE ABOVE DECISION OF THE HON BLE APEX COURT AND THE SPECIAL BENCH OF THE ITAT. AS PER THE DEC ISION OF THE HON BLE APEX COURT, BEFORE THE ISSUE OF NOTICE UNDER SECTION 158BD, SATISFACTION MUST BE RECORDED BY THE AO OF THE PERSON SEARCHED, THAT THE UNDISCLOSED INCOME BELONGS TO THE PERSON OTHER THAN THE PERSON SEARCHED AND THEN BOOKS OF ACCOUNTS OR OTHER DOCUMENTS SEIZED HAS TO BE HANDED OVER TO THE AO OF THE PERSON TO WHOM THE UNDISCLOSED INCOME BELONGS. THEREAFTER ON THE BASIS OF SUCH SATISFACTION, THE AO OF THE PERSONS TO WHOM THE UNDISCLOSED INCOME BELONGS WILL TAKE PROCEEDINGS UNDER SECTION 158B D. SPECIAL BENCH OF THE ITAT HAS FURTHER HELD THAT SUCH SATISFACTION BY THE AO OF THE PERSON SEARCHED HAS TO BE IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 11 OF 18 RECORDED IN THE COURSE OF PROCEEDINGS UNDER SECTION 158BC AND NOT THEREAFTER. MEANING THEREBY, THE SATISFACTION MUST BE RECORDED BEFORE THE COMP LETION OF THE ASSESSMENT OF THE PERSON SEARCHED. NOW IN THE CASE OF THE ASSESSEE WE HAVE REPRODUCED THE SATISFACTION NOTE IN PARA - 7 ABOVE. 12. FROM THE SATISFACTION NOTE, IT SEEMS THAT IT IS RECORDED BY THE AO OF THE ASSESSEE AND NOT THE AO OF JAYRAJ GRO UP OF CASES. THIS INFERENCE OF OURS IS ON THE FOLLOWING BASIS: I) HEADING OF THE NOTE IS REASONS FOR ISSUE OF NOTICE U/S.158BD OF THE ACT . THUS, IT IS THE REASONS RECORDED BY THE AO BEFORE THE ISSUE OF NOTICE UNDER SECTION 158BD. OBVIOUSLY, THE REASON IS RECORDED BY THE AO WHO ISSUED THE NOTICE UNDER SECTION 158BD. IT SEEMS THAT THE AO CONSIDERED THE PROVISION OF SECTION 158BD SIMILAR TO SECTION 148 AND THEREFORE BEFORE THE ISSUE OF NOTICE, HE RECORDED THE REASONS FOR ISSUING OF SUCH NOTICE. II) THE NAME OF THE ASSESSEE MENTIONED IN THE SATISFACTION NOTE IS SHRI UPENDRA N. PATEL, SHRI LALIT M. PATEL & SHRI CHAMPAK M. PATEL. THUS, THE REASON IS RECORDED IN THE CASE OF THESE ASSESSEE AND NOT IN THE CASE OF JAYRAJ GROUP OF CASES. HAD THE SATISFACTION REC ORDED BY THE AO OF JAYRAJ GROUP OF CASES, THEN THE NAME OF THE ASSESSEE WOULD HAVE BEEN JAYRAJ GROUP OF CASES AND NOT AS SHRI UPENDRA N. PATEL, SHRI LALIT M. PATEL & SHRI CHAMPAK M. PATEL. III) IN THE FIRST LINE OF THE SATISFACTION NOTE, THE AO HAS MEN IONED THE SEARCH AND SEIZURE ACTION IN THE JAYRAJ GROUP OF CASES WAS CARRIED OUT UNDER SECTION 132(1) ON 19 - 12 - 2001 . IF THE SATISFACTION NOTE WAS RECORDED BY THE AO OF JAYRAJ GROUP OF CASES, HE WOULD HAVE MENTIONED A SEARCH AND SEIZURE ACTION HAS TAKEN PLACE IN THE CASE OF THE ASSESSEE. IV) AT THE END OF THE NOTICE, THE AO HAS MENTIONED SINCE THIS FACT COULD BE DISCOVERED FROM THE VARIOUS