M/s Madeeha Enterprises., Hospet. V. The Assistant Commissioner of Income Tax, Central Circle-2, Belagavi., Belgaum

ITSSA 91/PAN/2016

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3100 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIRAJ Y V
• Assessee Lawyers: SHRINIVAS NAYAK
• Keywords: Document seized; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K.BANSAL, HON'BLE ACCOUNTANT MEMBER SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER IT (SS) A NO. 91 TO 96 /PAN/201 6 (ASST. YEAR: 2005 06 TO 201 0 1 1 ) M/S. MADEEHA ENTERPRISES #1622, MADEEHA HOUSE KHB COLONY, JP NAGAR HOSPET KARNATAKA 583201 PAN NO. AALFM 5919 R V. ACIT, CENTRAL CIRCLE 2, SHROFF CO L ONY, SHRADDHA B UILDING , KHANAPUR ROAD, TILAKWADI , BELGAUM KARNATAKA (APPELLANT) (RESPONDENT) IT (SS) A NO. 97 TO 101/PAN/2016 (ASST. YEAR : 2005 06 TO 20 09 1 0 ) D CIT, CENTRAL CIRCLE , SHRADDHA B UILDING , SARAF COLONY KHANAPUR ROAD, TILAKWADI, BELGA VI KARNATAKA V. M/S. MADEEHA ENTERPRISES #1622, MADEEHA HOUSE KHB COLONY, JP NAGAR HOSPET - 583201 PAN NO. AALFM 5919 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRINIVAS NAYAK CA DEPARTMENT BY : SHRI RAVIRAJ Y.V - D R DATE OF HEARING : 2 9 /03/2017 . DATE OF PRONOUNCEMENT : 2 9 /03/2017 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER 1 . ITA .NO. 91 TO 96 /PAN/2016 ARE APPEAL S FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) IN APPEAL NO. 2 IT (SS) A NO. 9 1 TO 101 /PAN/2017 M/S. MADEEHA ENTERPRISES ITA.NO. 133/CIT(A) VI /BNG/2013 14 & ITA.NO.239/CIT(A) - 2/PNJ/2015 16 DATED 27.10.2016, ITA.NO.134/CIT(A) VI /BNG/20 13 - 14 & ITA.NO.240 / CIT (A) - 2 / PNJ / 2015 16 DATED 27.10.2016, ITA.NO.135/CIT(A) VI /BNG/20 13 - 14 & ITA.NO.241/CIT(A) - 2/PNJ/2015 16 DATED 27.10.2016, ITA.NO.136/CIT(A) VI/BN G/20 13 - 14 & ITA.NO.242 / CIT(A) - 2 / PNJ / 2015 16 DATED 27.10.2016, ITA.NO.137/CIT(A) VI /BNG/20 13 - 14 & ITA.NO.243/CIT(A) - 2/PNJ/2015 16 DATED 27.10.2016 AND ITA.NO.138/CIT(A) VI /BNG/2013 - 14 & ITA.NO.244 / CIT(A) - 2 / PNJ / 2015 16 DATED 27.10.2016 FOR THE ASSESSMENT YEAR S FROM 2005 06 TO 2010 - 11 RESPECTIVELY. THE APPEALS FROM ITA.NO. 97 TO 101 ARE APPEALS FILED BY THE REVENUE AGAI N ST THE ORDER OF THE LEARNED CIT(A) IN APPEAL NO ITA.NO.133/CIT(A) VI/BNG/2013 14 & ITA.N O.239/CIT(A) - 2/PNJ/2015 16 DATED 27.10.2016, ITA.NO.134/CIT(A) VI/BNG/2013 - 14 & ITA.NO.240 / CIT (A) 2 / PNJ / 2015 16 DATED 27.10.2016, ITA.NO.135/CIT(A) VI /BNG/2013 - 14 & ITA.NO.241/CIT(A) - 2/PNJ/2015 16 DATED 27.10.2016, ITA.NO.136/CIT(A) VI/BNG/201 3 - 14 & ITA.NO.242 / CIT(A) 2 / PNJ / 2015 16 DATED 27.10.2016 AND ITA.NO.137/CIT(A) VI /BNG/2013 - 14 & ITA.NO.243/CIT(A) - 2/PNJ/2015 16 DATED 27.10.2016 FOR THE ASSESSMENT YEAR 2005 06 TO 2009 10 RESPECTIVELY . 