When AO of searched person and other person is same there is no requirement to record satisfaction

Bharat Ginning & Pressing Factory Vs ITO (ITAT Ahmedabad)

ITAT Ahmedabad held that when AO of searched person and other person is same, there is no mandatory requirement for AO of searched person to record satisfaction of material having found belonging to the person for valid jurisdiction under section 153C of the Income Tax Act.

Facts- The assessee challenges the validity of the assessment framed under section 153C of the Act, to the effect that a valid jurisdiction to frame assessment under section 153C of the Act could have been assumed only on the fulfillment of the condition prescribed in law of the AO of the searched person having recorded satisfaction of documents found during search belonging to the assessee; that in the present case, it was pleaded that there was no such satisfaction recorded by the AO of the searched person.

Conclusion- Hon’ble Apex Court in the case of Super Malls P.Ltd. held that in such circumstances ,of the AO of the searched person and the other person being the same, there was no mandatory requirement for the AO of the searched person to record satisfaction of material having been found belonging to the person, and a single satisfaction note would suffice for assumption of valid jurisdiction under section 153C of the Act.

Held that the argument of the assessee that for a valid assumption of jurisdiction under section 1 53C of the Act, the AO of the searched person has to mandatorily record satisfaction of material or documents found during the course of search belonging to the assessee, is misplaced and against principles of law admittedly laid down by the Hon’ble Apex Court in the case of Super Mall P. Ltd., and is rejected.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

These five appeals have been filed by the assessee against separate orders passed by the ld.Commissioner of Income Tax(A), Ahmedabad of even dated i.e 17.1.2007 under section 250(6) of the Income Tax Act, 1961 [hereinafter referred to as “the Act” for short]for the above five assessment years.

2. At the outset, it was stated that the present appeals have been recalled for hearing vide order in MA Nos.56 to 60/Ahd/2016 dated 29.1.2020,being earlier disposed of by the ITAT vide its order dated 12/4/2013. Copies of both the orders were filed before us.

3. Perusal of the order of the ITAT in the MA filed by the assessee reveals that the ITAT recalled the order for the limited purpose of adjudicating the issue of validity of the assessment framed under section 153C of the Act in all the present appeals, noting the mistake of the issue having not been adjudicated in accordance with the decision of the Hon’ble Supreme Court as well as Hon’ble jurisdictional High Court, which was referred to by the assessee during the course of hearing before the ITAT.

4. Para-2 of the order in the MA notes the mistake pointed out by the assessee in the order of the ITAT, of having not considered the pleadings of the assessee challenging validity of the assessment framed under section 153C of the Act, to the effect that a valid jurisdiction to frame assessment under section 153C of the Act could have been assumed only on the fulfillment of the condition prescribed in law of the AO of the searched person having recorded satisfaction of documents found during search belonging to the assessee; that in the present case, it was pleaded before the ITAT that there was no such satisfaction recorded by the AO of the searched person and this pleading of the assessee was rejected by the Tribunal on the ground that there was no requirement to record such satisfaction. The contents of para-2 in this regard are reproduced hereinunder:

“….In brief, the grievance of the assessee is that the assessment orders in this case have been passed under section 153C of the Act. For taking cognizance under section 153C it is mandatory that the AO of the searched persons should record a satisfaction note exhibiting fact that during the course of search certain documents belonged to other persons were found and perusal of these documents would indicate that taxable income of the assessee has escaped assessment. After this satisfaction note, he would transmit record along with these documents to the AO who has jurisdiction over such other persons. In the present case, no satisfaction was recorded by the AO of the searched person. The assessee has raised this plea during the course of hearing, but was rejected by the Tribunal on the ground that there were no requirement to record such satisfaction. This view is contrary to a large number of decisions referred by the assessee, which has been duly noted by the Tribunal. Thus, the Tribunal has committed apparent error. In support of his contentions, he relied upon the judgment of Hon’ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. reported in 262 ITR 146 which has been upheld by the Hon’ble Supreme Court reported in 305 ITR 227. Thus, according to the ld. counsel for the assessee, if the Tribunal failed to take cognizance of the proposition laid down by the Hon’ble jurisdictional High Court, then it would be construed that the Tribunal has committed an apparent error.”

