JOINT COMMISSIONER OF INCOME TAX (OSD) CENTRAL CIRCLE 2 (3), MUMBAI V. ACME DEWLLERS PRIVATE LIMITED , MUMBAI

MA 262/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3907 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 06-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Search and seizure
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM M A NO. 262 / MUM/20 1 8 (ARISING OUT OF ITA NO.4127/MUM/2012 ( ASSESSMENT YEAR : 2003 - 04 ) JT. COMMISSIONER OF INCOME TAX (OSD) CC - 2(3) ROOM NO .803, 8 TH FLOOR PRATISTHA BHAWAN OLD CGO ANNEXE BUILDING M.K.ROAD, MARINE LINES MUMBAI 400 020 VS. M/S. ACME DWELLERS PVT LTD., GR. FLOOR, ACME GHAR 19, KD ROAD, VILE PARLE (W) MUMBAI - 400 056 PAN/GIR NO. AAECA1038M ( APPELLANT ) .. ( RESPONDENT ) REVEN UE BY SHRI CHAITANYA ANJARIA ASSESSEE BY SHRI JITENDRA JAIN DATE OF HEARING 11 / 01 /201 9 DATE OF PRONOUNCEMENT 31 / 01/ 201 9 / O R D E R PER R.C.SHARMA (A.M) : THIS MA IS FILED BY THE REVENUE ARISING OUT OF ITA NO.4127/MUM/2012. 2. THROUGH THIS MA, IT WAS SUBMITTED BY LD. DR THAT ITAT ALLOWED ASSESSEES APPEAL AFTER RECORDING A FINDING TO THE FACT THAT SATISFACTION NOTE BY ASSESSING OFFICER WHILE ISSUING NOTICE U/S.153C OF THE INCOME TAX ACT WAS NOT THERE. AS PER LD. DR, THE SATISFACTION NOT E WAS VERY MUCH THERE, THUS, THE ORDER PASSED BY THE TRIBUNAL DATED 22/09/2017 ALLOWING M A NO. 262/MUM/2018 M/S. ACME DWELLERS PVT. LTD., 2 THE APPEAL ON THE GROUND OF SATISFACTION NOTE HAVING NOT BEEN RECORDED AMOUNTS TO MISTAKE APPARENT FROM RECORD, WHICH DESERVES TO BE RECTIFIED U/S.254(2) OF THE IT ACT. 3. ON THE OTHER HAND, LD. AR CONTENDED THAT NO SATISFACTION NOTE AT ALL WAS THERE AND THE TRIBUNAL HAVE GIVEN SO MANY OPPORTUNITIES TO THE LD. DR TO PRODUCE SATISFACTION NOTE BEFORE T HE DATE OF HEARING, HOWEVER, FINALLY THE CIT DR HAS GIVEN A LETTER TO TH E BENCH DATED 10/07/2017, WHEREIN THE CIT DR HAS SHOWN INABILITY TO PROVIDE SATISFACTION NOTE AS THE SAME WAS NOT AVAILABLE IN THE RECORD. ACCORDINGLY, IT WAS CONTENDED THAT THE TRIBUNAL HAVE CORRECTLY APPRECIATED THE FACTS REGARDING NON - AVAILABILITY OF TH E SATISFACTION NOTE WHICH IS ESSENTIAL FOR FRAMING ASSESSMENT U/S.158BD / 153C OF THE IT ACT. 4. RELIANCE WAS PLACED ON THE DECISION OF CO - ORDINATE BENCH IN THE CASE OF IRAISAA HOTELS PVT. LTD., IN MA NO.29/MUM/2017 DATED 10/09/2018 WHEREIN THE TRIBUNAL HA VE OBSERVED AS UNDER: - IN FACT, IN COURSE OF HEARING OF APPEAL BEFORE THE TRIBUNAL ALSO NO NEW MATERIAL / INFORMATION WAS BROUGHT ON RECORD BY THE DEPARTMENT TO CONTROVERT THE FINDING OF THE ASSESSING OFFICER IN THE REMAND REPORT OR FINDING OF THE LEARNED COMMISSIONER (APPEALS). THEREFORE, IN THE ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON RECORD BY THE DEPARTMENT TO CONTROVERT THE FINDING OF THE FIRST APPELLATE AUTHORITY ON FACTS, THE TRIBUNAL HAD TO ACCEPT THE DECISION OF THE LEARNED COMMISSIONER (APPEALS ). AFTER THE PASSING OF THE ORDER OF THE TRIBUNAL THE DEPARTMENT HAS COME FORWARD WITH THE FINAL ORDER OF THE SEBI BY STATING THAT, THOUGH, IT WAS AVAILABLE AT THE TIME OF HEARING OF APPEAL BUT IT COULD NOT BE BROUGHT TO THE NOTICE OF THE TRIBUNAL. THUS, A S COULD BE SEEN WHATEVER NEGLIGENCE OR LACHES FOR NOT BRINGING THE FINAL ORDER OF SEBI TO THEM/S. IRAISAA HOTELS PVT. LTD. M A NO. 262/MUM/2018 M/S. ACME DWELLERS PVT. LTD., 3 NOTICE OF THE TRIBUNAL LIES WITH THE DEPARTMENT AND FOR SUCH NEGLIGENCE OR LACHES OF THE DEPARTMENT, THE APPEAL ORDER PASSED BY THE T RIBUNAL CANNOT BE TERMED AS ERRONEOUS TO BRING IT WITHIN THE AMBIT OF SECTION 254(2) OF THE ACT. AFTER DISPOSAL OF APPEAL BY THE TRIBUNAL IF THE DEPARTMENT COMES WITH FRESH EVIDENCE CERTAINLY IT CANNOT BE ENTERTAINED, MUCH LESS, BY TAKING RECOURSE TO SECTION 254(2) OF THE ACT. THEREFORE, THE PRESENT APPLICATION FILED BY THE DEPARTMENT IS NOT MAINTAINABLE. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE MISCELLANEOUS PETITION AS WELL AS THE ORDER PASSED BY THE TRIBUNAL DATED 22/09/2017 . WE FOUND THAT THE TRIBUNAL HAVE ALLOWED ASSESSES APPEAL AFTER RECORDING FOLLOWING FINDINGS: - 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CARE FULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED BY LEARNED AR IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. 8. FACTS IN BRIEF ARE THAT SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT WAS CO NDUCTED IN THE CASE OF ACME GROUP, RESIDENCE OF ITS DIRECTORS / PARTNERS AND RELATED PERSONS ON 24/07/2008. THEREAFTER, AO ISSUED NOTICE TO THE ASSESSEE COMPANY U/S.153C. THE ASSESSEE HAS TAKEN AN ADDITIONAL GROUND BEFORE US TO THE EFFECT THAT NO SATISFACT ION HAS BEEN RECORDED BY THE AO OF THE SEARCHED PERSON, THEREFORE, ASSESSMENT DESERVES TO BE ANNULLED, ACCORDINGLY ORDER PASSED BY THE AO U/S.143(3) R.W.S.153C IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. AS PER LEARNED AR RECORDING OF SATISFACTION BY THE ASSESSING OFFICER OF SEARCHED PERSON IS A PRE - REQUISITE FOR ISSUANCE OF NOTICE U/S.153C OF THE ACT AND FAILING OF WHICH RENDERS THE PROCEEDINGS U/S.153C OF THE ACT ILLEGAL AND BAD IN LAW. 9. WE FIND THAT THE ADDITIONAL GROUND SO RAISED BY THE ASSESSEE IS PURELY LEGAL IN NATURE. THEREFORE, IN VIEW OF THE DECISION OF SUPREME COURT IN CASE OF NATIONAL THERMAL POWER COMPANY, THE SAME DESERVES TO BE ADMITTED FOR DECISION. IN THIS REGARD, LEARNED AR HAS ALSO PLACED ON RECORD CBDT CIRCULAR NO.24/15 DATED 31/1 2/2015 WHICH READS AS UNDER: - SUBJECT: RECORDING OF SATISFACTION NOTE UNDER SECTION 158BDI153C OF THE ACT - REG. - M A NO. 262/MUM/2018 M/S. ACME DWELLERS PVT. LTD., 4 THE ISSUE OF RECORDING OF SATISFACTION FOR THE PURPOSES OF SECTION 158BD/153C HAS BEEN SUBJECT MATTER OF LITIGATION. 2. THE HON'BLE SUPREME COURT IN THE CASE OF M/S CALCUTTA KNITWEARS IN ITS DETAILED JUDGMENT IN CIVIL APPEAL NO.3958 OF2014 DATED 12.3.2014(AVAILABLE IN NJRS AT 2014 - LL - 0312 - 51) HAS LAID DOWN THAT FOR THE PURPOSE OF SECTION 158BD OF THE ACT, RECORDING OF A SATISFACTION NOTE IS A PREREQUISITE AND THE SATISFACTION NOTE MUST BE PREPARED BY THE AO BEFORE HE TRANSMITS THE RECORD TO THE OTHER AO WHO HAS JURISDICTION OVER SUCH OTHER PERSON U/S 158BD. THE HON'BLE COURT HELD THAT 'THE SATISFACTION NOTE COULD BE PREPARED AT ANY OF THE FOLL OWING STAGES: (A) AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 158BC OF THE ACT; OR (B) IN THE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 158BC OF THE ACT; OR (C) IMMEDIATELY AFTER THE ASSE SSMENT PROCEEDINGS ARE COMPLETED UNDER SECTION 158BC OF THE ACT OF THE SEARCHED PERSON. ' 3. SEVERAL HIGH COURTS HAVE HELD THAT THE PROVISRONS OF SECTION 153C OF THE ACT ARE SUBSTANTIALLY SIMILAR/PARI - MATERIA TO THE PROVISIONS OF SECTION 158BD OF THE ACT AND THEREFORE, THE ABOVE GUIDELINES OF THE HON'BLE SC, APPLY TO PROCEEDINGS U/S 153C OF THE IT ACT, FOR THE PURPOSES OF ASSESSMENT OF INCOME OF OTHER THAN THE SEARCHED PERSON. THIS VIEW HAS BEEN ACCEPTED BY CBDT. 4. THE GUIDELINES OF THE HON'BLE SUPREME COURT AS REFERRED TO IN PARA 2 ABOVE, WITH REGARD TO RECORDING OF SATISFACTION NOTE, MAY BE BROUGHT TO THE NOTICE OF ALL FOR STRICT COMPLIANCE. IT IS FURTHER CLARIFIED THAT EVEN IF THE AO OF THE SEARCHED PERSON AND THE 'OTHER PERSON' IS ONE AND THE SAME, T HEN ALSO HE IS REQUIRED TO RECORD HIS SATISFACTION AS HAS BEEN HELD BY THE COURTS. 5. IN VIEW OF THE ABOVE, FILING OF APPEALS ON THE ISSUE OF RECORDING OF SATISFACTION NOTE SHOULD ALSO BE DECIDED IN THE LIGHT OF THE ABOVE JUDGEMENT. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT PENDING LITIGATION WITH REGARD TO RECORDING OF SATISFACTION NOTE UNDER SECTION 158 BD/153C SHOULD BE WITHDRAWN / NOT PRESSED IF IT DOES NOT MEET THE GUIDELINES LAID DOWN BY THE PEX COURT. 9. IT IS CLEAR FROM THE ABOVE CIRCULAR THAT C BDT HAS DIRECTED THE DEPARTMENTAL OFFICERS TO FOLLOW THE DECISION OF HONBLE SUPREME COURT IN CASE OF KOLKATA KNITWEARS (SUPRA) WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF SECTION 158 BD /153C OF THE ACT, RECORDING OF SATISFACTION M A NO. 262/MUM/2018 M/S. ACME DWELLERS PVT. LTD., 5 NOTE IS A PRE - REQUISITE AND THE SATISFACTION NOTE MUST BE PREPARED BY THE AO BEFORE IT TRANSMITS THE RECORD TO THE OTHER AO WHO HAS JURISDICTION OVER SUCH OTHER PERSON. IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT NO SUCH SATISFACTION HAS BEEN RECORDED BY AO. UNDER THESE FACTS A ND CIRCUMSTANCES, APPLYING THE JUDICIAL PRONOUNCEMENTS OF SUPREME COURT AS STATED IN CBDT CIRCULAR DATED 31/12/2015, WE ANNUL THE ASSESSMENT FRAMED U/S.143(3) R.W.S. 153C OF IT ACT. 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 6. THE CO - ORDINATE BEN CH IN THE CASE OF IRAISAA HOTELS PVT. LTD., (SUPRA) HAVE CLEARLY OBSERVED THAT AFTER CONCLUDING THE HEARING AND PASSING THE ORDER, THE DEPARTMENT HAS COME FORWARD WITH A DOCUMENT, WHICH COULD NOT BE BROUGHT TO THE NOTICE OF TRIBUNAL DURING THE COURSE OF HE ARING, THE SAME CANNOT BE CONSIDERED AND DOES NOT TANTAMOUNT TO MISTAKE APPARENT FROM RECORD. THE TRIBUNAL OBSERVED THAT WHATEVER INCLUSIONS OF L A CHES OF THE DEPARTMENT THE APPELLATE ORDER PASSED BY THE TRIBUNAL CANNOT BE TERMED AS ERRONEOUS TO BRING IT WI THIN THE AMBIT OF SECTION 254(2) OF THE ACT. 7. IT WAS FURTHER OBSERVED THAT AFTER DISPOSAL OF THE APPEAL BY THE TRIBUNAL IF THE DEPARTMENT COMES WITH FRESH EVIDENCE, CERTAINLY IT CANNOT BE ENTERTAINED, MUCH LESS BY TAKING RECOURSE OF SECTION 254(2) OF TH E ACT. EVEN ON MERIT, WE FOUND THAT SATISFACTION NOTE WAS DATED 28/04/2009 WHEREAS NOTICE U/S.153C WAS ISSUED ON 08/12/2008. THUS, IT IS CLEAR THAT THIS SATISFACTION NOTE WAS NOT RECORDED PRIOR TO ISSUE OF NOTICE U/S.153C WHEREAS MANDATORY REQUIREMENT THAT SATISFACTION SHOULD BE RECORDED FIRST AND ON THE BASIS OF SUCH SATISFACTION NOTE, AO SHOULD ISSUE NOTICE M A NO. 262/MUM/2018 M/S. ACME DWELLERS PVT. LTD., 6 U/S.153C. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE MA FILED BY THE REVENUE. 8. IN THE RESULT, MA FILED BY REVENUE IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT ON THIS 31 / 01 /201 9 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 31 / 01 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//