ACIT, C.C. 3, , JAIPUR V. ARUN AGARWAL, JAIPUR

MA 25/JPR/2023

AI Insights

The case involves the ACIT, Central Circle-3, Jaipur, as the appellant, and Shri Arun Agarwal, the respondent, concerning the assessment years 2009-10, 2010-11, and 2011-12. The Revenue filed Miscellaneous Applications against the common order of the ITAT, Jaipur Bench, which had quashed the orders of the CIT (A) and AO. The core issue was whether the AO had jurisdiction to record a satisfaction note prior to assuming jurisdiction over the assessee's case for the specified assessment years. The Tribunal's earlier decision was based on the finding that the satisfaction note was recorded without jurisdiction, leading to the quashing of the subsequent assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132462 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-06-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 27-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Rectification of order; Document seized; Accommodation entries; Documents seized
• Section: 69; 148; 132; 153A; 143(2); 13; 153C

Judgement Text

vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR JhlaanhixkslkbZ]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM Miscellaneous Application No.25 to 27/JP/2023 (Arising out of vk;djvihy la-@ITA No. 344 TO 346/JP/2022) fu/kZkj.ko"kZ@AssessmentYears :2009-10, 2010-11& 2011-12 ACIT C.C. 3 Jaipur cuke Vs. Shri Arun Agarwal Mansarovar, RameshwaramParisar Sitabari, Tonk Road, Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABYPA 8137 F vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksjls@Revenue by: Shri A.S. Nehra, Addl. CIT-DR fu/kZkfjrh dh vksjls@Assesseeby : Shri Mukesh Khandelwal, CA lquokbZ dh rkjh[k@Date of Hearing : /06/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 09 /08/2023 vkns'k@ORDER PER BENCH: The Revenue has filed three Miscellaneous Applications against common order of ITAT, Jaipur Bench dated 22-11-2022 for rectification of mistake u/s 254(2) of the I.T.Act by praying therein as under:- ‘’1. The Hon'ble ITAT vide order dated 22.11.2022 has quashed the order of CIT (A) and AO stating that Ld. CIT (A) is not justified in sustaining the action of the AO in holding that the AO had recorded the satisfaction note prior to assuming the jurisdiction over the case of the assessee. 2 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR 2. In this case, original return of income was filed by assessee 03.11.2009, declaring total income at Rs. 1,31,330/- for the Assessment Year 2009-10. The case of assessee was selected for scrutiny u/s 148 of the income tax Act, 1961. Accordingly, the assessment u/s 153C r.w.s. 143 (3) of the Income tax Act, 1961 was completed on 31.12.2019 and income was assessed at Rs. 1,60,17,270/-. Thereafter, a search was conducted against the assessee group-Swaroop Narain Shiv Narain& Kumawat Group u/s 132 (1) of the Act on 28.09.2017. During the course of search, 13 highly incriminating papers were found from the bedroom of Sh. Baldeep Goyal situated at C-42, Lajpat Marg, C-Scheme, Jaipur which were seized as Page nos. 11 to 23 of Exhibit- 2. The printed papers have details of loans from various entities mainly Kolkata based companies with time period mentioned and interest amounts calculated. The hand written pages are working of the above loans and payments to RIICO by 'A' (Sh. Arun Agarwal) and by 'B' (Sh. Baldeep Goyal). Separate BG A/c (Sh. Baldeep Goyal Account) is also there in handwritten papers. 3. The entries of these papers (handwritten and printed) corroborate each other. The factual position is that a plot in Pratap Nagar, Tonk Road, Jaipur was purchased in auction from Rajasthan Housing Board (RHB) by a company M/s Aditya Propcon Pvt. Ltd. Sh. Baldeep Goyal and Sh. Arun Agarwal both are directors in the company. This plot was purchased for a sale consideration price of Rs. 26.11 Crore from RHB M/s Aditya Propcon Pvt. Ltd. has taken unsecured loans from Kolkata based various entities. This unsecured loan was taken in various assessment years. Noting in Exhibit-2 makes it clear that cash was paid by Sh. Baldeep Goyal and Sh. Arun Agarwal to Kolkata based entities and same was received back in the form of unsecured loan in M/s Aditya Propcon Pvt. Ltd. and from this unsecured loan, the loan was repaid to RIICO. PageNos. 11 and 12 reflect that total cash of Rs. 7,88,80,000/- was paid by Sh. Arun Agarwal. These papers reflect that entries have been taken in M/s Aditya Propcon Pvt. Ltd. from various parties (mostly Kolkata Companies) for which cash has been paid by Sh. Baldeep Goyal and Sh. Arun Agarwal. On perusal of these entries, it was also found that these pages also contain some of the entries which pertain to period beyond six years from 3 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR assessment year relevant to previous year in which search was conducted. 