5. The ITAT found merit in this contention of the assessee noting that in view of various judicial pronouncements including that of the Hon’ble Apex Court and the jurisdictional High Court, it was mandatory for the AO of the searched person to record satisfaction of documents found during search belonging to other persons ,before transmitting the record to the AO of other persons to whom documents were found during the course of search; that the Tribunal having failed to consider the authoritative pronouncements of the Hon’ble Apex court as well as Hon’ble Gujarat High Court referred to by the assessee, during the course of hearing, in the right perspective, there was an apparent error committed by the ITAT, and accordingly, all the MAs were allowed and the order of the Tribunal was recalled. The detailed finding of the ITAT at para-4 to 6 of the order, in this regard are as under:

“4. We have duly considered rival submissions and gone through the record carefully. At this stage, before we embark upon an inquiry on the facts of the present case, in order to find out whether any apparent error was committed by the Tribunal or not while passing impugned order dated 29.3.2016, we think it appropriate to bear in mind certain basic principles for exercising powers contemplated in section 254(2) of the Income Tax Act. There are series of decisions at the end of the Hon’ble Supreme Court as well as Hon’ble High Court expounding scope of exercising powers under section 254(2) of the Act. We do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. During the course of hearing, the Tribunal has passed following interim order:

“06.12.2019 Present : Shri NimeshVayawala, AR Shri L.J. Jain, Sr.DR

The Id.DR has filed an application for adjournment stating therein that information called for vide order dated 4.10.2019 is yet to be received from the Assessing Officer.

2. The ld.counsel for the assessee, on the other hand, raised objection on the adjournment, and submitted that these MAs. were filed way back in 2016. The department has been seeking adjournment time and again. The Department was directed to produce satisfaction note, if any, recorded in the case of searched person for taking action against the present assessee under section 153C of the Act as well as any material belonged to the assessee as stated found at the premises of the assessee. The order sheet dated 4.10.2019 reads as under:

“04.10.2019 Present assessee by: Shri NimeshVayawala, AR Revenue by: Shri Jamesh Kurian, Sr.DR

The learned Counsel for the assessee, at the very outset, submitted that while upholding taking cognizance under Section 153C at the end of the Assessing Officer, the Tribunal has observed that where the Assessing Officer is common for the searched person and any other person, then no separate satisfaction is required to be recorded. This finding of the Tribunal is contrary to the decision of the Hon’ble jurisdictional High Court.

In view of the above, we are of the view that Department is required to produce copy of the satisfaction, if any, recorded in the case of searched person. The Department is further required to produce any material belonging to the assessee, if found, at the premises of the assessee. The Department has been taking adjournments for a quite sufficient time; therefore, we direct the Assessing Officer to produce these details by next date of hearing. The hearing is adjourned to 6″ December 2019. Copy of this order be supplied to both the parties.”

3. He further pointed out that all the material was collected by the assessee under Right to Information Act, and these are already being taken on record during the course of appeal hearing. For this purpose, he brought to our notice copy of the letter dated 18.5.2012 wherein Dy.CIT, Bharuch Circle, Shri R.V. Patel informed Yakub Ahmed Coldrink for issuance of notice under section 153C to Bharat Ginning & Pressing Factory. On the strength of these details he submitted that there is no need to adjourn the hearing.

4. We have duly considered contentions of the ld.counsel for the assessee. However, at this stage without getting these details verified from the Revenue, we are not inclined to accept them on its face, because if these details were available, during the appeal hearing, they could have been considered on that time also. In proceedings under section 254(2) our jurisdiction is very limited. Therefore, we grant some more time to the Revenue, and direct the Assessing Officer to remain present on the date of next hearing with relevant record. Copy of this order be supplied to Administrative Commissioner for ensuring the compliance.