2 . AS THE ISSUE IN ALL THE APPEALS ARE COMMON THE SAME ARE BEING DISPOSED OF BY THIS COMMON ORDER. 3 . SHRI SHRINIVAS NAYAK, CA REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI RAVIRAJ Y.V REPRESENT E D ON BEHALF OF THE REVENUE. 4 . AT THE TIME OF HEARING LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CHALLENGED THE ISSUANCE OF NOTICE UNDER SECTION 153C OF THE ACT. IT WAS A SUBMISSION THAT NO 3 IT (SS) A NO. 9 1 TO 101 /PAN/2017 M/S. MADEEHA ENTERPRISES SATISFACTION HAS BEEN RECORDED IN THE CASE OF THE ASSESSE E BEFORE THE ISSUANCE OF THE NOTICE UNDER SECTION 153C OF THE ACT. IT WAS A SUBMISSION THAT THERE WAS SEARCH INITIATED IN THE CASE OF SHRI M.A . ZAHID AND SHRI M.A. NAYEEM . HOWEVER THE ADDRESS GIVEN FOR THE SEARCH BELONGED TO THEIR BROTHER M.A.ALEEM WHO W AS THE PARTNER IN THE ASSESSEE FIRM. IT WAS A SUBMISSION THAT NO SEARCH HAS BEEN CONDUCTED IN THE CASE OF SHRI M.A.ALEEM AND HIS WIFE SMT FAHMIDA ALEEM WHO ARE THE PARTNERS OF THE ASSESSEE FIRM. ON SPECIFIC QU ERY BY THE BENCH TO THE LEARNED DEPARTMENTAL REPRESENTATIVE AS TO WHETHER THERE WAS ANY SEARCH WARRANT IN THE NAME OF SHRI M.A.ALEEM AND SMT FAHMIDA ALEEM, IT WAS FAIRLY ACCEPTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THERE WAS NO SEARCH WARRANT. IT WAS FURTHER SUBMISSION THAT THE SEARCH WARRANT WAS IN THE NAME OF SHRI M.A . ZAHID AND SHRI M.A. NAYEEM WHO ARE THE BROTHERS OF SHRI M.A.ALEEM AND THE PREMISES SOUGHT TO BE SEARCHED WAS MADEEHA HOUSE , NO . 1662, KHB COLONY , JP NAG A R , HOSPET WHICH WAS THE RES IDENCE OF SHRI M.A.ALEEM AND SMT FAHMIDA ALEEM WHO ARE THE PARTNERS OF M/S. MAD EEHA ENTERPRISES. 5 . IT WAS A SUBMISSION BY THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT IN THE COURSE OF THE SEARCH AT THE PREMISES OF MADEEH A HOUSE NO INCRIMINATING EVIDENCE RELATING TO SHRI M.A. ZAHID AND SHRI M.A. NAYEEM WAS FOUND. THIS WAS ALSO ACCEPTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IT WAS FURTHER SUBMISSION BY THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT IN THE CASE O F THE SEARCH OF SHRI M.A. ZAHID AND SHRI M.A. NAYEEM NO INCRIMINATING EVIDENCE AGAINST ASSESSEE FIRM WAS FOUND RELATING TO THE ASSESSEE. IT WAS A SUBMISSION THAT AT THE PREMISES SEARCHED THE BOOKS OF ACCOUNTS OF M/S. MAD EEHA ENTERPRISES , THE ASSESSEE HERE IN WAS FOUND AS THE PREMISES BELONGED TO THE PARTNERS OF THE ASSESSEE FIRM. IT WAS A SUBMISSION THAT NO SATISFACTION HAS BEEN RECOR D ED FOR THE PURPOSE OF ISSUES NOTICE UNDER SECTION 153 C OF THE ACT. TO THIS THE LEARNED 4 IT (SS) A NO. 9 1 TO 101 /PAN/2017 M/S. MADEEHA ENTERPRISES DEPARTMENTAL REPRESENTATIVE PLACED B EFORE U S COPY OF THE ORDER SHEET ENTRY DATED 12.03.2012 IN THE CASE OF M/S. MAD EEH ENTERPRISES FOR THE ASSESSMENT YEAR 2005 06 WHICH IS EXTRACTED HEREIN BELOW: - ORDER