M/S. DALMIA CONSOLIDATED PVT. LTD.,DELHI vs. DCIT, NEW DELHI

PER H.S. SIDHU, JM

The Assessee has filed the Appeal against the impugned Order dated

22.3.2017 of Ld. CIT(A)-37, New Delhi pertaining to assessment year

2008-09. The assessee has raised the following grounds:-

appellant that Satisfaction Note recorded is vitiated in law since as expressly held by the jurisdictional court in the case of CIT Vs. Radhey Shyam Bansal 337 ITR 217(Del), the Satisfaction Note does not highlight the satisfaction of the assessing officer that the documents seized represent "undisclosed income". 4. That without prejudice to the generality of the previous ground of appeal above, the Ld. CIT(A) erred in upholding the validity of assessment order passed under section 153C143(3) of the Income Tax Act, 1961, rejecting the argument of the appellant that addition made in the assessment order was not based on any seized material discussed in the satisfaction note. 5. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the validity of assessment order passed under section 153C/143(3) of the Income Tax Act, 1961, rejecting the contention of the appellant that the assessing officer had grossly erred in not disposing off the objections raised by the appellant with regard to the issuance of the notices and initiation of assessment under section 153C of the Act. 6. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the addition of Rs. 3,00,00,000/- treating the share capital received as unexplained cash credit u/s. 68 of the Act by rejecting the contention of the appellant that as per settled proposition of law no addition can be made in a non-abated assessment year where no incriminating material is found during the search. 7. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the addition of Rs. 3,00,00,000/- treating the share capital received from 9 companies as unexplained cash credit u/s. 68 of the Act. 8. That the appellant craves leave to add, amend, alter or modify any of the grounds of appeal prior to or at the time of hearing.

132(1) of the Income Tax Act, 1961 (hereinafter referred as the Act) was

conducted in Dalmia Group of cases on 20.1.2012, 27.1.2012 and

28.1.2012 by the Investigation Wing, Unit-VI(1), New Delhi including the

premises of Sh. Parag Dalmia at 4, Bhikaji Kama Place, New Delhi. As a

consequence of the search and seizure action on the above premises,

incriminating documents were seized which relate to M/s Dalmia

Infrastructure Pvt. Ltd. (formerly known as M/s Dalmia Equities Pvt. Ltd.).

In consequence to the aforesaid search and seizure action, a proposal for

initiation of assessment proceedings u/s. 153C of the Act in the case of

Dalmia Infrastrcuture Pvt. Ltd. (formerly known as Dalmia Equities Pvt.

Ltd.) (PAN AACCD7702P) was received from the DCIT, Central Circle -2,

New Delhi dated 21.3.2014 alongwith Satisfaction Note. Subsequently,

proceeding u/s. 153C of the Act was initiated in this case. Notice u/s.

153C read with section 153A of the Act was issued on 21.3.2014. Notice

u/s. 143(2) read with Section 142(1) of the Act was issued on 6.6.2014. In

response to the aforesaid notice, ITR algonwith Tax Audit Report was

submitted. In the ITR for AY 2008-09, the assessee company has shown

NIL income and in response to above notices issued, the AR of the

assessee attended he proceedings from time to time and filed the required

details and information. On perusal of the Balance Sheet as on 31.3.2008,

AO found that during the year under consideration, the assessee company

has raised share capital of Rs. 1,00,00,000/- and share premium of Rs.

2,75,00,000/- from 13 entities (as mentioned in assessment order at page

no. 2). AO further found that 4 entities that are group concerns of the

assessee company hold 75% share holding without paying any share

premium. However, the other share holder companies hold only 25%

share i.e. 2,50,000 shares after paying share premium of Rs.

2,75,00,000/- (@ Rs. 110/- per share). Vide summons u/s. 131 of the Act

dated 5.2.2015, the assessee was asked to ensure the person deposition

of the Directors of 09 companies (as mentioned at page no. 3 of the

assessment order). AO observed that assessee failed to ensure the

personal deposition of the Directors of these companies. Further, the

assessee was issued show cause notice dated 11.3.2015 wherein it was

required to show cause why the funds amounting to Rs. 3.00 crores

received from these 9 companies in the form of share capital and share

premium may not be considered as its own fund which has been routed

through these shell companies. The assessee company has not furnished

any bonafide submission in this regard. Therefore, AO observed that the

genuineness of the transactions entered with and creditworthiness of M/s

Reets Plastics Pvt. Ltd., M/s Top-Tech Cables Pvt. Ltd., M/s Sears Exim

Pvt. Ltd., M/s Raj K Mercantile Corporation Ltd., M/s MGI Glass Industries

Ltd., M/s Canyon Financial Services Ltd., has not been satisfactory

explained by the assessee in terms of section 68 of the Act. Hence, total

amount of Rs. 3.00 crores credited in the books of assessee as share

capital / share premium was being disallowed u/s. 68 of the Act and

added back to the total income of the assessee and accordingly, the

income of the assessee was assessed at Rs. 3,00,00,000/- vide order

dated 24.3.2015 passed u/s. 153C read with Section 153A/143(3) of the

Act. Against the assessment order, the assessee appealed before the Ld.

CIT(A), who vide her impugned order dated 22.3.2017 has dismissed the

appeal of the assessee.

before the Tribunal.

Paper Book containing pages 1 to 124 in which he has attached the copy of

letter dated 27.9.2017 addressed to DCIT, Circle-26 seeking copy of

satisfaction note; copy of covering letter dated 15.3.2018 addressed by

DCIT, Cirlce7(1), Delhi; copy of satisfaction note dated 21.3.2014 recorded

by DCIT, Central Circle-2, New Delhi; copy of satisfaction note dated

21.3.2014 recorded by DCIT, Circle 10(1), New Delhi; copy of seized

material referred to in satisfaction note; page wise explanation for seized

material referred to in satisfaction note; copy of certificate of incorporation

pursuant to change in name from Dalmia Infrastructure (P) Ltd. to Dalmia

Consolidated (P) Ltd.; copy of written submission dated May 12, 2016 filed

before CIT(A)-37; copy of written statement dated 17.2.2017 filed before

CIT(A); copy of written submission dated 22.2.2.017; copy of order passed

by the Hon’ble Supreme Court in the case of CIT-3 vs. Sinhgad Technical

Education Society 250 taxmann.com 225 (SC). And copy of order passed

by the Hon’ble High Court of Delhi in the case of Pr. CIT Central-2 vs.

Index Securities Pvt. Ltd. 86 taxmann.com 84 (Delhi). He stated that that

in the present case jurisdiction has been wrongly invoked and the

assessment order is void-ab-initio since the essential jurisdictional

requirement viz., that the seized documents must be incriminating and

must relate to the AY's whose assessments are sought to be reopened has

not been met. It was submitted that none of the documents referred to in

the satisfaction note are incriminating and none of these documents relate

to AY 2008-09. Hence, the issue relating to aforesaid jurisdictional

requirement has been settled by the Hon’ble Supreme Court in the case of

CIT Vs. Sinhgad Technical Education Society 84 taxmann.com 290 (SC).

This view has also been taken by the jurisdictional High Court in following

cases:-

- Pr.CIT Vs. Index Securities Pvt. Ltd. 86 taxmann.com 84(Del) - CIT Vs. RRJ Securities Ltd. 62 taxmann.com 391 (Del) - ARN Infrastructure India Ltd. Vs. ACIT 81 taxmann.com 260 (Del) 5. Ld. Counsel of the assessee further stated that another jurisdictional

requirement that the seized document must "belong to" the person other

than searched person i.e. Dalmia Consolidated Pvt. Ltd. has not been met

as no satisfaction in this regard has been recorded, which is against the

proposition of law settled by the Hon’ble Delhi High Court in the case of

Pepsico Holdings India Pvt. Ltd. Vs. ACIT 370 ITR 295 (Del). It was further

contented that the satisfaction note dated 21.03.2014 recorded by DCIT,

Circle-10(1), New Delhi makes a reference to certain seized documents

which are of innocuous nature and not at all incriminating. This assertion

of the assessee company is validated by the fact that no addition in

respect of the documents referred in the satisfaction note has been made

in the assessment order passed u/s 153C read with section 153A/ 143(3).

Therefore, there is no rational or nexus between the seized material and

the satisfaction that a third person (i.e. assessee company) has

"undisclosed income". He further stated that it may be pertinent to note

that the said satisfaction note does not even mention the existence of any

"undisclosed income" belonging to the assessee company. Thus, the very

basis for formation of belief about existence of undisclosed income is not

found on cogent material. Therefore, the invocation of jurisdiction is

vitiated in law and would render the assessment void-ab-initio. He further

stated that Ld. CIT(A) has erred in upholding the validity of assessment

order passed under section 153C/143(3) of the Income Tax Act, 1961 by

rejecting the argument of the assessee that addition made in the

assessment order was not based on any seized material discussed in the

satisfaction note. It was further stated that the assessment order is

contrary to law in as much as the addition u/s 68 of the Act has been

made in the absence of any incriminating documentation unearthed during

the course of search. It was further contented that it is an uncontroverted

position that in respect of the 9 companies discussed and reproduced in

the assessment order which is forming basis for present addition, no

material much less incriminating material suggesting existence of any

undisclosed income of the assessee was found during the course of search

proceedings. He further stated that in the appellate proceedings the

assessee relied upon the decision of the Jurisdictional High Court in the

case of CIT V. Kabul Chawla (201S) 380 ITR S73 (Delhi), wherein, the

Hon'ble High Court held that completed assessment cannot be inferred by

the AO while making the assessment under Section 153A of the Act, if no

documentation incriminating in nature is unearthed during the course of

search proceedings. The Commissioner of Income Tax (Appeals)-37 has

dismissed the appeal of the Assessee on the ground that the Assessing

Officer has not erred in making addition of Rs.3,00,00,000/- u/s 68 of the

Income Tax Act without meeting the above argument raised by the

assessee.

authorities below and stated that lower authorities have passed well-

reasoned orders which do not need any interference. She stated that a

search and seizure action under section 132 of the Act was conducted in

the Dalmia Group of cases on 20.1.2012, 27.1.2012 and 28.1.2012

including the premises of Sh. Parag Dalmia. As a consequence of the

search incriminating documents were found at the various premises that

were relevant to the case of the assessee concern. It was further stated

that DCIT, CC-2, New Delhi (AO of searched person) recorded satisfaction

on the basis of seized documents and forwarded a copy of the proposal as

well as satisfaction note to the AO of the assessee concern. Ld. CIT(DR)

during the hearing has produced the copy of assessment records as well

as Satisfaction Note in the instant case recorded by the AO/DCIT, CC-

10(1)) based on which the AO has issued notice u/s. 153C of the Act to

the assessee, which read as under:-

SATISFACTION NOTE M/s Dalmia Infrastructure Pvt. Ltd.

“A letter F.No. DCIT/CC-02/2013-14/2065 dated 21.3.2014 of the DCIT, Central Circle-2, New Delhi has been received in this office on 21.3.2014. This letter contains certified copy of seized material pertaining to M/s Dalmia Infrastructure Private Limited (AACCD7702D) and satisfaction note for initiating assessment proceedings under section 153C of the Income Tax Act, 1961 in this case for Assessment Years 2006-07 to 2011-12. A search & seizure oration was carried out in the case of M/s Dalmia group of cases on 20.1.2012, 27.1.2012 and 23.1.2012 by the Investigation Wing, Unit-VI(1), New Delhi. During the course of search on Sh. Parag Dalmia, 113- 114, Mohta Building, 4, Bhikaji Kama Place, New Delhi, certain documents were found and seized as per Annexure A- 4 and A-5. The appraisal report of the group as well as the seized material has been examined so far and it reveals that the following documents belong to M/s Dalmia Infrastructure Private Limited.

Annexure Page Nos. Party Description of documents A-4 41/DB-8 This page on letter head of Dalmia Infrastructure (P) Ltd. is certified true copy of the resolution passed in the Board of Directors meeting of the company. A-4 93, 98, 100- These pages are 106/DB-8 letters from Dalmia Infrastructure (P) Ltd. addressed to

Purvanchal Construction Works (P) Ltd. regarding surrendering of flats. A-5 3-5/DB-8 These pages contain the details of trial balance of Dalmia Infrastructure (P) Ltd. for the period 1.4.2010 to 31.3.2011 A-5 6-9/DB-8 These pages contain the details of trial balance of Dalmia Infrastructure (P) Ltd. for the period 1.4.2011 to 23.1.2012

I have examined the documents and I am satisfied that the above seized material belongs to M/s Dalmia Infrastructure (P) Ltd.(Formerly known as Dalmia Equities Pvt. Ltd.). Hence notice under section 153C may be issued in the case of M/s Dalmia Infrastructure (P) Ltd. accordingly for the AYs 2006-07 to 2011-12. Sd/- (Astha Lakshmi) DCIT, Circle 10(1), New Delhi”

6.1 Ld. CIT(DR) further stated that AO has rightly observed that

assessee failed to ensure the personal deposition of the Directors of these

companies and also observed that genuineness of the transactions entered

with and creditworthiness of M/s Reets Plastics Pvt. Ltd., M/s Top-Tech

Cables Pvt. Ltd., M/s Sears Exim Pvt. Ltd., M/s Raj K Mercantile

Corporation Ltd., M/s MGI Glass Industries Ltd., M/s Canyon Financial

Services Ltd., has not been satisfactory explained by the assessee in terms

of section 68 of the Act. Hence, total amount of Rs. 3.00 crores credited in

the books of assessee as share capital / share premium was rightly

disallowed u/s. 68 of the Act and added back to the total income of the

assessee, which action the Ld. CIT(A) has upheld. Hence, she requested

that the appeal filed by the Assessee may be dismissed. Further, in

support of her contention, she filed a Paper Book containing pages 1 to 89

in which she has attached the copy of various following decisions wherein

it has been held that merely establishing identity of creditors is not

enough:-

- CIT vs. Precision Finance (P) Ltd. 208 ITR 465 (Cal.) - CIT vs. United Commercial & Industries Co. (P) Ltd. 187 ITR 596 (Cal.) - CIT vs. Nipun Builders & Developers (P) Ltd. 350 ITR 407 (Delhi) - CIT vs. Nova Promoters & Finlease (P) Ltd. 342 ITR 169 (Delhi) - Mukesh Shaw vs. ITO 204 taxman 615 (Jharkhand). - NR Portfolio (P) Ltd. vs. CIT 29 Taxmann.com 291 (Delhi). - CIT vs. Empire Buildtech (P) Ltd. 366 ITR 110 (Delhi) - CIT vs. Focus Exports (P) Ltd. 229 Taxman 8 (Delhi). - CIT vs. MAF Academy (P) Ltd. 361 ITR 258 (Delhi) - Navodaya Castle (P) Ltd. vs CIT 56 taxmann.com 18 (SC) - Sudhir Kumar Sharma (HUF) vs. CIT 69 taxmann.com 219 (SC). 7. On the issue of validity of assessment order passed u/s.

153C/143(3) of the Act, Ld. CIT(DR) has stated that according to

provisions of section 153A & 153C of the Act, it is clear that the basic pre-

requisite to issue notice under section 153C is that the AO 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. If the AO is so

satisfied he shall assess and reassess such income according to the

provisions of section 153A. In such a case the AO shall assess or reassess

the total income of six assessment years immediately preceding the

assessment year relevant to the previous year in which such search is

conducted or requisition made. In support of her contention, she relied

upon the following case laws:-

- Ganpati Fincap Services (P) Ltd. vs. CIT (2017) 82 Taxmann.com 408 (Delhi). - PCIT vs. Super Malls Pvt. Ltd. (2016) 76 taxmann.com 267 (Delhi) - PCIT vs. Nau Nidh Overseas Pvt. Ltd. (ITA No. 58/2017). - PCIT vs. Instronics Ltd. (2017) 82 taxmann.com 357 (Delhi) - SSP Aviation Ltd. 20 taxmann.com 214 (Delhi High Court) - Dr. KM Mehboob vs. DCIT (2012) 211 Taxman 52 (Ker) - Rajesh Sunderdas Vaswani vs. ACIT (2016) 76 taxmann.com 311 (Gujarat) - CIT vs. Classic Enterprises (35 taxmann.com 244) - Savesh Kumar Agarwal vs. UOI (35 taxmann.com 85)

referred to by the Ld. DR with reference to validity of assessment u/s 153C

of the IT Act have all been dealt with by the Delhi High Court in later

decisions relied upon by him in his submissions and there are of no

consequence.

the impugned order passed by the Ld. CIT(A), Paper Books filed by both

the parties and the case laws relied upon by them as well as the

Satisfaction Notes dated 21.3.2014 recorded by the DCIT, CC-2, New Delhi

& another Satisfaction Note recorded by the DCIT, Circle 10(1), New Delhi,

and the assessment records produced by the Ld. CIT(DR) and the reply of

the assessee.

9.1 For the sake of clarity, we are reproducing herewith the Satisfaction

note dated 21.3.2014 prepared by the AO of the searched person (Sh.

Parag Dalmia) i.e DCIT Central Circle-2, New Delhi (page 5) of the Paper

Book and the one prepared by the AO of the person other than searched

person (Dalmia Consolidated Pvt. Ltd. ) i.e. DCIT, Circle 10(1), New Delhi

(page 6) of Paper Book and the Note on the Satisfaction submitted by the

Assessee filed with the Paper Book at page no. 26-29.

SATISFACTION NOTE 21.03.2014 A search & seizure operation was carried out in the case of M/s Dalmia Group of cases on 20.01.2012, 27.01.2012 & 28.01.2012 by the Investigation Wing Unit-VI(1), New Delhi.

During the course of search on Sh. Parag Dalmia, 113-114, Mohta Building, 4, Bhikaji Cama Place, New Delhi, certain documents were found and seized as per Annexure A-1, containing pages 1 to 170. The appraisal report of the group as well as the seized material has been examined so far and it reveals that the following companies subscribed for shares of M/s Dalmia Infrastructure Pvt. Ltd. (Formerly known as Dalmia Equities Pvt. Ltd.) (AACCD7702P).

Annexure Page Description of documents Nos./ Party

A-4 41/DB-8 This page on letter head of Dalmia Infrastructure Pvt. Ltd. is certified true copy of the resolution passed in the Board of directors meeting of the company.

A-4 96, 98 These pages are letters from 100- Dalmia Infrastructure Pvt. Ltd. 106/DB-8 addressed to Purvanchal Construction Works Pvt. Ltd. regarding surrendering of flats.

A-5 3-5/DB-8 These pages contain the details of Trial Balance of Dalmia Infrastructure Pvt. Ltd. for the period 01.04.2010 to 31.03.2011

A-5 8-9/DB-8 These pages contain the details of Trial Balance of Dalmia Infrastructure Pvt. Ltd. for the period 01.04.2011 to 23.01.2012

I have examined the documents and I am satisfied that the above seized material belongs to M/s Dalmia Infrastructure Pvt. Ltd. (Formerly known as Dalmia Equities Pvt. Ltd.). Hence, notice u/s 153C may be issued in the case of /s Dalmia Infrastructure Pvt. Ltd. (Formerly known as Dalmia Equities Pvt. Ltd.) accordingly for the AYs 2006-07 to 2011-12. (G.P. Singh) DCIT, Central Circle-2, New Delhi

SATISFACTION NOTE

“A letter F.No. DCIT/CC-02/2013-14/2065 dated 21.3.2014 of the DCIT, Central Circle-2, New Delhi has been received in this office on 21.3.2014. This letter contains certified copy of seized material pertaining to M/s Dalmia Infrastructure Private Limited (AACCD7702D) and satisfaction note for initiating assessment proceedings under section 153C of the Income Tax Act, 1961 in this case for Assessment Years 2006-07 to 2011-12. A search & seizure oration was carried out in the case of M/s Dalmia group of cases on 20.1.2012, 27.1.2012 and 23.1.2012 by the Investigation Wing, Unit-VI(1), New Delhi. During the course of search on Sh. Parag Dalmia, 113- 114, Mohta Building, 4, Bhikaji Kama Place, New Delhi, certain documents were found and seized as per Annexure A- 4 and A-5. The appraisal report of the group as well as the seized material has been examined so far and it reveals that the following documents belong to M/s Dalmia Infrastructure Private Limited.

Annexure Page Nos. Party Description of documents A-4 41/DB-8 This page on letter head of Dalmia Infrastructure (P) Ltd. is certified true copy of the resolution passed in the Board of Directors meeting of the company. A-4 93, 98, 100- These pages are 106/DB-8 letters from Dalmia Infrastructure (P) Ltd. addressed to Purvanchal Construction Works (P) Ltd. regarding

surrendering of flats. A-5 3-5/DB-8 These pages contain the details of trial balance of Dalmia Infrastructure (P) Ltd. for the period 1.4.2010 to 31.3.2011 A-5 6-9/DB-8 These pages contain the details of trial balance of Dalmia Infrastructure (P) Ltd. for the period 1.4.2011 to 23.1.2012

I have examined the documents and I am satisfied that the above seized material belongs to M/s Dalmia Infrastructure (P) Ltd.(Formerly known as Dalmia Equities Pvt. Ltd.). Hence notice under section 153C may be issued in the case of M/s Dalmia Infrastructure (P) Ltd. accordingly for the AYs 2006-07 to 2011-12. Sd/- (Astha Lakshmi) DCIT, Circle 10(1), New Delhi” “DALMIA INFRASTRUCTURE PVT. LTD. EXPLANATION OF THE ASSESSEE ON DOCUMENTS REFERED TO IN THE SATISFACTION NOTE Notes on seized material

S.No. Particulars 1. Annexure A-4 (Pages 41/DB-8) Explanation Certified true copy of the Board resolution on 23.3.2011 at the registered office of the Company, resolving the approval on the suit against MVL Ltd. and authorizing Sh. Parag Dalmia. This is self explanatory.

Note on surrender of flats to M/s. Purvanchal Construction Works Pvt Ltd. 1 The seized documents relate to four apartments booked by the Assessee - Dalmia Infrastructure Pvt. Ltd. (DIPL) vide agreements dated 9th January 2009 (Assessment Year 2009-10) in the project Purvanchal Height, Plot No. GH-02, ZETA-Ol, Greater NOIDA, U.P. 2. Copies of all four purchase agreements are enclosed herewith as Annexure A and the same were duly recorded in the books of accounts of the assessee for the relevant financial year. 3. As against expectation, the whole project got in trouble because of agitation of farmers against arbitrary acquisition of lands by Greater Noida Authority and the future of the investment turned gloomy. Multiple suits were filed and farmers started fierce agitation on roads. (Everything is part of national news papers and whole

nation is aware of it, however, a copy of one news item is enclosed for perusal as Annexure B) 4. Due to the above sentiments, and sensing that assesee’s investments facing risk of getting zero as several acquisitions by Greater Noida Authority were set aside by Allahabad High Court, the assessee started evaluating various possibilities of exiting from the project. In the meantime the Builder had sent a letter dated 24th 5. August, 2011 (copy enclosed as Annexure C asking to take possession and pay the stamp duty and clear the balance outstanding, thereby, increasing the cost of each apartment by approx. Rs. 150/- per sq.ft. 6. In case desperate situation, the builder was pressed upon to accept surrender of the same for which the Builder agreed. Copies of surrender documents are enclosed as Annexure D. 7. The investment was shown under loans and advances (being booking amount of the flats) in the books of accounts of assessee. Copy of the balance sheet as at 31.3.2011 is enclosed as Annexure E (Schedule VII- Current Assets- - C Loans and Advances, which reflects the total figure of investment at Rs. 5,41,09,000 as loans and advance). 8. As the balance sheet is showing a figure of Rs. 9,03,87,251.64, a copy of ledger of the loan and advances is enclosed as Annexure F, explaining the components thereof. 9. These 4 flats were surrendered to the Builder (copy of the surrender letter already enclosed as Annexure D, the following payments were received- Flat No. A-1/201 S.No. Cheque No. Cheque Drawn on Cheque Clearing Date bank amount date a. 460964 19.10.2011 Vijay Bank 5,00,000 25.10.2011 b. 460965 30.11.2011 Vijay Bank 30,06,900 30.11.2011 c. 460966 30.12.2011 Vijay Bank 30,06,911 30.12.2011

Flat No. A-1/204

S.No. Cheque No. Cheque Drawn on Cheque Clearing Date bank amount date a. 460967 19.10.2011 Vijay Bank 5,00,000 25.10.2011 b. 460968 30.11.2011 Vijay Bank 30,06,900 30.11.2011 c. 460969 30.12.2011 Vijay Bank 30,06,911 30.12.2011

Flat No. A-2/103 S.No. Cheque No. Cheque Drawn on Cheque Clearing Date bank amount date a. 460970 19.10.2011 Vijay Bank 5,00,000 25.10.2011 b. 460971 30.11.2011 Vijay Bank 25,26,305 30.11.2011 c. 460972 30.12.2011 Vijay Bank 25,26,300 30.12.2011

Flat No. A-2/207 S.No. Cheque No. Cheque Drawn on Cheque Clearing Date bank amount date a. 460973 19.10.2011 Vijay Bank 5,00,000 25.10.2011 b. 460974 30.11.2011 Vijay Bank 24,98,907 30.11.2011 c. 460975 30.12.2011 Vijay Bank 24,98,907 30.12.2011

The above payments are duly reflected in the books of accounts. A copy of the Bank statement of the Royal Bank of Scotland is enclosed as Annexure G. 10.A copy of the balance sheet as at 31.3.2012 is enclosed in which the opening balance of non-current investments as per Note NO. 9, is reduced Rs. 5,41,09,000.00 which represent the amount received from surrender of above flats.”

9.2 One of the contentions raised by the Ld. DR at the time of hearing

was that assumption of jurisdiction was to be tested by examining the

satisfaction note recorded by the assessing officer of the searched person

i.e. DCIT, Central Circle-2, New Delhi and not that of the assessing officer

who has passed the assessment order u/s 153C/143(3). It has been noted

by us that in the present case the assessing officer of person other than

the searched person is different from the assessing officer of the searched

person. Upon careful examination of both the satisfaction notes

reproduced above it has also been noted by us that there is a very subtle

but important difference between the two. The satisfaction note recorded

by the assessing officer of the searched person mentions the following :-

“ During the course of seach o Sh. Parag Dalmia, 113-114, Mohta Building, 4, Bhikaji Kama Place, New Delhi, certain documents were found and seized as per Annexure A-1, containing pages 1 to 170. The appraisal report of the group as well as the seized material has been examined so far and reveals that the following companies subscribed for shares of M/s Dalmia Infrastructure Pvt. Ltd. (Formerly known as Dalmia Equities Pvt. Ltd.)(AACCD7702P).”

9.3 However, thereafter the satisfaction note is completely silent on the

names of the subscribing companies or the specific seized material which

according to the AO was incriminating. The only difference between the 2

satisfaction notes is the reference to the subscription of share capital

reproduced above. The contention raised by the Ld. DR therefore, was to

take a broader view and test the assumption of jurisdiction based on the

satisfaction note recorded by DCIT, Central Circle-2, New Delhi i.e.

assessing officer of the searched person. Hence, the first issue to be

examined is whether – “Assumption of jurisdiction u/s 153C of the Act is to

be examined on the basis of satisfaction recorded by the assessing officer

of the person other than searched person or the assessing officer of the

searched person.”

9.4 It would be important to refer to the provisions of section 153C of

the Act as applicable to the facts of the present case as under :-

Assessment of income of any other person Section 153C

(1) 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 is 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 for the relevant assessment year or years referred to in sub-section (1) of section 153A.

The highlighted portion of above reproduced section 153C(1) of the Act was further amended w.e.f 1-10-2014 by substituting it with the following :-

“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, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person.”

9.5 The above substitution has the effect of now making it mandatory

for the AO of the “other person” also to record satisfaction that the books

of account or documents, etc., have a bearing on the determination of the

total income of such 'other person' before embarking upon the exercise of

his assessment or reassessment. However, as per settled law,we find that

even in the pre-substitution era of the relevant part of sub-section (1) of

section 153C covering the period under consideration, recording of

satisfaction by the assessing officer was a sine qua non so as to enable

the AO of the “other person” to start with the proceedings for making

assessment or reassessment.

9.6 In the case of Pr. CIT Central-2 Vs. Index Securities Pvt. Ltd. 86

Taxmann.com 84 (Delhi) a search action took place on 14.09.2010 on the

Jagat Group and its Directors. Assumption of jurisdiction u/s 153C of the

Act was held to be invalid by the ITAT against which the revenue filed an

appeal before the Delhi High Court. The order of the ITAT was upheld by

the Delhi High Court. In para 31 of the said order it was held by the court

that satisfaction note forms the basis for initiating the proceedings under

Section 153C of the Act. The relevant portion of the order is reproduced

below :-

“31. As regards the second jurisdictional requirement viz., that the seized documents must be incriminating and must relate to the AYs whose assessments are sought to be reopened, the decision of the Supreme Court in Sinhgad Technical Education Society (supra) settles the issue and holds this to be an essential requirement. The decisions of this Court in RRJ Securities and ARN Infrastructure India Ltd. v. Asstt. CIT [2017] 394 ITR 569/81 taxmann.com 260 (Delhi) also hold that in order to justify the assumption of jurisdiction under Section 153C of the Act the documents seized must be incriminating and must relate to each of the AYs whose assessments are sought to be reopened. Since the satisfaction note forms the basis for initiating the proceedings under Section 153C of the Act, it is futile for Mr. Manchanda to contend that this requirement need not be met for initiation of the proceedings but only during the subsequent assessment.”

9.7 In the case of CIT Vs. RRJ Securities Ltd. 62 Taxmann.com 391

(Delhi) search and seizure operation were undertaken under Section 132

of the Act in the case of Sh. B.K.Dhingra, Smt. Poonam Dhingra and M/s

Madhusudan Buildcon Pvt. Ltd. on 20.10.2008 on the basis of which

proceedings under section 153C of the Act were initiated in the case of RRJ

Securities Ltd. Assumption of jurisdiction u/s 153C of the Act was held to

be invalid by the ITAT against which the revenue filed an appeal before the

Delhi High Court. The order of the ITAT was upheld by the Delhi High

Court. In para 18 to 20 of the order after referring to decisions of other

High Courts on the topic the Court concluded that recording of satisfaction

is sine qua non to commence proceedings under Section 153C of the Act in

respect of such other person. The relevant para 18 to 20 of the order are

as under :-

“18. It, plainly, follows that the recording of a satisfaction that the assets/documents seized belong to a person other than the person searched is necessarily the first step towards initiation of proceedings under Section 153C of the Act. In the case where the AO of the searched person as well as the other person is one and the same, the date on which such satisfaction is recorded would be the date on which the AO assumes possession of the seized assets/documents in his capacity as an AO of the person other than the one searched. 19. The Allahabad High Court in the case of CIT v. Gopi Apartments [2014] 365 ITR 411/46 taxmann.com 280 has expressed a similar view in the following words:-

“25. A bare perusal of the provision contained in Section 153C of the I.T. Act leaves no doubt that, as is provided under Section 158BD, where the Assessing Officer, while proceeding under Section 153A against a person who has been subjected to search and seizure under Section 132(1) or has been proceeded under

Section 132A, 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.

Thus, there are two stages:

The first stage comprises of a search and seizure operation under Section 132 or proceeding under Section 132A against a person, who may be referred as ‘the searched person’. Based on such search and seizure, assessment proceedings are initiated against the ‘searched person’ under Section 153A. At the time of initiation of such proceedings against the ‘searched person’ or during the assessment proceedings against him or even after the completion of the assessment proceedings against him, the Assessing Officer of such a ‘searched person’, may, if he is satisfied, that any money, document etc. belongs to a person other than the searched person, then such money, documents etc. are to be handed over to the Assessing Officer having jurisdiction over ‘such other person’.

The second stage commences from the recording of such satisfaction by the Assessing Officer of the ‘searched person’ followed by handing over of all the requisite documents etc. to the Assessing Officer of such ‘other person’, thereafter followed by issuance of the notice of the proceedings under Section 153C read with section 153A against such ‘other person’.

The initiation of proceedings against ‘such other person’ are dependent upon a satisfaction being recorded. Such satisfaction may be during the search or at the time of initiation of assessment

proceedings against the ‘searched person’, or even during the assessment proceedings against him or even after completion of the same, but before issuance of notice to the ‘such other person’ under Section 153C.

9.8 There has been a catena of decisions of various High Courts where

it has been held that assumption of jurisdiction u/s 153C of the Act was

invalid where the seized documents did not relate to the relevant

assessment year and were not incriminating. This proposition of law has

been upheld by the Delhi High Court in the case of Pr. CIT Central-2 Vs.

Index Securities Pvt. Ltd. 86 Taxmann.com 84 (Delhi), CIT Vs. RRJ

Securities Ltd. 62 Taxmann.com 391 (Delhi), ARN Infrastructure India

Ltd. Vs. ACIT 81 Taxmann.com 260 (Delhi) and by the Supreme Court in

the case of CIT Vs. Sinhgad Technical Education Society 84 Taxmann.com

290 (SC). If the requirement in law was restricted to recording of

satisfaction by the assessing officer of the searched person that the books

of accounts or documents etc. belong to person other than searched

person and thereafter the assessing officer of the “other person” was not

required to record any satisfaction prior to 1-10-2014, before proceeding

further u/s 153C there was no reason for the Courts to have settled the

above proposition. Therefore, it has to be held that even in the pre-

substitution era of the relevant part of sub-section (1) of section 153C

covering the period under consideration, recording of satisfaction by the

assessing officer of the “other person” was a sine qua non so as to enable

the AO of the “other person” to start with the proceedings for making

assessment or reassessment, in those cases where the assessing officer

of the searched person and “other person” were not same.

9.9 The next issue to be determined is that assumption of jurisdiction

u/s 153C of the Act is to be examined based on satisfaction recorded by

the assessing officer of the “other person” or the assessing officer of the

searched person. This issue has been settled by the Delhi High Court in the

case of CIT Vs. RRJ Securities Ltd. 62 taxmann.com 391 (Del) where it

has been held as under :-

”32. Section 153C of the Act merely requires the AO of A searched person to handover the assets and documents seized, which belong to another person, to the AO of that person. The AO of a searched person is not required to examine whether such documents could provide a clue

for discovery of undisclosed income of the person to whom the document so belongs. This Court in SSP Aviation Ltd.(supra) had observed as under:

“At the time when the Assessing Officer having jurisdiction over the searched person reaches the satisfaction that the document belongs to a person other than the searched person, it is not necessary for him to also reach a firm conclusion/opinion that the document shows undisclosed income belonging to such other person. That is a matter for enquiry, which is to be conducted in the manner prescribed by section 153C.” 33. The record slip belongs to the Assessee and, therefore, the action of the AO of the searched persons recording that the same belongs to the Assessee cannot be faulted. However, the question then arises is whether the AO of the Assessee was justified in taking further steps for reassessing the income of the Assessee in respect of the assessment years for which the assessments were concluded and in respect of which the seized document had no bearing. In our view, the same would be clearly impermissible as the seized material now available with the AO, admittedly, had no nexus with those assessments and was wholly irrelevant for the purpose of assessing the income of the Assessee for the years in question. Merely because a valuable article or document belonging to an Assessee is seized from the possession of a person searched under Section 132 of the Act, does not mean that the concluded assessments of the Assessee are necessarily to be re-opened under Section 153C of the Act. In our view, the concluded assessments cannot be interfered with mechanically and solely for the reason that a document belonging to the Assessee, which has no bearing on the assessments of the Assessee for the years preceding the search, was seized from the possession of the searched persons.

with. Merely because valuable articles and/or documents belonging to the Assessee have been seized and handed over to the AO of the Assessee would not necessarily require the AO to reopen the concluded assessments and reassess the income of the Assessee. 36. The decision in SSP Aviation (supra) cannot be understood to mean that the AO has the jurisdiction to make a re-assessment in every case, where seized assets or documents are handed over to the AO. The question whether the documents/assets seized could possibly reflect any undisclosed income has to be considered by the AO after examining the seized assets/documents handed over to him. It is only in cases where the seized documents/assets could possibly reflect any undisclosed income of the Assessee for the relevant assessment years, that further enquiry would be warranted in respect of those years. Whilst, it is not necessary for the AO to be satisfied that the assets/documents seized during search of another person reflect undisclosed income of an Assessee before commencing an enquiry under Section 153C of the Act, it would be impermissible for him to commence such enquiry if it is apparent that the documents/assets in question have no bearing on the income of the Assessee for the relevant assessment years. 37. As expressly indicated under Section 153C of the Act the assessment or reassessment of income of a person other than a searched person would proceed in accordance with the provisions of Section 153A of the Act. The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized. 38. As indicated above, in the present case, the documents seized had no relevance or bearing on the income of the Assessee for the relevant assessment years and could not

possibly reflect any undisclosed income. This being the undisputed position, no investigation was necessary. Thus, the provisions of section 153C, which are to enable an investigation in respect of the seized asset, could not be resorted to; the AO had no jurisdiction to make the reassessment under Section 153C of the Act. 39. In view of the above, the third question framed, whether the proceedings under Section 153C of the Act could be initiated against the Assessee, is answered in favour of the Assessee and against the Revenue. 40. In view of the above, it is not necessary for us to examine the other questions. The appeals are, accordingly, dismissed. In the circumstances, the parties are left to bear their own costs.” 9.10 In the case of CIT, Hyd. Vs. Shettys Pharmaceuticals & Biologicals

Ltd. 57 Taxmann.com 282 (AP) while examining the validity of assumption

of jurisdiction u/s 153C it was held as under :-

“6. It is therefore clear that firstly satisfaction has to be recorded by the Assessing Officer who conducted search, 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 of the Act. Thereafter, the Assessing Officer having jurisdiction over third party on receipt of the seized material or books of accounts or document being handed over to him shall record his own satisfaction after examining the same independently without being influenced by the satisfaction of the Seizing Officer. In other words it is not an automatic action. We find satisfaction of two officers is missing. In this connection we set out the text of the order of the Assessing Officer which is as follows:

“A search and seizure operation u/s 132 was carried out in the group case of Dr. T. Yadhaiah Goud and others on 25.3.2010. During the course of search operation documents belonging to SHETTY PHARMACEUTICALS & BIOLOGICAL LTD., has been seized. Hence it is considered to initiate proceedings u/s 153C of the I.T. Act.”

9.11 From the above reproduced portion of the orders of Delhi High Court

and AP High Court it is apparent that when the question regarding validity

of assumption of jurisdiction is to be decided, the satisfaction note of the

AO of “other person” would be relevant. This is also logical since

application of mind must be of the AO who is assuming jurisdiction u/s

153C of the Act. The AO of “other person” cannot assume jurisdiction in a

mechanical manner based on satisfaction recorded by the AO of the

searched person, where both the assessing officers are different.

Therefore, we are of the view that it is futile for the Ld. DR to argue that

validity of assumption of jurisdiction has to be examined on the basis of

satisfaction recorded by the AO of searched person.

9.12 After perusing the Satisfaction Note recorded by the AO of “other

person” as well as Note on the Satisfaction submitted by the assessee

alongwith its enclosures, as discussed above, we find that the seized

documents do not relate to the assessment year under consideration i.e.

AY 2008-09 and none of the documents referred to in the satisfaction note

are incriminating. This is further validated by the fact that no addition on

the basis of these documents has been made in the assessment order. The

assessment order does not refer to any seized document. Explanation

furnished by the assessee with regard to the seized documents referred in

the satisfaction note is as under :-

S.No. Particulars 1. Annexure A-4 (Pages 41/DB-8) Explanation Certified true copy of the Board resolution on 23.3.2011 at the registered office of the Company, resolving the approval on the suit against MVL Ltd. and authorizing Sh. Parag Dalmia. This is self explanatory. 2. Annexure A-4 (Pages 96, 98, 100-106/DB-8) Explanation Letters to M/s Purvanchal Construction Works Pvt. Ltd. for surrendering the following Apartments at their Project viz., ‘Purvanchal Heights’ at Gr. Noida, for their buy back at cost. i) A-1/201 (page 100) ii) A-1/204 (page 98 & 106) iii) A-2/103 (page 96 & 104) iv) A-2/207 (page 102) Copies of purchase deeds, surrender letters and bank statements are enclosed. 3. Annexure A-45(Pages 305/DB-8) Explanation

Working papers on trial balance for the period from 1.4.2010 to 31.3.2011. 4. Annexure A-4 (Pages 6-9/DB-8) Explanation Working papers on trial balance for the period from 1.4.2011 to 23.1.2012.

9.13 The Ld. DR could not controvert the explanation of the assessee

regarding the above documents at the time of hearing. Even otherwise the

AO has not made any addition with regard to the above documents

referred to in the Satisfaction Note in the assessment order for AY 2008-09

or other assessment years confirming the fact that these are not

incriminating. Copies of the above referred documents are annexed in the

paper Book filed by the assessee and a perusal of the same also confirms

that none of these documents relate to assessment year under

consideration i.e. AY 2008-09.

9.14 As regards documents at Sl. No. 2 of the above Table it was noted

that the seized documents relate to four apartments booked by the

Assessee - Dalmia Infrastructure Pvt. Ltd. vide agreements dated 9th

January 2009 in the project Purvanchal Height, Plot No. GH-02, ZETA-01,

Greater NOIDA, U.P. and the copies of all four purchase agreements as

appended as Annexure A were duly recorded in the books of accounts of

the assessee for the relevant financial year. It was further noted that

against expectation, the whole project got in trouble because of agitation

of farmers against arbitrary acquisition of lands by Greater Noida Authority

and the future of the investment turned gloomy. It was further noted that

in view of above, assesee’s investments facing risk of getting zero as

several acquisitions by Greater Noida Authority were set aside by Hon’ble

Allahabad High Court, the assessee started evaluating various possibilities

of exiting from the project. However, in the meantime the Builder had sent a letter dated 24th August, 2011 asking to take possession and pay

the stamp duty and clear the balance outstanding, thereby, increasing the

cost of each apartment by approx. Rs. 150/- per sq.ft. In case

desperate situation, the builder was pressed upon to accept surrender of

the same for which the Builder agreed. Copies of surrender documents are

placed on record. The investment was shown under loans and advances

(being booking amount of the flats) in the books of accounts of assessee.

Copy of the balance sheet as at 31.3.2011 is on record (Schedule VII-

Current Assets- - C Loans and Advances, which reflects the total figure of

investment at Rs. 5,41,09,000 as loans and advance).As the balance

sheet is showing a figure of Rs. 9,03,87,251.64, a copy of ledger of the

loan and advances is on record, explaining the components thereof. These

4 flats were surrendered to the Builder (copy of the surrender letter

already on record, the following payments were received-

Flat No. A-1/201 S.No. Cheque No. Cheque Drawn on Cheque Clearing Date bank amount date a. 460964 19.10.2011 Vijay Bank 5,00,000 25.10.2011 b. 460965 30.11.2011 Vijay Bank 30,06,900 30.11.2011 c. 460966 30.12.2011 Vijay Bank 30,06,911 30.12.2011

Flat No. A-1/204 S.No. Cheque No. Cheque Drawn on Cheque Clearing Date bank amount date a. 460967 19.10.2011 Vijay Bank 5,00,000 25.10.2011 b. 460968 30.11.2011 Vijay Bank 30,06,900 30.11.2011 c. 460969 30.12.2011 Vijay Bank 30,06,911 30.12.2011

Flat No. A-2/103 S.No. Cheque No. Cheque Drawn on Cheque Clearing Date bank amount date a. 460970 19.10.2011 Vijay Bank 5,00,000 25.10.2011 b. 460971 30.11.2011 Vijay Bank 25,26,305 30.11.2011 c. 460972 30.12.2011 Vijay Bank 25,26,300 30.12.2011

Flat No. A-2/207 S.No. Cheque No. Cheque Drawn on Cheque Clearing Date bank amount date a. 460973 19.10.2011 Vijay Bank 5,00,000 25.10.2011 b. 460974 30.11.2011 Vijay Bank 24,98,907 30.11.2011 c. 460975 30.12.2011 Vijay Bank 24,98,907 30.12.2011

9.15 The above payments are duly reflected in the books of accounts. A copy of the Bank statement of the Royal Bank of Scotland is on record. A copy of the balance sheet as at 31.3.2012 is also on record in which the opening balance of non-current investments as per Note NO. 9, is reduced Rs. 5,41,09,000.00 which represent the amount received from surrender of above flats. 9.16 In view of above, we are of the view that in the present case jurisdiction has been wrongly invoked and the assessment order was void- ab-initio since the essential jurisdictional requirement viz., that the seized documents must be incriminating and must relate to the AY's whose assessments are sought to be reopened has not been met. It was noted that none of the documents referred to in the satisfaction note of the AO of “other person” are incriminating and none of these documents relate to AY 2008-09. Therefore, this issue of jurisdictional requirement has already been settled by the Hon’ble Supreme Court in the case of CIT Vs. Sinhgad Technical Education Society 84 taxmann.com 290 (SC) wherein, the Hon’ble Supreme Court has observed as under:- “Section 153C of the Income Tax Act, 1961 – Search and seizure - Assessment of income of any other person (validity of notice) – Assessment years 2000-01 to 2003-04 – Whether as per provisions of section 153C, incriminating material which was seized had to pertain to assessment years in

question - Held, yes – Whether where loose papers found and seized from residence of President of assessee, an educational institution, indicating capitation fees received by various institutions run by assesee did not establish co- relation document wise with assessment years in question, notice issued under section 153C had rightly been quashed and set aside. (Head Notes Only).” 9.17 We further find this view has also been taken by the jurisdictional High Court in following cases:- -Pr.CIT Vs. Index Securities Pvt. Ltd. 86 taxmann.com 84(Del) - CIT Vs. RRJ Securities Ltd. 62 Taxmann.com 391 (Del) -ARN Infrastructure India Ltd. Vs. ACIT 81 taxmann.com 260 (Del) 9.18 In the case of Pr.CIT Vs. Index Securities Pvt. Ltd. 86 taxmann.com 84(Del) the Court held as under :- “32. In the present case, the two seized documents referred to in the Satisfaction Note in the case of each Assessee are the trial balance and balance sheet for a period of five months in 2010. In the first place, they do not relate to the AYs for which the assessments were reopened in the case of both assessees. Secondly, they cannot be said to be incriminating. Even for the AY to which they related, i.e. AY 2011-12, the AO finalised the assessment at the returned income qua each Assessee without making any additions on the basis of those documents. Consequently even the second essential requirement for assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees.” 9.19 We further find that Ld. DR did not produce any contrary record and decision to the record and decisions relied upon by the Ld. Counsel of the assessee. However, the decision of the Hon’ble Supreme Court of India in the case of CIT vs. Singhad Technical Education Society (Supra) and the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. RRJ Securities Ltd. 62 taxmann.com 391 (Del) and Pr.CIT Vs. Index Securities Pvt. Ltd. 86 taxmann.com 84(Del), are squarely applicable in the present case. However, the case laws relied upon by the Ld. CIT(DR) are of lower courts and distinguishable on facts, therefore, they are not applicable in the present case. The decisions in the case of PCIT vs. Super Malls Pvt. Ltd. (2016) 76 taxmann.com 267 (Delhi) and PCIT vs. Nau Nidh Overseas Pvt. Ltd. (ITA No. 58/2017) have been considered

by the Delhi High Court in the case of Pr.CIT Vs. Index Securities Pvt. Ltd. 86 taxmann.com 84(Del) decided against the revenue on the validity of assumption of jurisdiction u/s 153C of the Act. The decision in the case of Ganpati Fincap Services (P) Ltd. vs. CIT (2017) 82 Taxmann.com 408 (Delhi) and PCIT vs. Instronics Ltd. (2017) 82 taxmann.com 357 (Delhi) merely hold that where the assessing officer of the person searched and the other person are the same there is no need for recording two separate satisfaction notes. On the facts of the present case where assessing officer of the searched person and other person are not same this decision is not relevant. Interestingly in the case of PCIT vs. Instronics Ltd. (2017) 82 taxmann.com 357 (Delhi) the mater was restored to ITAT for consideration of further grounds including the question whether assumption of jurisdiction by the AO und section 153C qua the Asessee was justified on the ground that the documents seized and stated to belong to the Assessee were not incriminating. The decision in the case of CIT vs. Classic Enterprises (35 taxmann.com 244) lays down that where after search at business premises of assessee-firm and its partner, books of account were handed over to concerned Assessing Officer, who after recording satisfaction issued notice under section 153C and completed assessment under section 153C/143(3), assessment was in accordance with law. In Savesh Kumar Aggarwal Vs. UOI 35 taxmann.com 85 (All) it was held that Assessing Officer can proceed under section 153A to find out source of income, even if seized goods were released for valid entry in stock books. In Rajesh Sunderdas Vaswani vs. ACIT (2016) 76 taxmann.com 311 (Gujarat) issuance notice u/s 153C was held to be valid as there was prima facie incriminating material. In In Dr. KM Mehboob vs. DCIT (2012) 211 Taxman 52 (Ker) it was held that for transferring file under section 153C, there is no need to examine as to whether evidence or materials seized in course of search of an assessee represents or proves undisclosed income of another assessee. This view is opposite to the latest decisions of the jurisdictional High Court i.e Delhi High Court and hence ratio of decision of Kerela High Court cannot be applied. The decision in the case of SSP Aviation Ltd. 20 taxmann.com 214 (Delhi High Court) has already been considered by the Supreme Court in the case of CIT vs. Singhad Technical Education Society (Supra).

9.20 Keeping in view of the facts and circumstances of the case as explained above and respectfully following the decision of the Hon’ble Supreme Court of India in the case of CIT vs. Singhad Technical Education Society (Supra) as well as the decision of the Hon’ble Jurisdictional High Courts referred above, we are of the considered view that documents referred to in the Satisfaction Note are related to Assessment Year in dispute i.e. AY 2008-09. Therefore, invocation of jurisdiction is vitiated in law and would render the assessment void-ab-initio. Accordingly, we cancel the assessment order as well as appellate order. 9.21 Since the assessment order is being quashed on the validity of assumption of jurisdiction u/s 153C of the Act remaining ground raised by the assessee have become academic in nature and are therefore not being adjudicated. 10. In the result, the appeal of the Assessee is allowed.

Order pronounced on 19/07/2018.

Sd/- Sd/- [T.S. KAPOOR] (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 19/07/2018

*SR BHATNAGAR*