The ACIT, Sagar v. M/s. Hotel Paradise,, Sagar

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C.SHARMA ACCOUNTANT MEMBER PAN NO. : AADFH2621R I.T.A.NO. 30 TO 36/JAB/2008 A.YS.: 1998-99 TO 2004-05 ACIT CIRCLE SAGAR M/S. HOTEL SONAM & SMART BAR VS LINK ROAD SAGAR. (APPELLANT) (RESPONDENT) PAN NO. : AADFH-2622-N I.T.A.NO.01 TO 05/JAB/2008 A.YS. : 1999-2000 2001-04 TO 2004-05 ACIT M/S. HOTEL PARADISE CIRCLE SAGAR VS DEEN DAYAL NAGAR MAKRONIYA SAGAR (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. SINGH CIT DR RESPONDENTS BY : SHRI H.P.VERMA ADV. AND SHRI ASHISH GOYAL CA 2 O R D E R PER R. C. SHARMA A.M. I.T.A.NO. 30 TO 36/JAB/2008 THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 12 TH NOVEMBER 2007 FOR THE ASSESSMENT YEARS 1998-99 TO 2004-05. 2. COMMON GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN AL L THE APPEALS WHICH READS AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DECLARING THE ASSESSMENT PROCEEDINGS U/S 153C R.W.S. 143(3) OF THE INCOME-TA X ACT 1961 TO BE AB INITIO NULL & VOID FOR ALL THE SEVEN YEARS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING ADDITIONS MADE ON MERIT TREATING THE ASSESSMENT PROCEEDINGS TO BE AB INITIO NULL & VOID FOR ALL THE SEVEN YEARS. 3 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ON THE ABOVE ISSUES MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 5. THE APPELLANT RESERVES THE RIGHT TO ADD OR AMEND AN Y GROUND OF APPEAL. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERU SED. 4. THE FACTS IN BRIEF ARE THAT THERE WAS SEARCH AT T HE LARGE NUMBER OF CASES OF LIQUOR CONTRACTORS OF SAGAR IN D ECEMBER 2003. ALONGWITH SEARCH SURVEY WAS ALSO UNDERTAKEN IN ASS ESSEES CASE. THERE AFTER NOTICE U/S 153A DATED 28.3.2005 WAS IS SUED TO THE ASSESSEE FOR FILING RETURN OF INCOME FOR ALL THE SI X PRECEDING YEARS RELEVANT TO THE PREVIOUS YEARS IN WHICH SEARCH ACTI ON HAD BEEN CARRIED OUT. IN RESPONSE TO THE NOTICE THE ASSESSE E FILED RETURN FOR ALL THE SEVEN YEARS ON 26.10.2005. THEREAFTER THE AO ISSUED NOTICE U/S 142(1) ON 7.12.2005 ALONGWITH DETAILED Q UESTIONNAIRE. THEREAFTER THE AO ALSO ISSUED NOTICE U/S 143(2). I N RESPONSE TO THE QUESTIONNAIRE THE ASSESSEE FURNISHED REPLY AND ALSO SUBMITTED DETAILED ASKED BY THE ASSESSING OFFICER. THEREAFTER ON 8.3.2006 THE DEPARTMENT REALIZED THAT IN ASSESSEE S CASE NO SEARCH WARRANT HAD BEEN ISSUED AND THUS IT WAS NO T PROPER TO HAVE ISSUED NOTICE U/S 153A ON 28.3.2005. ACCORDING LY ON 4 8.3.2006 THE AO ISSUED SEPARATE NOTICE U/S 153C FO R EACH OF THE ASSESSMENT YEAR AFTER DULY RECORDING SATISFACTION N OTE FOR EACH YEAR. THE ASSESSEE WAS GIVEN FIVE DAYS TIME TO FILE RETURNS. THE ASSESSEE FILED RETURNS ON 13 TH MARCH 2006 IDENTICAL TO THOSE FILED EARLIER IN RESPONSE TO NOTICE U/S 153A WITHOU T ISSUING ANY FURTHER NOTICE U/S 143(2) THE AO MADE ASSESSMENT F OR ALL THE YEARS VIDE ORDER DATED 30 TH MARCH 2006. IN THE APPEAL FILED BEFORE THE LD. CIT(A) THE ASSESSEE HAS RAISED QUES TION ON THE VALIDITY OF THE ORDERS MADE AND ALSO FILED DETAILED SUBMISSIONS VIDE LETTER DATED 8 TH DECEMBER 2006 25 TH JANUARY 2007 11 TH SEPTEMBER 2007 AND 16 TH OCTOBER 2007 THE COPIES OF WHICH WERE ALSO FORWARDED TO THE AO FOR HIS COMMENTS. 5. BY THE IMPUGNED ORDER THE LD. CIT(A) ANNULLED THE ASSESSMENT AFTER HAVING THE FOLLOWING OBSERVATIONS :- 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS ON RECOR D AND THE SUBMISSIONS MADE BY THE RIVAL PARTIES. FIRST OF ALL IT IS NOTED THAT EVEN IN A CASE WHERE SECTION 153C HAS BE EN INVOKED THE PROCEDURE TO MAKE THE ASSESSMENT IS TH E SAME AS IN A SEARCH CASE. HOWEVER THE ONLY RELEVAN T ISSUE COULD BE WHETHER SECTION 153C HAD BEEN VALIDL Y INVOKED OR NOT AND IF IT IS SO THEN THE FIRST NOTI CE ISSUED IN THE MONTH OF MARCH 2005 U/S 153A COULD NOT BE REGAR DED AS INVALID FOR THE REASON THAT IN RESPECT OF BOTH T YPE OF 5 CASES I.E. SEARCH CASE AND NON-SEARCH BUT COVERED U/S 153C THE NOTICE TO BE ISSUED FOR CALLING THE RETUR NS IS THE SAME. IN RESPONSE TO THE FIRST NOTICE DTD. 28.3.200 5 THE ASSESSEE HAD FILED THE RETURNS AND THE AO HAD ALSO ISSUED THE NOTICES U/S 143(2) AND 142(1). IN OTHER WORDS THE FIRST NOTICE PURPORTEDLY ISSUED U/S 153A IN THE MONTH OF MARCH 2005 CANNOT BE HELD TO BE INVALID FOR THE REASON THAT THERE IS NO DISTINCTION IN THE NOTICE TO BE IS SUED IN A CASE COVERED U/S 153A OR 153C. THUS IT CANNOT BE SAID THAT THE ASSESSMENTS HAVE BEEN MADE WITHOUT AFFORDI NG DUE OPPORTUNITY TO THE ASSESSEE AND HENCE THIS OBJE CTION ON THE VALIDITY OF THE ORDERS THEREFORE IS HELD TO BE NOT TENABLE. 6. AS REGARDS THE SECOND ISSUE AGAINST THE VALIDITY OF THE ASSESSMENT ORDERS I.E. THE ABSENCE OF AN OBJECTIVE AND A BONA FIDE SATISFACTION FOR INVOKING SECTION 153C T HE LD. AUTHORIZED REPRESENTATIVE HAS REFERRED TO SECTION 2 92C WHICH HAS BEEN INSERTED BY THE FINANCE ACT 2007 BU T WITH RETROSPECTIVE EFFECTIVE FROM 1 ST OCTOBER 75 TO STATE THAT THIS SECTION HAS CREATED A LEGAL PRESUMPTION T O TREAT THE BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLI ON JEWELLERY OR TREAT THE BOOKS OF ACCOUNT OTHER DOCU MENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS FOUND IN POSSESSION OF THE PERSON-SEARCHED TO BE PERTAINING TO THAT PERSON ONLY. IT IS THEN STATED T HAT THOUGH IT IS REBUTTABLE PRESUMPTION BUT TO COME OUT OF THI S PRESUMPTION A FINDING TO THE CONTRARY HAS TO BE TH ERE ON RECORD. BUT SUCH A FINDING IS POSSIBLE ONLY WHEN TH OSE 6 BOOKS OF ACCOUNT AND DOCUMENTS ARE FIRST CONFRONTED TO THE PERSON SEARCHED AND ON HAVING REGARD TO THE REPLY SUBMITTED BY HIM A FINDING OF THOSE BEING OR PART T HEREOF TO BE BELONGING TO THE PERSON OTHER THAN THE PERSON - SEARCHED IS GIVEN. THE FACT ON THE OTHER HAND IS TH AT THE AO SIMULTANEOUSLY HAD ISSUED NOTICES U/S 153A IN THE MONTH OF MARCH 2005 TO A LARGE NUMBER OF PERSONS BOTH SEARCHED AND NON-SEARCHED. THIS FACT SHOWS THAT AT THE TIME OF ISSUANCE OF THE NOTICE U/S 153A TO THE ASSESSEE THERE WAS NO SATISFACTION IN EXISTENCE AS TO THE AC TIONABLE BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE ASSE SSEE WHICH HAD BEEN SEIZED DURING A SEARCH ACTION. IT SH OWS THAT WHEN FOR THE FIRST TIME NOTICE U/S 153A WAS ISSUED IN MARCH 2005 NO SATISFACTION WAS IN EXISTENCE OR HA D BEEN ARRIVED AT FOR INVOKING SECTION 153C AGAINST THE AS SESSEE. THIS FACT HAS EVEN BEEN ADMITTED BY THE AO AS IN TH E ASSESSMENT ORDERS HE HAS STATED THAT THE NOTICE ISS UED U/S 153A IN MARCH 2005 WAS NOT PROPER. HOWEVER AT THE SAME TIME THE AO HAS STATED THAT THE 153-C NOTICE D TD. 8.3.2006 WAS ISSUED TO REGULARIZE THE PROCEEDINGS WHICH STAND-INITIATED ON ACCOUNT OF 153A NOTICE ISSUED IN MARCH 2005 FOLLOWED BY NOTICES ISSUED U/SS 143(2) AND 14 2( 1). ACCORDING TO THE LD. AR THE PROCEEDINGS WHICH ARE AB INITIO ILLEGAL BECOME INCAPABLE OF BEING REGULARIZ ED. NEVERTHELESS HE HAS EMPHASIZED THE FACT THAT SECTI ON 153-C WAS INVOKED WITHOUT THERE BEING ANY BONA FIDE SATISFACTION AND IN THIS REGARD HAS REFERRED TO THE SO CALLED SATISFACTION NOTE THE RELEVANT PORTION OF W HICH IS 7 REPRODUCED HEREUNDER: 'DURING THE COURSE OF SEARCH PROCEEDINGS CARRIED OUT IN THE CASE OF SHRI SANTOSH KUMAR SAHU SHRI R. P. KESHARWANI CA/AR OF THE GROUP SHRI ANIL JAISWAL SHRI RAMSEWAR SHARMA M/S ASHOK TRADERS AND SHRI RAVI SHRIVASTAVA CERTAIN INCRIMINATING DOCUMENTS RELEVANT TO THE ASSESSEES WERE ALSO FOUND AND SEIZE D. THUS ON THE BASIS OF SUCH INCRIMINATING DOCUMENTS THE ISSUE OF NOTICE U/S 153C OF THE I.T.ACT IS PROP ER. HENCE TO REGULARIZE THE PROCEEDINGS THE NOTICE U/S 153C IS ISSUED. IT IS THUS STATED THAT THE AO HAS NOT IDENTIFIED AN Y SUCH DOCUMENTS ALLEGED TO BE BELONGING TO THE ASSESSEE. MOREOVER HE HAS NOT GIVEN THE BASIS FOR COMING TO THE PRIMA FACIE INFERENCE OF THE DOCUMENTS IF ANY TO B E OF INCRIMINATING NATURE. IN FACT IDENTICAL STEREO TYP E SATISFACTION NOTE HAS BEEN RECORDED IN AS MANY AS 1 3 CASES INVOLVING ABOUT 40 ASSESSMENTS AND WHICH FACT BY ITSELF