MOUS SEIZED DURING THE COURSE OF SEARCH IN JAYRAJ GROUP, THE NOTICES U/S.158BD ARE ISSUED TO THE ASSESSEES . THIS NOTING CLEARLY PROVES THAT THE REASON WAS RECORDED BY THE AO OF SHRI LALIT M. PATEL AND NOT OF THE AO OF JAYRAJ GROUP. IF THE SATISFACTION HAS BEEN RECORDED BY THE AO OF JAYRAJ GROUP CASES, HE WOULD HAVE MENTIONED THAT DURING THE COURSE OF SEARCH IN THE CASE OF THE ASSESSEE, VARIOUS MOUS BELONGED TO SHRI UPENDRA N. PATEL, SHRI LALIT M. PATEL & SHRI CHAMPAK M. PATEL WERE FOUND. THE SAME ARE IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 12 OF 18 BEING FORWARDED TO THEIR AO FOR TAKING ACTION UNDER SECTION 158BD IN THEIR CASES. IN VIEW OF THE ABOVE, WE ARE OF TH E OPINION THAT THE SATISFACTION WAS RECORDED BY THE AO OF THE ASSESSEE AND NOT BY THE AO OF THE PERSON SEARCHED. AS PER THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) AS WELL AS SPECIAL BENCH DECISION IN THE CASE OF MAJOJ A GGARWAL (SUIPRA), THE SATISFACTION IS TO BE RECORDED BY THE AO OF THE PERSONS SEARCHED THAT TOO DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE PERSON SEARCHED. 13. THAT THE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 158BC WAS DATED 23 - 2 - 2004,WHILE THE ASSESSMENT OF JAYRAJ GROUP WAS ORIGINALLY COMPLETED UNDER SECTION 158BC ON 30 - 1 - 2004. THAT THEREAFTER UNDER SECTION 263 SUCH ORDER WAS SET ASIDE AND FRESH ASSESSMENT ORDER WAS PASSED ON 29 - 12 - 2006. HOWEVER, IT IS NOT THE CASE OF THE REVENUE THAT THE ORDER UNDER SECTION 263 WAS PASSED WITH REGARD TO SOME FINDING PERTAINING TO UNDISCLOSED INCOME OF THE ASSESSEE VIZ. SHRI LALIT M. PATEL. IN THE FRESH ASSESSMENT ORDER PASSED IN PURSUANCE OF SECTION 263 ALSO THERE IS NO MENTION WITH REGARD TO UNDISCLOSED INCOME, IF ANY BELONGED TO SHRI LALIT M. PATEL. 14. IN VIEW OF THE TOTALITY OF THE ABOVE FACTS, WE ARE OF THE OPINION THAT THE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 158BD BY THE AO OF THE ASSESSEE CANNOT BE SAID TO BE VALID SATISFACTION FOR ISSUE OF NOTICE UNDER SECTION 158BD, WE THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) AND THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MANOJ AGGARWAL (SUPRA), HOLD THAT THE ISSUE OF NOTICE UNDER SECTION 158BD IN THE CASE OF THE ASSESSEE WAS NOT VALID. WE QUASH THE SAME. ONCE THE NOTICE UNDER SECTION 158BD ITSELF IS QUASHED, THE ASSESSMENT ORDER PASSED UNDER SECTION 158BC IN PURSUANCE TO THE NOTICE ISSUE D UNDER SECTION 158BD IS ALSO QUASHED. LEARNED AUTHORISED REPRESENTATIVE ACCORDINGLY SUBMITS THAT THE ASSESSING OFFICER HAS ERRED IN TAKING RECOURSE TO ABOVE STATED SATISFACTION NOTE AS THE TRIGGERING