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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal originally disposed by this Tribunal vide order dated 25.7.2016. The assessee went in appeal before the High Court by raising following question of law: 1. Whether the Tribunal was justified in law in not cancelling the assessment when it has recorded a finding that records were not produced and consequently an adverse inference ought to have been drawn and cancelled the assessment on the facts and circumstances of the case? 2. Whether the assessment under section 153C of the Act, is valid when proper satisfaction is not recorded by the Assessing Officer in the manner contemplated in law before initiating proceedings under section 153C of the Act on the facts and circumstances of the case?
M/s. KBL Layout Bangalore Page 2 of 17 3. Whether the Tribunal erred in law in keeping the issues of merit open which is without jurisdiction on the facts and circumstances of the case? 4. Whether the Tribunal has power to keep issues open which it cannot subsequently adjudicate as it has become functus officio and consequently the appellant will become remedy less in future and hence the order passed by the Tribunal is bad in law on the facts and circumstances of the case?
2. The Hon’ble High Court vide judgement 23.8.2022 remitted the issue to the file of Tribunal by observing as follows: “7. Shri A. Shankar submitted that the ITAT has remitted the matter to the Commissioner of Income Tax (Appeals) to record findings with regard to the validity of the assessment under section 153C of the Act to the extent of enhancement of assessment made by the Commissioner of Income Tax (Appeals) and kept other issues open. He contended that the ITAT has erred in passing such order because other issues could not have been kept open. Once the order is passed by the ITAT, the same attains finality and consequently, the order of Commissioner of Income Tax (Appeals) excluding the validity under section 153C of the Act, becomes final. Accordingly, he prayed that in the facts and circumstances of this case, this Court may consider setting aside the ITAT’s order and to remit entire matter to the ITAT for fresh consideration.
8. Sri E.I. Sanmathi for the Revenue, does not dispute the position of law and has no objection for remitting the entire matter to the ITAT.
9. In view of the above, we pass the following order: ORDER
i. The appeal is allowed. ii. The order dated 25.7.2016 in (Assessment year: 2006-07) by ITAT, Bengaluru, is set aside; iii. The matter is remitted to the ITAT for re-consideration of the entire appeal on its merits; iv. In the circumstances, the substantial question of law recorded hereinabove do not call for any answer and accordingly they are not answered; No costs.”
2.1 Hence, this appeal is listed for fresh hearing before us. Since the earlier order of the Tribunal was set aside for reconsideration of the entire appeal on merits, we consider all the grounds raised by the assessee before this Tribunal on earlier occasion as below:
M/s. KBL Layout Bangalore Page 3 of 17 1. The order of the authorities below in so far as it is against the Appellant, is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant's case.
The appellant denies itself to be assessed on a sum of Rs.1,11,22,908/- as against a sum of Rs.16,20,956/- as declared by the appellant under the facts and circumstances of the case.
3. Without prejudice, the income ought to have been estimated at 5% or in extreme case 8% of the total turnover of Rs.3,78,54,839/- on the facts of the case.
Without prejudice, the income ought to have been estimated at 5% or in extreme case 8% of Rs.3,27,14,279/- on the facts of the case.
The CIT-A erred in enhancing the assessment by making additions of Rs.57,81,981/- on the facts of the case.
The enhancement made by the commissioner is on wrong appreciation of facts and requires to be made Nil under the facts of the case.
7. The authorities below failed to appreciate that the conditions mentioned under section 132 of the Act did not exist and consequently the search itself is not valid on the facts and circumstances of the case. 8. The authorities below erred and ought to have satisfied themselves that the mandatory conditions for action under section 132 exist and then only issued notices for assessments on the facts and circumstances of the case. Thus the authorities below ought to have examined the validity of search proceedings for assumption of jurisdiction under Chapter XIV of the Act. 9. The orders of the authorities below are bad in law as the mandatory conditions to invoke the jurisdiction under section 153C of the Act did not exist, or having not been complied with and consequently the orders of the authorities below are bad in law for want of requisite jurisdiction. 10. The order passed by the CIT-(A) is on a wrong appreciation of facts and is against the principles of natural justice under the facts and circumstances of the case. 11. The appellant denies itself liable to be levied to interest under section 234A, 234B and 234C of the Act and further the computation of interest was not provided to the appellant as regard to the rate, period and method of calculation of interest under the facts and circumstances of the case. The appellant expressly urges that the period of levy of interest is not in accordance with section 234A,234B and 234C of the Act.
