MALIK NETWORK & COMPUTER P.LTD,DELHI vs. ITO, WARD-16(2), NEW DELHI

Though the assessee has raised several grounds of appeal before us, the ground No.2 raised by the assessee is challenging the validity of assumption of jurisdiction u/s 153C of the Act. We deem it fit to address this preliminary legal ground first.

We have heard both the parties and perused the material available on record. The return of income for the Assessment Year 2008-09 was filed by the assessee company on 17.09.2008 u/s 139(1) of the Act declaring income of Rs.1350/-, which was duly processed u/s 143(1) of the Act. A search and seizure action u/s 132 of the Act was conducted in PNC group of Agra on 25.08.2011. Along with this search, the premises of Sh. Ashok Kumar Jain and his wife Smt. Meena Jain were also covered at New Delhi. From the seized documents of Sh. Ashok Kumar Jain and Smt. Meena Jain vide Annexure A-1 at page 122, the Assessing Officer of Sh. Ashok Kumar Jain and Smt. Meena Jain recorded a satisfaction that the said seized documents belongs to assessee herein. The said seized documents i.e. Annexure A-1, page 122 was forwarded to the ld. Assessing Officer of the assessee on 21.03.2014. Pursuant to the receipt of this seized document together with the satisfaction note recorded by the Assessing Officer of the searched party, a satisfaction note was recorded in the case of the assessee herein on 22.09.2014 and proceedings u/s 153C of the Act were initiated in the hands of the assessee.

It would be relevant to understand the contents of the seized documents that were forwarded to the Ld. Assessing Officer of the assessee i.e. Annexure A-1 page 122, page-124 and page-116 thereon. All these seized documents only represent the various cheques issued by the assessee in favour of certain parties, which are detailed as under:-

It could be noticed that all the aforesaid seized documents references only contain cheques issued by the assessee in favour of certain parties through regular banking channels. We have gone through the satisfaction note recorded by the Ld. Assessing Officer of the assessee for assuming jurisdiction u/s 153C of the Act, wherein, there is absolutely no effort made by the Ld. Assessing Officer to even make a preliminary enquiry to the fact that as to whether the aforesaid cheques issued were encashed by the concerned parties from the assessee. In any event, there is absolutely no taxable event or these materials/information having any bearing on the determination of total income of the assessee for assuming jurisdiction u/s 153C of the Act. For the sake of convenience, the satisfaction note recorded by the Ld. Assessing Officer for assuming jurisdiction u/s 153C of the Act is reproduced hereunder:-

Another letter F. No. DCIT/CC/Agra/PNC/153C/2013-14/1513 dated 05-03-2014 of the DCIT, Central Circle, Agra has been received in this office on 10.3.2014. This letter contains copy of two pages of seized documents seized during search operation u/s 132 of PNC Group on 25.8.2011 which are as under: a) Photo copy of seized material, i.e. page 116 of Annexure- A-1 is a copy of following three cheques issued by M/s Malik Network Computers P. Ltd. to M/s Akshay Commercial Pvt. Ltd. Cheque No.000009 dated 04/07/06 for Rs.5,00,000/- Cheque No.000010 dated 04/07/09 for Rs. 10,00,000/- Cheque No.000011 dated 4/7/09 for Rs. 10,00,000/- All the three drawn on Bank of India, MGF Plaza Branch, Gurgaon. b) Photo Copy of seized material i.e. page No. 122 of Annexure-A-1 which is a copy of cheque No.000017 dated 9.10.2009 for Rs.25,00,000/-issued by M/s Malik Network & Computers P. Ltd. in favour of M/s Om Vijya Nivesh P.Ltd. drawn on Bank of India, MGF Plaza branch, Gurgaon 3. Another letter F. No.DCIT/CC/Agra/PNC/153C/2013-14/1557

From the above, it could be noticed that there is absolutely no material available with the Ld. AO of the assessee to legally assume jurisdiction u/s 153C of the Act based on the seized materials received from the Ld. Assessing Officer of PNC Group. Hence, we have absolutely no hesitation to hold that there is no satisfaction that could be construed as being recorded in the case of the assessee based on the seized materials received from the Ld. Assessing Officer of the searched party, which have a bearing on the determination of total income of the assessee qua the assessment year under consideration. Hence, we uphold that the assumption u/s 153C of the Act in the case of the assessee is illegal and void ab initio.

The decision rendered by us hereinabove for Assessment Year 2008-09 shall apply with equal force for other Assessment Years also as jurisdiction was assumed u/s 153C of the Act for those years also based on the very same satisfaction note reproduced supra.

Since, the entire assessment years framed u/s 153C of the Act are quashed as void ab initio for the years under consideration, the other grounds raised by the assessee raising certain legal issues as well as on merits need not be gone into and they are left open.

In the result, all the appeals of the assessee are allowed.