SHEET NAME OF THE ASSESSEE : M/S. MADEEHA ENTERPRISES PAN : AALFM 5919 R ASSESSMENT YEAR : 2005 06 12.03.2012 SIR, IN THE CASE OF SRI M. A. ZAHID & SRI M. A. NAYEEM, A SEARCH U/S. 132 HAS BEEN CONDUCTED ON 22.02.2011 AND IN CONNECTION WITH THE SAME, THE PREMISES OF SRI M. A. ALEEM & SMT FAHMIDA ALEEM, PARTNERS OF M/S MADEEHA ENTERPRISES 'MADEEHA HOUSE', NO. 1622, KHB COLONY, J P NAGAR, HOSPET AND BUSINESS PREMISES OF M/S MADEEHA ENTERPRISES, SHOP NO.B/2, GROUND FLOOR, LAL BAHADUR SHASHTRI COMPLEX, BANGALORE ROAD, BELLARY WERE ALSO SEARCHED AND DOCUMENTS / ASSETS WERE S EIZED AS PER INVENTORIES A/MAA AND A/ME ANNEXED TO THE PANCHANAMA DATED 22.02.2011 RESPECTIVELY. THE ABOVE CASE HAS BEEN NOTIFIED TO THIS CIRCLE VIDE CIT, GULBARGA'S F.NO.90/NOTIFICATION/CIT - GLB/2011 - 12 DATED 28.07.2011. HENCE, A NOTICE CALLING FOR THE RET URNS OF INCOME FOR THE ASST YEAR 2005 - 06 TO 2010 - 11 AS ENVISAGED U/S. 153C ISSUED. PUT UP FOR SIGNATURE SD/ - DCIT, CC - 2, BGM 6 . IT WAS SUBMISSION BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE RE CORDING IS ONLY TO THIS EXTENT A S RECORDED IN THE ORDER SHEET. 5 IT (SS) A NO. 9 1 TO 101 /PAN/2017 M/S. MADEEHA ENTERPRISES THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT, THE RECORD IN THE ORDER SHEET IS TO BE CONSIDERED AS THE RECORDING OF THE SATISFACTION. 7 . IN REPLY LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DR E W OUR ATTENTION TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSI FOODS PVT. LTD. REPORTED IN 367 ITR 112 TO SUBMIT THAT THE ORDER SHEET NOTING AS EXTRACTED ABOVE DID NOT CONSTITUTE RECORDING OF THE SATISFACTION. HE FURTHER PLACED RELI ANCE OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF KARNATAKA IN THE CASE OF ARIHANT ALUMINIUM CORPORATION AS REPORTED IN [ 2016 ] TAXMA NN.COM 286 (KARNATAKA) AS ALSO THE CIRCULAR ISSUED BY THE CBDT IN CIRCULAR NO . 24/2015 DATED 31.12.15. IT WAS A SUBMISSION THAT AS PER THE DECISION OF THE HONBLE KARNATAKA HIGH COURT , RECORDING OF SATISFACTION FOR THE EXERCISE OF POWER UNDER SECTION 153C IS A MANDATORY REQUIREMENT AND CANNOT BE GIVEN A GO BY EITHER AT THE STAGE OF INITIATION OR DURING THE COU RSE OF THE ASSESSMENT OR AT THE CONCLUSION OF THE ASSESSMENT. IT WAS FURTHER SUBMISSION THAT THE RECORDING OF SATISFACTION WAS TO BE MADE BEFORE HE TRANSMITS RECORDS TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE OTHER PERSON . IT WAS SUBMISSION THA T AS PER THE CIRCULAR ISSUED BY THE CBDT IN PARA 2 PART (B) THE SATISFACTION NOTE WAS TO BE PREPARED AT THE TIME OF OR ALONG WITH THE INITIATION OF THE PROCEEDINGS AGAINST T HE SEARCHED PERSON, OR IN THE COURSE OF THE ASSESSMENT PROCEEDINGS OR IMMEDIATELY A FTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED THE CASE OF THE SEARCH ED PERSON. IT