LEADS TO THE INFERENCE THAT THOSE WERE RECOR DED WITHOUT APPLICATION OF MIND AND HENCE THERE IS ABSE NCE OF ANY BONA FIDE SATISFACTION FOR INVOKING SECTION 153 C. THE AO HOWEVER HAS CONTESTED THIS ALLEGATION OF RECORDI NG THE SATISFACTION NOTE IN A ROUTINE MANNER WITHOUT APPLI CATION OF MIND AND IN THIS REGARD HAS STATED THAT JUST BECAUS E THE SATISFACTIONS IN ALL THE CASES ARE IDENTICAL DOES N OT MEAN THAT THOSE WERE RECORDED WITHOUT APPLICATION OF MIN D. IN SUPPORT OF THIS VIEW HE HAS RELIED UPON THE FOLLOW ING DECISIONS OF THE HON'BLE APEX COURT: 1 2 8 1. STATE OF M.P. VS. RAMSINGH - AIR 2000 SC 870 2. SHIVAJI ATMARAM SAVANT VS. STATE OF MAHARASHTRA AIR 1986 SC 617 3. MOHINDER SINGH GILL VS. CHIEF ELECTION COMMISSIONER AIR 1996 S.C. 851 THE LD. AR IN RESPONSE HAS STATED THAT NONE OF THESE CASE LAWS HAVE ANY APPLICABILITY TO THE FACTS OF THE PRESENT CASE AND IN THIS REGARD HAS MADE ELABOR ATE SUBMISSIONS. FURTHER HE HAS STATED THAT THOSE DECIS IONS WERE RENDERED IN A DIFFERENT CONTEXT WHICH IS NOT E VEN REMOTELY CONNECTED TO THE INCOME-TAX LAW. STILL FUR THER HE HAS STATED THAT IT CAN BE ESTABLISHED BEYOND DOU BT THAT THERE COULD NOT HAVE BEEN ANY BASIS TO INVOKE SECTION 153C AND IN THIS REGARD HAS REFERRED TO THE FACT THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS DID NOT CONFRONT ANY DOCUMENT EITHER RELATING TO OR NOT RELATING TO ASSESSEE WHICH HAD B EEN SEIZED DURING ANY SEARCH ACTION. THE DOCUMENTS WHIC H WERE CONFRONTED WERE THOSE WHICH HAD BEEN IMPOUNDED DURING SURVEY ACTION CARRIED OUT SIMULTANEOUSLY AT THE ASSESSEE'S OFFICE PREMISES. 6.1 I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD AND THE SUBMISSIONS MADE BY THE RIVAL- PARTIES. FIRST O F ALL IT IS NOTED THAT THE SECTION 153C EFFECTS THE SUBST ANTIVE RIGHTS OF A PERSON IN SO FAR AS A PERSON WHO HAS NO T BEEN SEARCHED IS MADE TO FACE THE HARSH CONSEQUENCE S 9 OF REOPENING OF SIX YEARS' CASES. THIS SECTION THUS CANNOT BE GIVEN A LIBERAL INTERPRETATION SINCE IF I T IS SO DONE THEN THE PROCEEDINGS UNDER THIS SECTION CAN B E INITIATED AGAINST A PERSON-NOT-SEARCHED MERELY ON T HE GROUND THAT SOME ACCOUNT OR EVEN A BANK STATEMENT O F THE PERSON HAS BEEN FOUND IN A SEARCH ACTION. IF IN SUCH A CASE INVOKING OF SECTION 153C IS HELD TO BE JUSTI FIED THEN THIS SECTION CAN BECOME A READY TOOL FOR REOPE NING SIX YEAR CASES ON ANY PRETEXT OF A PERSON WHO HAD S OME DEALING WITH THE PERSON-SEARCHED. THE ID. AR HAS ARGUED THAT BEFORE INVOKING SECTION 153C THERE HAS TO BE SOME MATERIAL ON RECORD TO COME OUT OF THE PRESUMPTION OF SECTION 292C AND WHICH IS POSSIBLE O NLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERS ON- SEARCHED. BUT NO SUCH FINDING OF PRESUMPTION NOT BE ING APPLICABLE HAS BEEN GIVEN BEFORE INVOKING SECTION 1 53C. I FIND SOME MERIT IN THIS CLAIM. FURTHER I ALSO FIN D THAT THE SATISFACTIONS RECORDED IN MARCH 2006 FOR ALL TH E SEVEN YEARS WERE WITHOUT APPLICATION OF MIND AS IS EVIDENT FROM THE FACT THAT IN ALL THE OTHER 12 CASE S INVOLVING ABOUT 40 ASSESSMENTS THE AO HAS RECORDED IDENTICAL STEREO TYPE SATISFACTIONS BY STATING THAT DURING SEARCH ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASES OF SANTOSH KUMAR SAHU AND OTHERS INCRIMINATIN G DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEARS SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. HOWEV ER THESE FACTS BY THEMSELVES COULD NOT BE REGARDED TO BE A 10 SUFFICIENT GROUND TO HOLD THE INVOKING OF SECTION 1 53C WAS ILLEGAL. IT IS BECAUSE OF THE REASON THAT ON A PLAIN READING OF SECTION 153C IT DOES NOT TRANSPIRE THAT RECORDING OF A SATISFACTION IS A MUST. BUT AT THE S AME TIME IT IS ALSO TO HOLD THAT IT DOES NOT MEAN THAT REQUIRED SATISFACTION COULD BE HIGHLY SUBJECTIVE NOT OPEN T O SCRUTINY BY THE APPELLATE AUTHORITIES. THE MINIMUM REQUIREMENT TO JUSTIFY THE INVOKING OF SECTION 153C IS THAT AT LEAST IT SHOULD BE POSSIBLE TO GATHER A SATISFACTION ON HAVING REGARD TO THE FACTS ON RECOR D. BUT TO GATHER THIS SATISFACTION THERE SHOULD BE SOME SE IZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FO UND IN A SEARCH ACTION. FURTHER THE SAME SHOULD HAVE AL SO BEEN CONFRONTED TO THE ASSESSEE. BUT DURING ASSESSMENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSESSEE WAS CONFRONTED TO HIM. WHAT WAS CONFRONTED WERE THE DOCUMENTS IMPOUNDED DURING SURVEY ACTION CONDUCTED AT ITS OFFICE. IN VIEW OF T HESE FACTS IT IS HOLD THAT THE INVOKING OF SECTION 153C AGAINST THE ASSESSEE WAS BAD IN LAW. THE PROCEEDINGS SO INITIATED THEREFORE IS HELD TO BE VOID AB-INITIO AN D ALL THE ASSESSMENTS THEREFORE ARE DECLARED AB-INITIO NULL & VOID. 7. IN THE NEXT GROUNDS OF APPEAL THE APPELLANT HAS CHALLENGED THE ADDITIONS ON MERIT. SINCE THE PROCEE DINGS INITIATED BY INVOKING SECTION 153C HAVE BEEN HELD T O BE VOID AB-INITIO FOR ALL THE YEARS THESE GROUNDS OF APPEAL THEREFORE BECOME INFRUCTUOUS AND ARE DISPOSED OFF A S 11 DISMISSED. 6. AGGRIEVED BY THE ABOVE ORDER OF THE LD. CIT(A) THE REVENUE HAS APPROACHED US. 7. IT WAS CONTENDED BY THE LD. CIT DR THAT APPRAISAL R EPORT PREPARED BY THE ADI AMOUNTS TO SATISFACTION BY THE ASSESSING OFFICER FOR ISSUE OF NOTICE U/S 153C ACCORDINGLY THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE TO THE EFFECT THAT NO SATISFACTION WAS RECORDED FOR ASSUMING JURISDICTION U/S 153C IS NOT SUSTAINABLE. THE LD. CIT DR ALSO PLACED ON RECO RD APPRAISAL REPORT OF SANTOSH KUMAR SAHU AND ASSOCIATES. OUR AT TENTION WAS DRAWN TO THE ORDER OF THE LD. CIT(A) IN WHICH FOR A SSESSMENT YEAR 2004-05 ALSO HE HAS QUASHED THE ASSESSMENT FRAMED U/S 153C. AS PER LD. CIT DR FOR ASSESSMENT YEAR 2004-05 NO N OTICE U/S 153C WAS REQUIRED TO BE ISSUED IN RESPECT OF THE YE AR DURING WHICH SEARCH IS CONDUCTED MEANING THEREBY NOTICE I S REQUIRED TO BE SERVED FOR THE PRECEDING SIX ASSESSMENT YEARS FA LLING PRIOR TO THE YEAR OF SEARCH. THE LD. CIT DR FURTHER CONTEND ED THAT NO JUSTIFICATION IS TO BE GIVEN BY THE ASSESSING OFFIC ER REGARDING ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH INDICATING UNDISCLOSED INCOME INSOFAR AS THERE IS CHANGE IN THE SCHEME OF ASSESSMENT U/S 158BC AND SECTION 153A. OU R 12 ATTENTION WAS INVITED TO THE RELEVANT PROVISIONS OF SECTION 158BC WHEREIN UNDISCLOSED INCOME WAS REQUIRED TO BE ASCER TAINED VIS-- VIS PROVISIONS OF SECTION 153A WHEREIN TOTAL INCOM E OF THE ASSESSEE IS TO BE COMPUTED AFTER SEARCH. AS PER THE LD. CIT DR IN THE NEW SCHEME OF SECTION 153A ASSESSMENT IS MADE FOR ASCERTAINING TOTAL INCOME OF THE ASSESSEE AND THERE IS NO MENTION OF THE WORD UNDISCLOSED INCOME IN THE PROVISIONS OF SECTION 153A. 8. ON THE OTHER HAND IT WAS ARGUED BY THE LD. AUTHORI ZED REPRESENTATIVE THAT WHILE ASSUMING JURISDICTION U/S 153C COPY OF SATISFACTION NOTE SHOULD BE GIVEN TO THE ASSESSE E THEREFORE MERE RECORDING OF ANY SATISFACTION IN THE APPRAISAL NOTE BY THE ADI WILL NOT AMOUNT TO PROPER SATISFACTION AS STIP ULATED U/S 153C FOR ASSUMING JURISDICTION. AS PER LD. AUTHORIZ ED REPRESENTATIVE THE APPRAISAL REPORT IS A SECRET DO CUMENT PREPARED BY THE DEPARTMENT TO MONITOR THE ASSESSMEN T TO BE FRAMED AFTER SEARCH. AS PER LD. AUTHORIZED REPRESEN TATIVE SINCE THE COPY OF SUCH APPRAISAL NOTE IS NOT FURNISHED TO THE ASSESSEE THE ASSESSEE DOES NOT GET ANY RIGHT TO VERIFY SUCH SATISFACTION AND TO FILE APPEAL AGAINST THE SAME TO ANY COURT OF LAW . OUR ATTENTION WAS INVITED TO THE DETAILED FINDING RECORDED BY THE TRIBUNAL IN CASE OF M/S. M/S. CHIRCHIND HYDRO POWER LIMITED BH OPAL 17 13 ITJ 197. THE LD. AUTHORIZED REPRESENTATIVE READ OUT THE RELEVANT PARA 78 TO82 AT PAGES 56 TO 99 OF THE ORDER AND SUB MITTED THAT IN TERMS OF DECISION OF THE TRIBUNAL SUCH APPRAISAL R EPORT CANNOT BE TREATED AT PAR WITH THE SATISFACTION NOTE AS STIPUL ATED BY THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHW ARI AND G.K. N. DRIVE SHAFT. RELIANCE WAS ALSO PLACED BY TH E LD. AUTHORIZED REPRESENTATIVE ON THE DECISION OF THE HO N'BLE SUPREME COURT WHEREIN THE ISSUE OF NOTICE U/S 143(2 ) EVEN WHILE FRAMING BLOCK ASSESSMENT IN PURSUANCE OF SEARCH WAS HELD TO BE NECESSARY AND ASSESSMENT FRAMED WITHOUT SUCH ISSUE OF NOTICE EVEN ON THE BASIS OF INCRIMINATING MATERIAL FOUND D URING COURSE OF SEARCH WAS HELD TO BE INVALID. RELIANCE WAS ALSO PLACED ON THE DECISION OF COORDINATE BENCH IN THE CASE OF RISHI C ONSTRUCTION 10 ITJ 346 AND ASHWINI BUILDERS 10 ITJ 618. 