5. Matter now stands adjourned to 17th January, 2020.

Sd/-
(AM)
WASEEM AHMED

Sd/-
(JM)
RAJPAL YADAV”

5. In response to this query, the AO appeared in person, and filed a copy of letter dated 14.1.2020. He admitted that during the course of assessment proceedings in the case of searched person, no satisfaction was recorded. However, he pointed out that reasons were recorded for issuance of notice under section 153C of the Act in the case of the assessee. He placed copy of reasons dated 11.10.2004 along with letter dated 14.1.2020. A categorical statement was made by the AO as well as of the ld.DR that no satisfaction note was recorded and available in the record of searched persons. We also deem it appropriate to take note of the finding of the Tribunal in the order dated 17.4.2013 on this respect. It reads as under:

“

Further, he relied upon the case of ACIT, Circle-1, Gwalior vs. M/s Global Estate In ITA Nos. 144 to 149/Agra/2011 for A.Y. 2003-04 to 2008-09, order dated 30.11.2012, wherein the issue was no satisfaction recorded by the A.O. of the search party. Again, he further relied upon in case of AkilGulamalisomji vs. ITO, Pune [2012] 20 taxmann.com 380 (Pune), wherein the issue of prior approval of ACIT/ JCIT is required to pass the order u/s.153C r.w.s. 153A of the IT Act. The assessee further relied upon following cases:

i). CIT vs. M/s Gambhir Silk Mills in Tax Appeal No. 1493 of 2010 – wherein assessment proceeding u/s. 153C was completed and documents not written by the assessee. Held, proceeding invalid.

ii. CIT vs. Meghmani Organics Limited in Tax Appeal Nos. 2077, 2078 to 2086 of 2009 – wherein documents not written by the assessee. The proceeding held invalid.

iii. CIT vs. Jyotindra V Vasa in Tax Appeal No. 99 of 2011- wherein proceeding u/s. 153C held invalid on the ground that no books of account and other valuables were found belonging to the assessee.

iv. Vijaybhai N. Chandrani vs. ACIT [2011] 333 ITR 436 (Guj.) – wherein proceeding u/s. 153C is held invalid on the basis ofassessee’s name referred in different columns.

v. Shri Alkesh M. Patel vs. DCIT, Central Circle-1(1), Ahmadabad in IT(SS)A Nos. 144 to 146/Ahd/2010 & C.O. Nos. 90, 91, 105/Ahd/2010 – wherein Co-ordinate ‘D’ Bench, Ahmedabad held that diary belonging to the assessee was found, therefore, initiation proceeding u/s.153C is held valid.

vi. DCIT, CC-1(2), Ahmadabad vs. Shri AbhalbhaiArjanbhai Jadeja in ITA Nos. 174, 175 & 176/Ahd/2009 for A.Y. 03-04, 04-05 & 05-06 – wherein Co- ordinate ‘B’ Bench, Ahmadabad held that proceeding u/s. 153C is held valid.

vii. Vishnu Anant Mahajan vs. ACIT, Circle 5, Baroda – wherein salary and interest income of the partner is held business income in the hands of partner. viii. CIT vs. Late J. Chandrasekar (HUF) [2011] 338 ITR 61 (mad) – wherein proceeding u/s. 153C is held invalid as the Revenue do not possess any material to show that materials were available at the hand of the Assessing Officer at the time of issuing notice. Besides above, number of cases have also been referred by the ld. A.R. Therefore, he requested that the proceeding initiated u/s.153C is to be declared null and void. At the outset, ld. CIT D.R. argued that both the lower authorities were right in confirming the action u/s.153C of the IT Act as during the course of search at the residence premises of Shri Yakub A. Colddrink, books of the firm as per Annexure A/11 & A/12 were found and seized which were admitted by the partner belonging to the appellant firm in his statement dated 29.08.2003 recorded u/s. 132(4) of the IT Act. Thus, he prayed to confirm the action of the CIT(A).

5. We have heard the rival contentions and perused the material on record. The search operation was carried out at the residence as well as business premises of Shri Yakub A. Colddrink where from the books of account of the firm as per Annexure A/11 & A/12 and loose paper as per Annexure-3 were found and seized. As per Section 153C, the books of account belonging to the other person is required to be found and seized at the premises of the search took place where assessment u/s. 153A has been made i.e. searched party. For initiating proceeding u/s.153C, it is not necessary that these books of account should be incriminating. When books of account of the appellant found and seized from the search place of the partner of the firm, the A.O. is fully empowered to initiate proceeding u/s. 153C of the IT Act against the firm i.e. other person. The A.O. of the both partners as well as firm was same. Therefore, no separate satisfaction is required to be recorded as held in case of CIT vs. Panchajanyam Management Agencies & Services [2011] 333 ITR 281 (Ker.), wherein it was held that search in premises of the managing partner – same A.O. having jurisdiction over managing partner and firm – notice to firm u/s.158 BD r.w.s. 158BC, the A.O. need not to record reasons – block assessment of firm is valid. The case laws cited by the appellant are squarely not applicable as in case of All Cargo Global Logistics Ltd. vs. DCIT (supra), already scrutiny assessment has been made and no incriminating documents were found during the course of search. Therefore, proceeding u/s.153A was invalid. The case laws cited by the appellant in case of ACIT vs.