WAS A SUBMISSION THAT THE SAID CIRCULAR ISSUED BY THE CBDT RELATED TO 153BD / 153C PROCEEDINGS . IT WAS A SUBMISSION THAT AS PER THE CIRCULAR IF THE SATISFACTION HAS NOT BEEN RECORDED AS PER THE GUIDELINES LAID DOWN BY THE APEX COURT IN THE CASE OF CTIT VS CALCUTTA KNITWEARS REPORTED IN 362 ITR 673 (S C) THEN PENDING LITIGATION WITH REGARD TO THE RECORDING OF THE SATISFACTION WERE TO BE WITHDRAW N / NOT PRESSED. 6 IT (SS) A NO. 9 1 TO 101 /PAN/2017 M/S. MADEEHA ENTERPRISES 8 . IT WAS A SUBMISSION BY THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT A PERUSAL OF THE ORDER SHEET NOTING EXTRACT CLEARLY SHOWS THAT THE SAME WAS NOT IN THE NATURE OF THE SATISFACTION. IT WAS A FURTHER SUBMISSION THAT A PERU SAL OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSI FOODS PVT. LTD. , THE HONBLE DELHI HIGH COURT HAS CATEGORICALLY HELD THAT THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR THE BASIS FOR THE CONCLUSION THAT THE ASSESSING OFFI CER OF THE PERSON IN RESPECT OF WHOM THE SEARCH WAS CONDUCTED IS SATISFIED THAT THE SEIZED DOCUMENTS BELONGED TO ANOTHER PERSON. IT WAS SUBMISSION THAT A PERUSAL OF THE CONTENTS OF THE SATISFACTION NOTE AS PROVIDED BY THE LEARNED DEPARTMENTAL REPRESENTATI VE NO SATISFACTION AS REQUIRED UNDER SECTION 153C COULD BE DISCERNED AND CONSEQUENTLY AS THE VERY FIRST STEP PRIOR TO THE ISSUE OF THE NOTICE UNDER SECTION 153 C HAVING NOT BEEN FULFILLED THE NOTICE UNDER SECTION 153C WAS LIABLE TO BE QUASHED. 9 . IN REPLY LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESS ING OFFICER AND CIT(A). IT WAS A SUBMISSION THAT ORDER SHEET NOTING WAS LIABLE TO BE CONSIDERED AS SATISFACTION NOTE. IN REPLY TO SPECIFIC QUARRY AS TO WHETHER THERE IS ANY SATISFACTION NOTE R ECORDING IN THE CASE OF THE PERSONS SEARCHED. IT WAS REPLIED THAT THE ORDER SHEET NOTING AS SUBMITTED WAS THE SATISFACTION NOTE AVAILABLE. 10 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET, A PERUSAL OF THE ORDER SHEET NOTE AS SUBMITTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AND EXTRACT ABOVE CLEARLY SHOWS THAT T HE ORDER SHEET NOTING IS FROM THE FILE OF THE ASSESSEE. THERE IS NO ORDER SHEET NOTING PRODUCED BEFORE U S FROM THE FILE OF THE SEARCHED PERSONS NAMELY SHRI M.A. ZAHID AND SHRI M.A. NAYEEM TO SHOW ANY SATISFACTION FOR THE PURPOSE OF TRANSFERRING ANY RECORDS TO THE ASSESSING OFFICER OF 7 IT (SS) A NO. 9 1 TO 101 /PAN/2017 M/S. MADEEHA ENTERPRISES THE ASSESSEE. A PERUSAL OF THE ORDER SHEET ALSO CLEARLY SHOWS THAT T HE SAME IS NOT A RECORDING O F SATISFACTION IN SO FAR AS THERE IS NO IDENTIFICATION AS WHAT IS THE NATURE OF THE DOCUMENTS SEIZED OR WHAT IS THE UNDISCLOSED ASSETS OR INCOME WHICH IS FOUND AS BEL ONGED TO THE ASSESSEE. 