M/s. KBL Layout Bangalore Page 4 of 17 12. Without prejudice, the interest levied under sections 234 A,B & C ought to have been waived on the facts of the case. 13. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 14. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed in the interest of justice and equity.
2.2 The assessee has raised following additional grounds:
1. “The authorities below failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153C of the Act on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of UOI vs. Ajil Jain, reported in 260 ITR 80.
2. The assessment is bad in law as reasons for issue of notice under section 153C of the Act have not been given and the appellant has reasons to believe that the same has not been recorded and consequently the assessment is bad in law. The appellant submits that mandatory conditions to assume jurisdiction is to
3. record reasons and in the absence of the same the assessment is bad in law and liable to be cancelled.
4. The order of assessment is further bad in law as the mandatory condition of recording of satisfaction is not complied with or having complied, copy of satisfaction note has not been provided to the appellant and thus the assessment has no legs to stand the test of law.
5. The assessment is further bad in law as the approval from the Joint Commissioner was not obtained or having obtained the copy of the same has not been provided to the appellant under the facts and circumstances of the case.”
Facts of the case are that the assessee M/s KBL Layout belongs to Sri C R Lakshminarayana and K B Lakshman group of cases. There was a search action u/s 132 of Income Tax Act conducted in the case of Sri C R Lakshminarayana and Sri K B Lakshman group on 06.10,2009. In response to Notice u/s 153C, the assessee filed its return of income on 02.09.2011 declaring total income of Rs.16,20,956/-.
M/s. KBL Layout Bangalore Page 5 of 17 However, the same was revised on 23.09.2011 at a total income of Rs.53,40,927/- with the observations as under:-
PAN AAAAK6089J AY 2006-07 Sub: Revised Return of income 3.1 The assessee – AOP had admitted an additional income of Rs.75,00,000 before Asst. DIT (Inv) vide letter dated 8.1.2010. Subsequently, assessee-AOP received a Notice dated 31.5.2011 from Mysore Urban Development Authority requiring completion of pending works in SY No.84/1, 85, 86/1-2, and 130, Avanahalli Village, Mysore Taluk. In view of this, the assessee-AOP is making revised return by declaring additional income of Rs.75,00,000/- subject to following adjustments:- 1. Income returned 16,20,956 2. Provision (as claimed in original return of income 20,01,952 3. Income as admitted in letter dt.8.1.2010 to ADIT (Inv) 75,00,000 1,11,22,908
Less: Expenditure subsequently incurred (vide letter dated 31.5.2011 of MUDA) 1. Civil work paid by a/c payee cross cheque 26,37,000 Deducting TDS to Mr. Muralidhar, Civil Works Contractor, during financial year 2011-12 (Vide bill dated 5.6.2011) 2. Electrical work paid by account payee 19,44,981 Crossed cheque deducting TDS to M/s. Sahana Electricals as per bill 3. Provision for sanitary work pending for 12,00,000 Want of marking by MUDA Engineers (estimated – Definite liability) Total 57,81,981
M/s. KBL Layout Bangalore Page 6 of 17 3.2 Although, the assessee has declared income at Rs.1,11,22,908/- including Rs.75 lakhs additional income admitted during search proceedings, the assessee has also claimed additional expenses of Rs.57,81,981/- being payments made during FY 2011- 12 at Rs.26,37,000/- Rs.19,44,981/- and additional liability of Rs.12,00,000/- on account of estimated provision for sanitary works, over and above the expenses claimed in the original return of income In effect, therefore, the assessee has declared an additional income of only Rs.17,18,019/- in the return of income filed declaring Rs.53,40,927/- as Rs.20,01,952/- is on account of provisions wrongly claimed in original return of income. This Rs.17,18,109/- is against Rs.75 lakhs declared during the course of search proceedings. 3.3 Further, regarding assuming jurisdiction u/s 153C of the Act, the ld. CIT(A) has observed that this issue has not been elaborated. In any case, after perusing the records he observed that pursuant to search and seizure in the case of C R Lakshminarayana and K B Lakshman group of cases, action u/s 153C were initiated in the case of the assessee. Reasons for the same have duly been recorded by the Assessing Officer, who is also the Assessing Officer initiating 153A in respect of Sri K B Lakshman, the person in whose case search has been initiated. The reasons recorded by the ld. CIT(A) are as under:- ‘Satisfaction note for initiating action u/s 153C Action u/s 132 was conducted in the residential premises of Sri K.B. Lakshman on 6.10.2009 based on the authorization issued by the Addl. DIT (Inv)-II, Bangalore vide Warrant No. dt. During the course of search in the case of Sri C.R. Lakshminarayana and K.B. Lakshman group the following books/documents were found and seized u/s 132.
Exhibit I.D. Page Nos. A/KBL/03 131 to 138 A/KBL/04 1 to 5 A/KBL/05 5 to 8 On a scrutiny of the above documents seized it is seen that the above materials belongs to M/s. KBL Layout, I am satisfied that action u/s 153C has to be initiated
M/s. KBL Layout Bangalore Page 7 of 17 in the case of M/s. KBL Layout for the AYs 2004-05 to 2009-10. Hence, issue notice u/s 153C.”
3.4 The ld. CIT(A) observed that the assessee has never questioned the same before the AO and has filed a return of income on 23.9.2011 after being issued a notice u/s 153C. The ld. AO has accepted total income as returned by the assessee itself. As all requirements of section 153C of the Act have been met, he concluded that invoking of jurisdiction by ld. AO is in order and was upheld. 3.5 Regarding enhancement, the ld. CIT(A) observed that the appellant had offered Rs.75 lakhs as additional income in the statement, before the Investigating Officer, on the basis of claim of expenses of Rs 1,52,98,796/- which he could not substantiate and out of which Rs 75 lakhs was agreed to as his additional income. While admitting the same in his return of income declared on 23.09.2011, after claiming additional expense of Rs 57,81,981/-, only Rs 17,18,109/- as additional income was declared in the return so filed. The Assessing Officer has assessed the same without any addition. Even against this, the appellant is in appeal before ld. CIT(A). Since, the appellant has itself declared Rs 53,40,927/- in the return of income filed by it on 23.09.2011 and paid taxes as well, there is no grounds for objecting to the assessment of this income declared by it in the return of income filed. However, he observed that the income so returned and assessed is also not the correct income assessable as detailed in the subsequent paragraphs. As pointed out above, no details or explanation have been furnished with regard to this claim of additional expenditure of Rs 57,81,981/-. The ld. CIT(A) observed that on the basis of seized material marked as A/KBL/04 and A/KBL/05, which showed income earned by the appellant not declared, the investigating authorities had questioned the appellant as under: "On analysis of seized material marked as A/KBL/04 pages no. 1 to 5 and A/KBL/05 page no. 5 to 8, it was noticed that assessee has sold the sites during the financial years 2003-04, 2004-05 and 2005-06. And as assessee follows project completion method, income is declared in the A.
M/s. KBL Layout Bangalore Page 8 of 17 Y, 2006-07 on completion of the project. Relevant statement of Mr Ravi, his reply vide statement u/s 131 dated 6.2.2010 is reproduced below :-
Qn.No.6. It is seen from the copy of the return of income of M/s KBL Layout that sale proceeds were received in three financial years i.e. 2003-04, 2004-05 and 2005-06. Out of the total sale proceeds of Rs 3,78,54,839/-, it was seen that substantial portion of the sale proceeds i.e. Rs.3,51,31,039/- were received in financial year 2003-04 itself, whereas, you have offered income arising out of this project only for assessment year 2006-07. Please state why you have not offered income for assessment year 2004-05 wherein, 92% of the sale proceeds have been received. Ans : We followed project completion method for M/s KBL Layout and therefore file return of income for assessment year 2006-07 as sale of sites were completed during this year and the receipts were finalized." As stated above, assessee has filed return of income declaring the income from sale of sites during the A. Y. 2006-07.
3.6 The ld. CIT(A) while examining, the books of accounts of M/s KBL Layout for the financial year 2003-04, it was seen that an amount of Rs.1,52,98,796/-was paid towards layout formation expenses. Mr. Ravi, when asked to explain the genuineness of these payments, stated that all these payments have been made for the purpose of project development only, like purchase of material, labour charges and were made in cash as it was a business requirement. However, it was also stated that they do not have any vouchers or bills to prove their expenses, as they have been misplaced. This explanation was not acceptable to the ld. CIT(A) as expenses to the tune of over Rs.50 lakhs were being claimed as 'layout formation expenses" without maintaining any documentary evidence. The amount of Rs per acre has been claimed as layout formation expenses without any evidences. Further, he observed that assessee was given opportunity to produce the bills and vouchers in support of his claim, assessee failed to produce the evidences. When this was put across to Mr. Ravi, he agreed to re- work the expenses from the available records and admitted an M/s. KBL Layout Bangalore Page 9 of 17 income of Rs.75,00,000/~ in addition to Rs 16,20,956/- for the assessment year 2006-07 in respect of M/s KBL Layout.
3.7 The ld. A.R. further observed that as is clear from the above, additional income of Rs.75 lakhs was offered for tax as per the statement recorded on the basis of findings of the seized material. Also, in the return filed on 23.09.2011, only Rs.53,40,927 was offered for tax (which includes Rs.20,01,952/- on account of provisions not allowable). As pointed out in the assessment order at para 5.1 and 5.2, the project was with regard to purchase and development of sites at Mysore during the period 2003-04, 2004-05 and 2005-06 for which income was declared in the A.Y 2006-07 on completion of the project. The additional income offered as a result of search proceedings was on account of the fact that a claim of Rs.1,52,98,796/-as being paid towards lay out formation expenses was found to be without any basis or details. The appellant was unable to produce the bills and vouchers before the ld. CIT(A) and therefore he admitted an income of Rs.75 lakhs in addition to Rs.16,20,956/- for the A.Y. 2006-07. He observed that any claim of expenditure incurred during the A.Y. 2011-12 in relation to A.Y. 2006-07 cannot be allowed. Therefore, expenses of Rs.26,37,000/-, Rs.19,44,981/- cannot be allowed. Also, the estimated provision for sanitary work pending of Rs.12 lakhs claimed is also not allowable. The total additional claim of Rs.57,81,981/- therefore is without any basis. 3.8 He observed that in respect of the above, a notice u/s 251(2} dated 06.02.2013 was issued to the appellant for response by 20.0.2013 by registered post (acknowledgement on record). Another copy of the same was handed over to the appellant's counsel on 20.02.2013 allowing further time for reply. The submissions of the appellant dated 12.03.2013 have been taken into account.
M/s. KBL Layout Bangalore Page 10 of 17 3.9 The ld. CIT(A) observed that the appellant has also made a claim before him that the income declared in the return of income is substantial when compared with the total turnover for which 8% is stated to be the accepted norm. It is seen however, that the appellant is in the business of procuring, developing and selling sites. This cannot be compared with the construction business as it is primarily sale of land for which profit/income is known to be in multiples of the investment and cannot be compared with 8% or any other such figure as is normally accepted in case of construction business. Also, it is to be noted that the appellant has himself offered Rs.75 lakhs as the additional income pertaining to the 3 years which was declared in A.Y. 2006-07 on account of completion of project for the reason that he was unable to explain the incurring of development expenditure to the tune of Rs.1.52 crores claimed by it. As against this, Rs.75 lakhs was to be brought for tax as admitted by him during the course of proceedings pursuant to the search action in his case.
3.10 The ld. CIT(A) observed that it is relevant to note in the return of income filed on 23.09.2011, the appellant has himself admitted Rs.1,11,22,908/- (including Rs.75 lakhs additional income offered) as his income but claimed additional expenses of Rs.57,81,981/-. He observed that these additional expenses claimed of? 57,81,9817- are clearly not allowable. These expenses or provisions cannot be allowed against income pertaining to 2006-07 and therefore are disallowed. Accordingly, the ld. CIT(A) has enhanced the income by Rs.57,81,981/- and total income determined at Rs.1,11,22,908/-. Against this the assessee is in appeal before us.
4. Ground No.1 is very general in nature, which do not require any adjudication.
5. Ground No.2 is corelated to the other grounds of appeal on additions made by ld. AO, which will be adjudicated along with ground No.5
M/s. KBL Layout Bangalore Page 11 of 17
6. Ground Nos.3 & 4 are with regard to estimation of income which cannot be applied in the present case as the presumptive taxation at 5% is applicable only when the turnover of the assessee is less than Rs.40 lakhs in the assessment year under consideration. However, in the assessee’s case, it is admitted fact that the turnover of the assessee is more than Rs. 40 lakhs. As such, provision u/s 44AD of the Act or any of the presumptive taxation cannot be applied. Hence, both these ground Nos.3 & 4 are dismissed.
Next ground Nos.5 & 6 are with regard to enhancing of assessment. The plea of the assessee is that the ld. AO has rightly considered the submissions of the assessee and allowed the deduction of Rs.57,81,991/- out of the income offered by the assessee before ADIT (Inv.) vide assessee’s letter dated 8.1.2010 and same to be granted to the assessee. 7.1 On the other hand, ld. D.R. submitted that the assessee has offered the additional income of Rs.75 lakhs before ADIT (Inv.) over and above the income declared by the assessee and also an amount of Rs.20,01,952/-, which is declared as provision in original return of income filed by the assessee. Thus, according to the ld. D.R., total income offered by assessee is as follows:
Provision - Rs.20,01,952/- (as claimed in original return of income)
2. Income as admitted in letter dt.8.1.2010 - Rs.75,00,000/- before ADIT (Inv.) Total - Rs.95,01,952/- 7.2 However, while filing the return of income, assessee claimed additional expenditure at Rs.57,81,981/- and offered net business additional income at Rs.37,19,971/-, which is absolutely wrong and accepted by the ld. AO. Hence, ld. CIT(A) has enhanced the assessment on this count which is to be confirmed.
M/s. KBL Layout Bangalore Page 12 of 17
We have heard the rival submissions and perused the materials available on record. In the present case, it is admitted that assessee has offered additional income as follows: 1. Provision - Rs.20,01,952/- (as claimed in original return of income)
2. Income as admitted in letter dt.8.1.2010 - Rs.75,00,000/- before ADIT (Inv.) Total - Rs.95,01,952/- 8.1 However, the assessee claimed additional deduction of expenditure while offering additional income before filing the return u/s 153C of the Act as follows: Less: Expenditure incurred 1. Civil work paid by account payee crossed cheque 26,37,000 deduction TDS to Mr. Muralidhar, Civil works contractor, during financial year 2011-12 (vide Bill dated 5.6.2011) 2. Electrical work paid by account payee crossed 19,44,981 cheque deducting TDS to M/s. Sahana Electricals as per bill 3. Provision for Sanitary work pending for want of 12,00,000 marking by MUDA Engineers (Estimated) – Definite liability Total Expenditure 57,81,981 Additional business income 37,19,971 8.2 The ld. CIT(A) while adjudicating the appeal of the assessee noted this wrong claim made by the assessee and disallowed the same and enhanced the income to the tune of Rs.51,87,981/-. Now the claim of the ld. A.R. is that the assessee has only offered vide letter dated 8.1.2010 before ADIT (Inv.) at Rs.75 lakhs as gross income and it is not a net income. As such, various expenditure incurred for earning this income to be deducted which amounts to Rs.57,81,981/-. This plea of the assessee is totally wrong. 8.3. The contents of the letter which has been brought to our notice by ld. A.R. vide its letter dated 5.9.2011 filed before ld. AO, which is as follows:-
M/s. KBL Layout Bangalore Page 13 of 17 “13.Income offered for taxation Rs.37,80,029:
13.1. Vide letter dated 08.01.2010 to the Asst. DIT(lnv-), Unit-l(l), Bangalore^, income of Rs.75,00,000 was offered for taxation in addition to the returned income of Rs.16,20,956, as under:
"In continuation to my statement recorded u/s.131 in your office on 6th January, 2010, I admit additional income of Rs.75 lakhs in the case of M/s. KBL Layout, an AOP, for the assessment year 2006-07. This admission is made with a view to avoid protracted litigation and to avoid penalty proceedings u/s.271(l)(c) of the Income-tax Act. We have already declared income of Rs. 16,20,956 in the return of income filed on 3/11/2006 in respect of M/s. KBL Layout This amount of Rs.75 lakhs is in addition to the income already declared.
I would like to add that though we have maintained books of accounts and bills and vouchers for M/s.KBL Layout, AOP, from financial years 2002-03 to 2005- 06 (wrongly mentioned as 2006- 07) and produced copies of books before you for verification, it is not possible for us to produce the bills and vouchers as they are misplaced."
8.4 Contrary to the above letter, assessee making incorrect plea before us that assessee offered only gross income and this expenditure of Rs.57,81,981/- to be deducted from that additional income offered by the assessee. In our opinion, this plea of the assessee cannot be accepted as the income by the assessee is additional income towards the discrepancy found by the investigation team and now the assessee cannot go back at this stage without retracting the same on earlier occasion. Accordingly, we find no merit in this ground of the appeal of assessee and dismissed accordingly.
Next ground Nos.7 to 10 are with regard to assuming jurisdiction u/s 153C of the Act. According to the ld. A.R., there was no valid satisfaction recorded by assessee, which is mandatory in this case as the assessee other person as enumerated in these provisions and since there was no valid satisfaction recorded by ld. AO of the assessee, the assessment order is to be quashed.
M/s. KBL Layout Bangalore Page 14 of 17
The ld. D.R. relied on the order of lower authorities.
We have heard the rival submissions and perused the materials available on record. In this case, ld. AO of the searched person and assessee said to be the same and satisfaction has been recorded by the ld. AO of the searched person Mr. K.B. Lakshman as follows: “Satisfaction note for initiating action u/s 153C Action u/s 132 was conducted in the residential premises of Sri K.B. Lakshman on 6.10.2009 based on the authorization issued by the Addl. DIT (Inv)-II, Bangalore vide Warrant No. dt. During the course of search in the case of Sri C.R. Lakshminarayana and K.B. Lakshman group the following books/documents were found and seized u/s 132.
Exhibit I.D. Page Nos. A/KBL/03 131 to 138 A/KBL/04 1 to 5 A/KBL/05 5 to 8 On a scrutiny of the above documents seized it is seen that the above materials belongs to M/s. KBL Layout, I am satisfied that action u/s 153C has to be initiated in the case of M/s. KBL Layout for the AYs 2004-05 to 2009-10. Hence, issue notice u/s 153C.”
11.1 It is to be noted that, there was search in the case of Mr. K.B. Lakshman, consequent to search u/s 132 of the Act on 6.10.2009. Consequent to this search action in case of Mr. K.B. Lakshman, the ld. AO initiated proceedings u/s 153A of the Act in case of Mr. K.B. Lakshman in whom case search was took place. Subsequent to this, he recorded satisfaction u/s 153C of the Act in case of present assessee as reproduced in earlier para. In our opinion, before issuing notice u/s 153C of the Act, the ld. AO of the searched person must be “satisfied” that, inter-alia, any document seized or requisitioned “belong or pertain to or related to” a person other than the searched person. Thereafter, ld. AO may transfer the records/documents/things/papers, etc. to the AO having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating
M/s. KBL Layout Bangalore Page 15 of 17 to such other person, the jurisdictional AO may proceed to issue a notice for the purpose of completion of assessment u/s 153C of the Act. 11.2 It is to be noted that there are 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. 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 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 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 is fulfilled. In case, where the M/s. KBL Layout Bangalore Page 16 of 17 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.
11.3 In the present case, from the aforesaid satisfaction note, it emerges that the Assessing Officer is satisfied that the documents marked as A/KBL/03, A/KBL/04 & A/KBL/05 belonged to the other person - assessee. He is also satisfied that these documents are seized from the searched person. He is also satisfied that the documents so seized from the residence of the searched person belonged to the assessee-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, 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.
11.4 Further, it is an admitted fac that ld. AO of the searched person and AO of the other person i.e. assessee are the same and the ld. AO of the searched person recorded the satisfaction as mentioned earlier and there is a valid satisfaction recorded by the ld. AO of the searched
M/s. KBL Layout Bangalore Page 17 of 17 person and hence, we do not find any infirmity in assuming jurisdiction u/s 153C of the Act. This view of our is fortified by the judgement of Hon’ble Supreme Court in the case of Super Malls Pvt. Ltd. Vs. PCIT (423 ITR 281) (SC). In view of this, we dismiss these legal grounds raised by assessee in its appeal.
Ground Nos.11 & 12 are with regard to levy of interest u/s 234A, 234B & 234C of the Act, which is consequential and mandatory in nature. Hence, these grounds are dismissed.
Ground Nos.13 & 14 are general in nature, which do not require any adjudication.
In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 13th Dec, 2023