M/s Pratibha Industries Ltd. (supra) is totally on different footing which was on apportionment of the disclosure between 80IA unit or non 80IA unit. In assessee’s case, in all the years, no scrutiny assessment has been made by the A.O. The return of the appellant had been process u/s. 143 (1) (a) and it was held by the Hon’ble Apex Court in case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd, 291 ITR 500 (SC), intimation u/s.143(1)(a) cannot be treated to be an order of assessment and there being no assessment u/s.143(1)(a). The Section 153D has been amended w.e.f. 01.06.2007 whereas the ld. A.O. has passed orders u/s. 153C in all the years on 24/03/2006. Thus, no approval of JCIT/ACIT is required. Keeping in view of the facts and legal position on this issue, we have considered view that CIT(A) was right in confirming the action of the A.O. u/s.153 of the IT Act. Thus, the first ground of appeal in all the years is dismissed.”

6. The Hon’ble Supreme Court in the case of CIT Vs. Calcutta Knitwears, reported 362 ITR 673 (SC) has considered procedure required to be followed in assessment order under section 158BD of the Act. The conditions enumerated in section 158BD are identical to section 153C of the Act. In other words, section 153C is successor of section 158BD. In both these sections fundamental requirement is, before taking cognizance of section 153C, a satisfaction note is required to be recorded by the AO of the searched person exhibiting the fact that during the course of search certain incriminating material belonged to the assessee found and seized, who reveals escapement of taxable income. After recording the satisfaction, record would be transmitted to the AO of such other person who has territorial jurisdiction over other person. Hon’ble Supreme Court in the case of Calcutta Knitewear (supra) laid down when this satisfaction could be recorded. It has been summarized in paragraph-44 of the judgment which reads as under:

“44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person.”

Thus, it is mandatory to record satisfaction by the AO of the searched person before transmitting record to the AO of other persons to whom documents were found during the course of search; circumstances at which this satisfaction could be recorded has also been contemplated by the Hon’ble Supreme Court. Apart from the above, there are large numbers of decisions at the end of the Hon’ble Gujarat High Court viz. CIT Vs. Niranjan K. Zaveri, 20 DTR 153 (Guj), DCIT Vs. Lalitkumar M. Patel 36 taxmann 554 (Guj). The Tribunal failed to consider authoritative pronouncements of the Hon’ble Supreme Courts as well as Hon’ble Gujarat High Court referred by the assessee during the course hearing in right perspective, and therefore, an apparent error has been committed. We allow these Misc. Applications, and recall the impugned order of the Tribunal. We direct the Registry to re-fix the appeals on 2.3.2020 for hearing afresh. Issue notice to both parties.

6. We have also gone through the order of the ITAT in the first round, and we have noted from para-5 of the order that the ITAT had dismissed this contention of the assessee of satisfaction of the AO of the searched person to be recorded for a valid assumption of jurisdiction under section 153C of the Act by the AO of the assessee, by holding that the AO of the partners as well as of the firm,(the assessee before us) was the same, and since it was partners who were subjected to search action, the AOs of both firms and partners being the same, the ITAT held that there was no separate satisfaction required to be recorded by the AO of such searched persons while transmitting documents to the AO of the assessee, and in this regard, it relied upon the decision of the Kerala High Court in the case of CIT v. Panchajanyam Management Agencies & Services [2011] 333 ITR 281.

7. Before that we have noted from para-5 of the ITAT order that the ITAT also recorded a finding of the fact that during search operation at the residential and business premises of Yakub AColddrink, the books of accounts of the firm as per Annexure A/11 and A/12 and list paper as per Annexures were found and seized. The relevant finding of the ITAT at para-5 is reproduced in the order passed by the ITAT in the MA filed by the assessee, which is reproduced hereinabove.

