SHRI VINAY PRATAP SINGH,LUCKNOW vs. ASTT. COMMISSIONER OF INCOME TAX, LUCKNOW

PER: T.S. KAPOOR, A.M:

This is a group of six appeals filed by the assessee against separate orders of ld. CIT(A) all dated 21.08.2015. The assessee in these cases has taken multiple grounds both on legal issues as well as on merits of the cases. However, at the time of hearing only Ground No.2 on legal issue was argued. These appeals involve similar issues and therefore, these were heard together and for the sake of convenience a common and consolidated order is being passed. The Ground No. 2 of the appeal which is common in all appeals and which has been argued by the ld. AR is reproduced below: “2. Because Ld. Commissioner of Income Tax (A) grossly erred in law while observing that there is no requirement in law of handing over the documents by the AO of Section 132 proceedings (searched person) to the Assessing Officer of 153C proceedings ignoring the verdict of the Hon’ble Apex Court in the case of Calcutta Knitwear and other binding judgment and which jurisdictional defect is fatal to the proceedings, rendering the same as bad in law.”

2 ITA No.682 to 687/Lkw/2015 2. The ld. AR at the outset submitted that an information in this case was received from the office of DIG, Anti Terrorist Squad (ATS), Gomti Nagar, Lucknow on 17.08.2011 regarding seizure of cash amounting to Rs.65,87,000/- from two persons namely Safaat Ejaz Siddiqui & Tabish Mansoor. Since these persons could not explain the source/purpose of the cash and therefore, cash was seized by the ATS and consequently a warrant of authorization dated 17.08.2011 u/s. 132A of the Act was issued by the Director of Income Tax (Inv), Kanpur and was executed for requisition of the cash seized by Anti Terrorist Squad, Gomti Nagar, Lucknow. The ld. AR in this respect invited our attention to copy of Panchnama placed at Pgs. 132 to 141. Inviting our attention to copy of Panchnama, the ld. AR submitted that Panchnama indicates that only cash as per annexure was seized. Our particular attention was invited to Paper Book Pg. 134 where against Column No.5, it was mentioned that in the course of search cash was seized and against the columns against books of account, bullion, jewellery etc. there were clearly signs of strike off which means that none of the other things other than cash was seized. It was submitted that AO in these cases has made assessments on the basis of bank account statement which was provided to AO by ATS vide their letter dated 25.08.2011 and in this respect our attention was invited to Para 4 (5)(1) of ld. CIT(A) order where ld. CIT(A) has noted this fact. It was argued that since no books of account or any other document including bank statement were seized during search therefore, these bank statements could not be said to have been handed over to the AO of the other person and therefore, the assessments in these cases is void abinito and needs to be quashed. Reliance in this respect was placed on the judgment of Special Bench in the case of ACIT, Circle 3 Ferozepur vs. Sonu Verma [2008] 115 ITD 37 (Amristsar) wherein it was held that jurisdiction to complete block assessment u/s. 158BBC is conferred on the Assessing Officer only on the physical handing over of all books of account/documents/assets requisitioned u/s. 132A of the Act. It was submitted that provisions of Section 158BBC are pari materia with the provisions of section 153C of the Act and reliance in this regard was placed

