SHRI MANSINGH CHOUHAN, Indore V. THE ACIT 2(1), Indore

ITSSA 235/IND/2014

• Counselvise Citation: [2017] 119 COUNSELVISE.COM (IT) 3114 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: K C AGRAWAL
• Keywords: Loose papers; Documents seized
• Section: 143(3); 132

Judgement Text

MANSINGH CHOUHAN IT(SS) 235/IND/2014 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER ..&./ I.T.A. NO.235/IND/2016 ' ( )*( / ASSESSMENT YEAR: 2007-08 MANSINGH CHOUHAN INDORE PAN AHFPC 1796B ` :: + / APPELLANT VS ACIT 2(1) INDORE :: ,-+ / RESPONDENT ' (. / # / ASSESSEE BY SHRI K.C. AGRAWAL 0) / # / REVENUE BY SHRI LALCHAND 1 ')2 / $ DATE OF HEARING 10 .1.2017 3456* / $ DATE OF PRONOUNCEMENT 10 .1.2017 #7 / O R D E R PER SHRI D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-I, INDORE, DATED 31.3.20 14. MANSINGH CHOUHAN IT(SS) 235/IND/2014 2 2. THE SHORT FACTS OF THE CASE ARE THAT THE NOTICE U/S 153C OF THE ACT WAS SERVED ON THE ASSESSEE ON 17.7.20 09. IN RESPONSE TO THE NOTICE, THE ASSESSEE SUBMITTED OR IGINAL RETURN OF INCOME ON 28.3.2008 DECLARING TOTAL INCOME AT RS. 171220/-. THE ASSESSEE WAS HOLDING ONE SAVINGS BANK ACCOUNT NO. 10921 IN BANK OF INDIA, DEWAS. THE ASSESSEE HAS NOT SHOWN ANY INTEREST INCOME OF RS. 669/- IN HIS RETURN OF INCOME. THE ASSESSEE HAS RECEIVED UNSECURE D LOAN FROM THE FOLLOWING PERSONS :- NAME OF LOAN DONOR DATE OF LOAN GIVEN ACCOUNT NO. OF LOAN DONOR RELEVANT ASSESSMENT YEAR AMOUNT IN RS. SHRUTI CONSTRUCTION COMPANY 7.6.2006 0362000024771 HDFC BANK 2007-08 2500000 INDERSINGH 4.12.2006 2007-08 950000 MEHTAB SINGH 4.12.2006 2007-08 950000 NASRENDRA S/O BAPULAL CHOUHAN 4.12.2006 2007-08 600000 RAMRATAN SITARAM 18.5.2006 88051011000023 3 BOI 2007-08 29,89,000 VISHNU SHARMA 16.5.2006 88051011000022 9 BOI 2007-08 1058000 VRINDAWAN ISHWARLAL 28.9.2006 88151011000028 4 BOI 2007-08 8,80,000 ASHARAM 16.5.2006 88051011000023 0 BOI 2007-08 462000 MANSINGH CHOUHAN IT(SS) 235/IND/2014 3 SHRI NATHULAL 2007-08 1,10,000 DURING THE COURSE OF SEARCH PROCEEDINGS AND ASSESSMEN T PROCEEDINGS IT WAS FOUND THAT MAANSINGH CHOUHAN IS A MAN OF NO MEANS. AS PER HIS STATEMENT DURING THE SEARCH HE EXPLAINED THAT HE HAS RECEIVED THE LOAN FROM THE ABOV E PERSONS OF RS. 11349000/- IN CASH. LATER ON HE HAS EXPLAINED THAT HE HAS RECEIVED THE LOAN FROM THE ABOVE PERSONS BY CHEQUE. MAANSINGH CHOUHAN EXPLAINED THAT HE HAS AVAILED THIS UNSECURED LOAN TO PURCHASE THE AGRICULTURAL LAND AND OTHER PROPERTIES AND HE SUBMITTED THAT HE HAS RECEIVED THIS LOAN WITHOUT ANY SECURITY HUN DI. THEREFORE, THE INQUIRIES WERE CONDUCTED FROM VISHNU S/O SITARAM CHAUDHARY AND HE HAS ALSO STATED THAT MAANSINGH CHOUHAN HAS USED HIS NPOWER OF ATTORNEY TO OPERATE THE BANK ACCOUNT ALONG WITH OTHERS. SIMILARLY, NARENDRA BAPULAL CHOUHAN ALSO STATED THAT MAANSINGH CHOUHAN USED HIS NAME FOR THE TRANSACTION IN THE BANK AND MANSINGH CHOUHAN IT(SS) 235/IND/2014 4 SIMILARLY ALL THE INQUIRIES WERE MADE. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT MAANSINGH CHOUHAN HAS NOT BEEN ABLE TO PROVE THE GENUINENESS OF THE LOAN TAKEN BY HIM. THEREFORE, THE INVESTMENT IN THE PROPE RTY FOR THE ASSESSMENT YEAR 2007-08 WAS TREATED AS INCOME AND THE LOAN WAS TREATED AS HIS INCOME. THE MATTER CARRIED TO THE LEARNED CIT(A) AND THE LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS TAKEN A LEGAL GROUND THAT AS PER SECTION 53C OF THE ACT BEFORE ISSUING THE NOTICE TO THE ASSESSEE, THE SEARCH PARTY HAS NOT RECORDED ANY SATISFACTION. THERE WAS SEARCH AT THE PREMISES OF MRS. ROZINA KUMRAWAT AND IN THAT PREMISES TWO UNSIGNED CHEQUES WERE FOUND WHICH WERE RECOVERED UNDER THE SEARCH. THE CHEQUES WERE FOUND FROM MRS. ROZINA KUMRAWAT BELONGING TO THIRD PARTY WHO IS THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED MANSINGH CHOUHAN IT(SS) 235/IND/2014 5 THAT THE SEARCH WAS CONDUCTED AT THE PREMISES OF THIRD PARTY AND IF THE SEARCH IS CONDUCTED ON THE THIRD PARTY THEN THE ASSESSING OFFICER IS DUTY BOUND TO RECORD SATISF ACTION NOTE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER SECTION 153C NOTICE CAN BE ISSUED BY THE ASSE SSING OFFICER WHERE HE IS SATISFIED THAT DURING SEARCH OPERAT ION IN THE CASE OF OTHER PERSONS, MONEY, BULLION, JEWELLERY OR OTHER ARTICLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED PERTAINED TO OTHER PERSONS TO WHOM SUCH NOTICE U/S 1 53C OF THE ACT IS ISSUED AND AS PER SECTION 153C OF THE A CT IF ANY SEIZURE OF MONEY, JEWELLERY, BULLION AND OTHER ART ICLES, SECONDLY ANY MONEY, JEWELLERY, OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNTS SEIZED PERTAINED TO THE P ERSONS OTHER THAN AGAINST WHOM THE SEARCH WASA CARRIED OUT AND LASTLY THAT THE ASSESSING OFFICER IS SATISFIED THAT THE SAID MONEY, JEWELLERY AND OTHER ARTICLES OR THINGS OR BOO KS OF ACCOUNTS OR DOCUMENTS SEIZED PERTAINED TO PERSONS OTH ER MANSINGH CHOUHAN IT(SS) 235/IND/2014 6 THAN THE PERSONS AGAINST WHOM SUCH NOTICE IS ISSUED. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT CBDT CIRCULAR NO. 24/15 DATED 31 ST DECEMBER, 2015 HAS CLARIFIED THE ISSUE REGARDING SATISFACTION FOR THE PURPOSE OF S ECTION 158BD/BC OF THE ACT TO AVOID LITIGATION. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECISIO N OF THIS TRIBUNAL IN THE CASE OF ANAND STEEL; ITA NO. 133/IND/2013. MOREOVER, HE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CALCUTTA KNITWEARS IN CIVIL APPEAL NO. 3958 OF 2014 DATED 12.3.2014 WHER EIN THE PRINCIPLE HAS BEEN LAID DOWN THAT THE PURPOSE OF RECORDING SATISFACTION IS PRE-REQUISITE AND SATISFACTION NOTE MUST BE PREPARED BY THE ASSESSING OFFICER BEFORE HE TRANSMIKTS THE RECORD TO THE OTHER ASSESSING OFFICER WHO HAS JURISDICTION OVER SUCH OTHER PERSON U/S 158BD/BC . THEREFORE, IN THIS CASE DURING THE COURSE OF HEARING , THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THI S MANSINGH CHOUHAN IT(SS) 235/IND/2014 7 CASE THE ASSESSING OFFICER WHO HAS SEARCHED IN THE PREMISES OF MRS. ROZINA KUMRAWAT ON 20.10.2008 HAS NO T RECORDED ANY SATISFACTION BEFORE HANDING OVER RECORD TO ANOTHER ASSESSING OFFICER WHO HAS JURISDICTION OVER T HE ASSESSEE. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSEE HAS REQUESTED THE ASSESSING OFFICER TO PROVID E THE COPY OF SATISFACTION RECORDED BY THE SEARCH PARTY FROM WHOM THE ALLEGED PAPERS WERE FOUND. THE LEARNED DR WAS GIVEN AMPLE OPPORTUNITY TO PROVIDE THE SAME. THE MATTE R WAS KEPT FOR HEARING ON 23.11.2016 TO CALL FOR THE RE CORD, THE SATISFACTION RECORDED BY THE SEARCH PARTY AND AGAIN TH E MATTER WAS ADJOURNED TO 30.11.2016 THEN AGAIN THE MATTER WAS ADJOURNED TO 21.12.2016 BUT THE LEARNED DR COULD NOT BRING ANY SATISFACTION BEFORE US. THEREFORE, WHEN THER E IS NO SATISFACTION, AS PER THE CBDT CIRCULAR, THE APPEAL MAY BE ALLOWED. MANSINGH CHOUHAN IT(SS) 235/IND/2014 8 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT SEARCH U/S 132 OF THE ACT WAS CONDUCTED AT THE PREMISE S OF MRS. ROZINA KUMRAWAT ON 20.10.2008.THE LOOSE PAPER NO. 1 TO 8 OF LPS/13 BESIDES OTHER LOOSE PAPERS SEIZED L PS-2 TO 23, SATISFACTION WAS RECORDED ON 17.7.2009 BY THE ASSESSING OFFICER BUT IT IS A FACT THAT NO INCRIMINATIN G DOCUMENTS WERE FOUND OR SEIZED RELATING TO ASSESSMENT UNDER APPEAL. THERE WAS NO REFERENCE OF ANY MATERIAL IN T HE ASSESSMENT ORDER COMPLETED U/S 153C OF THE ACT AND EV EN NO REFERENCE OF PERSONS WHEREFROM THE ALLEGED PAPERS WERE FOUND. THEREFORE, THERE WAS NO INCRIMINATING MATERIAL O R DOCUMENT. THEREFORE, THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT READ WITH SECTION 153C OF THE ACT IS NOT AS MANSINGH CHOUHAN IT(SS) 235/IND/2014 9 PER LAW. DURING THE COURSE OF HEARING, THE LEARNED DR WAS SPECIFICALLY ASKED TO PRODUCE THE SATISFACTION REGARDING SEARCH PARTY AS TO WHETHER THE ASSESSING OFFICER WHO HAS MADE THE SEARCH HAS RECORDED ANY SATISFACTION BEFORE TRANSMITTING THE RECORD TO THE OTHER ASSESSING OFFIC ER WHO HAS JURISDICTION OVER THE PERSON U/S 153C OF THE ACT . THE LEARNED DR SUBMITTED THAT THE ASSESSING OFFICER WHO H AS MADE THE ASSESSMENT ORDER HAS RECORDED SATISFACTION, BUT THE ASSESSING OFFICER WHO HAS SEARCHED, HAS NOT RECO RDED ANY SATISFACTION, THEREFORE, AS PER THE DECISION OF THE HON'BLE SUPREME COURT AND AS PER THE CBDT CIRCULAR NO. 24/2014 DATED 31 ST DECEMBER, 2015 IT IS HELD AS UNDER :- IN VIEW OF THE ABOVE, FILING OF APPEALS ON THE ISSUE OF RECORDING OF SATISFACTION NOTE SHOULD ALSO BE DE CIDED IN THE LIGHT OF THE ABOVE JUDGMENT. ACCORDINGLY, TH E BOARD HEREBY DIRECTS THAT PENDING LITIGATION WITH R EGARD TO RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C SHOULD BE WITHDRAWN/NOT PRESSED IF IT DOES NOT MEET THE GUIDELINES LAID