4. On this basis, the AO initiated action against the assessee by recording satisfaction note on 13.12.2019 for opening the case of the assessee u/s 153C and consequently on the basis of the seized material, the AO issued notice under section 153C calling upon the assessee to file returns for assessment years in question. Assessee filed his return declaring certain taxable income. The AO completed the assessment u/s 153C r.w.s. 143(3), by making various additions to the appellant's income and framed the assessment u/s 153C of the Act. additions on account of unexplained expenditure u/s 69 of the Income Tax Act, 1961 for A.Y. 2009- 10 to 2011-12. 5. Against the order of AO, assessee has filed appeal before the Ld. CIT(A) which were disposed off by passing order dt. 10.08.2022 wherein appeal of the assessee have been dismissed. 6. Aggrieved by the order of the Ld. CIT(A), the assessee has filed appeal before the Hon'ble ITAT. Thereafter, The Hon'ble ITAT vide order dated 22.11.2022 has quashed the order of CIT(A) and AO stating that Ld. CIT(A) is not justified in sustaining the action of the AO in holding that the AO had recorded the satisfaction note prior to assuming the jurisdiction over the case of the assessee. 7. The Hon'ble ITAT, Jaipur has quashed the order of CIT (A) & AO without appreciating the following facts & legal position: a. The PAN of the present assessee was centralised to Dy./Asstt. CIT, Central Circle-3, Jaipur vide order u/s 127 dated 02.09.2019 passed by the worthy Pr. CIT-2, Jaipur. Further, it was contended that satisfaction note as prepared by the AO was obtained and on perusal of the aforesaid note prepared by the AO, the Ld AR of the assessee contended that the same was prepared prior to the date of the case being transferred to the AO. Accordingly, the Ld. AR argued that on the date of recording such satisfaction, the Ld. AO did not have any jurisdiction over the case of the assessee and hence the satisfaction note so prepared in a scrap document and could not have been relied by the AO for proceeding further in the matter. 4 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR b. As regards, the aforesaid contention of the Ld. AR of the assessee, it is to submit that thesatisfaction note was prepared by the AO on 13.12.2019 for the AYS 2008-09 to 2011-12 (Copy enclosed as Annexure-B) whereas the satisfaction note referred by the Ld. AR of the appellant pertains to AYS 2012-13 to 2018-19. Therefore, it is clear that the AO has rightly prepared the satisfaction note in the case of the assessee for the year under consideration after receiving the case on transfer vide order dt. 02.09.2019 passed by the Hon'ble Pr. CIT-2, Jaipur. It is further observed that the notice u/s 153C of the Act for the year under consideration was issued on 16.12.2019 1.e. after having jurisdiction over the case, in compliance to which the return of income was e- filed by the assessee on 17.12.2019 declaring a total income of Rs. NIL. Thus, Id. ITAT has overlooked the above facts and is not right in accepting the appeal of the assessee that AO had no jurisdiction at the time of initiating the proceedings u/s 153C of the Act. c. The Hon'ble 17AT has passed combined order for AY 2009-10 to AY 2011-12 AY 2013-14 and quashed order of AO as well as Ld. CIT (A) for all the AYS by holding that the AO did not have jurisdiction to assess the case, despite of the facts mentioned above that satisfaction note vas prepared notice u/s 1530 of the IT Act, 1961 was issued by the AO after having jurisdiction over the case as per the IT Act & IT Rules. The Hon'ble TAT has quashed theorder passed by the AO on technical ground ignoring the vital fact that assessee has not even demanded the same in Ground of appeals for the year under consideration. d. Further, it is pertinent to mention here that for the year under consideration, assessee has neither in ground of appeal before the appellate authorities (CIT(A) & ITAT) nor during the assessment proceedings raised the issue that the Assessing Officer had recorded the satisfaction note prior to assuming the jurisdiction over the case of the assessee but Hon'ble ITAT has decided the appeal in favour of the assessee. Hon'ble ITAT has erred in passing a combined order for the A.Y. 2009-10 to 2011-12 2013-14 giving relief to the assessee by holding that the AO did not have jurisdiction to assess the case ignoring the 5 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR vital fact that the facts are not similar for the A.Y. 2009-10 to 2011-12 with A.Y. 2013-14, particularly when the jurisdiction order u/s 127 assigning the jurisdictions to the AO, the DCIT, Central Circle-3, Jaipur was passed on 02.09.2019 and the satisfaction note for A.Ys 2009-10, 2010-11 & 2011-12 was recorded on 13.12.2019. 2.1 It is noteworthy to mention in all the Misc. Applications that the grounds raised by the Department are almost same except the amount in declaration of total income and assessed income. Therefore, we are taking up the grounds of Misc. Application for the assessment year 2009-10 for adjudication and the decision thereupon shall apply mutatis mutandis in other Misc. applications of the Department. 2.2 On the other hand, the ld. AR of the assessee filed the following written submission countering the points raised by the Department and therefore, further submitted that the Departments wants to get the ITAT order (supra) reviewed in the garb of Misc. Applications as the Misc. Applications do not cover merit because of the reason that the ITAT Bench has very elaborately discussed the issue in its appeal order dated 22-11-2022. ‘’The above three appeals along with appeal no. 347/JPR/2022 were decided by a composite order dated 22.11.2022 wherein lead case was taken for the AY 2013-14 and the same was decided in favour of the assessee on the ground that no valid satisfaction note was prepared by the ld. AO for proceeding against the assessee u/s 153C and the assessment order as well as order of the Ld. CIT (A) were quashed. Same ground has been applied by the Hon`ble Bench for allowing the appeals of the assessee for the years for which the ld. AO has filed instant MAs. The contention of the ld. AO is that AY 2013-14 was covered in the period of six years prior to the year of search whereas the Ays covered in these MAs were covered in the relevant Assessment Years being prior to six years from the year of search and hence he 6 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR has filed the Miscellaneous Applications on the ground that for the AY 2009-10 to 2011- 12 proper satisfaction had been recorded by the ld. AO prior to issue of notice u/s 153C and hence the orders deserves to be recalled. The assessee wishes to submit as under :- 1. In this case the ld. AO had recorded first satisfaction note on 01.08.2019 (APB 17) for proceeding against the assessee for AY 2012-13 to 2018-19. In this satisfaction note she states that the assessee had made unaccounted payment of Rs. 7,88,80,000 for accommodation entries from Kolkata Based companies in the name of Aditya Propcon P Ltd. Thereafter another satisfaction note dated 13.12.2019 (APB 18) was prepared wherein also allegation against the assessee was for unaccounted payment of Rs. 7,88,80,000. This satisfaction note had been prepared for proceeding against the assessee for AY 2008-09 to 2011-12. In consequence to both the satisfaction notes notices u/s 153C were issued and finally the income as per above satisfaction note was assessed as under :- AY 2009-10 Rs. 1,08,00,000 AY 2010-11 Rs. 3,28,00,000 AY 2011-12 Rs. 2,55,60,000 AY 2012-13 NIL AY 2013-14 Rs. 97,20,000 -------------------------- Total Rs. 7,88,80,000 -------------------------- A close look at both the satisfaction notes would reveal that both are having identical language (including the quantum of undisclosed income) except the fact that in the second satisfaction note a bifurcation is given about year wise undisclosed income, but the fact remains that total quantum of undisclosed income of the assessee in both the satisfaction note was exactly same and there was no new material with the ld. AO for recording second satisfaction note. The ld. AO was having jurisdiction over the cases of the searched person as well the assessee and she had all the documents with her and after complete analysis of the seized papers she worked out that the assessee had made undisclosed payment of Rs. 7,88,80,000 and while preparing the satisfaction note dated 01.08.2019 she had mentioned this quantum in the satisfaction note. Accordingly in the first instance she had issued notices u/s 153C for six years. During the assessment proceedings she again prapared a satisfaction note dated 13.12.2019 mentioning exactly the samenotings except some yearwise allocation for proceeding against the assessee for period beyond six years 7 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR from the year of search. The assessee has following objections to the contentions of the ld. AO in the present proceedings :- i. As per section 153C r.w.s. 153A there is no requirement of preparing multiple satisfaction notes for proceeding against the other person. Even for travelling beyond six AYs from the year of search there is no requirement of preparing any separate satisfaction note in 4 th proviso to section 153A. When in the first satisfaction note complete quantum of undisclosed payment by the assessee was recorded there was no requirement of preparing such second satisfaction note. Therefore the second satisfaction which has been made the basis for filing instant MAs is not a valid document. ii. It is quite apparent from both the satisfaction notes that that ld. AO did not come into possession of any other material except those considered for preparing first satisfaction note. In both the satisfaction notes reference to 13 highly incriminating papers found from the possession of Shri Baldep Goyal find place. In both the notes that undisclosed payment has been quantified at Rs. 7,88,80,000. Therefore it is the first satisfaction note which has to be considered as final document. iii. The Hon`ble ITAT had taken a conscious decision after examining both the satisfaction notes critically and assessing the same factually and legally and therefore there is no merit in the MA of the ld. AO and same deserves to be dismissed. The contention that the satisfaction note dated 13.12.2019 was prepared after getting charge over the case is without any basis as there is no legal standing of the second satisfaction note. 2. It is also further submitted that Provisions of section 153A gives a blanket permission to the AO to proceed against the search person or the other person (as per section 153C) for ten years prior to the year of search with a condition that for proceeding for four years beyond six years from the year of search, as prescribed in fourth proviso to section 153A that there has to be a concealment of over Rs. 50.00 Lacs for each year or in aggregate and that too has to be represented in the form of asset. When the first step taken u/s 153A for proceeding for six assessment years for which there is no special condition, have been held to be illegal subsequent step is liable to be quashed. It is something like when notice u/s 143(2) has been held to be illegal all consequent proceedings automatically goes. Just for theoretical purpose if in the case of assessment the ld. AO has referred the matter for valuation purpose to DVO and in the appellate proceedings the notice u/s 143(2) has been held to be illegal there can not be a demand that although notice u/s 143(2) was wrong but the addition made on the basis of report of DVO is correct as there is no illegality in referring the matter to DVO. Therefore there was no mistake on the part of the Hon`ble Bench to decide the matter for the AY 2009-10 to 2011-12 basing its decision on the order for the AY 2013-14. 8 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR 3. The claim of the ld. AO that there was no ground of appeal from the side of the assessee is not correct. Kindly peruse first ground of appeal in all these three appeals which runs as under :- ‘’That the ld. CIT (A) has erred in law and on facts in sustaining the action of the ld. AO in assuming jurisdiction to assessee the case of the assessee u/s 153C for the year in appeal, which is part of extended period of assessment in terms of explanation 1 to 4th proviso to section 153A, without appreciating that the assumption of jurisdiction for assessing the case of the appellant u/s 153C itself was not valid. Relief may please be allowed by quashing the assessment so framed. ‘’ In the above ground the assessee has challenged the action of the ld. AO in going for assessing the case of the assessee for relevant assessment years (i.e. period beyond six years from the year of search) in view of the fact that basic assumption for assessing the case u/s 153C was not valid. This ground exactly covers the situation dealt with by the Hon`ble ITAT in its order. Therefore the contention that no such ground was taken by the assessee before the Hon`ble Bench is incorrect and deserves to be ignored. Even otherwise it is sincerely submitted that the Hon`ble ITAT has vast powers to pass such orders as it may deem fit as per provisions of section 254(1) of the Income Tax Act, 1961. As the Hon`ble ITAT is a judicial forum and for imparting justice it may pass orders as it may deem fit considering the material available before it. Therefore this ground of the ld. AO is also without any merits and deserves to be quashed. It is therefore sincerely prayed that Miscellaneous Applications of the ld. AO may kindly be dismissed and oblige.’’ 2.3 We have heard both the parties and perused the submissions of respective parties (supra) and again meticulously gone through ITAT, Jaipur Bench order dated 22-11-2022. Now the Bench feels to dispose off the Misc. Applications of the Revenue by taking into consideration the counter reply of the assessee. The Bench also feels that it does not want to repeat the facts of the case which has already been enunciated in its order dates 22-11-2022. From the submissions raised by both the parties, the Bench noted that the AO recorded first satisfaction note on 01-08-2019 for initiating proceedings u/s 153C in the case of the assessee- Shri 9 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR Arun Agrwal (PAN ABYPA8137 F, MansaroverRameshwaram, Parisar, Sita Badi, Tonk Road, Jaipur for the assessment year 2012-13 to 2018-19 (APB 17) which pertain to unaccounted payments of Rs.7,88,0,000 from unaccounted entries from Kolkata Based Companies in the name of Aditya Propcon Pvt. Ltd. It is imperative to mention the first satisfaction note raised by the ACIT-CC-3, Jaipur as under: ‘’Satisfaction note for initiating proceedings u/s 153C in the case of Sh. Arun Agarwal (PAN-ABYPA8137F), MansaroverRameshwaram, Parisar Sita Badi, Tonk Road, Jaipur. During the course of the search, 13 highly incriminating papers were found from the bedroom of Shri Baldeep Goyal-situated. at C-42, Lajpat Marg, C-Scheme, Jalpur which were seized as Page Nos. 11-23 of Exhibit-2. The printed papers have details of loans from various entities mainly Kolkata based companies with time period mentioned and interest amounts calculated. The handwritten pages are, working of the above loans and payments to RIICO by 'A' (Sh. Arun Agarwal) and by 'B' (Sh. Baldeep Goyal, Separate BG A/c (Sh. Baldeep Goyal account) is also there in handwritten papers. The entries of these papers (handwritten and printed) corroborate each other. A plot in Pratap Nagar, Tonk Road, Jaipur was purchased in auction from Rajasthan Housing Board (RHB) by a company M/s Aditya Propcon Pvt. Ltd. Shri Baldeep Goyal and Shri Arun Agarwal both are directors in the company. This plot was purchased for a sale, consideration price of Rs.26.11. Cr. from RHB. M/s Aditya Propcon Pvt Ltd. has taken unsecured loans from Kolkata based various entities. This unsecured loan was taken in various AYS. The unsecured loan thus obtained by M/s Aditya Propcon Pvt. Ltd. was used to repay the loan. Noting in Exhibit-2 makes it clear that cash was paid by Shri Baldeep Goyal and Shri Arun Agarwal to Kolkata based entities and same was received back in the form of unsecured loan in M/s Aditya PropconP.Ltd. and from this unsecured loan RICO loan was repaid. Page Nos. 11 and 12 reflect that total cash of Rs 7,88,80,000/- was paid by Sh. Arun Agarwal, 10 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR These papers reflect that entries have been taken in M/s Aditya Propcon Pvt. Ltd. from various parties (mostly Kolkata Companies) for which cash has been paid by Shri Baldeep Goyal and Shri Arun Agarwal. Form the above seized documents/books of account, it is observed that these are relating to other person (e. Sh. Arun Agarwal (PAN-ABYPA8137F), MansaroverRameshwaram, Parisar Sita Badi, Tonk Road, Jaipur were found at the residence of Sh. Baldeep Goyal, C-42, LajpatMarg, C-Scheme, Jaipur. I am therefore, satisfied that Initiation of proceedings u/s 153C of the IT Act, 1961 is required in the case of Sh. Arun Agarwal (PAN- ASYPA8137F)ACIT. CC-3, JPR.’’ 2.31. It is also noted that second satisfaction note dated 13-12-2019 (PB 18-19) was prepared by the ACIT, CC-3, Jaipur wherein allegation was for unaccounted payment of Rs.7,88,80,000/- and this satisfaction note pertains to the Assessment Year 2008-09 to 2011-12 which is reproduced as under:- ‘’A.Ys. 2008-09 to 2011-12 PAN-ABYPA8137F Order Sheet Satisfaction note for initiating proceedings u/s 153C in the case of Sh. Arun Agarwal (PAN-ABYPAS137F), MansaroverRameshwaram, Parisar Sita Badi, Tonk Road, Jalpur. During the course of the search, 13 highly incriminating papers were found from the bedroom of Shri Baldeep Goyal situated at C-42, Lajpat Marg, C- Scheme, Jaipur which were seized as Page Nos. 11-23 of Exhibit-2. The printed papers have details of loans from various entitles mainly Kolkata based companies with time period mentioned and interest amountscalculated. The handwritten pages are working of the above loans and payments to RICO by'A' (Sh. Arun Agarwal) and by 'B' (Sh. Baldeep 11 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR Goyal). Separate BG A/C (Sh. BaldeepGoyalaccount) is also there in handwritten papers. The entries of these papers (handwritten andprinted) corroborate each other. A plot in Pratap Nagar, Tonk Road, Jaipur was purchased in auction from Rajasthan Housing Board (RHB) by a company M/s Aditya Propcon Pvt. Ltd. Shri Baldeep Goyal and Shri Arun Agarwal both are directors in the company. This plot was purchased for a sale consideration price of Rs.26.11 Cr. from RHB. M/s Aditya Propcon Pvt. Ltd. has taken unsecured loans from Kolkata based various entities. This unsecured loan was taken in various AYS. The unsecured loan thus obtained by M/s Aditya Propcon Pvt. Ltd. was used to repay the loan. Noting in Exhibit-2 makes it clear that cast: was paid by Shri Baldeep Goyal and Shri Arun Agarwal to Kolkata based entities and same was received back in the form of unsecured loan in M/s Aditya PropconP.Ltd, and from this unsecured loan RIICO loan was repaid. Page Nos. 11 and 12 reflect that total cash of Rs. 7,88,80,000/- was paid by Sh. Arun Agarwal. These papers reflect that entries have been taken in M/s Aditya Propcon Pvt. Ltd, from various parties (mostly Kolkata Companies) for which cash has been paid by Shri Baldeep Goyal and Shri Arun Agarwal. On perusal of these entries it was also found that these pages also contain some of the entries which pertains to period beyond six years from assessment year relevant to previous year in which search was conducted. The details of these entries are: AY 2008-09: Rs. 0.83 cr. AY 2009-10: Rs. 1.08 cr AY 2010-11: Rs. 3.28 cr AY 2011-12: Rs. 2.55 cr Since these amounts are the unexplained cash of the assessee which he has used to pay the unsecured loans managed through accomodation entries therefore these clearly fall under the category of "asset" as defined by explanation 2 to fourth proviso to section 153A of the act and are greater than 50 lakh for each AY therefore the case can be assessed u/s 153C beyond six years as per second proviso to section 153C of the Act. 12 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR From the above seized documents/books of account, it is observed that these are relating to other person i.e. Sh. Arun Agarwal (PAN-ABYPA8137F), MansaroverRameshwaram, Parisar, Sita Badi, Tonk Road, Jaipur were found at the residence of Sh. Baldeep Goyal, C-42, Lajpat Marg, C-Scheme, Jaipur. I am therefore, satisfied that Initiation of proceedings u/s 153C of the IT Act, 1961 is required in the case of Sh. Arun Agarwal (PAN-ASYPA8137F) for the above mentioned assessments. ACIT. CC-3, JPR .’’ 2.3.2 It is also noted that both the satisfaction notes relate to identical language which includes the quantum of undisclosed income except the fact that in the second satisfaction note a year wise bifurcation is given as to undisclosed income but the fact remains that total quantum of undisclosed income of the assessee in both the satisfaction note was more or less same. It is also noted from both the satisfaction notes that notices u/s 153C were issued and finally the income as per above satisfaction notes was assessed as under:- AY 2009-10 Rs. 1,08,00,000 AY 2010-11 Rs. 3,28,00,000 AY 2011-12 Rs. 2,55,60,000 AY 2012-13 NIL AY 2013-14 Rs. 97,20,000 -------------------------- Total Rs. 7,88,80,000 -------------------------- It is also pertinent to mention that the quantum of undisclosed income of the asessee in both the satisfaction note was exactly same and there appears no fresh material with the AO for recording second satisfaction note for which the relevant submission of the assessee is necessary to reproduce as under:- 13 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR ‘’The ld. AO was having jurisdiction over the cases of the searched person as well the assessee and she had all the documents with her and after complete analysis of the seized papers she worked out that the assessee had made undisclosed payment of Rs. 7,88,80,000 and while preparing the satisfaction note dated 01.08.2019 she had mentioned this quantum in the satisfaction note. Accordingly in the first instance she had issued notices u/s 153C for six years. During the assessment proceedings she again prapared a satisfaction note dated 13.12.2019 mentioning exactly the samenotings except some yearwise allocation for proceeding against the assessee for period beyond six years from the year of search. The assessee has following objections to the contentions of the ld. AO in the present proceedings :- i. As per section 153C r.w.s. 153A there is no requirement of preparing multiple satisfaction notes for proceeding against the other person. Even for travelling beyond six AYs from the year of search there is no requirement of preparing any separate satisfaction note in 4 th proviso to section 153A. When in the first satisfaction note complete quantum of undisclosed payment by the assessee was recorded there was no requirement of preparing such second satisfaction note. Therefore the second satisfaction which has been made the basis for filing instant MAs is not a valid document. ii. It is quite apparent from both the satisfaction notes that that ld. AO did not come into possession of any other material except those considered for preparing first satisfaction note. In both the satisfaction notes reference to 13 highly incriminating papers