8. Therefore the limited issue for consideration before us in this recalled matter is, whether for a valid assumption of jurisdiction to frame assessment u/s 153C of the Act, the AO of the searched person has to record satisfaction that documents or material found during the course of search action related to the assessee, who was not subjected to search action u/s 132 of the Act.

9. During the course of hearing before us, the ld.counsel for the assessee fairly conceded that in view of the facts as noted by the ITAT,that the AO of the searched person and the assessee were the same and the AO of the assessee had recorded reasons for initiating proceedings under section 153C of the Act, the issue stood decided against the assessee by the decision of the Hon’ble Apex Court in the case of Super Malls P.Ltd. Pr.CIT, (2020) 115 taxmann.com 105,wherein ,he pointed out it was categorically held that in such circumstances ,of the AO of the searched person and the other person being the same, there was no mandatory requirement for the AO of the searched person to record satisfaction of material having been found belonging to the person, and a single satisfaction note would suffice for assumption of valid jurisdiction under section 153C of the Act.

10. In view of the above, the issue for adjudication before us, for which the order was recalled by the ITAT, we hold stands decided against the assessee, as per its own admission of the issue being covered by the decision of the Hon’ble Supreme Court in the case of Super Mall P. Ltd. (supra).

But during the course of hearing before us, the ld.counsel for the assessee proceeded to argue on the merits of the satisfaction recorded by the AO taking the plea that there was no incriminating material which was found during search and further that a single note of satisfaction was recorded by the AO for all the years involved, while he should have recorded separate satisfaction for all the years for which assessment was framed u/s 153C of the Act, pointing out incriminating material relating toeach year which was found during the course of search. He placed reliance on the decision of the Hon’ble Apex Court in the case of CIT Vs. Sinhgad Technical Education Society, (2017) 84 taxmann.com 290 (SC) for the same.

10. We have heard contentions of the ld.counsel for the assessee at length. We also went through all the documents to which our attention was drawn, which included copy of response of the department to RTI application filed by the assessee stating that with respect to the assessee, nothing was found during the search, and he even pointed out to the assessment order passed stating that it did not refer to any seized material found.

We see no reason to entertain these fresh pleas now raised by the assessee before us for the simple reason that it has nothing to do with the mistake which was noted by the ITAT in the order passed in the first round, and for which purpose, the appeal was recalled. As noted above, the only mistake which was noted by the ITAT was with regard to its finding that no satisfaction note of the AO of the searched person is required regarding documents relating to the assessee found during the course of search on some other persons for a valid assumption of jurisdiction to frame assessment u/s 153C of the Act. The ITAT in the order passed u/s 254(2) of the Act, found the same to be contrary to the law laid down by the Hon’ble Apex Court and Hon’ble jurisdictional High Court in this regard, and accordingly held that there was an error and mistake apparent from record in the order of the ITAT.

Clearly the order of the ITAT was recalled for the limited purpose of adjudicating the challenge by the assessee to the validity of assessment framed u/s 153C of the Act in the absence of satisfaction of the AO of the searched person of any material belonging to the assessee found during search conducted on certain persons. Scope of adjudication, now, before us is to be confined only to this aspect. On this aspect, the ld.counsel for the assessee has conceded that it has no case in view of the decision of the Hon’ble Supreme Court in the case of Supermall P.Ltd. (supra); There therefore arises no occasion to go beyond this scope as that would tantamount to revising the order passed by the ITAT in the first round itself, for which purpose, the order of the ITAT cannot be recalled u/s 254(2) of the Act. Therefore, we are not inclined to entertain the fresh pleas now raised by the assessee against the validity of assessment framed under section 153C of the Act, being beyond the scope of recall made by the ITAT in the MA filed by the assessee.