3 ITA No.682 to 687/Lkw/2015 on the circular 24/2015 dated 31.12.2019 issued by the CBDT wherein CBDT itself has accepted that provisions of Section 158BBD & 153C are pari materia. Our attention was invited to copy of circular placed at paper book Pgs. 164 to 165. In view of above, judicial precedent and facts and circumstances, it was prayed that the assessments be quashed as these are void ab initio. 3. The ld. DR, on the other hand, heavily placed reliance on the orders of authorities below and submitted that the AO was authorized to take into cognizance the copy of bank accounts submitted by ATS and therefore, the legal ground taken by the assessee be dismissed. 4. We have heard rival parties and have gone through the material placed on record. The facts in brief are that the Office of DIG, Anti Terrorist Squad, Gomti Nagar, Lucknow on 17.08.2011 seized cash of Rs. 65,87,000/- from two persons namely Safaat Ejaz Siddiqui & Tabish Mansoor. Since these persons could not explain the source/purpose of the cash and therefore, cash was seized by the ATS and consequently a warrant of authorization dated 17.08.2011 u/s. 132A of the Act was issued by the Director of Income Tax (Inv), Kanpur and was executed for requisition of the cash seized by Anti Terrorist Squad, Gomti Nagar, Lucknow. The Assessing Officer in the assessment order noted that in the course of requisition u/s. 132A of the Act in the cases of Shri Safaat Ejaz Siddiqui & Tabish Mansoor information was provided by ATS regarding various bank accounts in the name of assessee Shri Vinay Pratap Singh, Shri Rahat Ezaj Siddiqui and Shri Danish Khan. The AO observed that these persons were also made co-accused by the ATS as their bank account showed substantial deposit and withdrawals and in view of the above facts, satisfaction was recorded u/s. 153C of the Act and accordingly the cases of the assessee were reopened u/s. 153C and additions were made to the income in respective years regarding deposits in the bank account of the assessee. The ld. AR argued that assessment u/s. 153C of the Act in this case is void abinito because of the fact that no books of account were seized in the case of searched person and therefore, no books of account or other documents can be said to have been handed over

4 ITA No.682 to 687/Lkw/2015 to the AO of other person. In this respect, it is important to observe the contents of panchnama placed at paper book Pgs. 132 to 141. The panchnama shows that only cash belonging to, Safaat Ejaz Siddiqui & Tabish Mansoor i.e. principal searched person was taken into custody in the requisition proceedings u/s. 132A of the Act. No other document or books of account or bank statements were seized and if these were not seized, the question of handing over of these documents to AO of assessee does not arise and if that be the case the assessment of the assessee cannot be reopened u/s. 153C of the Act as the finding of some document or asset belonging to other person is a sin qua non. In this respect, it is important to visit the provisions of Section 153C of the Act which for the sake of completeness are reproduced below: “153C. (l)Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A : Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person:”

5 ITA No.682 to 687/Lkw/2015 Mansoor information was provided by the ATS regarding various bank accounts in the name of Shri Vinay Pratap Singh, Shri Rahat Ezaj Siddiqui and Shri Danish Khan. These persons were also make co-accused by the STS as their bank accounts showed substantial deposits and withdrawals.”

The Assessing Officer has noted that during requisition u/s 132A in the case of Shafaat Ezaj Siddiqui and Tabish Mansoor, certain bank statements in their names and that in the name of assessee were provided by ATS. However, a copy of requisition u/s 132A, placed in P.B. page 126, clearly shows the striking of column of books of account and on documents and requisition was only issued for taking the custody of assets which in the present case is cash. Moreover, it is a fact that ATS during search proceedings did not seize anything other than cash which is apparent from the copy of Panchnama. Therefore, the findings of A.O. that in the course of requisition u/s 132A information was provided by ATS regarding bank accounts is not correct. In fact the bank statements were provided to A.O. after proceedings of ATS which is further proved from the findings of ld. CIT(A) as contained in para 4(5)(1) where he has mentioned that the details of bank account were communicated by ATS vide their letter No.ATS-25-02-(01)/2011/4158 dated 25.08.2011. For the sake of completeness, the findings of ld. CIT(A) are also reproduced below: “4(5)(i) In the instant case information was received from the office of the DIG, Anti Terrorist Squad (ATS), Gomti Nagar, Lucknow on 17.08.2011 regarding seizure of cash amounting to Rs. 65,87,000/- from two persons namely Shri Shafaat Ejaz Siddiqui & Shri Tabish Mansoor. They could not explain the source/purpose of the cash and thus; the cash was seized by the ATS. Consequently, a warrant of authorization dated 17.08.2011 under section 132A of the Income Tax Act, 1961 was issued by the Director of Income Tax (Inv.) Kanpur and was executed for requisition of the cash seized by the Anti Terrorist Squad (ATS), Gomti Nagar, Lucknow. During the course of action of the ATS, bank accounts of the searched persons as well as Shri Vinay Pratap Singh, the appellant were found." Details of such bank accounts were communicated by the ATS vide their letter No. ATS-25-2-(01)/2011/4158 dated 25.08.211. The letter mentions two bank accounts of the appellant as under- • HDFC Bank A/C No. 07222020001730 • ICICI Bank A/C No. 021401525357 These findings clearly demonstrate that a warrant of authorization dated 17/08/2011 under section 132A of Income Tax Act was issued by Director of Income Tax (Inv.), Kanpur and was executed for requisition of cash seized by the Anti Terrorist Squad, Gomti Nagar, Lucknow.

