LATE SHRI JAYANT MANEKLAL WAGLE,,PUNE vs. INCOME-TAX OFFICER,,

The learned Authorized Representative for the assessee pointed out that the additional grounds of appeal raised by assessee are the jurisdictional issue, hence the same needs to be addressed first before referring to the issue raised on merits of additions made.

The additional grounds of appeal raised by assessee read as under:- 1] The assessee submits that the notice issued u/s 153C was bad in law and accordingly, the asst. completed u/s 144 r.w.s. 153C be declared null and void. 2] The assessee submits that no proper satisfaction was recorded while issuing the notice u/s 153C to the assessee and hence, the assessment order passed u/s. 144 r.ws. 153C is bad in law and the same may be declared as null and void.

We find that the assessee has challenged the notice issued under section 153C of the Act on the ground that no proper satisfaction was recorded before issuing the said notice and hence, the assessment order passed under section 144 r.w.s. 153C of the Act be declared as null and void.

The issue raised vide additional grounds of appeal is jurisdictional in nature and involves question of law and no verification of facts, hence the same is admitted for adjudication.

Briefly, in the facts of the case, search action under section 132(1) of the Act was carried out in Sinhgad Technical Educational Societies (STES) / M N Navale group on 20.07.2005. During the course of search at the residence and office premises, certain documents were seized, in which there was reference to assessee. The Assessing Officer incharge of M N Navale group of cases forwarded the seized documents belonging to assessee to the Assessing Officer in whose jurisdiction the assessee was being assessed. The Assessing Officer in the assessment order vide para 2 has referred to the seized

The assessee by way of additional grounds of appeal challenged the exercise of jurisdiction under section 153C of the Act on the ground that no proper satisfaction was recorded by the Assessing Officer of searched person. The said issue as pointed out, raised by way of additional grounds of appeal for the first time before us. So, in order to decide the same, the learned Departmental Representative for the Revenue was directed to produce assessment records with satisfaction note vide noting dated 25.04.2017. The appeal was fixed on 18.07.2017 and thereafter on 12.10.2017 and some directions were again given to the learned Departmental Representative for the Revenue. In response, on the next date of hearing i.e. 07.11.2017, letter dated 01.11.2017 was filed wherein it was pointed out that since it was very old record, hence more time be granted to produce the same before the Bench. The plea of learned Departmental Representative for the Revenue was accepted and the matter was adjourned to 23.01.2018, on which date, again similar letter was filed by learned Departmental Representative for the Revenue along with a letter from the Assessing Officer pointing out that since the scrutiny folder was not available with his office and hence, satisfaction note under section 153C of the Act of the Assessing Officer, copies of documents and

The learned Authorized Representative for the assessee referred to the assessment order passed by Assessing Officer and pointed out that the perusal of the same reflects that in para 2 there was reference to the seized documents

The learned Departmental Representative for the Revenue fairly admitted that records were not traceable as it is apparent from the letter dated 30.10.2018 and showed inability to produce the same.

We have heard the rival contentions and perused the record. The assessment in the case was initiated consequent to search proceedings being conducted against M N Navale group. The said search had taken place on the said group on 20.07.2005. During the course of search, certain documents were found which were seized vide Panchanama dated 22.06.2005; during the course of search at the residence of Shri M N Navale in the said seized documents, there was mention of certain transactions with the assessee. It may be pointed out that the assessee is deceased and is being represented by his legal heir. The Assessing Officer in para 1 talks about search and seizure operation and in para 2 has referred to the seized documents relating to the assessee. In para 3 of assessment order, the Assessing Officer mentions that

Now, let us look at the provisions of section 153C of the Act, which relates to the assessment of a person other than the person searched. Section provides that in case during the course of search on the searched person, certain documents are found which belong to another person, then the Assessing Officer incharge of the searched person has to record satisfaction in this regard and thereafter, pass on the documents to the Assessing Officer incharge of the other person. Recording of satisfaction before passing on information along with seized documents is must; in the absence of which proceedings initiated under section 153C of the Act are vitiated. Since the assessment order is silent about recording of satisfaction or handing over of satisfaction note by the Assessing Officer of searched person to the Assessing Officer of assessee, then it was incumbent upon the Department to prove its case of having jurisdiction under section 153C of the Act i.e. to produce satisfaction note of the Assessing Officer incharge of the searched person, pursuant to which documents were handed over to the Assessing Officer of assessee and proceedings were initiated under section 153C of the Act. Despite several opportunities being allowed to the learned Departmental Representative for the Revenue, satisfaction note and the assessment records could not be produced, though efforts were made but on the ground that records are very old, the same cannot be produced. But this cannot be taken as ground for allowing the claim of Department. The onus was upon the

In the result, the appeal of assessee is allowed.