11. Even otherwise, we have noted from the order of the ITAT in the first round that this plea of no incriminating material relating to the assessee being found during search on the partners, and therefore, the assessment framed under section 153C being bad in law, was raised before the ITAT, and was dealt with by it also, rejecting this contention, pointing out that documents and books of accounts of the firm as well as loose papers were found and seized. The ITAT further held that for initiating proceedings under section 153C it is not necessary that these books of accounts should be incriminating and accordingly rejected this plea of the assessee. At para-4 of the order of the ITAT, the contention of the ld.counsel for the assessee, in this regard are reproduced, wherein are also reproduced the contentions of the assessee regarding the Department admitting, in the RTI application filed by the assessee, that no incriminating material was found against the assessee under:

“4. Now the assessee is before us in all the years. Ld. Counsel for the appellant contended that there is no books of account were found during the course of search belonging to the firm. Therefore, no proceeding u/s. 153C could be initiated against the firm. He relied upon the decision of ITAT, Special Bench, Mumbai, in case of All Cargo Global Logistics Ltd. vs. DCIT in ITA Nos. 5018 to 5022 & 5059/M/10, order dated 6th July, 2012, wherein it was held that proceeding u/s. 153A will be made on the basis of incriminating material. He further relied upon the decision of ITAT, ‘C’ Bench, Mumbai, in case of ACIT vs. M/s Pratibha Industries Ltd. in ITA Nos. 2197 to 2199/Mum/2008, A.Y. 2000-01 to 2002-03, ITA Nos. 2200 to 2201/Mum/2008, A.Y. 2003-04 to 2004-05 & ITA No. 2202/Mum/2008, A.Y. 2005­-06, wherein it was held that CIT(A) was right in apportionment of offered amount of Rs. 1.95 Crore to the income eligible for deduction u/s.80IA for the A.Y. 05-06 and proceeding u/s. 153A is to be made on the basis of incriminating document found indicating undisclosed income. Then the addition was only be restricted to those documents/incriminating materials and clubbed only to the assessment remained originally as the law does not permit the A.O. to disturb already concluded issues whether it pertained to any income or expenditure or deduction by relying the Honoble Delhi High Court decision in case of CIT vs. Anil Kumar Bhatia. He submitted written reply vide letter dated 06th February, 2013, which is reproduced as under:

(1) Nothing belonging to the assessee is found & same is confirmed by reply to RTI & Order also do not refer to any seized material.

(2) The paper book filed by the department also do not contain any paper which is even alleged to belonging to the assessee. Those papers are used in case of Y.A. Colddrink but not in case of the assessee.

(3) The issue was raised before C.I.T.(A). He has held that 153C applicable if undisclosed income of third persons is found. He has erroneously applied principles of 158 BD. The requirement u/s. 153C is that something belonging to the assessee must be found.

(4) The department is bound to show as to which document thing etc found during search belongs to the assessee. In spite of several adjournments the onus is not discharged. The reply to the RTI clearly shows that A.O. denies that any thing belonging to the assessee was found the onus to prove that ingredient of 153C are satisfied is on the A.O. Agra Bench. 144 to 149/Agra 2011 (Para no.9.4 to 9.7).

(5) On an earlier occasion when matter substantially progressed for about 45 minutes the Hon’ble Bench was taken through all the papers. The synopsis of that proceeding has been prepared & filed. Kindly refer to our submitted dated 30-11- 2012 and 18-06-2012. In the submission dated 30-11-2012 the reference to made to the paper book filed on 30-09-2012 to the paper book filed on 03-09-2012.

(6) Further the perusal of assessment order will show that same has been passed without permission of joint C.I.T. it has been held that the order passed without prior approval of joint C.I.T. are invalid we refer to the recent decision of Pune Bench 20 taxmann.com 380(Pune).

(7) We have also referred to various decision to show that unless the property goes out of the firm 45(4) is not applicable. Here simply on the basis of retirement and admission of some partners the capital gain u/s.45(4) has been even though the same firm continues.

Further, he relied upon the case of ACIT, Circle-1, Gwalior vs. M/s Global Estate In ITA Nos. 144 to 149/Agra/2011 for A.Y. 2003-04 to 2008-09, order dated 30.11.2012, wherein the issue was no satisfaction recorded by the A.O. of the search party. Again, he further relied upon in case of Akil Gulamali somji vs. ITO, Pune [2012] 20 taxmann.com 380 (Pune), wherein the issue of prior approval of ACIT/ JCIT is required to pass the order u/s.153C r.w.s. 153A of the IT Act. The assessee further relied upon following cases:

i. CIT vs. M/s Gambhir Silk Mills in Tax Appeal No. 1493 of 2010 – wherein assessment proceeding u/s. 153C was completed and documents not written by the assessee. Held, proceeding invalid.