11 . THE ASSESSMENT ORDER WAS ALSO PERUSED . THE ASSESSMENT ORDER ALSO DOES NOT REFER TO ANY OF THE SEIZED MATERIALS. HOWEVER IN PAGE 2 PARA 4 FOR THE ASSESSMENT YEAR 2005 - 06 REFERENCE IS BEING MADE TO THE AUDIT ED PROFIT & LOSS ACCOUNT OF THE ASSESSEE FIRM FOR THE ASSESSMENT YEAR 2007 08, 2008 09, 2009 10, 2010 11 . ADMITTEDLY T HESE ARE AUDITED PROFIT & LOSS ACCOUNTS AND WOULD VERY MUCH BE AVAILABLE WITH THE R EGULAR RETURNS FILED BY THE ASSESSEE. THIS BEING SO IT CANNOT BE SAID THA T THE ORDER SHEET NOTING AS HAS BEEN PRODUCED BEFORE U S BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AN D EXTRACT ABOVE CAN IN ANY MANNER BE CONSIDERED AS THE SATISFACTION NOTE IN SO FAR AS THE SAID NOTE DOES NOT DIS CLOSE THE REASONS OR THE BASIS FOR THE CONCLUSION THAT THE ASSESSING OFFICER OF THE PERSON IN RESPECT OF WHOM THE SEARCH WAS CO NDUCTED IS SATISFIED THAT THE SEIZED DOCUMENTS BELONGS TO THE ASSESSEE. 12 . FURTHER A PERUSAL OF THE CIRCULAR ISSUED BY THE CBDT REFERRED TO (SUPRA) WHEN APPLIED TO THE PRESENT CASE, SHOWS THAT THE MANDATORY REQUIREMENT OF THE RECORDING OF THE SATISFACTION NOTE FOR THE EXERCISE OF THE POWER UNDER SECTION 153C HAS NOT BEEN COMPLIED WITH EITHER AT THE TIME OF THE INSTITUTION OF THE PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 153A OR IN THE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 153A IN TH E CASE OF THE SEARCHED PERSON OR IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS WER E COMPLETED UNDER SECTION 153A OF THE SEARCHED PERSON. THOUGH IT HAS BEEN SUBMITTED THAT, THE ASSESSING OFFICER OF BOTH THE SEARCHED PERSON AND THE ASSE SSEE ARE THE 8 IT (SS) A NO. 9 1 TO 101 /PAN/2017 M/S. MADEEHA ENTERPRISES SAME, S TILL IN VIEW OF THE CIRCULAR ISSUED BY THE CBDT AS REQUISITE SATISFACTION HAS NOT BEEN RECORDED, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSI FOODS PVT. LTD. REFERRED (SUPRA), AS ALSO FOLLOWING THE PRINCIPLE S LAID DOWN BY THE HONBLE JURISDICTION AL KARNAT AKA HIGH COURT IN THE CASE OF ARIHANT ALUMINIUM CORPORATION AND THE CIRCULAR ISSUED BY THE CBDT IN CIRCULAR NO . 24/2015 DATED 31.12.2015, THE NOTICES ISSUED ON THE ASSESSEE UNDER SECTION 153C AND CONSEQUENTLY ASSE SS MENTS COMPLETED UNDER SECTION 143 (3) READ WITH SECTION 153C STANDS ANNULLED. IN THE CIRCUMSTANCE S APPEAL S FILED BY THE ASSESS EE STANDS ALLOWED AND THE APPEAL S FILED BY THE REVENUE STANDS DISMISSED. 13 . IN THE RESULT, APPEALS FILED BY THE ASSESS EE STAN D ALLOWED AND THE APPEALS FILED BY THE REVENUE S TAND DISMISSED . ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 2 9 TH DAY OF MARCH, 2017 AT GOA . SD/ - SD/ - (P.K.BANSAL) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 9 TH MARCH, 2017 . VSSGB / - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A), 5 . THE D.R. 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI