ACIT, CENTRAL CIRCLE-1, BHUBANESWAR vs. M/S. SRI SAI RAMESWARA SOLVENTS PVT. LTD., KORAPUT

आयकर अऩीऱीय अधधकरण, कटक न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री अरुण खोड़पऩया ऱेखा सदस्य के समऺ । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर (तऱाशियाां और अशिग्रहण) अऩीऱ सं/IT(SS)A Nos.04-06/CTK/2021 (ननधाारण वषा / Assessment Year :2013-2014 to 2015-2016) ACIT, Central Circle-1, Vs M/s Sri Sai Rameswara Solvents Bhubaneswar Pvt. Ltd., Bhadraya Street, Jeypore, Koraput-764001 PAN No. : AAJCS 3201 K AND Cross Objection Nos.24-26/CTK/2021 (Arising out of IT(SS)A Nos.04-06/CTK/2021) (ननधाारण वषा / Assessment Year :2013-2014 to 2015-2016) M M/s Sri Sai Rameswara Solvents Vs ACIT, Central Circle-1, Pvt. Ltd., Bhadraya Street, Bhubaneswar Jeypore, Koraput-764001 PAN No. : AAJCS 3201 K AND आयकर अऩीऱ सं/ITA Nos.81-83/CTK/2021 (ननधाारण वषा / Assessment Year :2013-2014 to 2015-2016) ACIT, Central Circle-1, Vs M/s Sri Sai Rameswara Solvents Bhubaneswar Pvt. Ltd., Bhadraya Street, Jeypore, Koraput-764001 PAN No. : AAJCS 3201 K AND Cross Objection Nos.27-29/CTK/2021 (Arising out of ITA Nos.81-83/CTK/2021) (ननधाारण वषा / Assessment Year :2013-2014 to 2015-2016) M/s Sri Sai Rameswara Solvents Vs DCIT, Corporate Circle-1(2), Pvt. Ltd., Bhadraya Street, Bhubaneswar Jeypore, Koraput-764001 PAN No. : AABCP 3276 D (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) ..

राजस्व की ओर से /Revenue by : Shri M.K.Gautam, CIT-DR ननधााररती की ओर से /Assessee by : Shri Jami Siva Sai, one of the directors of assessee. सुनवाई की तारीख / Date of Hearing : 18/10/2022 घोषणा की तारीख/Date of Pronouncement : 18/10/2022

2 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 आदेश / O R D E R Per Bench : IT(SS)A Nos.04-06/CTK/2021 are the appeals filed by the revenue against the separate orders of the ld. CIT(A)-2, Bhubaneswar, all dated 27.04.2021, passed in I.T.Appeal Nos.0415, 0416 & 0417/18-19, for the assessment years 2013-2014, 2014-2015 & 2015-2016, respectively. ITA Nos.81-83/CTK/2021 are the appeals filed by the Revenue against the separate orders of the ld. CIT(A)-2, Bhubaneswar, all dated 29.04.2021 passed in IT Appeal Nos.0122, 0412 & 0411/2018-19 for the assessment years 2013-2014 to 2015-2016. The assessee has also filed cross objections being CO Nos.24-27/CTK/2021 & 27-29/CTK/2021 against the above appeals of the revenue. 2. At the time of hearing, ld. AR on behalf of the assessee has filed an adjournment letter seeking time. Ld. AR was informed that adjournment will not be granted and the appeals are to be disposed off. After this, the Bench took a break of 10 minutes because the ld. CIT-DR submitted that he desires to get print out of the written submissions and argument notes. When the Bench reassembled, ld. AR of the assessee was not present in the court. However, one of the directors of the assessee, namely, Shri Jami Siva Sai, was present. He submitted that his Advocate is not available. In view of the above, the Bench proceeded to dispose off the appeals after hearing the arguments of the ld. CIT-DR and the material evidence available on record.