POINT FOR INITIATION OF SECTION 153C PROCEEDINGS UND ER CHALLENGE. IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 13 OF 18 1 0 . WE AFFORDED AMPLE OPPORTUNITY TO THE L EARNED DEPARTMENTAL REPRESENTATIVE FOR DEFENDING LEGALITY OF THE IMPUGNED PROCEEDINGS. THESE CASE FILES WERE PART HEARD ON 10.03.2016 . WE DIRECTED THE REVENUE TO PRODUCE THE RELEVANT SATISFACTION NOTE(S) ENTERED BEFORE INITIATION OF THE IMPUGNED SECTION 153C PROCEEDINGS. THE CASE STOOD FIXED FOR 22.03.2016 AND 01.04.2016 . LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT PRODUCE ANY SPECIFIC SATISFACTION NOTE IN THE CASE OF THE SEARCHED PARTY. SHE A DMITTED THAT THE ASSESSING OFFICER HAS NOT ENTERED ANY SEPARATE SATISFACTION NOTE IN CASE OF THE SEARCH ED PARTY M/S KUN V ARJI. SHE SUBMITS THAT THE A SSESSING OFFICER IS THE SAME IN CASE OF ASSESSEE AS WELL AS THE SEARCHED PARTY. HE IS ACCORDINGLY SUPPOSED TO HAVE ALL THE RELEVANT INFORMATION AS TO IN WHOSE CASE THE IMPUGNED INCRIMINATING MATERIAL IS TO BE USED FOR T HE PURPOSE OF ASSESSING UNDISCL OSED INCOME BASED ON THE ALLEGED INCRIMINATING MATERIAL. LEARNED DEPARTMENTAL REPRESENTATIVE FILES ON RECORD DE CISION OF ANOTHER BENCH IN ITA N OS . 1832 TO 1834/ KOL /2014 IN THE CASE OF KPC MEDICAL COLLEGE & HOSPITAL VS. DCIT DECIDED ON 24.06.2015 OBSERVING AS UNDER : - 16. THERE IS BUILT - IN FALLACY IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. THE FALLACY B ECAME EVIDENT IF THE ARGUMENT IF TESTED BY ENVISIONING TO THE FACTS OF THE PRESENT CASE. THERE IS NO DISPUTE THAT NOTICE UNDER SECTION 153C WAS ISSUED BY THE AO AFTER RECORDING THE SATISFACTION EXTRACTED SUPRA. THE AO IS THE SAME AO WHO HAS JURISDICTION OV ER THE SEARCHED PERSON AS WELL AS THE OTHER PERSON I.E. THE ASSESSEE. LET US TAKE A SITUATION, THE AO WAS EXAMINING THE FILE OF SHRI BHASKAR GHOSH. ON PERUSAL OF HIS STATEMENT RECORDED UNDER SECTION 132(4) COUPLED WITH THE FACT OF CASH FOUND DURING THE COU RSE OF SEARCH AND BUTTRESSED BY THE MANAGING DIRECTOR (FINANCE) OF THE KPC GROUP OF COMPANIES, VISUALIZED THAT CASH BELONGED TO THE ASSESSEE, HE IMMEDIATELY TOOK A PIECE OF PAPER AND RECORDED HIS SATISFACTION THAT THE MONEY BELONGS TO THE ASSESSEE, THEREFO RE NOTICE UNDER SECTION 153C IS TO BE ISSUED IN THE CASE OF ASSESSEE. THE QUESTION IS, WHERE THIS PAPER WAS PLACED BY HIM? WHETHER IN THE ORDER SHEET ENTRIES OF SHRI BHASKAR GHOSH S ASSESSMENT PROCEEDINGS; IN A SEPARATE FILE OR IN CUPBOARD AVAILABLE IN HIS ROOM. THERE IS NO DISPUTE RAISED BY THE LD. REPRESENTATIVES THAT THIS SATISFACTION WAS NOT RECORDED WITHIN THE STAGES CONTEMPLATED BY THE IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 14 OF 18 HON BLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS (EXTRACTED SUPRA). THE ATTEMPT AT THE END OF LD. COUN SEL FOR THE ASSESSEE IS THAT THERE SHOULD BE A STRAIGHT JACKET SYSTEM, WHEREBY THE SATISFACTION RECORDED EVEN BY THE SAME AO THEN, THAT SHOULD BE PLACED IN THE FILE OF SEARCHED PERSON AND IF IT IS PLACED IN SOME OTHER CUPBOARD IN HIS ROOM BY THE AO THEN, T HERE CANNOT BE ANY SATISFACTION, WE FAIL TO APPRECIATE THAT TECHNICAL APPROACH AT THE END OF ASSESSEE. THE LAW DOES NOT REQUIRE THE MANNER AND THE PROCEDURE OF KEEPING THE FILES. THE SECTION ONLY REQUIRES THAT A SATISFACTION BE RECORDED AND IT SHOULD BE DU RING THE PERIOD PROPOUNDED BY HON BLE S.C. IN CALCUTTA KNITWEARS, THAT HAS BEEN RECORDED IN THE PRESENT CASE. IT IS AVAILABLE ON PAGE 74 OF THE PAPER BOOK. THE SECOND SCENARIO CAN ALSO HAPPEN THAT SEIZED MATERIAL OF KPC GROUP MIGHT BE KEPT IN A COMMON BUND LE, WRAPPED IN A CLOTH WHERE ALL THE FILES ARE EMANATING FROM SEARCH AND SURVEY ARE BEING PLACED. IF THE ABOVE SATISFACTION NOTE WAS FOUND TO BE TAGGED WITH OTHER FILE WOULD IT BE HELD THAT NO SATISFACTION WAS RECORDED. IN OUR UNDERSTANDING THE REPLY WILL BE THAT SATISFACTION WAS RECORDED. LEARNED DEPARTMENTAL REPRESENTATIVE THEREAFTER TAKES US TO THE CO - ORDINATE BENCH CONCLUSION OF THE ASSESSING OFFICER HAVING RECORDED SATISFACTION AFTER NO TICING THAT BOTH ASSESSEE S CASE FILES WERE ON THE SAME TABLE AS UNDER : - 20. AS FAR AS THE JUDGMENTS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE ARE CONCERNED, WE HAVE CONSIDERED THEM AND THEY ARE DISTINGUISHABLE ON FACTS. THE EMPHASIS OF THE LD. COUNSEL FOR THE ASSESSEE WAS ON THE DECISION OF ITAT IN THE CASE OF TANVIR COLLECTIONS (P) LTD. VS. ACIT 54 TAXMANN.COM 379 (DELHI - TRIB). IN THIS CASE THE ITAT HAS DEALT WITH A SIMILAR SITUATION, WHERE THE AO WAS HAPPENED TO BE A COMMON AO. THE ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS THAT IF AO OF THE SEARC HED PERSON AND THE ASSESSEE IS THE SAME IT DOES NOT MAKE ANY DIFFERENCE WHETHER SATISFACTION IS RECORDED IN THE CASE OF THE SEARCHED PERSON OR THE OTHER PERSON. THE ITAT HAD ARRIVED AT A CONCLUSION THAT SATISFACTION WAS RECORDED WHILE TAKING UP THE CASES O F OTHER PERSON. THIS CONCLUSION HAS BEEN DRAWN ON THE BASIS OF MATERIAL SUPPLIED UNDER QUERY MADE AS PER RTI ACT. IT IS A FACTUAL ISSUE. WE ARE CONSCIOUS OF THIS FACT BUT WE HAVE DEALT WITH THE FACTS IN THE PRESENT CASE AND OBSERVED THAT SATISFACTION WAS R ECORDED BY THE AO WHILE SCRUTINIZING THE PAPERS OF THE SEARCHED PERSON. IT IS VERY DIFFICULT TO CREATE