ACIT, CENTRAL CIRCLE-3(1), HYDERABAD vs. SHAKILA BAIG, HYDERABAD

On being aggrieved, the assessee carried the matter in appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the validity of notice issued u/sec.153C of the Act in light of satisfaction note recorded by the Assessing Officer before issuing notice and contended that in absence of proper satisfaction note, the notice issued u/sec.153C of the Act is invalid and consequent assessment order passed by the Assessing Officer is null and void. The learned CIT(A) after considering the relevant submissions of the assessee and also by following the decision of ITAT in the group cases pertaining to various persons including Mrs. L. Reena Peterson, releated-search party in the case of M/s. MBS Jewellers in ITA.Nos.1082 to 1087/Hyd./2014 and ITA.Nos.1211 to 1218/Hyd./2014, quashed the assessment order passed by the Assessing Officer on the ground that the satisfaction which was drawn to initiate the proceedings u/sec.153C merely records that the documents pertaining the appellant

Aggrieved by the order of the learned CIT(A), the Revenue is now in appeal before the Tribunal.

Ms. M. Narmada, learned CIT-DR submitted that, the learned CIT(A) has erred in not following the decision of Hon’ble Supreme Court in the case of Super Malls (P.) Ltd., vs., PCIT-8, New Delhi reported in [2020] 115 taxmann.com 105 (SC) wherein it has been held that, in case Assessing Officer of searched person and other person is same, it is sufficient by Assessing Officer to record in satisfaction note that documents seized from searched person belonged to 7 ITA.No.515/Hyd./2022 other person and, there is no requirement of transmitting documents so seized from searched person to other person. In the present case, going by the satisfaction note recorded by the Assessing Officer of the searched person, it is very clear that the documents so seized belonged/relates to the assessee. Therefore, the notice issued u/sec.153C on the basis of the said satisfaction is valid. The learned CIT(A) without considering the relevant points simply quashed the notice u/sec.153C and consequent assessment order passed by the Assessing Officer. Therefore, she submitted that the order of the learned CIT(A) should be set aside and the addition made by the Assessing Officer should be upheld. She further submitted that, in the alternative, since the learned CIT(A) has not discussed the issue on merits and the learned CIT(A) has quashed the assessment order passed by the Assessing Officer on legal issue, the matter may be restored back to the file of learned CIT(A) to decide the appeal on merits.

Shri Abhishek Garg, Advocate-Learned Counsel for the Assessee, on the other hand, supporting the order of 8 ITA.No.515/Hyd./2022 the learned CIT(A) submitted that, this issue is squarely covered in favour of the assessee by the order of the ITAT, Hyderabad in appellant group case where under similar satisfaction note recorded by the Assessing Officer, the ITAT has quashed the assessment order on the ground that the satisfaction note recorded by the Assessing Officer is not as per the provisions of sec.153C of the Act and consequently, the assessment order passed by the Assessing Officer is null and void. Learned Counsel for the Assessee further referring to various judicial precedents including decision of Hon’ble Supreme Court in the case of CIT vs., Sinhgad Technical Education Society [2017] 397 ITR 344 (SC) submitted that, it is the incumbent upon the Assessing Officer to record satisfaction qua each assessment year in light of material found during the course of search and thus, the Assessing Officer ought to have record satisfaction note on the basis of material found during the course of search which belonged/pertains to the other person and had a bearing on the total income of particular assessment year. In the present case, going by the satisfaction note recorded by the 9 ITA.No.515/Hyd./2022 Assessing Officer, the Assessing Officer merely stated that the documents relating to the assessee-respondent, but has not arrived at a correct satisfaction that the said document had a bearing on the total income of the assessee. Therefore, in absence of proper satisfaction note recorded by the Assessing Officer, the issue of notice u/sec.153C and consequent assessment order is in valid and liable to be quashed. The learned CIT(A) after considering relevant facts has rightly quashed the assessment order passed by the Assessing Officer.

