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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” : HYDERABAD
Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU
These three Revenue’s appeals for AYs.2014-15 to 2016- 17 arise from the CIT(A)-12 Hyderabad’s order(s) all dated 23-08-2018, passed in appeal Nos.10453, 10456 & 10460/2017-18; respectively in proceedings u/s.143(3) r.w.s.153C of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both parties. Case files perused.
The Revenue’s identical sole substantive ground pleaded in all these appeals seems to reverse the CIT(A)’s action quashing Section 153C proceedings on the ground that the Assessing Officer; common for both the searched as well as the :- 2 -: 2149 & 2150/Hyd/2018 instant assessee, failed to record the twin satisfaction(s) as per the CBDT Circular No.24/2015, dt.31-12-2015. Relevant lower appeal discussion to this effect reads as follows:
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We have heard rival submissions against and in support of the CIT(A)’s impugned action quashing Section 153C assessment in the instant three cases. The Revenue’s vehement contention is that since the assessing authority herein is common for both the searched as well as the instant assessee, the twin satisfaction claimed at the latter’s behest forms no ground to quash the same.
Learned authorised representative’s case, on the other hand, is that the CIT(A) has rightly gone by the CBDT circular making it clear that the Assessing Officer has to record separate satisfaction(s) qua the searched as well as the third party in issue as is the clinching fact in the instant case.
We have given our thoughtful consideration to the foregoing rival contentions qua the legality of Section 153C proceedings. We find that the hon'ble apex court’s latest decision in Civil Appeals Nos.2006-2007 of 2020, M/s.Super Malls Pvt. Ltd., Vs. PCIT, Dt.05-03-2020 has settled the law on the issue of the Assessing Officer being common in the searched as well as third party that the twin round(s) of satisfaction is nowhere mandatory after considering CBDT’s circular (supra) as follows:
“5. We have heard the learned counsel for the respective parties at length. 5.1 As observed hereinabove, the short question which is posed for the consideration of this Court is, whether there is a compliance of the provisions of Section 153C of the Act by the Assessing Officer and all the conditions which are required to be fulfilled before initiating the proceedings under Section 153C of the Act have been satisfied or not?
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This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of the Act in the case of Calcutta Knitwears (supra) as well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd. (supra). As held, before issuing notice under Section 153C of the Act, the Assessing Officer of the searched person must be “satisfied” that, inter alia, any document seized or requisitioned “belongs to” a person other than the searched person. That thereafter, after recording such satisfaction by the Assessing Officer of the searched person, he may transmit the records/documents/things/papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue a notice for the purpose of completion of the assessment under Section 158BD of the Act and the other provisions of Chapter XIV-B shall apply. 6.1 It cannot be disputed that the aforesaid requirements are held to be mandatorily complied with. There can be two eventualities. It may so happen that the Assessing Officer of the searched person is different from the Assessing Officer of the other person and in the second eventuality, the Assessing Officer of the searched person and the other person is the same. Where the Assessing Officer of the searched person is different from the Assessing Officer of the other person, there shall be a satisfaction note by the Assessing Officer of the searched person and as observed hereinabove that thereafter the Assessing Officer of the searched person is required to transmit the documents so seized to the Assessing Officer of the other person. The Assessing Officer of the searched person simultaneously while transmitting the documents shall forward his satisfaction note to the Assessing Officer of the other person and is also required to make a note in the file of a searched person that he has done so. However, as rightly observed and held by the Delhi High Court in the case of Ganpati Fincap (supra), the same is for the administrative convenience and the failure by the Assessing Officer of the searched person, after preparing and dispatching the satisfaction note and the documents to the Assessing Officer of the other person, to make a note in the file of a searched person, will not vitiate the entire proceedings under Section 153C of the Act against the other person. At the same time, the satisfaction note by the Assessing Officer of the searched person that the documents etc. so seized during the search and seizure from the searched person belonged to the other person and transmitting such material to the Assessing Officer of the other person is mandatory. However, in the case where the Assessing Officer of the searched person and the other person is the same, it is :- 11 -: 2149 & 2150/Hyd/2018 sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, then the requirement of Section 153C of the Act is fulfilled. In case, where the Assessing Officer of the searched person and the other person is the same, there can be one satisfaction note prepared by the Assessing Officer, as he himself is the Assessing Officer of the searched person and also the Assessing Officer of the other person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the Assessing Officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself.
6.2. Now let us consider from the satisfaction note recorded by the Assessing Officer, in the present case. Whether there is a sufficient compliance of Section 153C of the Act or not. The satisfaction note reads as under: “Name and address of the assessee : M/s Super Malls (P) Ltd. Sector 12, HUDA, Karnal Regd. Office at 51, Transport Centre Punjabi Bagh, New Delhi. PAN : AAICS2163F Status : Company Reasons/Satisfaction note for taking up the case of M/s Super Malls (P) Ltd. Sector-12, HUDA, Karnal Regd. Office at 51, Transport Centre, Punjabi Bagh, New Delhi under Section 153C of the Income Tax Act, 1961. The jurisdiction of this case has been assigned to this Office u/s 127 of the Income Tax Act, 1961 by the worthy Commissioner of Income Tax-III New Delhi vide order F. No.CITIII/Delhi/ Centralization/1012- 1312455 dated 15.01.2013. By virtue of the authorization of the Director of Income Tax (Investigation), Chandigarh, a search & seizure operation u/s 132(1) of the Act was carried out on 08/09.04.2010 at the residential/business premises of Sh. Tejwant Singh & Sh. Ved Parkash Bharti Group of cases, Karnal, Panipat & Delhi and a survey u/s 133A of the IT. Act, 1961 was also carried out at the business premises of M/s Super Mall (P) Ltd. Karnal & New Delhi. During the course of search on 08/09.04.2010 at residence of Sh. Ved Parkash Bharti who is a Director in the assessee company M/s Super Mall (P) Ltd., Pen drives were found and seized as per Annexure-3 from vehicle No. HR06N-0063 parked in front of the residence of Sh. Ved
:- 12 -: 2149 & 2150/Hyd/2018 Parkash Bharti. Some documents as per Annexure A-1 were seized after taking print out of the above said pen drives. These documents contain the details of cash receipt on sale of shop/offices at M/s Super Mall, Karnal also beside other concerns. These documents are required for assessment proceedings. During the statement of Sh. Ved Parkash Bharti at the time of search, he has also stated that these documents pertain to him and M/s Super Mall (P) Ltd., Karnal in which he is Director. In view of the above and as per the provisions of sub-section 91 of Section 153C of the Act, I am satisfied that the document seized from the residence of Sh. Ved Parkash Bharti belongs to a person i.e. Super Mall (P) Ltd., other than the person referred in section 153A. Accordingly, it is directed to issue such person (M/s Super Mall (P) Ltd.) notice and assess and reassess income in accordance with the provision of section 153A of the Act.
Dated: 22.02.2013 sd/- (VED PARKASH KALIA)” From the aforesaid satisfaction note, it emerges that the Assessing Officer is satisfied that the documents containing the details of the cash receipts on sale of shop/offices at M/s Super Mall, Karnal belonged to the other person – assessee – M/s Super Mall. He is also satisfied that the documents/pen drive are seized from the searched person. He is also satisfied that the documents so seized from the residence of the searched person/Ved Prakash Bharti belonged to the assessee – the other person. Therefore, the Assessing Officer was satisfied and it is specifically mentioned that the documents so seized belonged to the assessee – the other person. Therefore, it cannot be said that the mandatory requirements of Section 153C of the Act, in the facts and circumstances of the case, have not been complied with. The satisfaction note by the Assessing Officer clearly states that the documents so seized belonged to the other person – the assessee and not the searched person. Thus, the High Court is justified in observing that the requirement of Section 153C has been fulfilled. On facts, we are in complete agreement with the view taken by the High Court on the requirement of Section 153C of the Act being fulfilled by the Assessing Officer before initiating the proceedings under Section 153C of the Act.
In view of the above and for the reasons stated above, all these APPEALS fail and the same deserve to be dismissed and are accordingly dismissed. Now, the learned ITAT shall decide and dispose of the appeals afresh on merits, at the earliest, in accordance with law, as observed by the High Court in the impugned Judgment(s) and Order(s)”.
:- 13 -: 2149 & 2150/Hyd/2018 5.1. It is therefore clear that the instant issue of twin satisfactions in case of the common Assessing Officer assessing both the searched as well as the third party; stands settled against the assessee and in favour of the department. We therefore adopt the above detailed reasoning mutatis mutandis to allow the Revenue’s identical sole substantive grievance raised in these three appeals. The CIT(A)’s order quashing the impugned assessment on identical lines stands reversed therefore. We further keep in mind the fact that the CIT(A) has not dealt with the assessee’s grievance(s) on merits and direct him to decide the same afresh within three effective opportunities of hearing. The assessee or its authorised representative shall appear before the CIT(A) on or before 30-09-2021 with all the relevant details and evidences to be followed by three effective opportunities of hearing; at its own risk and responsibility.
6. These Revenue’s appeals are treated as allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 10th May, 2021