3 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 3. First we shall take up the appeals of the revenue in IT(SS)A Nos.04-06/CTK/2021 filed for the assessment years 2013-2014, 2014- 2015 & 2015-2016, respectively. On perusal of the grounds raised by the revenue in all the appeals, it is found that the revenue has raised the similar grounds. Therefore, to avoid repetition, the similar grounds raised by the revenue in its appeal for A.Y.2013-2014 i.e. in IT(SS)A No.04/CTK/2021 shall be taken into consideration, which read as under :- (i) The Assessing Officer has completed the assessment by utilizing and relying on the information available from the seized documents (here cash book), but the CIT(Appeals) annulled the assessment order by observing that seized material for the assessment year which is incriminating in nature relating to assessee, do not exist. (ii) The satisfaction note recorded by the Assessing Officer before initiating proceedings u/s.153C clearly mentioned that the assessee has violated the provisions of section 40A(3) and the details of such violation have been quantified in page no. 67,92 to 120 of the Appraisal report. The CIT(A) has not given cognizance to the finding contained in Appraisal report and annulled the assessment on the ground that seized material were not used for making assessment. (iii) Any other ground of appeal that may arise at the time of hearing. 4. It was submitted by the ld. CIT-DR that the assessee is a company, which is engaged in the business of extraction of crude oil from rice bran and de-oiled cakes. It was the submission that there was a search on the premises of two of the directors of the assessee company, namely, Shri Jami Shiva Sai and Jami Ramesh on 12.02.2016. It was the submission that substantial incriminating documents have been found. There was also a survey u/s.133A of the Act on the premises of the assessee on

4 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 12.02.2016. On the basis of the evidence found in the course of search on the directors of the assessee company, the notice u/s.153C of the Act came to be issued on 21.02.2017 on the assessee company. The assessee company responded by submitting that the ITRs filed u/s.139(1) of the Act for the relevant assessment years may be considered as returns in response to the notice issued u/s.153C of the Act. Ld. CIT-DR further drew our attention to para 8 of the assessment order to submit that a show cause notice had been issued to the assessee to explain as to why the disallowance u/s.40A(3) of the Act was not to be done as payments had been made in excess of Rs.20,000/- or above on a single day to a single party. It was the submission that the assessee had responded mentioning four issues, first in respect of expenses below or at Rs.20000/-, second was the payment to cultivator and third was the expenses capitalized in the books of account and four other miscellaneous expenses. It was the submission that in respect of payment to cultivators, the AO proceeded to make addition as the same was in excess of Rs.20,000/- to a single person on a single day. The assessee had submitted that the payments to the cultivators were made because the cultivators had refused to accept checks/DDs and the cultivators asked for cash payments. It was the submission that no evidence had been produced before the AO regarding the claim of the cultivators and the AO further proceeded even doubting the genuineness of the expenses. It was the submission that on appeal, the ld. CIT(A) deleted the

5 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 addition by holding that there was no incriminating material found in the course of search. It was further submitted that in para 5.2, the ld. CIT(A) has extracted the satisfaction note. It was the submission that the said note clearly showed that incriminating documents in the form of cash book, valuation report, salary advance letter and details of cash payments had been found. It was the submission that thus clearly incriminating material had been found. It was the submission that the reliance placed by the ld. CIT(A) on the decision of the Hon’ble Supreme Court in the case of Sinhgad Technical Education Society, reported in [2017] 84 taxmann.com 290 (SC)/397 ITR 344 and in the case of Super Mall Pvt. Ltd., reported in 423 ITR 251 (SC) were erroneous. It was submitted by the ld. CIT-DR that the coordinate bench of the Tribunal in the case of Unicon Merchants Pvt. Ltd. passed in IT(SS)A Nos.23&24/CTK/2019, order dated 08.06.2022, has categorically held that once there is seized material in a search then the issuance of notice u/s.153C of the Act is mandatory and once a notice u/s.153C of the Act is issued, the consequential assessment on the basis of the seized material is a forlorn conclusion. It was further submitted by the ld. CIT-DR that the Hon’ble Delhi High Court in the case of Anil Kumar Bhatia, reported in 24 taxmann.com 94 (Delhi) has categorically held that once the assessment is reopened by issuance of notice u/s.153A of the Act, then disclosed as well as undisclosed income would be assessed. He also placed reliance on the decision of the Hon’ble Delhi High Court in the case of Kabul

6 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 Chawla, reported in 61 taxmann.com 412 (Delhi) to submit that the Hon’ble Delhi High Court has categorically held in para 37 that once a search took place u/s.132 of the Act, the notice u/s.153A of the Act would have to be mandatorily issued and the consequential assessment would include both disclosed as also undisclosed income. The ld. CIT-DR has filed his written submission as follows :- It is submitted that Section 153A (which is similarly worded to section 158BC of the Act), provides that where the AO. is satisfied that any money, bullion, jewellery or other valuable article or thing or any books of account or documents seized or requisitioned, he shall proceed against such person and issue such person a notice and assess or reassess undisclosed income of such other person. However, there is a distinction between the two provisions inasmuch as under section 158BC notice can be issued only where the money, bullion, jewellery or other valuable article or thing or any books of account or documents seized or requisitioned belong to such person, whereas under Section 158BC if the Assessing Officer is satisfied that any undisclosed income belongs to any person, in respect of whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he shall proceed to determine undisclosed income of such other person. It must be appreciated here that word "incriminating" has not been used in the Fourth Proviso inserted by Finance Act, 2017 w.e.f. 0l.04.2017 to Section 153A of the Act. Hence same can't be imported into it. i) The Hon'ble Kerala High Court in the case of E. N. Gopakumar vs. CIT (75 taxmann.com 215) held that assessment proceedings generated by issuance of a notice under section 153A(I)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on basis of which notice was issued under section 153A(I)(a) of the Act. The observations of the Hon'ble Kerala High Court in para-7, 8 and 9 are reproduced as under: " "7. In so far as the issue as to whether it is necessary that incriminating materials should be unearthed in a search under Section 132 of the Act to sustain a notice issued under Section 153A(1)(a) is concerned, the issue stands covered in favour of the

7 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 Department as per the judgment of this Court in St. Francis Clay Decor Tiles's case (supra) and Promy Kuriakose's case (supra) though the second among them relates to a third person to the search as well; which cases would fall under Section 153C of the Act. We, therefore, answer the said question stating that for the issuance of a notice under Section 153A(1)(a), it is not necessary that the search on which it was founded should have necessarily yielded any incriminating material against the assessee or the person to whom such notice is issued. 8. Section 153A is a provision which deals with assessment in case of search or requisition. The activation of a search is not something which is regulated by any limit as to period of time. Even if returns are filed and regular assessments are concluded, search on premises could always be made, if the authority concerned is satisfied that action ought to proceed in that line. Once that is done, Section 153A(1)(a) authorises the issuance of notice calling for filing of returns. This has been noted even under the point decided above. Once a return is filed in answer to such a notice, the Explanation to Section 153A provides, among other things, that all provisions of the Income Tax Act will apply to the assessment made under Section 153A of the Act. This is the manner in which the provisions in Sections 153A, 153B and 153C of the Act would regulate. Once that is done, it is well within the jurisdiction of the assessing authority to proceed with any lawful modes of assessment as prescribed in the Act. The Statute nowhere makes it conditional that the department has to unearth some incriminating material to conclude some method against the assessee in events where the assessment is triggered by a notice under Section 153A(1)(a) of the Act. This means that even when such notice is triggered following a search, the assessment proceedings can be concluded in any manner known to law, including under Section 143(3) or even Section 144 of the Act, if need be. Therefore, the assessment proceedings generated by the issuance of a notice under Section 153A (1)(a) of the Act can be concluded against the interest of the assessee including making additions even without any incriminating material being available against the assessee in the search under Section 132 of the Act on the basis of which the notice was issued under Section 153A(I)(a) of the Act. We answer this issue accordingly. 9. In the case in hand, the assessing authority had, upon receipt of the returns in answer to the notice under Section 153A(I)(a) of the Act, given an opportunity to the assessee to interact with the officer and thereafter he was required to place a cash flow statement. All that followed thereafter is the assessing authority carrying out an exercise of acting on the cash flow statement and concluding the assessment by determining the amounts on a meaningful and appropriate application of the cash flow statement by rearranging