We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that, during the course of search in the case of M/s. MBS Jewellers Pvt. Ltd., and it’s group cases on 11.03.2010 certain docuemnts were found and seized relating to the assessee viz.,Smt. Shakila Baig. The Assessing Officer has recorded satisfaction as required under the provisions of sec.153C of the Act in light of seized documents found during the course

We find that, in the present case, the Assessing Officer of the searched person and the Assessing Officer of the assessee are one and the same. The Assessing Officer has recorded satisfaction note in the case of the assessee as 12 ITA.No.515/Hyd./2022 ‘other person’ and observed that, documents found during the course of search on 11.03.2010 relates to Smt. Shakila Baig-Assessee. The provisions of sec.153C deals with assessment of ‘other person’. As per the provisions of sec.153C of the Act stood before 01.10.2014, where a search had been taken place and the Assessing Officer is satisfied that, any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates 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 notice and assess or reassess the income of the other person in accordance with the provisions of section 153A. In otherwords, during the course of search in a case any document belonged to other person is found, then, the Assessing Officer shall handover such documents

In the present case, going by the facts available on record, there is no dispute with regard to the fact that, during the course of search on 11.03.2010 in the case of M/s. MBS Jewellers Pvt. Ltd., and it’s group cases, a document was found and seized which contain copy of the sale deed no.6268/2008 dated 25.07.2008 for sale of land admeasuring ac.5.04 gts in Sy.no.172 of Hydernagar Mandal, Ranga Reddy District in favour of Dr. P.S. Prasad and the said document belongs to the assessee and having a bearing on the total income of the assessee for the assessment year 2009-2010. Therefore, in our considered view, the satisfaction note recorded by the Assessing Officer is in accordance with the provisions of sec.153C of the Act and consequently, notice issued u/sec.153C is valid and,

Coming back to the arguments of the Learned Counsel for the Assessee in light of the decision of Hon’ble Supreme Court in the case of Super Malls (P.) Ltd., vs., PCIT-8, New Delhi (supra) that, the satisfaction note recorded by the Assessing Officer is improper and not in accordance with the provisions of sec.153C of the Act. In our considered view, the law does not specify how to record a satisfaction and the manner in which such satisfaction note is to be recorded. The law only specifies the satisfaction of the Assessing Officer that, the documents found during the course of search belonged to other person. In the present case, the Assessing Officer of the searched person and the assessee is one and the same and the Assessing Officer of the assessee has recorded satisfaction in clear words and stated that, the said document found during the course of search belongs to the assessee. Therefore, in our

In this view of the matter and considering the facts of the case, we are of the considered view that the learned CIT(A) is erred in quashing the assessment order passed by the Assessing Officer u/sec.143(3) r.w.s.153C of the Act without considering the binding decision of Hon’ble Supreme Court in the case of Super Malls (P.) Ltd., vs., PCIT-8, New Delhi (supra) where the Hon’ble Supreme Court has explained the law and also the satisfaction note required to be recorded by the Assessing Officer of the searched person and the other person. Therefore, we are of the considered view that, there is merit in the arguments of 18 ITA.No.515/Hyd./2022 the Learned DR and thus, we reverse the order passed by the learned CIT(A) and upheld the order passed by the Assessing Officer.

We find that the learned CIT(A) has allowed relief to the assessee by quashing the assessment order passed by the Assessing Officer u/sec.143(3) r.w.s.153C of the Act. However, the learned CIT(A) has not discussed the issue on merits, since he has allowed the relief to the assessee on legal ground. It was the argument of the Learned Counsel for the Assessee that in case the issue is decided against the assessee, the matter may be remitted back to the learned CIT(A) to decide the issue on merits. The Learned DR present for the Revenue, has no objection for setting-aside the issue to the file of learned CIT(A) to decide the issue on merits. Thus, considering the arguments of both the sides, we reverse the order of the learned CIT(A) and restore the issue back to the file of learned CIT(A) with a direction to decide the issues involved in the appeal on merits, in accordance with law, by providing adequate opportunity of being heard to the assessee.