9. IN THE COUNTER REPLY CONTENTION OF THE LD. CIT DR WAS THAT ADI IS ALSO ASSESSING OFFICER AS PRESCRIBED UN DER THE INCOME-TAX ACT 1961. THEREFORE APPRAISAL REPORT P REPARED BY HIM IS A SATISFACTION AS REQUIRED U/S 153C. AS PER THE LD. CIT DR SURVEY CARRIED OUT WITH THE SEARCH SHOULD BE TREAT ED AS PART OF THE SEARCH INSOFAR AS IT IS A DECISION OF THE DEPA RTMENT TO CARRY OUT SEARCH AT MORE IMPORTANT PLACES AND TO CARRY OU T SURVEY AT 14 OTHER PLACES WHICH ARE NOT SO IMPORTANT BUT THE DO CUMENTS FOUND DURING SURVEY CANNOT BE IGNORED. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE DELHI HIGH COURT REPORTED I N 229 ITR 110. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREF ULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALS O DELIBERATED ON CASE LAWS RELIED ON BY THE LD. AUTHORIZED REPRES ENTATIVE AND LD. CIT DR DURING THE COURSE OF HEARING BEFORE US. FROM RECORD WE FIND THAT THERE WAS A SEARCH AT THE RESIDENCE OF SANTOSHKUMAR SAHU IN DECEMBER 2003 WHO WAS A PART NER IN THE ASSESSEE FIRM M/S HOTEL SONAM AND SMART BAR. T HERE WAS NO SEARCH BUT ONLY SURVEY AT THE ASSESSEE FIRM. TH E ASSESSING OFFICER ISSUED NOTICE U/S 153A ON 28.3.2005. THE AS SESSEE FILED RETURN OF INCOME FOR SEVEN YEARS ON 26.10.2005 AND THEREAFTER ISSUED NOTICE U/S 142(1) AND 143(2) OF THE ACT. TH EREAFTER THE DEPARTMENT REALISED THAT IN THE ASSESSEES CASE NO SEARCH WARRANT HAD BEEN ISSUED AND THEREFORE IT WAS NOT PROPER TO HAVE ISSUED NOTICE U/S 153A OF THE ACT. ACCORDINGLY ON 8.3.2006 THE ASSESSING OFFICER ISSUED ANOTHER NOTICE U/S 153C OF THE ACT FOR EACH OF THE ASSESSMENT YEARS. THE ASSESSEE WAS GIV EN FIVE DAYS TIME TO FILE THE RETURN OF INCOME. THE ASSESSEE FI LED THE RETURNS ON 13 TH MARCH 2006 IDENTICAL TO THOSE FILED IN RESPONSE T O NOTICE 15 U/S 153A OF THE ACT. HOWEVER NO NOTICE WAS ISSUED AFTER FILING OF THESE RETURNS U/S 143(2) OF THE ACT AND THE ASSESSI NG OFFICER FRAMED THE ASSESSMENT IN RESPECT OF ALL THE YEARS V IDE ORDER DATED 30 TH MARCH 2006. IN THE ORDER SO FRAMED THE ASSESSING OFFICER HAS JUST REFERRED THE DOCUMENTS FOUND DURING THE CO URSE OF SURVEY AT ITS BUSINESS PREMISES AND NONE OF THE DOC UMENTS WAS REFERRED TO AS HAVING BEEN FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF ITS PARTNER INDICATING UNDISCLOSED INCOME OF THE ASSESSEE FIRM. IN THE APPEAL FILED BEFORE THE LEAR NED COMMISSIONER OF INCOMETAX (APPEALS) CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT ASSUMPTION OF JUR ISDICTION U/S 153C OF THE ACT WAS NOT CORRECT INSOFAR AS NO SEARC H WAS CARRIED OUT AT THE ASSESSEES BUSINESS PREMISES NOR ANY INC RIMINATING DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH IN RESPECT OF PERSONS AGAINST WHOM ASSESSMENT WAS FRAMED U/S 153A OF THE ACT. IT WAS ALSO THE CONTENTION OF THE ASSESSEE TH AT WITHOUT ISSUE OF NOTICE U/S 143(2) OF THE ACT AFTER FILING OF THE RETURN IN COMPLIANCE WITH NOTICE U/S 153C OF THE ACT THE ASS ESSMENT FRAMED WAS INVALID AS HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON; 229 CTR 219. BY THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOMET AX 16 (APPEALS) OBSERVED THAT THE ASSESSING OFFICER HAS N OT IDENTIFIED ANY DOCUMENT ALLEGEDLY BELONGING TO THE ASSESSEE WH ICH WAS FOUND DURING THE COURSE OF SEARCH AND HE HAS NOT G IVEN ANY BASIS FOR COMING TO THE PRIMA FACIE INFERENCE OF TH E DOCUMENTS IF ANY TO BE OF INCRIMINATING NATURE. THE LEARNED CO MMISSIONER OF INCOMETAX (APPEALS) ALSO FOUND THAT IDENTICAL STERE O TYPE SATISFACTION NOTE HAS BEEN RECORDED IN AS MANY AS 1 3 CASES INVOLVING ABOUT 40 ASSESSMENTS WHICH FACT BY ITSELF LEAD TO THE INFERENCE THAT THOSE WERE RECORDED WITHOUT APPLICAT ION OF MIND AND HENCE THERE IS ABSENCE OF ANY BONAFIDE SATISF ACTION FOR INVOKING SECTION 153C OF THE ACT. IN VIEW OF THIS FACTUAL POSITION THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) OBS ERVED THAT SECTION 153C AFFECTS THE RIGHTS OF A PERSON INSOFAR AS A PERSON WHO HAS NOT BEEN SEARCHED IS MADE TO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEARS CASES. THE REFORE THIS SECTION CANNOT BE GIVEN A LIBERAL INTERPRETATION SI NCE IF IT IS SO DONE THEN THE PROCEEDINGS UNDER THIS SECTION CAN BE INITIATED AGAINST A PERSON NOT SEARCHED MERELY ON THE GROUND THAT SOME ACCOUNTS OR EVEN A BANK STATEMENT OF THE PERSON HAS BEEN FOUND IN A SEARCH ACTION. THUS IT WAS HELD THAT BEFORE INVOKING SECTION 153C OF THE ACT THERE HAS TO BE SOME MATERIAL ON R ECORD TO COME 17 OUT OF THE PRESUMPTION OF SECTION 292C WHICH IS POS SIBLE ONLY AFTER CONFRONTING THE IMPUGNED MATERIAL TO THE PERS ON SEARCHED. HOWEVER IN THE INSTANT CASE NO FINDING OF PRESUMP TION HAS BEEN GIVEN BEFORE INVOKING SECTION 153C OF THE ACT. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO OBSERVED T HAT SATISFACTION RECORDED IN MARCH 2006 FOR ALL THE SE VEN YEARS WAS WITHOUT APPLICATION OF MIND WHICH IS EVIDENT FROM O THER 12 CASES WHEREIN F0 ASSESSMENTS HAD BEEN FRAMED BY THE ASSES SING OFFICER AFTER RECORDING IDENTICAL STEREO TYPE SATISFACTION JUST BY STATING THAT DURING SURVEY ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASE OF SANTOSHKUMAR SAHU AND OTHERS INCRIMINATING DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEARS SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. AS PER THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THE MINIMUM REQUIREMENT TO JUSTIFY INVOKING OF SECTION 153C IS THAT ATLEAST IT SHOULD BE POSSIBLE TO GATHER SATISFACTION HAVING REGARD TO THE FACTS ON R ECORD BUT TO GATHER THIS SATISFACTION THERE SHOULD BE SOME SEIZ ED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FOUND IN A SEARCH ACTION AND THE SAME SHOULD ALSO HAVE BEEN CONFRONTE D TO THE ASSESSEE. A FINDING OF FACT WAS ALSO RECORDED BY T HE LEARNED 18 COMMISSIONER OF INCOMETAX (APPEALS) TO THE EFFECT T HAT DURING THE ASSESSMENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASSESSEE WAS CONFRONTED TO HIM AND WHAT WAS CONFRON TED WERE THE DOCUMENTS IMPOUNDED DURING SURVEY ACTION CONDUC TED AT ITS OFFICE. IT WAS THEREFORE HELD THAT INVOKING OF S ECTION 153C OF THE ACT AGAINST THE ASSESSEE WAS BAD IN LAW AND THE PRO CEEDINGS SO INITIATED WERE HELD TO BE VOID AB INITIO. THE ISSU E WITH REGARD TO ASSUMPTION OF POWER U/S 153C OF THE ACT HAS BEEN EL ABORATELY DEALT WITH BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CHIRCHIND HYDRO POWER LIMITED BHOPAL 17 ITJ 197 WHEREIN THE TRIBUNAL HAS HELD AS UNDER :- 78. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND DELIBERATED ON THE CASE LAWS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AN D BY THE RESPECTIVE COUNSELS DURING THE COURSE OF HEARI NG BEFORE US. FROM THE RECORD WE FIND THAT THE SEARCH WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF DIRECTORS/PARTNERS OF THESE CONCERNS AND NOT AT THE PREMISES OF THESE CONCERNS. AFTER THE SEARCH WAS CARRIED OUT AT THE RESIDENCE OF DIRECTORS/PARTNERS OF THESE ASSOCIATE CONCERNS ASSESSMENT WAS FRAMED IN RESPECT OF THESE CONCERNS U/S 153C OF THE ACT ON TH E PLEA THAT INCRIMINATING MATERIAL WAS FOUND DURING T HE COURSE OF SEARCH AT THE RESIDENCE OF PARTNERS/DIRECTORS. THE ASSUMPTION OF POWER BY THE ASSESSING OFFICER U/S 153C OF THE ACT FOR FRAMING T HE ASSESSMENT IS SUBJECT TO THE CONDITION THAT THE ASSESSING OFFICER ASSESSING THE SEARCH PARTY IS SATISFIED THAT THE JEWELLERY OR OTHER VALUABLE ARTI CLES OR THINGS OR BOOKS OF ACCOUNTS OR DOCUMENTS OR 19 ASSETS SEIZED OR REQUISITIONED PERTAIN TO SOME PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A THEN THE BOOKS OF ACCOUNTS OR THE DOCUMENTS O R ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVE R BY THE ASSESSING OFFICER OF SEARCHED PERSON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON AND THAT THE ASSESSING OFFICER SHALL PROCEED AGAINST EACH OF SUCH PERSONS AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF THE ACT. THE OPENING WORD OF SECTI ON 153C SPEAKS THAT NOT-WITH-STANDING ANYTHING CONTAINED IN SECTIONS 139 147 148 149 151 AND 153 WHERE THE ASSESSING OFFICER IS SATISFIED THA T ANY MONEY JEWELLERY OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A MEANING THEREBY THE ASSESSING OFFICER IS TO RECORD A SATISFACTION TO THE EFFECT THAT SUCH JEWEL LERY OR DOCUMENT SO SEIZED DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOME OTHER PERSON REFERRED T O IN SECTION 153A OF THE ACT. THUS THE PRE-REQUISIT E OF SECTION 153C IS THAT THE ASSESSING OFFICER MAKING T HE ASSESSMENT OF THE SEARCHED PERSON HAS TO SATISFY HIMSELF THAT SOME MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZURE BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON. THEN THE ASSESSING OFFICER MAKING THE ASSESSMENT OF SEARCHED PERSON HAS TO HAND-OVER THE SAID INCRIMINATING MATERIAL BELONGING TO SOME PERSON OTHER THAN THE SEARCHED PERSON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SAID OTHER PERSON. THEREAFTER THE ASSESS ING OFFICER HAVING THE JURISDICTION OVER THE PERSON OTH ER THAN THE SEARCHED PERSON SHALL ISSUE A NOTICE U/S 153C TO SUCH OTHER PERSON AND ASSESS HIS INCOME IN TERMS OF THE PROVISIONS OF SECTION 153A OF THE ACT. THUS THE NOTICE U/S 153C OF THE ACT IS TO BE ISSUE D ONLY AFTER RECORDING OF SATISFACTION. THE ASSUMPTIO N OF JUSRISDICTION TO ISSUE NOTICE AND FRAME ASSESSMENT UNDER SECTION 153C READ WITH SECTION 153A IS ACQUIRED BY THE ASSESSING OFFICER ONLY AFTER HAVING BEEN SATISFIED AND SUCH SATISFACTION IS RECORDED IN 20 WRITING. THESE PROVISIONS OF SECTION 153C ARE IN P ARI MATERIA WITH THE PROVISIONS OF SECTION 158BD WHICH PROVIDES THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO SATISFY HIMSELF THAT SOME UNDISCLOSED INCOME FOUND BY HIM BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON AND THEN HE OR THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER RECEIPT O F RECORD FROM THE ASSESSING OFFICER OF THE SEARCHED PERSON HAS TO ISSUE NOTICE U/S 158BD OF THE ACT AND HAS TO ASSESS INCOME OF SUCH OTHER PERSON. THE PROVISIONS OF SECTION 158BD OF THE ACT WERE EXAMINE D IN DETAIL BY THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI; 208 CTR 97. THE SAID HONBLE SUPREME COURT DECISION WAS FOLLOWED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF NEW DELHI AUTO FINANCE LIMITED; 300 ITR 83. THE HONBLE SUPREME COURT HAS LAID DOWN A PROPOSITION THAT THE ASSESSIN G OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO NECESSARILY RECORD IN WRITING THE SPECIFIC OBJECTIVE SATISFACTION WHICH IS MANDATORY TO THE EFFECT THAT THE UNDISCLOSED INCOME FOUND BY HIM ON THE BASIS OF SEIZED MATERIAL BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON. INSOFAR AS THE PROVISIONS OF SECTION 153C OF THE ACT ARE IN PA RI MATERIA WITH THE PROVISIONS OF SECTION 158BD OF THE ACT WITH REGARD TO THE REQUIREMENTS OF RECORDING NECESSARY SATISFACTION BY THE ASSESSING OFFICER OF SEARCHED PERSON THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) SHALL APPLY WITH FULL FORCE IN CASE OF INIT IATION OF PROCEEDINGS U/S 153C. THE ASSUMPTION OF JURISDICTION AND FRAMING OF ASSESSMENT BY THE ASSESSING OFFICER U/S 153C WITHOUT RECORDING SUCH SATISFACTION IS VOID AB INITIO. APPLYING THE PROPO SITION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT AS DISCUSSED ABOVE IT IS QUITE EVIDENT THAT RECORDING OF SATISFACTION BEFORE ISSUE OF NOTICE U/S 153C IS MANDATORY AND IN CASE WHERE NO SUCH SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER IN THE CASE OF SEARCHED PERSON TO THE EFFECT THAT SOME INCRIMINATING MATERIAL SO FOUND BELONGS TO SOME OTH ER 21 PERSON THE ASSESSMENT FRAMED U/S 153C WILL BE LIABLE TO BE QUASHED. HOWEVER DETAILED FINDING HA S BEEN RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER EXAMINING THE ASSESSMENT RECORDS OF THE CONCERNED PERSON/PARTIES TO THE EFFE CT THAT NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON. THIS FIND ING OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDING LY APPLYING THIS PROPOSTION OF LAW THE ASSUMPTION OF JURISDICTION AND FRAMING OF ASSESSMENT IN THE INSTA NT CASES BY THE ASSESSING OFFICER U/S 153C WERE BAD IN LAW. 79. IT WAS ARGUED BY SHRI K.K. SINGH THE LEARNED C IT DR THAT SATISFACTION NOTE AS STIPULATED U/S 153C OF THE ACT IS TO BE SEEN IN THE CONTEXT OF SATISFACTI ON NOTE PREPARED BY THE ADIT IN THE FORM OF APPRAISAL NOTE AFTER THE SEARCH IS OVER. HE PLACED ON RECORD A COPY OF THE APPRAISAL NOTE WHICH IS PREPARED BY THE ADIT AFTER THE SEARCH WAS OVER WHEREIN DETAILS OF SEARCH HAVING BEEN CARRIED OUT ALONG WITH THE SURVE Y CARRIED OUT ON THE SAME FAMILY MEMBERS OF THE GROUP WERE DULY MENTIONED ALONG WITH ASSERTION FOR ISSUE OF NOTICE U/S 153C IN CASES OF ASSESSEE NOT COVERED BY SEARCH BUT WHERE ONLY SURVEY ACTION HAS BEEN UNDERTAKEN. IT WAS CONTENDED BY THE LEARNED CIT DR THAT WHENEVER A SEARCH IS BEING PLANNED ON THE BASIS OF DETAILED INFORMATION COLLECTED BY THE DEPARTMENT AND AFTER DUE APPLICATION OF MIND STRATEGIES ARE FINALIZED IN RESPECT OF PLACES/PERSONS/CONCERNS WHERE SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT IS TO BE UNDERTAKEN AS WE LL AS THE PLACES/PERSONS/CONCERNS WHERE ACTION U/S 133A OF THE ACT WILL SERVE THE PURPOSE. THE WHOLE ACTION OF SEARCH AND SURVEY IS PLANNED AT A TIME AN D THE DEPARTMENT ALSO KEEPS IN MIND THAT THERE SHOULD NOT BE ANY HARASSMENT TO THE PERSONS/CONCERNS FALLING IN THE SAME GROUP WHO ARE NOT SO IMPORTANT BUT ARE VERY MUCH RELEVANT AND ASSOCIATED WITH THE ASSESSEE WHICH NECESSITATED SIMULTANEOUS SURVEY AT THEIR PREMISES SO THAT NOTHING IS LEFT OUT. OUR 22 ATTENTION WAS DRAWN TO VARIOUS LISTS PREPARED AS A PART OF APPRAISAL NOTE DULY MENTIONING THE NAMES OF THE PERSONS ALONG WITH THEIR ADDRESSES DATE OF SEARCH WHO ARE APPEARING IN THE WARRANT OF AUTHORIZATION U/S 132. A LIST WAS ALSO PREPARED TO SHOW THE PREMISES WHEREIN SURVEY WAS UNDERTAKEN U/S 133A OF THE ACT. IN THE APPRAISAL NOTE A LIST WAS ALSO GIVEN WHERE ACTION U/S 153C OF THE ACT WAS INTENDED TO BE INITIATED. AS PER THE LEARNED CIT DR SUCH LIST COMPRISES OF THE PERSONS OTHER THAN THE PERSON AT WHOSE PREMISES SEARCH IS BEING CARRIED OU T IN RESPECT OF THE DOCUMENTS FOUND AT SUCH PLACES WHICH PERTAIN TO THE PERSON OTHER THAN PERSON AGAIN ST WHOM ACTION U/S 132 WAS UNDERTAKEN. AS PER THE LEARNED CIT DR IT IS NOT ONLY THE OFFICER FRAMING THE ASSESSMENT SHOULD BE CONSIDERED AS ASSESSING OFFICER FOR RECORDING SATISFACTION BUT THE OTHER OF FICERS INVOLVED IN THE SEARCH AND SURVEY LIKE ADIT/DDIT SHOULD ALSO BE CONSIDERED. OUR ATTENTION WAS ALS O DRAWN TO THE PROVISIONS OF SUB-SECTION (7A) OF SECT ION 2 DEFINING THE ASSESSING OFFICER TO MEAN ASSISTANT COMMISSIONER DEPUTY COMMISSIONER ASSISTANT DIRECTOR DEPUTY DIRECTOR OR THE ITO WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTI ONS OR ORDERS ISSUED UNDER SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION OF THIS ACT A ND THE ADDITIONAL COMMISSIONER OR THE ADDITIONAL DIRECTOR OR JOINT COMMISSIONER OR JOINT DIRECTOR W HO IS DIRECTED UNDER CLAUSE (B) OF SUB-SECTION (4) OF THAT SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE PO WERS AND FUNCTIONS CONFERRED ON OR ASSIGNED TO AN ASSESSING OFFICER. AS PER THE LEARNED CIT DR UNDE R THE NEW SCHEME OF SECTION 153A/C THERE IS NO NEED TO FIND OUT UNDISCLOSED INCOME BUT THE ASSESSMENT IS MADE AFTER THE SEARCH IS CARRIED OUT TO ASSESS OR REASSESS THE INCOME OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING SIX ASSESSMENT YEARS AND THE CURRENT ASSESSMENT YEAR FALLING UPTO THE DATE OF SEARCH. HE FURTHER CONTENDED THAT UNDER THE OLD SCHEME OF SECTION 158BC/158BD OF THE ACT THE DEPARTMENT WAS TO ASSESS THE UNDISCLOSED INCOME ON THE BASIS INCRIMINATING DOCUMENTS FOUND DURING THE 23 COURSE OF SEARCH WHEREAS UNDER THE NEW SCHEME OF SECTION 153A/153C WHERE A SEARCH IS INITIATED U/S 132 OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S 132A THEN THE DEPARTMENT HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF SUCH ASSESSEE FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. ACCORDINGLY IT W AS PLEADED THAT JUDICIAL COGNIZANCE GIVEN TO THE LANGUAGE OF SECTION 158BD IN CASE OF MANISH MAHESHWARI BY THE HONBLE SUPREME COURT INSOFAR AS RECORDING OF NECESSARY SATISFACTION IS CONCERNED SHOULD NOT BE TAKEN WHILE INTERPRETING SECTION 153C OF THE INCOME TAX ACT UNDER THE NEW SCHEME OF FRAMING ASSESSMENT IN SEARCH CASES. AS PER THE LEARNED CIT- DR IN THE NEW SCHEME OF THE ACT APPRAISAL REPORT AMOUNTS TO SATISFACTION BY THE ASSESSING OFFICER FOR ISSUING A NOTICE U/S 153C OF THE ACT. 80. ON THE OTHER HAND IN REPLY TO THE LEARNED CIT DR'S CONTENTIONS IT WAS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT EVEN UNDER THE NEW SCHEME OF ASSESSMENT U/S 153C OF THE ACT SATISFACTION IS TO BE NECESSARILY RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON INDICATING THE DOCUMENTS SEIZED OR REQUISITIONED WHICH BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. HE INVITED OUR ATTENTION TO THE PRECISE LANGUAGE USED IN SECTION 153C OF THE AC T WHICH CATEGORICALLY REQUIRES THE ASSESSING OFFICER S SATISFACTION TO THE EFFECT THAT VALUABLES SEIZED DOCUMENTS FOUND DURING THE COURSE OF SEARCH WHICH BELONG TO A PERSON OTHER THAN A PERSON SEARCHED AND THE PROCEDURE OF HANDING OVER OF THESE DOCUMENTS/VALUABLES ETC. TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THEREAFTER OBLIGATION OF THE ASSESSING OFFICER OF S UCH OTHER PERSON TO PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND THEREAFTER TO ASSESS OR REASSESS THE INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF 24 SECTION 153A OF THE ACT. AS PER THE LEARNED COUNSE L FOR THE ASSESSEE COPY OF SUCH SATISFACTION NOTE SHOULD BE GIVEN TO THE ASSESSEE WHEREAS THE APPRAISAL NOTE AS REFERRED BY THE LEARNED CIT DR IS A CONFIDENTIAL DOCUMENT PREPARED BY THE DEPARTMENT FOR THEIR INTERNAL USE AND COPY OF WHICH IS NOT HAN DED OVER TO THE ASSESSEE. SUCH APPRAISAL REPORT IS A SECRET DOCUMENT PREPARED BY THE DEPARTMENT AND WHICH IS NOT OPEN TO THE ASSESSEE THEREFORE CANNO T BE TREATED AT PAR WITH THE SATISFACTION NOTE AS CONTEMPLATED U/S 153C OF THE ACT WITH REGARD TO THE DOCUMENTS SEIZED DURING THE PROCEEDINGS U/S 132 WHICH IS ALLEGED TO BE BELONGING TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A OF THE ACT. RELIANCE WAS ALSO PLACED ON THE PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI; 289 ITR 341(SUPRA) AND G.K. DRIVE SHAFT; 259 ITR 19 AND THE DECISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF RISHI CONSTRUCTION; 10 ITJ 346 AND ASNANI BUILDERS; 10 IT J 618. 81. WE HAVE DELIBERATED UPON THE CONTENTIONS OF THE LEARNED CIT DR SHRI K.K. SINGH AND LEARNED COUNSE L FOR THE ASSESSEE SHRI H.P. VERMA WITH REGARD TO INTERPRETATION OF RECORDING OF SATISFACTION WHILE ASSUMING JURISDICTION U/S 153C OF THE ACT. EVEN IN THE NEW SCHEME OF FRAMING OF ASSESSMENT IN CASE OF SEARCH CASES THE LEGISLATURE HAS CLEARLY STIPULATE D THE REQUIREMENT FOR RECORDING OF SATISFACTION WHILE ASSUMING JURISDICTION TO ISSUE NOTICE AND FRAME ASSESSMENT U/S 153C OF THE ACT WHICH REQUIRES THAT SATISFACTION TO BE RECORDED WITH REFERENCE TO THE DOCUMENTS AND OTHER MATERIALS FOUND DURING THE COURSE OF SEARCH BELONGING TO A PERSON OTHER THAN T HE SEARCHED PERSON. PRIMA FACIE ASSESSING OFFICER OF SEARCHED PERSON SHOULD FORM AN OPINION WITH REGARD TO ANY DOCUMENT VALUABLE ETC. AS FOUND DURING THE COURSE OF SEARCH THAT SUCH DOCUMENT WHICH IS DECLINED BY THE SEARCHED PERSON ACTUALLY BELONGS T O SOME OTHER PERSON AGAINST WHOM PROCEEDINGS U/S 153C ARE REQUIRED TO PUT INTO OPERATION. AFTER SUCH RECORDING OF SATISFACTION THE DOCUMENTS SO SEIZED 25 SHOULD BE HANDED OVER TO THE ASSESSING OFFICER OF SUCH OTHER PERSON. THE LEGAL REQUIREMENT OF RECORD ING OF SUCH SATISFACTION CANNOT BE SUBSTITUTED BY APPRAISAL NOTE WHICH IS PREPARED BY THE SEARCH PART Y AFTER COMPLETION OF SEARCH INSOFAR AS SUCH APPRAISA L NOTE IS A SECRET DOCUMENT PREPARED BY THE DEPARTMENT FOR THEIR INTERNAL USE CONTENTS OF WHIC H ARE NOT CONVEYED TO THE ASSESSEE NOR ITS COPY IS SUPPLIED TO THE ASSESSEE EVEN ON MAKING A WRITTEN REQUEST. THE APPRAISAL NOTE SO PREPARED BY THE DEPARTMENT IS MEANT TO MONITOR AFTER THE SEARCH PROCEEDINGS ARE OVER SO AS TO ENSURE EXHAUSTIVE ASSESSMENT OF ALL SEARCHED PERSON WITH RESPECT TO THEIR CORRECT INCOME AND TO PLAN A STRATEGY FOR FUR THER DEEP INQUIRY AND INVESTIGATION OF DOCUMENTS FOUND DURING THE COURSE OF SEARCH. SINCE COPY OF SUCH APPRAISAL NOTE IS NOT SUPPLIED TO THE ASSESSEE IT CANNOT BE TAKEN AT PAR WITH THE REQUIREMENT OF RECORDING OF SATISFACTION NOTE AS STIPULATED U/S 15 3C OF THE ACT WHICH IS A MANDATORY REQUIREMENT. WHAT IS THE LEGISLATIVE INTENT OF SUCH SATISFACTION AND IN WHAT MANNER IT SHOULD BE RECORDED HAS BEEN DEALT WITH IN THE JUDICIAL PRONOUNCEMENTS IN THE CASES OF MANISH MAHEHWARI AND G.K. DRIVE SHAFT BY THE HONBLE SUPREME COURT. ACCORDINGLY WE ARE NOT INCLINED TO AGREE WITH THE PROPOSITION THAT THE APPRAISAL NOTE PREPARED BY THE DEPARTMENT SHOULD BE TREATED AS A SATISFACTION NOTE AS REQUIRED TO BE RECORDED IN TERMS OF SECTION 153C OF THE ACT SO AS TO EMPOWER THE ASSESSING OFFICER TO ASSUME JURISDICTIO N TO ISSUE NOTICE AND THEREAFTER FRAME ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT. 82. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT F IND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WHO HAS QUASHED THE ASSESSMENT FRAMED U/S 153C OF THE ACT. FURTHER THE DETAILED FINDING RECORDED BY THE LEARN ED COMMISSIONER OF INCOMETAX (APPEALS) WITH RESPECT TO RECORDING OF SATISFACTION HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX 26 (APPEALS) QUASHING THE ASSESSMENTS FRAMED U/S 153C OF THE ACT IN THE CASES OF ALL THESE ASSESSES. IN THIS CASE IT WAS ALSO HELD THAT REPORT PREPARED BY ADI DOES NOT AMOUNT TO SATISFACTION AS CONTEMPLATED U/S 153C OF THE ACT INSOFAR AS COPY OF SUCH REPORT IS NOT GIVEN TO THE ASSESSEE AND IT IS A SECRET DOCUMENT WITH THE DEPARTMENT. 11. IN VIEW OF THE ABOVE RESPECTFULLY FOLLOWING T HE DECISION OF THE COORDINATE BENCH WHEREIN AFTER RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAH ESHWARI; 208 CTR 97 AND THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF NEW DELHI AUTO FINANCE LTD.; 300 ITR 83 WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN HOLDING THAT INVOKING OF SECTION 153C OF THE ACT AGAINST THE ASSESSEE WAS BAD IN LAW AND THE PROCEED INGS SO INITIATED WERE VOID AB INITIO. THEREFORE ALL THE A SSESSMENTS WERE DECLARED AB INITIO NULL AND VOID. 12. AS THE LEARNED COMMISSIONER OF INCOMETAX (APPEA LS) HAS NOT DEALT WITH THE MERITS OF THE ADDITION AND HAS N OT GIVEN ANY VERDICT THEREON THE GROUND TAKEN BY THE REVENUE TO THE EFFECT THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS ) HAS ERRED IN DELETING THE ADDITIONS MADE ON MERITS IS MIS-CO NCEIVED. 13. IN THE RESULT THE APPEALS OF THE REVENUE ARE D ISMISSED. 27 14. I.T.A.NO.01 TO 05/JAB/2008 15. THE FACTS IN THIS CASE ARE ALSO PARI MATERIAL T O THE FACTS DISCUSSED IN THE CASE OF HOTEL SONAM AND SMART BAR ITA NOS. 30 TO 36 DISCUSSED HEREINABOVE. ACCORDINGLY THE SAM E PROPOSITION IS BEING FOLLOWED IN THIS CASE ALSO BY RELYING ON T HE PROPOSITION DISCUSSED IN M/S CHIRCHIND HYDRO LIMITED WHICH IS A S UNDER :- FROM RECORD WE FIND THAT THERE WAS A SEARCH AT TH E RESIDENCE OF SANTOSH KUMAR SAHU IN DECEMBER 2003 WHO WAS A PARTNER IN THE ASSESSEE FIRM M/S HOTEL SO NAM AND SMART BAR. THERE WAS NO SEARCH BUT ONLY SURVEY AT THE ASSESSEE FIRM. THE ASSESSING OFFICER ISSUED NO TICE U/S 153A ON 28.3.2005. THE ASSESSEE FILED RETURN OF INCOME FOR SEVEN YEARS ON 26.10.2005 AND THEREAFTER ISSUED NOTICE U/S 142(1) AND 143(2) OF THE ACT. THEREAFTER THE DEPARTMENT REALISED THAT IN THE ASSESSEES CASE NO SEARCH WARRANT HAD BEEN ISSUED A ND THEREFORE IT WAS NOT PROPER TO HAVE ISSUED NOTICE U/S 153A OF THE ACT. ACCORDINGLY ON 8.3.2006 THE ASSE SSING OFFICER ISSUED ANOTHER NOTICE U/S 153C OF THE ACT F OR EACH OF THE ASSESSMENT YEARS. THE ASSESSEE WAS GIVEN FI VE DAYS TIME TO FILE THE RETURN OF INCOME. THE ASSESS EE FILED THE RETURNS ON 13 TH MARCH 2006 IDENTICAL TO THOSE FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. HOWEVER N O NOTICE WAS ISSUED AFTER FILING OF THESE RETURNS U/S 143(2) OF THE ACT AND THE ASSESSING OFFICER FRAMED THE ASSESSMENT IN RESPECT OF ALL THE YEARS VIDE ORDER D ATED 30 TH MARCH 2006. IN THE ORDER SO FRAMED THE ASSESSING OFFICER HAS JUST REFERRED THE DOCUMENTS FOUND DURIN G THE COURSE OF SURVEY AT ITS BUSINESS PREMISES AND NONE OF THE DOCUMENTS WAS REFERRED TO AS HAVING BEEN FOUND DURI NG THE COURSE OF SEARCH AT THE PREMISES OF ITS PARTNE R INDICATING UNDISCLOSED INCOME OF THE ASSESSEE FIRM. IN THE APPEAL FILED BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CONTENTION OF THE LEARNED COUN SEL FOR THE ASSESSEE WAS THAT ASSUMPTION OF JURISDICTION U/ S 153C OF THE ACT WAS NOT CORRECT INSOFAR AS NO SEARC H WAS 28 CARRIED OUT AT THE ASSESSEES BUSINESS PREMISES NOR ANY INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH IN RESPECT OF PERSONS AGAINST WHOM ASSESSMEN T WAS FRAMED U/S 153A OF THE ACT. IT WAS ALSO THE CONTENTION OF THE ASSESSEE THAT WITHOUT ISSUE OF NO TICE U/S 143(2) OF THE ACT AFTER FILING OF THE RETURN IN COMPLIANCE WITH NOTICE U/S 153C OF THE ACT THE ASSESSMENT FRAMED WAS INVALID AS HAS BEEN HELD BY T HE HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOO N; 229 CTR 219. BY THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) OBSERVED THAT T HE ASSESSING OFFICER HAS NOT IDENTIFIED ANY DOCUMENT ALLEGEDLY BELONGING TO THE ASSESSEE WHICH WAS FOUND DURING THE COURSE OF SEARCH AND HE HAS NOT GIVEN A NY BASIS FOR COMING TO THE PRIMA FACIE INFERENCE OF TH E DOCUMENTS IF ANY TO BE OF INCRIMINATING NATURE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO FO UND THAT IDENTICAL STEREO TYPE SATISFACTION NOTE HAS BE EN RECORDED IN AS MANY AS 13 CASES INVOLVING ABOUT 40 ASSESSMENTS WHICH FACT BY ITSELF LEAD TO THE INFERE NCE THAT THOSE WERE RECORDED WITHOUT APPLICATION OF MIN D AND HENCE THERE IS ABSENCE OF ANY BONAFIDE SATISF ACTION FOR INVOKING SECTION 153C OF THE ACT. IN VIEW OF T HIS FACTUAL POSITION THE LEARNED COMMISSIONER OF INCOM ETAX (APPEALS) OBSERVED THAT SECTION 153C AFFECTS THE RI GHTS OF A PERSON INSOFAR AS A PERSON WHO HAS NOT BEEN SEARC HED IS MADE TO FACE THE HARSH CONSEQUENCES OF REOPENING OF SIX YEARS CASES. THEREFORE THIS SECTION CANNOT B E GIVEN A LIBERAL INTERPRETATION SINCE IF IT IS SO DONE THE N THE PROCEEDINGS UNDER THIS SECTION CAN BE INITIATED AGA INST A PERSON NOT SEARCHED MERELY ON THE GROUND THAT SOME ACCOUNTS OR EVEN A BANK STATEMENT OF THE PERSON HAS BEEN FOUND IN A SEARCH ACTION. THUS IT WAS HELD T HAT BEFORE INVOKING SECTION 153C OF THE ACT THERE HAS TO BE SOME MATERIAL ON RECORD TO COME OUT OF THE PRESUMPT ION OF SECTION 292C WHICH IS POSSIBLE ONLY AFTER CONFRONTI NG THE IMPUGNED MATERIAL TO THE PERSON SEARCHED. HOWEVER IN THE INSTANT CASE NO FINDING OF PRESUMPTION HAS BEE N GIVEN BEFORE INVOKING SECTION 153C OF THE ACT. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ALSO OBSERVED THAT SATISFACTION RECORDED IN MARCH 2006 FOR ALL THE SEVEN YEARS WAS WITHOUT APPLICATION OF MIND WHI CH IS 29 EVIDENT FROM OTHER 12 CASES WHEREIN F0 ASSESSMENTS HAD BEEN FRAMED BY THE ASSESSING OFFICER AFTER RECORDIN G IDENTICAL STEREO TYPE SATISFACTION JUST BY STATING THAT DURING SURVEY ACTIONS CARRIED OUT IN DECEMBER 2003 IN THE CASE OF SANTOSHKUMAR SAHU AND OTHERS INCRIMINA TING DOCUMENTS PERTAINING TO EACH OF THE YEARS WERE FOUN D AND SEIZED WHEREAS THE FACT IS THAT IN SOME OF THE YEARS SOME OF THOSE CONCERNS WERE NOT IN EXISTENCE. AS P ER THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THE MINIMUM REQUIREMENT TO JUSTIFY INVOKING OF SECTION 153C IS THAT ATLEAST IT SHOULD BE POSSIBLE TO GATHER SAT ISFACTION HAVING REGARD TO THE FACTS ON RECORD BUT TO GATHER THIS SATISFACTION THERE SHOULD BE SOME SEIZED RECORD PERTAINING TO THE ASSESSEE WHICH HAD BEEN FOUND IN A SEARCH ACTION AND THE SAME SHOULD ALSO HAVE BEEN CONFRONTED TO THE ASSESSEE. A FINDING OF FACT WAS ALSO RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) TO THE EFFECT THAT DURING THE ASSESSMENT PROCEEDINGS NO SEIZED RECORD PERTAINING TO THE ASS ESSEE WAS CONFRONTED TO HIM AND WHAT WAS CONFRONTED WERE THE DOCUMENTS IMPOUNDED DURING SURVEY ACTION CONDUCTED AT ITS OFFICE. IT WAS THEREFORE HELD T HAT INVOKING OF SECTION 153C OF THE ACT AGAINST THE ASS ESSEE WAS BAD IN LAW AND THE PROCEEDINGS SO INITIATED WER E HELD TO BE VOID AB INITIO. THE ISSUE WITH REGARD T O ASSUMPTION OF POWER U/S 153C OF THE ACT HAS BEEN ELABORATELY DEALT WITH BY THE COORDINATE BENCH OF T HE TRIBUNAL IN THE CASE OF M/S. CHIRCHIND HYDRO POWER LIMITED BHOPAL 17 ITJ 197 WHEREIN THE TRIBUNAL HA S HELD AS UNDER :- 78. WE HAVE CONSIDERED THE RIVAL CONTENTIONS C AREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D DELIBERATED ON THE CASE LAWS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AND BY THE RESPECTIVE COUNSELS DURING THE COURSE OF HEARING B EFORE US. FROM THE RECORD WE FIND THAT THE SEARCH WAS CA RRIED OUT AT THE RESIDENTIAL PREMISES OF DIRECTORS/PARTNE RS OF THESE CONCERNS AND NOT AT THE PREMISES OF THESE CON CERNS. AFTER THE SEARCH WAS CARRIED OUT AT THE RESIDENCE O F DIRECTORS/PARTNERS OF THESE ASSOCIATE CONCERNS ASSESSMENT WAS FRAMED IN RESPECT OF THESE CONCERNS U/S 153C OF THE ACT ON THE PLEA THAT INCRIMINATING MATE RIAL 30 WAS FOUND DURING THE COURSE OF SEARCH AT THE RESIDE NCE OF PARTNERS/DIRECTORS. THE ASSUMPTION OF POWER BY THE ASSESSING OFFICER U/S 153C OF THE ACT FOR FRAMING T HE ASSESSMENT IS SUBJECT TO THE CONDITION THAT THE ASS ESSING OFFICER ASSESSING THE SEARCH PARTY IS SATISFIED TH AT THE JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR B OOKS OF ACCOUNTS OR DOCUMENTS OR ASSETS SEIZED OR REQUISIT IONED PERTAIN TO SOME PERSON OTHER THAN THE PERSON REFERR ED TO IN SECTION 153A THEN THE BOOKS OF ACCOUNTS OR THE DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER BY THE ASSESSING OFFICER OF SEARCHED PE RSON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER S UCH OTHER PERSON AND THAT THE ASSESSING OFFICER SHALL P ROCEED AGAINST EACH OF SUCH PERSONS AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF S ECTION 153A OF THE ACT. THE OPENING WORD OF SECTION 153C SPEAKS THAT NOT-WITH-STANDING ANYTHING CONTAINED IN SECTIONS 139 147 148 149 151 AND 153 WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY JE WELLERY OR BOOKS OF ACCOUNTS OR DOCUMENTS SEIZED OR REQUISI TIONED BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A MEANING THEREBY THE ASSESSING OFFICER IS TO RECORD A SATISFACTION TO THE EFFECT THAT SUCH JEWEL LERY OR DOCUMENT SO SEIZED DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOME OTHER PERSON REFERRED TO IN SECT ION 153A OF THE ACT. THUS THE PRE-REQUISITE OF SECTIO N 153C IS THAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO SATISFY HIMSELF THAT SOM E MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZ URE BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERS ON. THEN THE ASSESSING OFFICER MAKING THE ASSESSMENT OF SEARCHED PERSON HAS TO HAND-OVER THE SAID INCRIMINA TING MATERIAL BELONGING TO SOME PERSON OTHER THAN THE SEARCHED PERSON TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SAID OTHER PERSON. THEREAFTE R THE ASSESSING OFFICER HAVING THE JURISDICTION OVER THE PERSON OTHER THAN THE SEARCHED PERSON SHALL ISSUE A NOTICE U/S 153C TO SUCH OTHER PERSON AND ASSESS HIS INCOME IN TERMS OF THE PROVISIONS OF SECTION 153A OF THE ACT. THUS THE NOTICE U/S 153C OF THE ACT IS TO BE ISSUED ONLY AFTER RECORDING OF SATISFACTION. THE ASSUMPTION OF JUSRIS DICTION 31 TO ISSUE NOTICE AND FRAME ASSESSMENT UNDER SECTION 153C READ WITH SECTION 153A IS ACQUIRED BY THE ASSESSING OFFICER ONLY AFTER HAVING BEEN SATISFIED AND SUCH SATISFACTION IS RECORDED IN WRITING. THESE PROVISI ONS OF SECTION 153C ARE IN PARI MATERIA WITH THE PROVISION S OF SECTION 158BD WHICH PROVIDES THAT THE ASSESSING OFF ICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO SATISFY HIMSELF THAT SOME UNDISCLOSED INCOME FOUND BY HIM BELONGS TO SOME PERSON OTHER THAN THE SEARCHED PERSON AND THEN HE OR THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER RECEIPT O F RECORD FROM THE ASSESSING OFFICER OF THE SEARCHED PERSON H AS TO ISSUE NOTICE U/S 158BD OF THE ACT AND HAS TO ASSESS INCOME OF SUCH OTHER PERSON. THE PROVISIONS OF SEC TION 158BD OF THE ACT WERE EXAMINED IN DETAIL BY THE HON BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI; 208 CTR 97. THE SAID HONBLE SUPREME COURT DECISION WA S FOLLOWED BY THE HONBLE DELHI HIGH COURT IN THE CAS E OF NEW DELHI AUTO FINANCE LIMITED; 300 ITR 83. THE HONBLE SUPREME COURT HAS LAID DOWN A PROPOSITION T HAT THE ASSESSING OFFICER MAKING THE ASSESSMENT OF THE SEARCHED PERSON HAS TO NECESSARILY RECORD IN WRITIN G THE SPECIFIC OBJECTIVE SATISFACTION WHICH IS MANDATORY TO THE EFFECT THAT THE UNDISCLOSED INCOME FOUND BY HIM ON THE BASIS OF SEIZED MATERIAL BELONGS TO SOME PERSON OT HER THAN THE SEARCHED PERSON. INSOFAR AS THE PROVISION S OF SECTION 153C OF THE ACT ARE IN PARI MATERIA WITH TH E PROVISIONS OF SECTION 158BD OF THE ACT WITH REGARD TO THE REQUIREMENTS OF RECORDING NECESSARY SATISFACTION BY THE ASSESSING OFFICER OF SEARCHED PERSON THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI (SUPRA) SHALL APPLY WITH FULL FORCE IN C ASE OF INITIATION OF PROCEEDINGS U/S 153C. THE ASSUMPTION OF JURISDICTION AND FRAMING OF ASSESSMENT BY THE ASSES SING OFFICER U/S 153C WITHOUT RECORDING SUCH SATISFACTIO N IS VOID AB INITIO. APPLYING THE PROPOSITION OF LAW LA ID DOWN BY THE HONBLE SUPREME COURT AS DISCUSSED ABOVE I T IS QUITE EVIDENT THAT RECORDING OF SATISFACTION BEFORE ISSUE OF NOTICE U/S 153C IS MANDATORY AND IN CASE WHERE NO S UCH SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFF ICER IN THE CASE OF SEARCHED PERSON TO THE EFFECT THAT S OME INCRIMINATING MATERIAL SO FOUND BELONGS TO SOME OTH ER 32 PERSON THE ASSESSMENT FRAMED U/S 153C WILL BE LIAB LE TO BE QUASHED. HOWEVER DETAILED FINDING HAS BEEN RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER EXAMINING THE ASSESSMENT RECORDS OF THE CONCERNED PERSON/PARTIES TO THE EFFECT THAT NO SATI SFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON. THIS FINDING OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSI TIVE MATERIAL ON RECORD. ACCORDINGLY APPLYING THIS PROP OSTION OF LAW THE ASSUMPTION OF JURISDICTION AND FRAMING OF ASSESSMENT IN THE INSTANT CASES BY THE ASSESSING OF FICER U/S 153C WERE BAD IN LAW. 79. IT WAS ARGUED BY SHRI K.K. SINGH THE LEARNED C IT DR THAT SATISFACTION NOTE AS STIPULATED U/S 153C OF T HE ACT IS TO BE SEEN IN THE CONTEXT OF SATISFACTION NOTE P REPARED BY THE ADIT IN THE FORM OF APPRAISAL NOTE AFTER THE SEARCH IS OVER. HE PLACED ON RECORD A COPY OF THE APPRAIS AL NOTE WHICH IS PREPARED BY THE ADIT AFTER THE SEARCH WAS OVER WHEREIN DETAILS OF SEARCH HAVING BEEN CARRIED OUT A LONG WITH THE SURVEY CARRIED OUT ON THE SAME FAMILY MEMB ERS OF THE GROUP WERE DULY MENTIONED ALONG WITH ASSERT ION FOR ISSUE OF NOTICE U/S 153C IN CASES OF ASSESSEE N OT COVERED BY SEARCH BUT WHERE ONLY SURVEY ACTION HAS BEEN UNDERTAKEN. IT WAS CONTENDED BY THE LEARNED CIT DR THAT WHENEVER A SEARCH IS BEING PLANNED ON THE BAS IS OF DETAILED INFORMATION COLLECTED BY THE DEPARTMENT AN D AFTER DUE APPLICATION OF MIND STRATEGIES ARE FINAL IZED IN RESPECT OF PLACES/PERSONS/CONCERNS WHERE SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT IS TO BE UNDERTAK EN AS WELL AS THE PLACES/PERSONS/CONCERNS WHERE ACTION U/ S 133A OF THE ACT WILL SERVE THE PURPOSE. THE WHOLE ACTION OF SEARCH AND SURVEY IS PLANNED AT A TIME AND THE DEPARTMENT ALSO KEEPS IN MIND THAT THERE SHOULD NOT BE ANY HARASSMENT TO THE PERSONS/CONCERNS FALLING IN T HE SAME GROUP WHO ARE NOT SO IMPORTANT BUT ARE VERY M UCH RELEVANT AND ASSOCIATED WITH THE ASSESSEE WHICH NECESSITATED SIMULTANEOUS SURVEY AT THEIR PREMISES SO THAT NOTHING IS LEFT OUT. OUR ATTENTION WAS DRAWN TO VARIOUS LISTS PREPARED AS A PART OF APPRAISAL NOTE DULY MENTIONING THE NAMES OF THE PERSONS ALONG WITH THEI R ADDRESSES DATE OF SEARCH WHO ARE APPEARING IN THE 33 WARRANT OF AUTHORIZATION U/S 132. A LIST WAS ALSO PREPARED TO SHOW THE PREMISES WHEREIN SURVEY WAS UNDERTAKEN U/S 133A OF THE ACT. IN THE APPRAISAL N OTE A LIST WAS ALSO GIVEN WHERE ACTION U/S 153C OF THE AC T WAS INTENDED TO BE INITIATED. AS PER THE LEARNED CIT DR SUCH LIST COMPRISES OF THE PERSONS OTHER THAN THE PERSON AT WHOSE PREMISES SEARCH IS BEING CARRIED OUT IN RESPE CT OF THE DOCUMENTS FOUND AT SUCH PLACES WHICH PERTAIN TO THE PERSON OTHER THAN PERSON AGAINST WHOM ACTION U/S 13 2 WAS UNDERTAKEN. AS PER THE LEARNED CIT DR IT IS N OT ONLY THE OFFICER FRAMING THE ASSESSMENT SHOULD BE CONSIDERED AS ASSESSING OFFICER FOR RECORDING SATIS FACTION BUT THE OTHER OFFICERS INVOLVED IN THE SEARCH AND S URVEY LIKE ADIT/DDIT SHOULD ALSO BE CONSIDERED. OUR ATTENTION WAS ALSO DRAWN TO THE PROVISIONS OF SUB-S ECTION (7A) OF SECTION 2 DEFINING THE ASSESSING OFFICER TO MEAN ASSISTANT COMMISSIONER DEPUTY COMMISSIONER ASSISTANT DIRECTOR DEPUTY DIRECTOR OR THE ITO WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS OR ORDERS ISSUED UNDER SUB-SECTION (1) O R SUB- SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION O F THIS ACT AND THE ADDITIONAL COMMISSIONER OR THE ADDITIONAL DIRECTOR OR JOINT COMMISSIONER OR JOINT DIRECTOR W HO IS DIRECTED UNDER CLAUSE (B) OF SUB-SECTION (4) OF THA T SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FUNCTIONS CONFERRED ON OR ASSIGNED TO AN ASSESSING OFFICER. AS PER THE LEARNED CIT DR UNDER THE NEW SCHEME OF SECTION 153A/C THERE IS NO NEED TO FIND OUT UNDISCLOSED INCOME BUT THE ASSESSMENT IS MADE AFTE R THE SEARCH IS CARRIED OUT TO ASSESS OR REASSESS THE INCOME OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING SIX ASSESSMENT YEARS AND THE CURRENT ASSESSMENT YEAR FALLING UPTO THE DATE OF SEARCH. HE FURTHER CONTEN DED THAT UNDER THE OLD SCHEME OF SECTION 158BC/158BD OF THE ACT THE DEPARTMENT WAS TO ASSESS THE UNDISCLOSED INCOME ON THE BASIS INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH WHEREAS UNDER THE NEW SCHEME OF SECTION 153A/153C WHERE A SEARCH IS INITIATED U/S 132 OR BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR ANY ASSE TS ARE REQUISITIONED U/S 132A THEN THE DEPARTMENT HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF SUCH ASSESSE E FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE 34 ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. ACCORDINGLY IT WAS PLEADED THAT JUDICIAL COGNIZANC E GIVEN TO THE LANGUAGE OF SECTION 158BD IN CASE OF MANISH MAHESHWARI BY THE HONBLE SUPREME COURT INSOFAR AS RECORDING OF NECESSARY SATISFACTION IS CONCERNED S HOULD NOT BE TAKEN WHILE INTERPRETING SECTION 153C OF THE INCOME TAX ACT UNDER THE NEW SCHEME OF FRAMING ASSESSMENT IN SEARCH CASES. AS PER THE LEARNED CIT - DR IN THE NEW SCHEME OF THE ACT APPRAISAL REPORT AMOU NTS TO SATISFACTION BY THE ASSESSING OFFICER FOR ISSUING A NOTICE U/S 153C OF THE ACT. 80. ON THE OTHER HAND IN REPLY TO THE LEARNED CIT DR'S CONTENTIONS IT WAS ARGUED BY THE LEARNED COUNSEL F OR THE ASSESSEE THAT EVEN UNDER THE NEW SCHEME OF ASSESSME NT U/S 153C OF THE ACT SATISFACTION IS TO BE NECESSAR ILY RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED P ERSON INDICATING THE DOCUMENTS SEIZED OR REQUISITIONED W HICH BELONG TO A PERSON OTHER THAN THE PERSON REFERRED T O IN SECTION 153A OF THE ACT. HE INVITED OUR ATTENTION TO THE PRECISE LANGUAGE USED IN SECTION 153C OF THE ACT WH ICH CATEGORICALLY REQUIRES THE ASSESSING OFFICERS SATI SFACTION TO THE EFFECT THAT VALUABLES SEIZED DOCUMENTS FOUN D DURING THE COURSE OF SEARCH WHICH BELONG TO A PERS ON OTHER THAN A PERSON SEARCHED AND THE PROCEDURE OF HANDING OVER OF THESE DOCUMENTS/VALUABLES ETC. TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON AND THEREAFTER OBLIGATION OF THE ASSESSING O FFICER OF SUCH OTHER PERSON TO PROCEED AGAINST EACH SUCH O THER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND THERE AFTER TO ASSESS OR REASSESS THE INCOME OF SUCH OTHER PERS ON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF T HE ACT. AS PER THE LEARNED COUNSEL FOR THE ASSESSEE COPY O F SUCH SATISFACTION NOTE SHOULD BE GIVEN TO THE ASSESSEE WHEREAS THE APPRAISAL NOTE AS REFERRED BY THE LEAR NED CIT DR IS A CONFIDENTIAL DOCUMENT PREPARED BY THE DEPARTMENT FOR THEIR INTERNAL USE AND COPY OF WHICH IS NOT HANDED OVER TO THE ASSESSEE. SUCH APPRAISAL REPORT IS A SECRET DOCUMENT PREPARED BY THE DEPARTMENT AND WHIC H IS NOT OPEN TO THE ASSESSEE THEREFORE CANNOT BE T REATED AT PAR WITH THE SATISFACTION NOTE AS CONTEMPLATED U /S 153C OF THE ACT WITH REGARD TO THE DOCUMENTS SEIZED 35 DURING THE PROCEEDINGS U/S 132 WHICH IS ALLEGED TO BE BELONGING TO A PERSON OTHER THAN THE PERSON REFERRE D TO IN SECTION 153A OF THE ACT. RELIANCE WAS ALSO PLACED ON THE PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI; 289 ITR 341(SUPRA) A ND G.K. DRIVE SHAFT; 259 ITR 19 AND THE DECISION OF T HE JURISDICTIONAL TRIBUNAL IN THE CASE OF RISHI CONSTR UCTION; 10 ITJ 346 AND ASNANI BUILDERS; 10 ITJ 618. 81. WE HAVE DELIBERATED UPON THE CONTENTIONS OF THE LEARNED CIT DR SHRI K.K. SINGH AND LEARNED COUNSE L FOR THE ASSESSEE SHRI H.P. VERMA WITH REGARD TO INTERPRETATION OF RECORDING OF SATISFACTION WHILE A SSUMING JURISDICTION U/S 153C OF THE ACT. EVEN IN THE NEW S CHEME OF FRAMING OF ASSESSMENT IN CASE OF SEARCH CASES T HE LEGISLATURE HAS CLEARLY STIPULATED THE REQUIREMENT FOR RECORDING OF SATISFACTION WHILE ASSUMING JURISDICTI ON TO ISSUE NOTICE AND FRAME ASSESSMENT U/S 153C OF THE A CT WHICH REQUIRES THAT SATISFACTION TO BE RECORDED WI TH REFERENCE TO THE DOCUMENTS AND OTHER MATERIALS FOUN D DURING THE COURSE OF SEARCH BELONGING TO A PERSON O THER THAN THE SEARCHED PERSON. PRIMA FACIE ASSESSING OF FICER OF SEARCHED PERSON SHOULD FORM AN OPINION WITH REGA RD TO ANY DOCUMENT VALUABLE ETC. AS FOUND DURING THE CO URSE OF SEARCH THAT SUCH DOCUMENT WHICH IS DECLINED BY THE SEARCHED PERSON ACTUALLY BELONGS TO SOME OTHER PER SON AGAINST WHOM PROCEEDINGS U/S 153C ARE REQUIRED TO P UT INTO OPERATION. AFTER SUCH RECORDING OF SATISFACTI ON THE DOCUMENTS SO SEIZED SHOULD BE HANDED OVER TO THE ASSESSING OFFICER OF SUCH OTHER PERSON. THE LEGAL REQUIREMENT OF RECORDING OF SUCH SATISFACTION CANNO T BE SUBSTITUTED BY APPRAISAL NOTE WHICH IS PREPARED BY THE SEARCH PARTY AFTER COMPLETION OF SEARCH INSOFAR AS SUCH APPRAISAL NOTE IS A SECRET DOCUMENT PREPARED BY THE DEPARTMENT FOR THEIR INTERNAL USE CONTENTS OF WHIC H ARE NOT CONVEYED TO THE ASSESSEE NOR ITS COPY IS SUPPLI ED TO THE ASSESSEE EVEN ON MAKING A WRITTEN REQUEST. THE APPRAISAL NOTE SO PREPARED BY THE DEPARTMENT IS MEA NT TO MONITOR AFTER THE SEARCH PROCEEDINGS ARE OVER SO AS TO ENSURE EXHAUSTIVE ASSESSMENT OF ALL SEARCHED PERSON WITH RESPECT TO THEIR CORRECT INCOME AND TO PLAN A STRATEGY FOR FURTHER DEEP INQUIRY AND INVESTIGATION OF DOCUM ENTS FOUND DURING THE COURSE OF SEARCH. SINCE COPY OF SUCH 36 APPRAISAL NOTE IS NOT SUPPLIED TO THE ASSESSEE IT CANNOT BE TAKEN AT PAR WITH THE REQUIREMENT OF RECORDING O F SATISFACTION NOTE AS STIPULATED U/S 153C OF THE ACT WHICH IS A MANDATORY REQUIREMENT. WHAT IS THE LEGISLATIV E INTENT OF SUCH SATISFACTION AND IN WHAT MANNER IT S HOULD BE RECORDED HAS BEEN DEALT WITH IN THE JUDICIAL PRONOUNCEMENTS IN THE CASES OF MANISH MAHEHWARI AND G.K. DRIVE SHAFT BY THE HONBLE SUPREME COURT. ACCORDINGLY WE ARE NOT INCLINED TO AGREE WITH THE PROPOSITION THAT THE APPRAISAL NOTE PREPARED BY THE DEPARTMENT SHOULD BE TREATED AS A SATISFACTION NOTE AS REQUIRED TO BE RECORDED IN TERMS OF SECTION 153C OF THE ACT SO AS TO EMPOWER THE ASSESSING OFFICER TO ASSUM E JURISDICTION TO ISSUE NOTICE AND THEREAFTER FRAME ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT. 82. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT F IND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WHO HAS QUASHED THE ASSESSMENT FRAMED U/S 153C OF THE ACT. FURTHER THE DETAILED F INDING RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WITH RESPECT TO RECORDING OF SATISFACTION HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) QUASHING THE ASSESSMENTS FRAME D U/S 153C OF THE ACT IN THE CASES OF ALL THESE ASSES SES. IN THIS CASE IT WAS ALSO HELD THAT REPORT PREPARED BY ADI DOES NOT AMOUNT TO SATISFACTION AS CONTEMPLATED U/S 153C OF THE ACT INSOFAR AS COPY OF SUCH REPORT IS N OT GIVEN TO THE ASSESSEE AND IT IS A SECRET DOCUMENT WITH TH E DEPARTMENT. 2. IN VIEW OF THE ABOVE RESPECTFULLY FOLLOWING TH E DECISION OF THE COORDINATE BENCH WHEREIN AFTER RELY ING UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF MANISH MAHESHWARI; 208 CTR 97 AND THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF NEW DELHI AUTO FINANCE LTD.; 300 ITR 83 WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN HOLDING THAT INVOKING OF SEC TION 153C OF THE ACT AGAINST THE ASSESSEE WAS BAD IN LAW AND THE PROCEEDINGS SO INITIATED WERE VOID AB INITIO. T HEREFORE 37 ALL THE ASSESSMENTS WERE DECLARED AB INITIO NULL A ND VOID. 3. AS THE LEARNED COMMISSIONER OF INCOMETAX (APPEAL S) HAS NOT DEALT WITH THE MERITS OF THE ADDITION AND H AS NOT GIVEN ANY VERDICT THEREON THE GROUND TAKEN BY THE REVENUE TO THE EFFECT THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS ERRED IN DELETING THE ADDIT IONS MADE ON MERITS IS MIS-CONCEIVED. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED . 16. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH WE CONFIRM THE ACTION OF THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS) IN HOLDING THAT INVOKING OF SECTION 153C OF THE ACT AGAINST THE ASSESSEE WAS BAD IN LAW AND ALL THE ASS ESSMENTS FRAMED CONSEQUENT THERETO WERE DECLARED TO BE AB IN ITIO VOID. 17. IN RESPECT OF MERIT OF THE ADDITION ON ACCOUNT OF CAPITAL OF RS.3 68 000/- INTRODUCED BY THE PARTNERS THE LEARN ED COMMISSIONER OF INCOMETAX (APPEALS) AFTER RECORDIN G DETAILED FINDING DELETED THE SAME. THE LEARNED CIT DR RELI ED UPON THE ORDER OF THE ASSESSING OFFICER AND LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LEARNED COMMI SSIONER OF INCOMETAX (APPEALS). AS NOTHING WAS POINTED OUT TO CONTROVERT THE FINDING RECORDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WITH REGARD TO CAPITAL INTRODUCED BY THE PARTNER WE CONFIRM THE ACTION OF THE LEARNED COMMISSIONER OF I NCOMETAX (APPEALS). 38 18. INSOFAR AS THE ADDITION MADE ON ACCOUNT OF DVO S VALUATION THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS NOT GIVEN ANY VERDICT ON MERIT. HE HAS MERELY OBSERVED THAT DVOS REPORT WAS QUITE CRYPTIC IN WHICH NO BASIS HAS BEEN GIVEN FOR ESTIMATING THE COST OF CONSTRUCTION. BY STATING THAT SINCE AL L THE ASSESSMENTS HAVE BEEN HELD TO BE AUTHORITIES BELOW INITIO NULL AND VOID HE DID NOT FIND IT NECESSARY TO ADJUDICAT E THIS ISSUE. 19. IN THE RESULT ALL THE APPEALS OF THE REVENUE A RE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY 2011. SD SD (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :_28 TH FEBRUARY 2011. RKD 282