found from the possession of Shri Baldep Goyal find place. In both the notes that undisclosed payment has been quantified at Rs. 7,88,80,000. Therefore it is the first satisfaction note which has to be considered as final document. iii. The Hon`ble ITAT had taken a conscious decision after examining both the satisfaction notes critically and assessing the same factually and legally and therefore there is no merit in the MA of the ld. AO and same deserves to be dismissed. The contention that the satisfaction note dated 13.12.2019 was prepared after getting charge over the case is without any basis as there is no legal standing of the second satisfaction note. 2. It is also further submitted that Provisions of section 153A gives a blanket permission to the AO to proceed against the search person or the other person (as per section 153C) for ten years prior to the year of search with a condition that for proceeding for four years beyond six years from the year of search, as prescribed in fourth proviso to section 153A that there has to be a concealment of over Rs. 50.00 Lacs for each year or in aggregate and that too has to be represented in the form of asset. When the first step taken u/s 153A for proceeding for six assessment years for which there is no special condition, have been held to be illegal subsequent step is liable to be quashed. It is something like when notice u/s 143(2) has been held to be illegal all consequent proceedings automatically goes. Just for theoretical purpose if in the case of assessment the ld. AO has referred the matter for valuation purpose to DVO and in the appellate proceedings the notice u/s 143(2) has been held to be illegal there can not be a demand that although notice u/s 143(2) was wrong but the addition made on the basis of report of DVO is correct as there is no illegality in referring the matter to DVO. Therefore there was no 14 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR mistake on the part of the Hon`ble Bench to decide the matter for the AY 2009-10 to 2011-12 basing its decision on the order for the AY 2013-14. ‘’ It is also noted from the Misc. Application of the Department wherein it is mentioned that for the year under consideration, assessee has neither in ground of appeal before the appellate authorities (CIT(A) & ITAT) nor during the assessment proceedings raised the issue that the Assessing Officer had recorded the satisfaction note prior to assuming the jurisdiction over the case of the assessee but Hon'ble ITAT has decided the appeal in favour of the assessee. It is refuted by the ld. AR of the assessee as to the claim made by the Department that there was no ground of appeal from the side of the assessee is not correct for which he submitted to peruse first ground of appeal in all these three appeals which runs as under :- ‘’That the ld. CIT (A) has erred in law and on facts in sustaining the action of the ld. AO in assuming jurisdiction to assessee the case of the assessee u/s 153C for the year in appeal, which is part of extended period of assessment in terms of explanation 1 to 4th proviso to section 153A, without appreciating that the assumption of jurisdiction for assessing the case of the appellant u/s 153C itself was not valid. Relief may please be allowed by quashing the assessment so framed. ‘’ It may be noted from pages 5 & 6 of the counter reply of the assessee that the assessee had challenged the action of the AO assessing the case of the assessee for relevant assessment years i.e. period beyond six years from the year of search and that the assumption for assessing the case u/s 153C is not valid. The contention of the Department that no such ground was taken by the assessee before the ITAT, 15 ACIT, CENTRAL CIRCLE-3, JAIPUR VS SHRI ARUN AGARWAL, JAIPUR Jaipur Bench (supra) is not valid/ incorrect. Hence, taking into consideration all the points raised by the Department and the Assessee (supra), we feel that there is no ambiguity in the order of the ITAT dated 22-11-2022 and it does not require any rectification. Hence, the Bench does not find merit in the Misc. Applications of the assessee (supra) which are dismissed. 3.0 In the result, the above Misc. Applications filed by the Department are dismissed. Order pronounced in the open court on 09/08/2023. Sd/- Sd/- ¼jkBksMdeys'kt;UrHkkbZ ½ ¼lanhi xkslkbZ½ (Rathod Kamlesh Jayantbhai) (Sandeep Gosain) ys[kklnL;@Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 09 /08/2023 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. izR;FkhZ@ The Respondent- The ACIT, Central Circle-3, Jaipur 2. The Appellant- Shri Arun Agarwal, Jaipur 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File (MA No. 25/JP/2023) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar