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Income Tax Appellate Tribunal, BANGALORE BENCH ‘B’, BANGALORE
Before: SHRI A.K.GARODIA, ACCOUNANT MEMBER & SMT. ASHA VIJAYARAGHAVAN
BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA Nos. A.Y. Appellant v Respondent s . 1 2006-07 M/s R.V.T.V.Residency, ACIT, Central Circle- Siddaiah Road Cross, 2(1), Bangalore Lalbagh Fort Road, Bangalore-560 002 2 ITA No. 151(B)/2012 2006-07 Shri T.V.Prabhu, ACIT, Central Circle- No.17, 3rd Cross, 2(1), Bangalore Journalist Colony, Bangalore 3 ITA No.153(B)/2012 2007-08 M/s R.V.T.V.Residency, ACIT, Central Circle- Siddaiah Road Cross, 2(1), Bangalore Lalbagh Fort Road, Bangalore-560 002 4 C.O.65(B)/2012 2007-08 Shri T.V.Prabhu, DCIT, Central Circle- No.17, 3rd Cross, 2(1), Bangalore Journalist Colony, Bangalore 5 ITA No.330(B)/2012 2006-07 DCIT, Central Circle- Shri T.V.Prabhu, 2(1), Bangalore No.17, 3rd Cross, Journalist Colony, Bangalore 6 ITA No.331(B)/2012 2007-08 DCIT, Central Circle- Shri T.V.Prabhu, 2(1), Bangalore 7 ITA No.332(B )/2012 2006-07 DCIT, Central Circle- M/s 2(1), Bangalore R.V.T.V.Residency, Siddaiah Road Cross, Lalbagh Fort Road, Bangalore-560 002 8 ITA No.3339B)/2012 2007-08 DCIT, Central Circle- M/s 2(1), Bangalore R.V.T.V.Residency, Siddaiah Road Cross, Lalbagh Fort Road, Bangalore-560 002 Assessee by : Shri S.Parthasarathi, Advocate & Shri Cuddapah Ramesh, CA Revenue by : Ms. Neera Malhotra, CIT Date of hearing : 11-08-2016 Date of Pronouncement : 21-09-2016 O R D E R PER A. K. GARODIA, A. M.:-
Out of this bunch of eight appeals and cross objection, there are four cross appeals in the case of the assessee Shri T.V.Prabhu for A. Y. 2006 – 07 & 2007 – 08 and remaining four appeals are cross appeals for the assessment year: 2006-07
2 ITANos.151,152,153,330,331, 332,333 & CO No.65(B)/2012 2007-08 in the case of a different assessee i.e. M/s R.V.T.V.Residency. All these appeals were heard together and are being disposed of by this common order for the sake of convenience.
At the very outset, it was submitted by the ld. AR of the assessee that in both the cases and in both the years i.e. Shri T.V.Prabhu, for assessment years 2006- 07 and 2007-08 and M/s R.V.T.V. Residency for assessment years 2006-07 & 2007- 08, no satisfaction was recorded by the AO of the searched person and therefore, the assessment orders passed u/s 153C of the Act are not valid and in support of this contention, he placed reliance on the judgment of the Hon’ble Karnataka High Court rendered in the case of CIT Vs IBC Knowledge Park Pvt. Ltd. reported in 385 ITR 346 (Kar.). Thereafter, he submitted that the search was conducted in the case of Shri R.V. Devaraj, one of the business Associate of Shri T.V.Prabhu on 06-01-2009 and it is admitted position of the fact that no such satisfaction was recorded by the A. O. of the searched person and in this regard, he submitted that the finding of the ld. CIT(A) is this that non-recording of such satisfaction is curable defect but as per the judgment of the Hon’ble jurisdictional High Court, such defect is fatal to the assessment. He also submitted that copy of CBDT Circular No. 24/2015 dated 31.12.2015 is available on page 76 of the paper book and as per this, it is stated that as per several High Courts, provisions of section 153C of the I. T. Act are substantially similar/pari materia to the provisions of section 158 BD and therefore, the judgment of Hon’ble apex court in the case of M/s Calcutta Knitwears is applicable to proceedings u/s 153C also. It is also stated in this circular that even if the A.O. of the searched person and the other person is one and the same, then also 3 ITANos.151,152,153,330,331, 332,333 & CO No.65(B)/2012 the A.O. of the searched person is required to record his satisfaction-. Regarding the so called satisfaction note, he submitted that this is recorded by the A.O. of the assessee and not by the A.O. of the searched person.
The ld. DR of the revenue supported the assessment order in both these cases in both these years. At this juncture, specific query was raised by the Bench asking the ld. DR as to whether the revenue can produce any evidence to show that the required satisfaction was recorded by the AO of the searched person but no such satisfaction note could be produced by the learned DR of the revenue although he submitted the copy of satisfaction notes but the same were recorded by the A.O. of the assessee.
We have considered the submissions of both sides and have gone through the material available on record and also the judgment of the Hon’ble jurisdictional High Court rendered in the case of CIT Vs IBC Knowledge Park Pvt. Ltd., (Supra). In that case, it was held that the Tribunal was not correct in holding that the assessment u/s 153C was valid despite there being no satisfaction recorded to the effect that the documents found during the search were incriminating in nature and prima facie represented undisclosed income. It was also held that Sec.153C of the Act, is pari materia to Sec.158BD of the Act and therefore, recording of satisfaction that undisclosed income is belonging to third party has to be complied with and if the same is not recorded by the A.O. of the searched person then the assessment u/s153C of the Act is not valid.
In the present case, the revenue could not show that any satisfaction was recorded as required u/s 153C of the Act by the AO of the searched person. As per the letter of the A.O. submitted in course of hearing on 09.08.2016, he has submitted
4 ITANos.151,152,153,330,331, 332,333 & CO No.65(B)/2012 copy of two satisfaction notes and the assessment order in the case of Shri R V Devraj for A. Y. 2006 – 07 u/s 153A dated 30.12.2010. In the so called satisfaction notes, it is stated that “Notice u/s 153C issued.” Hence it has to be accepted that this is recorded by the A.O. of the assessee and that too after issue of notice u/s 153C and there is no date in the said satisfaction note. Under these facts, by respectfully following this judgment of the Hon’ble Karnataka High Court, we hold that the assessments u/s 153C of the Act, 1961 in both these cases in both these years are not valid and sustainable and therefore, all these four assessment orders are quashed.
In view of our above decision in the above Para, other grounds raised in assessee’s appeals and the cross objection are not required to be decided separately and all the four appeals filed by the revenue do not survive because when the assessment itself is not valid, no addition can be made over and above the returned income if any and therefore, even if the same is made by the AO and was deleted by the ld. CIT(A), no such appeal of the revenue is required to be decided separately against deletion of such additions.
In the result, all the three appeals of the assessee and the cross objection of the assessee are allowed and all the four appeals of the revenue are dismissed.
Order pronounced in the open court on the date mentioned on the caption page.
(ASHA VIJAYARAGHAVAN) (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER Bangalore: D a t e d : .09.2016
5 ITANos.151,152,153,330,331, 332,333 & CO No.65(B)/2012 am*