A DISTINCTION TO FIND OUT WHEN SUCH SATISFACTION WAS RECORDED WHEN FILES OF BOTH THE ASSESSEES ARE LYING OPEN UPON THE TABLE OF A.O. THE ITAT, DELHI BENC H HAD DRAWN INFERENCE ON THE BASIS OF FACTS AVAILABLE IN THAT CASE. IT HAD NOT INTERPRETED ANY PROVISION. WE HAVE CONSIDERED THIS ASPECT UNDER THE FORE GOING PARAGRAPH. THEREFORE, WE DO NOT FIND ANY MERIT IN THE FIRST FOLD OF SUBMISSION MADE BY THE LD. COU NSEL OF THE ASSESSEE. IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 15 OF 18 11. THE REVENUE ACCORDINGLY SEEKS TO VALIDATE THE IMPUGNED SATISFACTION NOTE TO HAVE BEEN ENTERED AS PER TRUE AND CORRECT INTERPRETATI O N OF SECTION 153C OF THE ACT. 12. WE HAVE HEARD RIVAL SUBMISSIONS. CASE FILES STAND S PERUSED. T HERE IS NO DISPUTE THAT THIS ASSESSEE IS NOT THE ONE SEARCHED SI NCE THE IMPUGNED PROCEEDINGS ARE UNDER SECTION 153C OF THE ACT C ONDUCTED ON 25.03.2008 IN CASE OF M/S . KUN V ARJI COMMODITIES B ROKERS P VT . L TD. THERE IS FURTHER NO ISSUE THAT THE DCIT CENTRAL C IRCLE 1(1) IS T HE COMMON ASSESSING AUTHORITY IN CASE OF BOTH THE ASSESSEES. T HE LEGAL POSITION ENVISAGED UNDER SECTION 153C OF THE ACT IS VERY CLEAR THAT THE ASSESSING O FFICER OF THE SEARCHED ASSESSEE HAS TO SATISFY HIMSELF THAT ANY MONEY, BULLION , JEWELL ERY OR OTHER VALUABLE ARTICLES ETC. BELONGS TO SOME OTHER PERSONS AND NOT THE SEARCHED ASSES SEE . THIS HAS TO BE FOLLOWED BY ANOTHER EXERCISE IN CASE OF SUCH OTHER ASSESSEE THAT THE SAME IS CAUSED ESCAP E MENT OF ANY INCOME. IT IS AT THIS STAGE THAT BOTH PA RTIES HAVE CROPPED UP THE INSTANT ISSUE. THE ASSESSEE S CASE IS THAT THERE IS NO SATISFACTION AT FIRST LEVEL IN CASE OF THE SEA RCHED ENTITY OPPOSED BY THE REV ENUE BY SAYING THAT THE ASSESSING OFFICER IS THE SAME WHO HAS EXPRESSED SATISFACTION IN ASSESSEE S CASE. THE LAW ABOUT ENTERING OF SUCH A SATIS FACTION IS VERY WELL SETTL E D NOW . HON BLE A PEX C OURT IN THE CASE OF MANISH MAHESH WARI VS. ACIT (2007) 289 ITR 341 (SC) HOLDS THAT SUCH A SATISFACTION IS INDEED MANDATORY . WE DEEM IT APPROPRIATE TO OBSE R VE TH AT THIS CASE DEALT WITH BLOCK ASSESSMENT SCHEME UNDER SECTION 158BD OF THE ACT AS IT EXISTED IN THE ERSTWHILE AVATAR UNDER C HAPTER XIV - B OF THE ACT. THE SAME STANDS REPEALED BY NEWLY INSERTED SECTIONS 153A TO 153C BY THE FINANCE ACT 2003. IT COMES TO O UR NOTICE THAT THE C ENTRAL BOAR D OF DIRECT TAXES HAS ISSUED ITS CIRCULAR NO.24 OF 2015 ALREADY ACCEPTING THAT RIGOR OF SECTION 153C VIS - A - VIS 158BD IS SUBSTANTIALLY IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 16 OF 18 SIMILAR /PAR I MATERIA AS HELD BY VARIOUS H ON BLE C OURTS. IT