6 ITA No.682 to 687/Lkw/2015

“Whether, the jurisdiction to complete block assessment under section 158BC is conferred on the Assessing Officer by service of a warrant of authorization under section 132A by a competent authority or on physical handling over the books of account/documents/assets etc. requisitioned, to Income-tax Authority concerned?”

7.1 While answering to this question, the Hon’ble Tribunal vide order dated 25.08.2008 held as under:

“10. We have heard the parties and have perused the material on record. 11. At the outset, the provisions of the relevant section 132A of the Act involved in the present controversy are being reproduced as follows :—

7 ITA No.682 to 687/Lkw/2015

"132A. Power to requisition books of account, etc.—(1) Where the [Director General or Director] or the [Chief Commissioner or Commissioner], in consequence of information in his possession, has reason to believe that - (a)& (b) ** ** ** (c)any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in forces, then, the [Director General or Director] or the [Chief Commissioner or Commissioner] may authorize any {[Joint] Director}, [Joint] Commissioner, (Assistant Director) [or Deputy Director], [Assistant Commissioner (or Deputy Commissioner) or Income-tax Officer] [hereinafter in this section and in subsection (2) or section 278D referred to as the requisitioning officer] to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be to deliver such books of account other documents or assets to the requisitioning officer. (2) On a requisition being made under sub-section (1), the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. (3) Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub- sections (4A) to (14) (both inclusive) of section 132 and section 132B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (1) of section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (b) or clause (c ), as the case may be, of sub-section (1) of this section and as if for the words "the authorised officer" occurring in any of the aforesaid sub-sections (4A) to (14), the words "the requisitioning officer were substituted"." 12. Thus, as per section 132A(l)(c), inter alia, where the Director General has reason to believe, on the basis of information in his possession that any asset represents income or property not disclosed, or which would not have been disclosed for the purposes of the Act by any person who is in possession thereof and such asset has been taken into custody by any officer or authority under any other law of the land for the time being in force, he may issue a warrant of authorization to require the officer or authority who has taken the custody of such asset, to deliver them to the Requisitioning Officer.

8 ITA No.682 to 687/Lkw/2015 13. In Amandeep Singh's case (supra), the facts are that on 21-3-1998, the assessee was driving a car from Ludhiana side towards Phagwara. His car was detained/searched at Hoshiarpur Chowk. Two bags containing Indian currency notes amounting to Rs. 21,05,000 were found. The assessee was detained. The car and currency notes were taken into custody for alleged offences under the Indian Penal Code and the FERA. An FIR was lodged. On 22-3-1998, the police authorities applied to the Chief Judicial Magistrate for police remand of the assessee for a week. On receipt of the information about this seizure, the Income-tax authorities recorded the statement of the assessee on 23-3-1998 to enquire into the source of the currency notes. Not satisfied with the explanation of the asssssee, the Director of Income-tax (Investigation) issued a requisition under section 132A of the Income-tax Act on 23-3-1998, requiring the police authorities to deliver the currency notes to him, as according to him, the currency notes represented income or property which had not been or would not have disclosed for the purposes of the Income-tax Act. In pursuance of the said requisition, the police authorities delivered the currency notes to the Director of Income-tax (Investigation), on 24-3-1998. Thereafter, on 20-7-1999, a notice under section 158BC of the Income-tax Act was issued, requiring the assessee to prepare and file the return for the block period concerned. The assessee complied and filed a return on 6-9-1999. During the assessment proceedings, the assessee filed a letter questioning the validity of the requisition under section 132A of the Act and the consequential notice under section 158BC on the ground that the Income-tax authorities had no power to requisition the currency notes from the custody of the S.H.O. The Assessing Officer did not agree with the assessee's objection and continued with the proceedings initiated under the notice. The assessee challenged the notices under sections 132A and 158BC of the Act by filing a writ petition before the Hon'ble High Court. 14. The Hon'ble High Court held, inter alia, that a perusal of section 132A of the Act makes it clear that the first step is making of a requisition by the income-tax authorities to an officer or authority who is in possession or control of the assets representing alleged undisclosed income for delivery of such assets; that the second step is the compliance by such officer or authority who then delivers the assets to the requisitioning authority in accordance with section 132A(2); that under the provisions of sections 102 and 457 of the Criminal Procedure Code, 1973, the police officer has to forthwith give a report of the seizure to the Magistrate having jurisdiction and produce the seized assets before the Court; that in case it is not possible to transport such properly for production before the Court, the police officer can give its custody to any person who furnishes the bond as prescribed under section 102(3) of the Criminal Procedure Code; that the Magistrate then passes an order under section 457 of the Criminal Procedure Code in respect of the disposal of such property or the delivery thereof to the person entitled to its possession; that while making such an order, the Magistrate also considers the claim made by any person of such seized property by allowing him an opportunity to appear before him and establish his claim; that the use of the word "forthwith" is something more forcefull than

9 ITA No.682 to 687/Lkw/2015 immediately or soon after the seizure of the property; that it contemplates no loss of time; that till such time as an order under section 457 of the Criminal Procedure Code by a Court having jurisdiction is obtained, the possession of the seized articles by the police officer cannot be deemed to be under the orders of the Court; that in the case before the Hon'ble High Court, the possession on 23-3-1998 was with the police authorities and, as such, the Director of Income-tax (Investigation) was well competent to issue the requisition under section 132A; that since the notice under section 132A was valid, the consequential notice under section 158BC was also valid; that however, the police officer was not legally competent to deliver the possession of the seized amount without obtaining order of the Court of competent authority under section 457 of the Criminal Procedure Code; and that the amount delivered to the Director of Income-tax (Investigation) had to be returned to the police authority who had to obtain necessary orders from the court of competent authority in accordance with the provisions contained in sections 102 and 457 of the Criminal Procedure Code. 15. In Chandra Prakash Agrawal's case (supra ), the relevant facts are that in a search conducted by the Officers of the Directorate General, Central Excise, New Delhi at the business premises of the assessee, certain documents were seized, on 7-6-2001. On the basis of such search, the DDIT (Invt.) initiated proceedings under section 132A against the assessee by issuance of a notice dated 27-3-2002. The assessee was required to give statement on the documents/papers seized by the Central Excise Department. The assessee submitted that the papers seized did not represent his income. He, however, in order to buy peace, offered a sum of Rs. 50 lakhs in the proceedings under section 132A of the Act. The DDIT (Invt.) sent a requisition on 18-4-2002 under section 132A, requisitioning the seized material from the Central Excise Department. The assessee, vide letter dated 10-2-2005. asked the DDIT (Invt.) to initiate proceedings under section 158BC for completing the block assessment pursuant to the surrender of Rs. 50 lakhs. The DDIT (Invt.), vide letter dated 7-3-2005, informed the petitioner that since the original papers/documents/accounts had not been made available by the Central Excise Authorities, notice under section 158BC of the Act could not be issued. The assessee challenged the notice dated 22-3-2005 issued under section 148 of the Act, inter alia, on the ground that as the books of account and other documents had been requisitioned under section 132A of the Act from the Central Excise Department on 18-4- 2002, the assessment of undisclosed income could only be made under section 158BC of the Act and no action under section 148 could be taken; that the Assessing Officer had no jurisdiction to reopen the assessment on the basis of the photocopies of the seized material when the original documents were not with him, especially when the assessee had surrendered Rs. 50 lakhs under section 132 before the DDIT (Invt.), consequent to receipt of notice under section 15 SBC of the Act. 16. The Hon'ble Allahabad High Court held, inter alia, that section 158BA(1) of the Act uses the words "are requisitioned"; that the word "requisition" means taking of actual possession; that the requisition is complete only when the seized books of account and other documents,

10 ITA No.682 to 687/Lkw/2015 which have been requisitioned, have been delivered to the requisitioning authority; that the provisions of Chapter XIV-B of the Act would come into play only when the books of account or other documents or assets are actually received by the Assessing Officer pursuant to the requi- sition made under section 132A; that the record of proceedings showed that the requisition was not duly executed as all the books of account and other documents had not been delivered to the requisitioning authority; and that so, the material or evidence relatable to the documents for which the requisition had been sent under section 132A could not be taken into consideration for the reassessment proceedings. 17. In Smt. Mahesh Kumari Batra's case (supra ), it has been held by the Special Bench of the Tribunal, inter alia, that the Assessing Officer acquires the power to assess the undisclosed income at the time of initiation of search, but the actual exercise of that power commences only after the search is over by serving notice under section 158BC; that therefore, the existence of search is the jurisdictional fact which is necessary to the validity of the proceedings and without which, the act of the Assessing Officer will be a mere nullity; that it is the existence of this jurisdictional fact, which will give jurisdiction to the Assessing Officer to assess the undisclosed income of the person searched; that when the jurisdictional fact of search exists to proceed under Chapter XIV-B of the Act, there is no need to bring in "the formation of belief by the Assessing Officer to proceed under the Chapter; that the term "jurisdiction" means authority or power to act in a matter, and not opportunity or power to do an act in a particular manner; that the rights, duties and responsibilities of the parties ' been created by sections 158B, 158BA and 158BB, the issue of notice under section 158BC does not, in any way, extend or restrict them; that the issue of notice under section 15SBC is merely an act within this md hence any error in issuing such notice will not render the entire proceedings invalid; and that such a mistake is easily taken care of by section 292B of the Act. Pertinently, whereas it was a search by the department, which was involved in Smt. Mahesh Kumari Batra's case (supra) it is not so in the present case. In the present case, no search is involved. Moreover, Amandeep Singh's case (supra), it is seen, was not before the Tribunal in Smt. Mahesh Kumari Batra's case (supra). 18. In Jageshwar Rosin & Turpentine Factory's case (supra), it has been held, inter alia, that merely because the goods/assets have not been delivered to the income-tax authorities, it is not enough to conclude that proceedings have to be quashed: and that there is no requirement under Chapter XIV-B and under section 158BA(1) or section 158BC, for delivery of the goods/assets in pursuance of the issuance of the requisition under section 132A for proceedings to determine the undisclosed income for the block period. 19. As per the assessee, the view taken by the Special Bench of the Tribunal in Smt, Mahesh Kumari Batra's case (supra) and the Division Bench of the Tribunal in Jageshwar Rosin & Turpentine Factory's case (supra) is contrary to that in Amandeep Singh 's case (supra) and Chandra Prakash Agrawal's case (supra).

11 ITA No.682 to 687/Lkw/2015

12 ITA No.682 to 687/Lkw/2015 (supra). Therefore, the Division Bench of the Tribunal did not have the benefit of these two decisions. 25. Pertinently, Chandra Prakash Agrawal's case (supra ) specifically notices and holds that sub-section (1) of section 158BA of the Income- tax Act uses the words "are requisitioned". The Hon'ble High Court has held, specifically, that "requisition" means taking of actual possession. The requisition is complete only when the seized books of account and other documents, which have been requisitioned, have been delivered to the requisitioning authority. It has been held that the provisions under Chapter XIV-B of the Act would come into play only when the books of account or other documents or assets are actually received by the Assessing Officer pursuant to the requisition made under section 132A of the Act. 26. It is trite law that the decision of a jurisdictional High Court is binding on the lower authorities/courts. Amandeep Singh's case (supra) is of the jurisdictional High Court and there is no question about its not being of a binding nature. Chandra Prakash Agrawal' s case (supra) is of the Hon'ble Allahabad High Court. However, its persuasive value cannot be detracted from. Moreover, no other High Court decision to the contrary has been pressed into service by the department. Further still, in Amandeep Singh's case (supra), the Hon'ble High Court has, while delivering the judgment, followed the decision of the Hon'ble Andhra Pradesh High Court in the case of Commissioner of Police v. Sadruddin H. Javeri [2000] 243 ITR 602. While doing so, it was held as follows:— "However, the facts of the present case are similar to the facts of the case of Sadruddin Javeri [2000] 243 ITR 579 (AP). In that case, the Andhra Pradesh High Court was considering the question whether the Income-tax authorities can justify and legally invoke section 132A of the Act to take delivery of the seized assets from the police when the seizure was in connection with an alleged offence and the seized assets are held under section 102 of the Criminal Procedure Code before the police authorities could report the seizure to the court and obtain an order under section 457 of the Criminal Procedure Code. It was held that such a course was not open to the income-tax authorities and the possession taken by them by invoking section 132A was illegal. The following observations of the court as appearing at page 595 of the report can be usefully referred to : Seen in this background the powers to requisition of books of account, etc., and any assets as contemplated under section 132A of the Income- tax Act, 1961, one has necessarily to consider, whether the expression 'any officer or authority under any other law for the time being in force' in clause (c) of section 132A(1) can in cases of seizure by a police officer be held to be the officer or authority who has taken into custody the assets which represented either wholly or partly income or property which has not been or would not have been disclosed for the purpose of the Income-tax Act, 1961. The police officer, who seized the property, we have already noticed, has a duty to transport the same to the court or to give custody thereof to any person on his executing a bond and

13 ITA No.682 to 687/Lkw/2015 undertaking to produce the property before the court as and when required and to give effect to the further orders of the court as to the disposal of the same. Thus, pursuant to the seizure, his possession or the custody of the property with any person under the bond undertaking to produce the property before the court is for and on behalf of the court and is custodia legis. There can be no transfer or appropriation of any property seized by the police except under the order of the court. Learned counsel for the Income-tax Officer has conceded before us that section 132 A of the Income-tax Act does not authorize any notice to the court as by no stretch of imagination can the court be identified as any officer or authority under any other law for the time being in force as contemplated under clause (c) of section 132A(l)read with clause (a] thereof. To say the least, there has been gross violation of law by the entry of the Income-tax Officers to take delivery of the properties from the police before the seizure is reported to the court and the court passed any order as to its custody." The court, accordingly, directed the immediale release of all the properties seized from the house of the petitioner. However, since there was some confusion as to whom the seized assets had to be released and also whether the prayer of the petitioner for quashing the notice under section 132A of the Act had been granted or not. a review petition was dismissed in Commissioner of Police v. Sadruddin H. Javeri [2QOQ] 243 ITR 602. 615 (AP) with the following observations:— "It is next contended by learned counsel for the petitioner that the police seized 127 articles from the premises of the writ petitioner, but handed over only 124 articles and not handed over items 26, 27 and 28, The writ petitioner in the writ petition sought for only 44 articles. Out of those 44 articles, the petitioner identified only 17 items and the remaining 27 items could not be identified by him. Now the court directed release of all the articles seized by the police from the premises. It is the grievance of the petitioner that the Department is entitled to appropriate these articles of the petitioner, against the petitioner's arrears or income-tax. Hence, the direction to return the articles is not warranted. Though it was prayed by the petitioner to set aside the notices issued under sections 132 and 132A of the Income-tax Act and the enquiry that may be held in consequence thereof, the court has not chosen to grant any such relief or to interfere with those proceedings. Hence, the Department is entitled to proceed with the enquiry. But, meanwhile as per the direction, ;he Income-tax Department is liable to return the articles to the petitioner. But it is made clear that the articles returned are subject to consequential orders that may be passed by the Department after enquiry is completed. Accordingly, this review petition is dismissed, subject to the above observations." From the above discussion, it clearly emerges that when a seizure is made by a police officer in connection with an alleged offence and held

14 ITA No.682 to 687/Lkw/2015 by him under section 102 of the Criminal Procedure Code, he is duty- bound to transport the same and produce the seized property before the court of competent jurisdiction. In case it is not convenient to transport the said property to the court, he may give its custody to any person on his executing a bond and an undertaking to produce the property after the court as and when required and to give effect to further orders of the court as to the disposal of the same. There can be no transfer or appropriation of any seized property by the police authorities except under an order of the Magistrate under section 457 of the Criminal Procedure Code. However, till the Magistrate issues an order about the custody of the seized assets, the possession will continue to be that of the police officer. It is only after the Magistrate passes an order under section 457 of the Criminal Procedure Code that the person getting possession of the seized property shall be deemed to be possessing it under the orders of the court. Viewed from this angle, in the present case, the possession and control of the seized amount on 23-3-1998. was that of the S.H.O., Police Station City, Phagwara. He cannot be said to be in possession of the seized amount under the orders of the court. Consequently, the seized amount could not be said to be in the custody of the court. 27. Therefore, reliance by the assessee on Amandeep Singh's case (supra) and Chandra Prakash Agrawal's case (supra) is quite justified. From these two High Court decisions, it comes out that without delivery of the requisitioned material, the statutory mandatory requirement of section 132A of the Act is not met with. As specifically held in Chandra Prakash Agrawal's case (supra), the provisions of Chapter XIV-B of the Act, i.e., assessment of search cases, would come into play only when the requisitioned material is actually received by the Assessing Officer pursuant to the requisition made under section 132A. In the present case, as noted in para No. 2 above, the Department requisitioned the seized documents vide letter dated 30-11-1998 (APB-103), but the requisitioned documents were never handed over to the Department by the police authorities and so, the requisition and warrant of authorization remained unconsum-mated, as neither the assets, nor the loose papers were received by the Department in satisfaction of the warrant of authorization, as admitted by the Additional Director of Income-tax (Investigation), Jalandhar in his letter dated 24-1-2000 to the Commissioner of Income-tax, Patiala (copy at APB 104 to 107). Thus, the requirements of section 132A(3) have not been complied with. Therefore, the provisions of section 158BC cannot be invoked. The provisions of section 158BC come into play on a valid requisition. 28. Apropos M.B. Lal's case (supra), that decision does not touch upon the controversy at hand. The question therein was not as to whether jurisdiction to block assess arises from the service of warrant of authorization or the physical handing over the requisitioned assets. In the present case, the validity of any search is not being questioned. 29. In view of the above, respectfully following Amandeep Singh's case (supra) and Chandra Prakash Agrawal's case (supra), we hold that jurisdiction to complete block assessment under section 158BC is

15 ITA No.682 to 687/Lkw/2015 conferred on the Assessing Officer only on the physical handing over of all the books of account/documents/assets requisitioned under section 132A, to the income-tax authorities concerned. 30. The question referred to this Special Bench is, therefore, answered in favour of the assessee and against the department.”

F.No.279/Misc./140 /2015/ITJ Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes ****** New Delhi, 31st December, 2015

Subject: Recording of satisfaction note under section 1S8BD/153C of the Act - reg.- 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 AppealNo.3958 of 2014 dated I2.3.2014(available in NJRS at 2014-LL-0312-51) has laid

16 ITA No.682 to 687/Lkw/2015 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 following 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 I58BC of the Act; or (c) immediately after the assessment proceedings are completed under section }58BCoflhe Act of the searched person." 3. Several High Courts have held that the provisions 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, then also he is required to record his satisfaction as has been held by the Courts.

17 ITA No.682 to 687/Lkw/2015 other grounds of appeal have not been adjudicated as they were not even argued.

(Order pronounced in the open court on 22/02/2021) Sd/- Sd/- (A.D. JAIN) (T.S. Kapoor) Vice President Accountant Member

Aks – Dtd. 22/02/2021

Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File