DOWN BY THE APEX COURT. MANSINGH CHOUHAN IT(SS) 235/IND/2014 10 MOREOVER, WE HAVE ALSO DECIDED A SIMILAR ISSUE IN THE C ASE OF ISHAR OVERSEAS; IT(SS)A NOS.126 & 127/IND/2011 DATED 18.5.2016 WHEREIN IT WAS HELD AS UNDER :- 10. IN THE ABOVE DECISION, IT HAS BEEN HELD THAT E VEN WHEN THE ASSESSING OFFICER OF THE PERSON SEARCHED A ND THE OTHER PERSON IS COMMON, THE ASSESSING OFFICER O F THE PERSON SEARCHED HAS TO NECESSARILY FORM A SATISFACT ION THAT THE ITEM REFERRED TO IN SEC. 153C BELONGS OR B ELONG TO A PERSON OTHER THAN THE PERSON SEARCHED. APPARENTLY , IN THE PRESENT APPEALS, NO SUCH SATISFACTION BY THE ASSESSING OFFICER HAS BEEN FOUND RECORDED. BEFORE U S, THE LD. DRS VEHEMENTLY ARGUED THAT THE APPRAISAL RE PORT IS PREPARED BY ADIT WHO IS AN ASSESSING OFFICER AND IF IN THE APPRAISAL REPORT, A RECORDING REGARDING A PARTI CULAR DOCUMENT BELONGING TO A THIRD PERSON OTHER THAN PER SON SEARCHED IS GIVEN THEN IT SHOULD TANTAMOUNT TO RECO RDING OF THE SATISFACTION BY THE PERSON SEARCHED. THE LD. DRS HAVE NOT CONTROVERTED THE SUBMISSION OF THE LD. AR OF THE ASSESSEE THAT IN 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 VIEW, ANY RECORDING IN AN APPRAISAL REPO RT CANNOT SUBSTITUTE THE LEGAL REQUIREMENT OF RECORDIN G OF SATISFACTION IN THE CASE OF PERSONS SEARCHED. SUCH VIEW WAS ALSO HELD BY INDORE BENCH IN THE CASE OF ACIT V S. CHIRCHIND HYDRO LTD. (2011) 17 ITJ 197 (INDORE). WE HAVE ALSO TAKEN NOTE OF A CIRCULAR NO.24/2015 DATED 31.12.2015, ISSUED BY THE CBDT, IN WHICH, THE BOARD , FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN CASE OF M/S. CALCUTTA KNITWEARS (CIVIL APPEAL NO. 3958 O F 2014 DATED 12.3.2014), HAS DIRECTED THAT WHERE THE SATIS FACTION BY THE ASSESSING OFFICER OF THE PERSON SEARCHED AND OTHER PERSON IS NOT FOUND RECORDED, THE DEPARTMENT SHOULD NOT PRESS THAT MATTER IN APPEAL. THUS, KEEPI NG IN VIEW RIVAL SUBMISSIONS IN LIGHT OF JUDICIAL PRONOUN CEMENTS MANSINGH CHOUHAN IT(SS) 235/IND/2014 11 AND PARTICULARLY THE DECISION OF HONBLE JURISDICTI ONAL HIGH COURT OF M.P. (SUPRA) AND CBDT CIRCULAR (SUPRA), ASSESSMENTS IN THE CASES OF BOTH THE PRESENT ASSESS EES ARE HELD AS ILLEGAL AND VOID-AB-INITIO. 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 CASE OF BHATIA COAL SALES LTD., THE GROUNDS RAISED BY THE ASSESSEES RELATING TO APPLICABILITY OF SECTI ON 153C ARE ALLOWED. WE, THEREFORE, FOLLOWING THE ABOVE ORDER, HOLD THAT SATISFACTION WAS RECORDED IN THE CASE OF THE ASSESSEE, THEREFORE, WE ALLOW THE GROUNDS OF APPEAL OF THE ASSESS EE. 6. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. A S WE HAVE ALLOWED THIS ISSUE, THEREFORE, WE HAVE NOT DEALT W ITH THE OTHER ISSUES ON MERIT. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 10 TH JANUARY, 2017. SD/- SD/- (..) ( . .) (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER JU DICIAL MEMBER DATED: 10.1.2017 DN/