FURTHER CLARIFIES THAT RECORDING OF SECTION 153C/158BD SATISFACTION IS A MUST IN CASE OF SEARCHED PERSON FOLLOWED BY TRANSMISSION OF THE CASE RECOR D S TO T HE A SSESSING OFFICER OF THE OTHER ASSESSEE. PARA NO.4 OF THIS CIRCULAR FURTHER ENVISAGES THAT THIS DUAL EXERCISE IS TO BE COMPLIED WIT H EVEN IF THE A SSESSING OFFICER HAPPENS TO BE THE SAME IN BOTH CASES. WE DEEM IT APPRO PRIATE TO OBSERVE IN THIS FACTUAL AND LEGAL BACKDROP THA T AN ASSESSING OFFICER HAS TO MANDATORILY FOLLOW THE ABOVE STATED DUAL SATISFACTION EXERCISE BEFORE INITIAT I NG SE CTION 153C PROCEEDINGS. WE FIND THAT NEITHER THE JURISDICTIONAL TRIBUNAL S DECISION NOR THAT OF KOLKATA BENCH (SUPRA) DEVIATE FROM THIS PRINCIPLE. THE FORMER DEALS WITH A SITUATION WHEREIN THE DEPARTMENT CARRIED OUT A SE ARCH IN CASE M/S . JAIRAJ GROUP, F OLLOWED BY ASSESSING OFFICER S ACTION RECORDING SATISFACTION FORMING BASIS FOR INITIATING SECTION 153C PROCEEDINGS IN CASE OF A THIRD PARTY WITHOUT FOLLOWING THE FIRST HURDLE OF SATISFACTION THAT THE MONEY, BULLION OR JEWELLERY ETC. BELONGED TO SOME THIRD PERSON AND NOT THE SEARCHED PARTY. THE LATTER DECISION PRECEDES A STEP FURTHER . IT HOLDS THAT THE ASSESSING OFFICER IN CASE OF SEARCHED AND THIRD PARTY IS THE SAME. AND IT IS VERY DIFFICULT TO CREATE A DISTINCTION TO FIND OUT WHEN SUCH SATISFACTION WAS RECORDED SINCE BOTH FILES WERE LYING TOGETHER ON THE ASSESSING AUTHORITY S TABLE. IT IS THEREFORE CLEAR TO US THAT THERE IS NO DISTINCTION ON LEGAL PRINCIPLE OF THE SATISFACTION PRECONDITION BEFORE INITIATION OF SECTION 153C PROCEEDINGS IN BOTH THESE DECI SIONS. THE LATTER DECISION IS OF THE VIEW THAT THE TIMING OF THIS SATISFACTION BEING RECORDED IN CASE OF SEARCHED ASSESSEE AND THIRD PARTY IS PURELY A FACTUAL ISSUE. W E DEEM IT APPROPRIATE TO OBSERVE THAT THERE IS NO MUTUAL CONTRADICTION SO FAR AS RATIO OF THESE TRIBUNAL S DECISIONS IS CONCERNED. IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 17 OF 18 13. WE TAKE NOTE OF OUR DISCUSSION HEREINABOVE AND REVERT BACK TO FACTS OF THE INSTANT CASE. WE REITERATE THAT THE ASSESSEE S CASE IS THAT ONCE THE ASSESSING OFFICER DOES N OT SPECIFICALLY RECORD SATISFACTION IN SEARCHED ENTIT Y S CASE THAT THE MONEY, BULLION , JEWELLERY ETC. IN QUESTION BELONGS TO A THIRD PERSON , PLACES THE SAME IN IT S FILE FOLLOW E D BY AN OPINION OF THE ABOVE STATED MATERIAL HAVING CAUSED ESCAPEMENT OF ANY INCOME. IT IS ACCORDINGLY ARGUED THA T THE IMPUGNED SATISFACTION DOES NOT ADHERE TO ABOVE STAT E D SETTLED LAW. THE REVENUE ON THE OTHER HAND MAKES OUT A CASE THAT THE ASSESSING OFFICER S SATISFACTION HAS COME ONLY AFTER