8 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 the entries thereof. That activity carried out by the assessing authority, though to a larger extent, was found against by the CIT (Appeals), has found disapproval at the hands of the Tribunal which is the last fact finding authority. We see that the decision of the Appellate Tribunal cannot be critisised as unreasonable, perverse or unavailable on the face of record. Resultantly, these appeals fail". It may please be noted that the Hon'ble Kerala High Court has duly noted the contrary decision of Hon'ble Delhi High Court in the case of Kabul Chawla (380 ITR 573), and Kurele Paper Mills (P.) Ltd. (380 ITR 571) and Hon'ble Mumbai High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (374 ITR 645) while holding the decision in favour of Revenue. ii.) The Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora (52 taxmann.com 172) held that the Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard to material available at time of original assessment. The observations of Hon'ble High Court in para-ll are reproduced as under: "10. Under the block assessment proceeding under Chapter XIV-B only the undisclosed income found during the search and seizure operation were required to be assessed and the regular assessment proceedings were preserved. The introduction of Section 153A of the Act provides a departure from this proceeding. Under Section 153A of the Act, the Assessing Officer has been given the power to assess or reassess the total income of the assessment years in question in separate assessment orders. Consequently, there would be only one assessment order in respect of six assessment years in which total disclosed or undisclosed income would be brought to tax. Consequently, even though an assessment order has been passed under Section 143(1) (a) or under Section 143(3) of the Act, the Assessing Officer would be required to reopen these proceedings and reassess the total income taking notice of undisclosed income even found during the search and seizure operation. The fetter imposed upon the Assessing Officer under Sections 147 and 148 of the Act have been removed by the non obstante clause under Section 153A of the Act. Consequently, we are of the opinion that in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed, which were subsisting when the search was made, the Assessing Officer would be competent to reopen the assessment proceeding already made and determine the total income of the assessee. The Assessing Officer, while exercising the power under Section 153A of the Act, would make assessment and compute the total income of the

9 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 assessee including the undisclosed income, notwithstanding the assessee had filed the return before the date of search which stood processed under Section 143(1)(a) of the Act. 11. In the light of the aforesaid, the reasons given by the Tribunal that no material was found during the search cannot be sustained, since we have held that the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of the original assessment. We find that the Tribunal dismissed the appeal while relying upon the decision of a Coordinate Bench of the Tribunal in the case of Anil Kumar Bhatia (supra). We find that the said decision of the Coordinate Bench of the Tribunal was set aside by the Delhi High Court in CIT v. Anil Kumar Bhatia [2012] 24 taxmann.com 98/211 Taxman 453. We find that the Tribunal only dismissed the appeal on this legal issue and had not considered the matter on merits". iii.) The Hon'ble Kerala High Court in the case of CIT vs. St. Frands Clay Decor Tiles (70 taxmann.com 234) held that neither under section 132 or under section 153A, phraseology 'incriminating' is used by Parliament, therefore, any material unearthed during search operations or any statement made during course of search by assessee is a valuable piece of evidence in order to invoke section 153A. The observations of the Hon'ble High Court in para- 20 & 21 are reproduced as under: "20. On a plain reading of Section 153A, it is clear that once search is initiated under Section 132 or a requisition is made under Section 132A after the 31st day of May 2003, the Assessing Officer is empowered to issue notice to such person requiring him to furnish return of income in respect of each assessment year following within six assessment years referred to in clause (b). It further treats the returns so filed as if such return were a return required to be furnished under Section 139. So that on a reading of Section 153A(1) it is categoric and clear that once a notice is issued and the Assessing Officer has required the assessee to furnish return for a period of six assessment years as contemplated under clause (b) then the assessee has to furnish all details with respect to each assessment year since the same is treated as a return filed under section 139. It is true that as per the first proviso, the Assessing Officer is bound to assess or reassess the total income with respect to each assessment year following the six assessment years specified in sub-clauses (a) and (b) of Section 153A. However, even if no documents are unearthed or any statement made by the assessee during the course of search under section 132 and no materials are received for the afore-specified period of six years, the assessee is bound to file a return, is the scheme of the