ii. CIT vs. Meghmani Organics Limited in Tax Appeal Nos. 2077, 2078 to 2086 of 2009 – wherein documents not written by the assessee. The proceeding held invalid.

iii. CIT vs. Jyotindra V Vasa in Tax Appeal No. 99 of 2011- wherein proceeding u/s. 153C held invalid on the ground that no books of account and other valuables were found belonging to the assessee.

iv. Vijaybhai N. Chandrani vs. ACIT [2011] 333 ITR 436 (Guj.) – wherein proceeding u/s. 153C is held invalid on the basis of assessee’s name referred in different columns.

v. Shri Alkesh M. Patel vs. DCIT, Central Circle-1(1), Ahmadabad in IT(SS)A Nos. 144 to 146/Ahd/2010 & C.O. Nos. 90, 91, 105/Ahd/2010 – wherein Co-ordinate ‘D’ Bench, Ahmedabad held that diary belonging to the assessee was found, therefore, initiation proceeding u/s.153C is held valid.

vi. DCIT, CC-1(2), Ahmadabad vs. Shri Abhalbhai Arjanbhai Jadeja in ITA Nos. 174, 175 & 176/Ahd/2009 for A.Y. 03-04, 04-05 & 05-06 – wherein Co- ordinate ‘B’ Bench, Ahmadabad held that proceeding u/s. 153C is held valid.

vii. Vishnu Anant Mahajan vs. ACIT, Circle 5, Baroda – wherein salary and interest income of the partner is held business income in the hands of partner.

viii. CIT vs. Late J. Chandrasekar (HUF) [2011] 338 ITR 61 (mad) – wherein proceeding u/s. 153C is held invalid as the Revenue do not possess any material to show that materials were available at the hand of the Assessing Officer at the time of issuing notice. Besides above, number of cases have also been referred by the ld. A.R. Therefore, he requested that the proceeding initiated u/s.153C is to be declared null and void. At the outset, ld. CIT D.R. argued that both the lower authorities were right in confirming the action u/s.153C of the IT Act as during the course of search at the residence premises of Shri Yakub A. Colddrink, books of the firm as per Annexure A/11 & A/12 were found and seized which were admitted by the partner belonging to the appellant firm in his statement dated 29.08.2003 recorded u/s. 132(4) of the IT Act. Thus, he prayed to confirm the action of the CIT(A).?

The findings of the ITAT rejecting the contentions of the assessee are in para-5 of the order as under:

“5. We have heard the rival contentions and perused the material on record. The search operation was carried out at the residence as well as business premises of Shri Yakub A. Colddrink where from the books of account of the firm as per Annexure A/11 & A/12 and loose paper as per Annexure-3 were found and seized. As per Section 153C, the books of account belonging to the other person is required to be found and seized at the premises of the search took place where assessment u/s. 153A has been made i.e. searched party. For initiating proceeding u/s.153C, it is not necessary that these books of account should be incriminating. When books of account of the appellant found and seized from the search place of the partner of the firm, the A.O. is fully empowered to initiate proceeding u/s. 153C of the IT Act against the firm i.e. other person.”

12. Therefore the arguments now being raised before us have already been dealt with by the ITAT in the first round and no grievance against the findings of the ITAT on the issue was raised by the assessee its MA, this issue stand adjudicated by the ITAT for all purposes, and the assessee is not entitled to, therefore, rake up this issue again during the hearing in recall , which as we have noted above is limited in scope, to adjudicate only the mistake in the order of the ITAT in the first round.

12. In view of the above, we hold that the argument of the assessee that for a valid assumption of jurisdiction under section 153C of the Act, the AO of the searched person has to mandatorily record satisfaction of material or documents found during the course of search belonging to the assessee, is misplaced and against principles of law admittedly laid down by the Hon’ble Apex Court in the case of Super Mall P. Ltd. (supra), and is rejected.

13. This order forms part of the original order dated 12.4.2013 passed in ITA No.2404, 2405, 2406, 2407 & 2408/Ahd/2007.

Order pronounced in the Court on 14th June, 2023 at Ahmedabad.