CAREFUL EXAMINATION O F THE ABOVE STATED INCRIMINATING MATERIAL BEING EXAM INED TOGETHER IN THE CASES OF M/S . KUN V ARJI AS WELL AS THE ASSESSEE. WE FIND NO REASON TO AGREE WITH THIS CONTENTION. AS OBSERVED BY THE LEARNED CO - ORDINATE BENCH IN L ALIT K UMAR M . P ATEL S CASE , THE ASSESSING OF F ICER IN THE IMPUGNED SATISFACTION MENTIONS ONLY ASSESSEE S NAME ON TOP OF THE SATISFACTION NOTE AND NOT THAT OF THE SEARCHED ENTITY. THERE IS NO MATERIAL PLACED ON RECORD BEFORE US THAT THE A SSESSING OFFICER HAD KEPT THE CASE FILES OF THE SEARCHED PARTY AND THAT OF THE ASSESS EE TOGETHER BEFORE DR AWING THE IMPUGNED SATISFACTION NOTE. IT IS MADE CLEAR THAT THE REVENUE S CONT ENTION BASED ON KOLKATA BENCH DECISION OF THE TRIBUNAL PUTS A HEAVY ONUS ON THE DEPARTMENT TO POSITIVELY PROVE THAT THE SAME A SSESSING OFFICER IN CASE OF SEARCHED ASSESSEE AS WE LL AS THE THIRD PARTY HAD COLLECTIVELY EXAMINED THE CASE FILES BEFORE RECORDING A SATISFACTION NOTE CONTEMPLATED UNDER SECTION 153C OF THE ACT. NEEDLESS TO SAY, THIS BURDEN STANDS UN - DISCHARGED. WE HOLD IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT THE R EVENUE S ARGUMENTS JUSTIFYING THE IMPUGNED SATISFACTION NOTE ARE DEV OID OF MERITS BEING NOT SUPPORTED BY ANY EVIDENCE MUCH LESS IN THE NATURE OF SUBSTANTIVE MATERIAL. WE CONCLUDE IN VIEW OF THE ABOVE STATED IT (SS) A NO S. 01, 02, 03, 89, 90 & 91 / AHD/ 20 1 1 & CO NO S.56, 57 & 58/A HD /2011 ASSESSMENT YEAR S : 2 0 05 - 06 TO 2008 - 09 PAGE 18 OF 18 LEGAL POSITION, BOARD S CIRCULAR AND OUR DISCUS SION HEREINABOVE THAT THE ASSESSING OFFICER HAS NOT RECORDED A VALID SATISFACTION BEFORE INITIATING SECTION 153C PROCEEDINGS IN QUESTION. THE IMPUGNED ASSESSMENT IS ACCORDINGLY QUASHED. IT ( SS ) A NO.01/AHD/2011 IS ALLOWED. 14. WE COME TO ASSESSMENT YEAR 20 06 - 07, 2007 - 08 & 2008 - 09 . T HERE IS NO DI SPUTE THAT ALL THESE ASSESSMENT S F RAMED UNDER SECTION 153C OF THE A CT ARISE FROM THE ABOVE EXTRACTED SATISFACTION NOTE ONLY. THE SAME ALREADY STANDS QUASHED IN ASSESSMENT YEAR 2005 - 06 HEREINABOVE. WE FOLLOW THE SA ME COURSE OF ACTION IN THESE THREE ASSESSMENT YEARS AS WELL. 15. TO SUM UP , ASSESSEE S APPEALS IT(SS)A NOS.01, 02, 03 AND C.O. NO.57/AHD/2011 ARE ALLOWED. HIS OTHER C.O. NO S .56 & 58/AHD/2011 ARE RENDERED INFRUCTUOUS. REVENUE S APPEALS IT(SS)A NOS.89, 90 & 91/AHD/2011 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON TH E 22 ND DAY OF APRIL , 201 6 . SD/ - SD/ - PRAMOD KUMAR S .S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 22 ND DAY OF A PRIL , 2016 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BEN CHES, AHMEDABAD