10 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 provision. Even though the second proviso to Section 15 3A speaks of abatement of assessment or reassessment pending on the date of the initiation of search within the period of six assessment years specified under the provision that will also not absolve the assessee from his liability to submit returns as provided under Section 153A(I)(a). This being the scheme of the provisions of the Act, the Appellate Tribunal ought to have considered the issue with specific reference to the facts involved in the case and as provided under Section 15 3A. 21. However, we find that the Tribunal without appreciating the facts and circumstances has proceeded purely on the basis that the cases at hand were covered under the Special Bench decision in All Cargo Logistics Ltd. (supra). In our view the course adopted by the Tribunal was not the proper one to decide the question with regard to the sustainability of the order passed by the First Appellate Authority. Therefore, we are of the considered opinion that the Tribunal has not adopted the right method to decide the issue with regard to the question framed in these appeals and therefore, it is only necessary to remand the matter to the Tribunal for fresh consideration". iv.) The Hon'ble Delhi High Court in the case of Filatex India Ltd. vs. CIT (49 taxmann.com 465) held that during assessment under section 153A, additions need not be restricted or limited to incriminating material, found during course of search. The observations of the Hon'ble High Court in para-2 are reproduced as under: "2. On the first question, we note that the Assessing Officer, in the proceedings under section 153A of the Act, had made several additions, relying upon the incriminating material found in the course of search, which was conducted on 18th January, 2006 and subsequent dates. A perusal of the impugned order by the Tribunal would disclose that incriminating material including statement of Sanjay Agrawal, GM (Marketing) have resulted in additions, which have been upheld. It is not the case of the appellant- assessee that initiation of proceedings under Section 153A was bad or unwarranted in law as no incriminating material was found during the search. The contention raised by the appellant-assessee is that the addition, which is the subject matter of questions No. (ii) and (iii) , was/is not justified in the assessment order under section 153A, as no incriminating material was found concerning the addition under Section 115JB of the Act. The said argument has no substance and has to be rejected. Under Section 153A of the Act, the additions need not be restricted or limited to the incriminating material, which was found during the course of search. There cannot be multiple assessments, once Section 153A of the Act is applicable. Section 153A(1) postulates one assessment, computing

11 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted or requisition was made. Total income is assessed or reassessed in the order under section 153A of the Act and the Section applies notwithstanding sections 139,147,148,149,151 and 153 of the Act". v.) The Hon'ble Allahabad High Court in the case of Savesh Kumar Agarwal vs. Union of India (35 taxmann.com 85) held in para-22 & 23 that the question which now called for consideration was whether on receipt of satisfaction note, even if the assessing authority receiving satisfaction note has already examined account books, and had not found anything adverse c:gainst the assessee and further seized goods had already been released in favour of the assessee, he was required to issue notice under section 153 C of the Act to file returns for six years. In this case, the Department had taken a stand that even if the books of account were examined by the Assessing Officer of the petitioner and the bullion having found validly entered in the stock books was released under section 132B, still the Assessing Officer could proceed under section 153A and assess the petitioner to find out the source of income. The observations of the Hon'ble High Court in para-24 & 25 are reproduced as under: "24. Where there is power to act in a particular manner, unless it is shown that power has been exercised without jurisdiction and lacks bona fide, the statutory notice given in exercise of such powers, may not be set aside by the court under article 226 of the Constitution of India. The argument that the second assessment for the same year and of the previous years will amount to duplication and will be needless exercise of power, overlooks the fact that such power actually exists and if there is any reason to believe, namely, the satisfaction of the assessing authority to examine the source of income, the court would not interfere to close such enquiry. 25. If there is power to do something under the Act, the action taken in the fiscal matters cannot be set aside in exercise of the writ jurisdiction on the ground that such power is to be exercised needlessly, without any purpose. The exercise of power in such case can only be challenged, if the power is being exercised with ulterior motive and mala fide intentions. It is not open for the petitioner to contend before the writ court that the exercise of power, which admittedly exists in the authority, will expose the petitioner to assessment for the same period on which assessing authority has already recorded satisfaction". In view of above judicial precedents and facts, the order of CIT(A) be reversed and that of the A.O. should be restored.

12 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 5. He specifically drew our attention to the decision of the Hon’ble Allahabad High Court in the case of Savesh Kumar Agarwal Vs. UOI, reported in 35 taxmann.com 85, to submit that once the evidence is found in the course of search and had been transferred to the AO of the assessee then the AO was required to issue notice u/s.153C of the Act and complete the assessment thereon. It was the submission that the order of the ld. CIT(A) deserves to be reversed and that of the AO to be restored. 6. We have considered the submissions of ld. CIT-DR. We have also perused the order of the ld. CIT(A). A perusal of para 5.1 of the order of the CIT(A) shows that the same is basically the gist of the arguments of the ld. AR of the assessee before him. Para 5.2 of the order of the ld. CIT(A) is his finding. In para 5.3 the ld. CIT(A) has categorically given a finding after reference to the various seized materials, referred to in the satisfaction note, that these evidences do not belong to any of the years under appeal. In para 5.4, the ld. CIT(A) then considered the Board Circular No.24/2015, which was issued in the background of the decision of the Hon’ble Supreme Court in the case of M/s Calcutta Knitwears, 43 taxmann.com 46(SC), which was in relation to the provision of Section 158BD of the Act. The said circular was issued following the decision of the Hon’ble Supreme Court in the case of M/s Calcutta Knitwears (supra), wherein the Hon’ble Supreme Court has held that the satisfaction note could be prepared at three stages. Similar is the decision of the Hon’ble

13 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 Supreme Court in the case of Super Mall Pvt. Ltd., 423 ITR 251 (SC)/[2020] 115 taxmann.com 105 (SC), which considered the provisions of Section 153C of the Act. In the said decision, the Hon’ble Supreme Court has held as follows :- “This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under section 153C of the Act in the case of Calcutta Knitwears (supra) as well as by the Delhi High Court in the case of Pepsi Food (P.) Ltd. (supra). As held, before issuing notice under section 153C of the Act, the Assessing Officer of the searched person must be "satisfied" that, inter alia, any document seized or requisitioned "belongs to" a person other than the searched person. That thereafter, after recording such satisfaction by the Assessing Officer of the searched person, he may transmit the records/documents/things/papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue a notice for the purpose of completion of the assessment under section 158BD of the Act and the other provisions of Chapter XIV-B shall apply.” 7. In para 5.5, the ld. CIT(A) has followed the decision of the Hon’ble Supreme Court in the case of Sinhgad Technical Education Society, [2017] 84 taxmann.com 290 (SC). It must be mentioned here that a perusal of the order of the ld. CIT(A) in para 5.2 shows that the ld. CIT(A) has extracted the satisfaction note recorded by the AO in the case of the assessee for the relevant assessment years. It is not the satisfaction note as recorded in the records of the persons searched. A perusal of the provisions of Section 153C of the Act clearly shows that, “where the Assessing Officer is satisfied that,—

14 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 (a) x x x x x (b) 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]” 8. Thus, clearly there must be a primary satisfaction recorded by the AO of the person searched that 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 searched. After recording the said satisfaction, the AO of the person searched is to hand over such books of account or documents, seized or requisitioned to the AO having jurisdiction over the other person. It is very much true that in view of the consolidation of search assessments, the AO could be the same in respect of the person searched as well as the person in respect of whom such evidence, documents, books of account etc. have been found. However, this does not exempt the AO from recording his specific satisfaction in the file of the person searched before considering such evidence in the hands of the person to whom it may relate. This is exactly what has been decided by the Hon’ble Supreme Court in the case of Super Mall Pvt. Ltd. (supra). Admittedly, the decision of the Hon’ble Supreme Court is in regard to the provisions of Section 153C of the Act. The various decisions relied on by the ld. CIT-DR are all in relation to a

15 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 case of person searched and the proceedings u/s.153A of the Act. Admittedly, the decision in the case of Unicon Merchants Pvt. Ltd., referred to supra, is relating to the provisions of u/s.153C of the Act but in that case, these arguments had not been taken. The decision in the case of Savesh Kumar Agarwal vs. Union of India, 35 taxmann.com 85 relied on by the ld. CIT-DR is also admittedly u/s.153C of the Act and on perusal of the same shows that, “question which now called for consideration would whether on receipt of satisfaction note, even if the assessing authority receiving the satisfaction note has already examined account books.” Here also the Hon’ble Allahabad High Court has followed the principles laid down by the Hon’ble Supreme Court in the case of Super Mall Pvt. Ltd. (supra). This being so, as the revenue has not been able to produce the satisfaction note recorded in the case of person searched, the initiation of proceedings u/s.153C of the Act in the case of the assessee herein for the relevant assessment years have rightly been quashed by the ld. CIT(A). 9. Further, a perusal of para 5.3 of the order of the CIT(A) clearly shows that the incriminating material, more so, the seized material referred to in the satisfaction note in the case of the assessee herein for the impugned assessment years, being none of the documents referred to or relate to any of the impugned assessment years. Even on this ground, we are of the view that the ld. CIT(A) was right in law in quashing the proceedings u/s.153C of the Act by following the decision of the Hon’ble

16 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 Supreme Court in the case of Sinhgad Technical Education Society, referred to supra. This being so, we find no error in the order of the ld. CIT(A) which calls for any interference by us. Accordingly, we uphold the findings recorded by the ld. CIT(A) in this regard. 10. Thus, the appeals of the revenue in IT(SS)A Nos.04-06/CTK/2021 are dismissed. 11. In respect of the cross objections filed by the assessee against the appeals of the revenue for the relevant assessment years under consideration, we found that the cross objections of the assessee are in support of the order of the ld. CIT(A). Since, we have already dismissed the appeals of the revenue upholding the order of the ld. CIT(A) in quashing the assessment framed u/s.153C of the Act by the AO, the cross objections of the assessee have become infructuous and the same are dismissed as infructuous. 12. Thus, the cross objections of the assessee in CO Nos.24- 26/CTK/2021 are dismissed. 13. Now, we shall take up the appeals of the revenue in ITA Nos.81- 83/CTK/2021 for the assessment years 2013-2014 to 2015-2016 along with the cross objections filed by the assessee against the above appeals of the revenue. 14. The revenue in all the appeals for the years under consideration has raised the common ground with regard to action of the ld. CIT(A) in deleting the penalty levied u/s.271(1)(c) of the Act.

17 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 15. The ld. CIT-DR submitted that the orders of the ld. CIT(A) is liable to be reversed and that the penalty order passed by the AO to be restored. 16. As we have already upheld the order of the ld. CIT(A) in quantum appeals, decided in above paras, and the proceedings u/s.153C of the Act initiated against the assessee have rightly been quashed by the ld.CIT(A), therefore, the consequential penalties levied by the AO has rightly been deleted by the ld. CIT(A) and we find no error in the findings of the ld. CIT(A) in deleting the penalty levied u/s.271(1)(c) of the Act. Accordingly, we uphold the same and dismiss the appeals of the revenue. 17. Thus, the appeals of the revenue in ITA Nos.81-83/CTK/2021 are dismissed. 18. In respect of the cross objections filed by the assessee against the appeals of the revenue for the relevant assessment years under consideration, it is noticed that the cross objections of the assessee are in supportive of the order of the ld. CIT(A) in cancelling the penalty u/s.271(1)(c) of the Act. Since, we have already dismissed the appeals of the revenue upholding the order of the ld. CIT(A) in cancelling the penalty levied u/s.271(1)(c) of the Act by the AO, the cross objections of the assessee have become infructuous and the same are dismissed as infructuous. 19. Thus, the cross objections of the assessee in CO Nos.27- 29/CTK/2021 are dismissed.

18 IT(SS)A Nos.04-06/CTK/2021 & ITA Nos.81-83/CTK/2021 CO Nos.24-26 & 81-83/CTK/2021 20. In the result, appeals of the revenue in IT(SS)A Nos.04- 06/CTK/2021 & ITA Nos.81-83/CTK/2021 & cross objections of the assessee in CO Nos.24-26/CTK/2021 & CO Nos.27-29/CTK/2021 are dismissed. Order dictated and pronounced in the open court on 18/10/2022.

Sd/- Sd/- (अरुण खोड़पऩया) (जाजज माथन) (ARUN KHODPIA) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 18/10/2022 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- 1. 2. प्रत्यथी / The Respondent- आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. आयकर आयुक्त / CIT 4. पविागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, 5. ITAT, Cuttack गार्ज पाईऱ / Guard file. 6. सत्यापऩत प्रयत //True Copy// आदेशानुसार/ BY ORDER,

(Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack