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Case Number

I.T.A. Nos. 2421/Del/2014 Assessment Years: 2003-04

Advocates

Assessee by: Shri Kapil Goel, Advocate
Department by: Smt. P.K. Sidhu, CIT, DR

Judges

R.S. Syal, A.M.
A.T. Varkey, J.M.

Acts

section 139, section 147, section 148, section 149, section 151 and section 153,
u/s 153C of the Income-tax Act, 1961 (hereinafter
section 153C(1) by the Finance (No.2) Act, 2014
u/s 153C of the I.T. Act, 1961
sub-section (1) of section.'19.

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Smart Summary

Tribunal Order Summary (Accountant Member R.S. Syal)

Factual and Procedural Background

A search and seizure action under section 132 of the Income-tax Act, 1961, was conducted on 20.10.2008 in the matters of Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd. During that search, documents belonging to the assessee (M/s Tanveer Collection Pvt. Ltd.) were reportedly found. On the basis of those documents, assessment proceedings were initiated against the assessee under section 153C read with section 153A for the assessment year 2003-04. The Assessing Officer (AO) computed the assessee's total income at ₹22,49,330. The assessee challenged, inter alia, the jurisdiction of the AO to frame assessment under section 153C contending that a proper satisfaction was not recorded by the correct AO. The CIT(A) dismissed the assessee's appeal on all legal and merits grounds. This appeal by the assessee is directed against the CIT(A)'s order dated 21.3.2014.

Legal Issues Presented

Whether the Assessing Officer who framed the assessment under section 153C had jurisdiction to do so in the absence of a satisfaction recorded by the AO of the person searched that the seized books/documents belonged to the assessee (the "other person")?
Whether a satisfaction note recorded by the AO of the assessee (who happened to be the same person as the AO of the searched persons) can substitute for the satisfaction required to be recorded by the AO of the person searched?

Arguments of the Parties

Appellant's (Assessee's) Arguments

The framing of assessment under section 153C is invalid because the statutory pre-condition—recording of satisfaction by the AO of the person searched that certain seized documents/belongings belong to the other person—was not fulfilled by the correct AO.
The satisfaction note placed on the file was not recorded by the AO of the persons searched and therefore did not confer jurisdiction on the AO who proceeded under section 153C.

Respondent's (Department's) Arguments

The recording of satisfaction was accomplished in substance; since the AO of the persons searched and the AO of the assessee were the same officer, the satisfaction recorded in the assessee's file suffices.
The defect (if any) in which AO recorded the satisfaction is at most a technicality and should not invalidate the assessment; technicalities should not defeat justice.
The co-ordinate Tribunal orders relied upon by the assessee are per incuriam because they did not consider the jurisdictional High Court decision in Ssp Aviation Ltd. v. Deputy Commissioner of Income Tax.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Manish Maheshwari v. Asstt. CIT [2007] 289 ITR 341 / 159 Taxman 258 (Hon'ble Supreme Court)	Interpretation of section 158BD: conditions precedent for taking recourse to block assessment in relation to any other person — (i) satisfaction must be recorded by the AO of the person searched that undisclosed income belongs to any person other than the searched person; (ii) books/documents/assets seized must be handed over to the AO having jurisdiction over such other person; and (iii) the AO must proceed under section 158BC.	The Tribunal treated the ratio as establishing that recording of satisfaction by the AO of the person searched is a mandatory condition precedent, and applied this reasoning by analogy to section 153C to conclude the AO of the assessee lacked jurisdiction when no such satisfaction was recorded by the AO of the searched persons.
CIT vs. Calcutta Knitwears [2014] 362 ITR 673 / 223 Taxman 115 (Mag.) / 43 taxmann.com 446 (Hon'ble Supreme Court)	For section 158BD, a satisfaction note is a sine qua non and must be prepared by the AO of the person searched before transmitting the records to the other AO.	The Tribunal relied on this pronouncement to reinforce that the satisfaction required by statute must be recorded by the AO of the person searched and is mandatory for conferring jurisdiction on the AO of the other person; the principle was applied to section 153C by parity.
Ssp Aviation Ltd. v. Deputy Commissioner Of Income Tax [2012] 346 ITR 177 / 207 Taxman 260 (Delhi High Court)	Held that the AO having jurisdiction over the searched person must be satisfied that seized articles/documents belong to a person other than the searched person; no requirement in section 153C(1) that such documents must conclusively reflect undisclosed income of the other person.	The Tribunal found this judgment supportive of the assessee's position because it emphasizes that the statutory satisfaction must be recorded by the AO of the person searched; thus it did not assist the Revenue's contention that satisfaction recorded elsewhere suffices.
Asstt. CIT v. Inlay Marketing (P.) Ltd. [IT Appeal No.4200 (Delhi) of 2012] (Delhi Tribunal)	Quashing of notices and consequential assessments under section 153C where satisfaction by AO of searched person was absent (as per Tribunal order).	The Tribunal regarded this co-ordinate bench order as correctly decided and followed it in concluding that the assessment in the present case should be quashed for want of jurisdiction.
Dy. CIT v. Aakash Arogya Mandir (P.) Ltd. [IT Appeal No.5437 (Delhi) of 2013] (Delhi Tribunal)	Quashing of notices and consequential assessments under section 153C in circumstances where required satisfaction was not recorded by the AO of the searched person.	The Tribunal treated this co-ordinate bench order as authoritative and consistent with law, and declined the Revenue's contention that those orders were per incuriam.

Court's Reasoning and Analysis

The Tribunal proceeded methodically from statutory language to application. It first reproduced section 153C(1) as it stood for the relevant period and explained the statutory scheme: where an AO of a searched person is satisfied that seized money, jewellery, books or documents belong to another person, those items must be handed over to the AO having jurisdiction over that other person, and only then can that AO proceed to assess or reassess under section 153C read with section 153A.

The Tribunal then drew a parallel with section 158BD (predecessor provision under block assessment) and noted Supreme Court authorities interpreting section 158BD. From those authorities it inferred that recording of satisfaction by the AO of the person searched is a mandatory condition precedent before jurisdiction vests in the AO of the other person. The Tribunal held that section 153C is in pari materia with section 158BD so the same principle applies.

The Tribunal examined the documents on record. It found a "satisfaction note" dated 08.09.2010 that on its face was titled and prepared as a "Satisfaction Note for issuing Notice u/s 153C ... in the case of M/s Tanveer Collection Pvt. Ltd." and that this note was recorded by the AO of the assessee. However, RTI replies issued to the searched persons (Shri B.K. Dhingra, Smt. Poonam Dhingra, M/s Madhusudan Buildcon) indicated that in their assessment records "there is no 'satisfaction note' available/recorded in respect of other entities."

From a conjoint reading of the satisfaction note in the assessee's file and the RTI replies, the Tribunal concluded that no satisfaction had been recorded by the AO of the persons searched that the seized documents belonged to the assessee. The satisfaction note in evidence had been prepared by the AO of the assessee and not by the AO in his capacity as AO of the searched persons.

The Revenue's principal contention — that the commonality of the AO (being the same officer for both searched persons and the assessee) rendered recording by the AO of the assessee sufficient — was rejected. The Tribunal emphasized the distinction between the identity of the officer and the capacity in which the officer acts: when the statute requires the AO of the person searched to record satisfaction, that satisfaction must be recorded by the officer in that capacity and in relation to the searched person. The statutory requirement cannot be satisfied by a note recorded by the AO in the separate capacity of the assessee's AO.

The Tribunal also noted the legislative amendment made by Finance (No.2) Act, 2014 (w.e.f. 1.10.2014) which further requires the AO of the other person to record satisfaction that seized documents/assets have a bearing on determination of the other person's income. However, it clarified that for the period in question (pre-amendment) the jurisdictional condition was that the AO of the person searched must record the satisfaction before the AO of the other person could proceed.

The Tribunal addressed the Revenue's argument that any defect was merely technical. It accepted the general principle that technicalities should not frustrate justice but held that lack of jurisdiction is not a mere technicality; jurisdictional defects go to the root and invalidate proceedings when the statutory foundation is missing.

The Tribunal considered co-ordinate Tribunal decisions quashing similar assessments and rejected the Revenue's submission that those decisions were per incuriam. It also referred to the SSP Aviation Ltd. High Court decision and held that it actually reinforced the requirement that satisfaction must be recorded by the AO of the person searched.

On these bases the Tribunal concluded that there was no satisfaction recorded by the AO of the persons searched and consequently the AO who proceeded under section 153C had no lawful jurisdiction to do so. Therefore initiation and the ensuing assessment were held to be void ab initio.

Holding and Implications

Core Holding: The appeal is allowed; the initiation and the ensuing assessment under section 153C of the Income-tax Act are set aside as void ab initio for want of jurisdiction.

Implications:

Direct effect on the parties: The Tribunal set aside the proceedings and assessment framed against the assessee under section 153C for the assessment year 2003-04 because the mandatory satisfaction by the AO of the persons searched was not recorded in those searched persons' files.
Because the Tribunal's decision was grounded on lack of jurisdiction, it did not need to decide the other legal or merits grounds taken by the assessee.
The opinion does not purport to lay down a new principle of law beyond applying existing Supreme Court and High Court precedents; no broader or novel precedent was claimed to be created by this order.

Judge/Member: RAHUL (as signed in the order). The order under summary follows from the statutory scheme, the documentary record (including RTI replies), and precedents interpreting the mandatory nature of the satisfaction requirement.

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Tanvir Collections Pvt. Ltd., (Now Known As Rahab Collections Pvt. Ltd.), Rz-61, Gali No. 25, Indira Park, Palam Colony, New Delhi v. Acit, Central Circle-21, New Delhi .

ORDER

R.S. Syal, Accountant Member - This appeal by the assessee is directed against the order passed by the CIT(A) on 21.3.2014 in relation to the assessment year 2003-04.

2. The assessee, through the first ground, has challenged the jurisdiction of the Assessing Officer in framing the assessment u/s 153C of the Income-tax Act, 1961 (hereinafter also called 'the Act').

3. Briefly stated, the facts of the case are that a search and seizure action u/s 132 of the Act was carried out in the cases of Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd. on 20.10.08. The AO has recorded in the instant assessment order that during the course of search on the above three persons, certain documents belonging to the assessee were seized. Proceedings were initiated against the assessee u/s 153C read with section 153A of the Act on the basis of such documents. The AO computed total income at `22,49,330/-. The assessee unsuccessfully argued before the ld. CIT(A) that a proper satisfaction was not recorded by the correct AO before taking up the proceedings u/s 153C against the assessee. The ld. CIT(A) dismissed the appeal of the assessee on all the legal issues taken up before him and also on merits.

4. Before us, the ld. Counsel for the assessee emphasized on the improper recording of satisfaction by the AO to contend that the search action and the consequential assessment be annulled. This was strongly countered by the ld. DR.

5. We have heard the rival submissions and perused the relevant material on record. It is apparent from the assessment order of the assessee that a search was carried out u/s 132 of the Act on Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd., and in such search proceedings some incriminating material belonging to the assessee was found which led to the making of assessment u/s 153C read with section 153A of the Act. In order to appreciate the contention made by the ld. AR on the question of recording of proper satisfaction, it would be apposite to note down the prescription of the relevant parts of section 153(1) at the material time, as under:—

"153C.Assessment of income of any other person.- (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A :"

6. From the above provision, it is clear that where the AO of the person searched is satisfied that any money, bullion, jewellery, books of accounts or other documents etc., belong to a person other than the person searched, then, such documents or assets, etc., shall be handed over to the AO of the 'other person' and the later AO shall proceed against such 'other person' to assess or reassess his income. A bare perusal of the provision indicates that before handing over such documents etc. to the AO of the 'other person', a 'satisfaction' has to be recorded by the AO of the person searched that money, bullion or jewellery, etc., found from the person searched belong to the 'other person'. Only when such 'satisfaction' is recorded by the AO of the person searched and such documents or assets seized, etc., are handed over to the AO of the 'other person', that the later AO acquires jurisdiction to make assessment or reassessment of the 'other person.' It is, therefore, amply vivid that the AO of the 'other person' can acquire jurisdiction to assess or reassess income of the 'other person' only when the AO of the person searched records satisfaction in his case before handing over money, bullion, jewellery, etc. to him. What emerges is that the recording of satisfaction by the AO of the person searched is a condition precedent for the AO of the 'other person' to acquire jurisdiction. Unless such jurisdictional condition is satisfied, there can be no question of making assessment or reassessment of the 'other person.'

7. At this juncture, it would be relevant to note the provisions of section 158BD, which is a predecessor provision of section 153C, under the scheme of block assessment. The relevant part of this section is as under :—

"158BD. Undisclosed income of any other person.— Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly."

8. It is discernible from a careful perusal of section 158BD that where the AO of the person searched is satisfied that undisclosed income belongs to any person other than the person searched, then, the books of account and other documents, etc., are to be handed over to the AO having jurisdiction over such 'other person' after recording of proper satisfaction by the AO of the person searched. It is only thereafter, that the AO of the 'other person' can proceed for determining his undisclosed income.

9. The Hon'ble Supreme Court in Manish Maheshwari v. Asstt. CIT [2007] 289 ITR 341/159 Taxman 258 noticed that the AO did neither record satisfaction that undisclosed income belonged to any person, other than the person searched nor handed over the books of account, documents, etc. to the AO having jurisdiction over the matter. In the light of the above facts, the Hon'ble Supreme Court quashed the proceedings under s. 158BD. It has been held in this case that sec. 158BD provides for taking recourse to a block assessment in terms of s. 158BC in respect of any other person, the conditions precedent wherefor are : (i) satisfaction must be recorded by the AO that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132; (ii) the books of account or other documents or assets seized or requisitioned had been handed over to the AO having jurisdiction over such other person; and (iii) the AO has proceeded under s. 158BC against such other person. The conditions precedent for invoking the provisions of s. 158BD, thus, are required to be satisfied before the provisions of Chapter XIV-B are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under s. 132A.

10. Almost similar issue of recording satisfaction and the framing of assessment u/s 158BD once again came up for consideration before the Hon'ble Supreme Court in the case of CIT vs. Calcutta Knitwears [2014] 362 ITR 673/223 Taxman 115 (Mag.)/43 taxmann.com 446 . The Hon'ble Apex Court has, inter alia, held in this case that: "for the purpose of section 158BD of the Act, a satisfaction note is sine qua non and must be prepared by the AO before he transmits the records to the other AO who has jurisdiction over such other person.'

11. When we consider the language of section 158BD as interpreted by the Hon'ble Summit Court in the above cases, we find it as a clear-cut proposition that the recording of satisfaction by the AO having jurisdiction over the person searched is an essential and prerequisite condition for bestowing jurisdiction to the AO of the 'other person.' On a close comparative study, it is overt that in so far as the question of acquiring jurisdiction by the AO of the person other than the person searched is concerned, the provisions of section 153C are in pari materia with section 158BD. Since the relevant part of section 158BD is similar to that of section 153C, the ratio decidendi of the judgments of the Hon'ble Summit Court to this extent will apply with full force in the context of sec. 153C as well.

12. Let us examine the facts of the instant case more elaborately. It is seen that some satisfaction was recorded, a copy of which is available on page 4 of the paper book, as under :—

"Satisfaction Note for issuing Notice u/s 153C of the I.T. Act, 1961 in the case of M/s Tanveer Collection Pvt. Ltd., RZ-126, West Sagar Pur, Shankar Park, New Delhi, PAN: AACCT6679D for A.Y. 2003-04 to 2008-09.

08.09.2010 In the case of Sh. B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd., search & seizure took place u/s 132 on 20.10.2008. The undersigned is the jurisdictional AO of this case. During the course of search & seizure documents/papers at pages 101 to 132 of Annexure A-30, Page 144 of Annexure 7 and pages 33 to 48 of Annexure 22 seized by Party R-2, are found to belong to M/s Tanveer Collection Pvt. Ltd., RZ-126, West Sagar Pur, Shankar park, New Delhi. I have examined the above mentioned documents/papers and provision of section 153C is invokeable in this case. As the undersigned is also the jurisdictional AO of M/s Tanveer Collection Pvt. Ltd., RZ-126, West Sagar Pur, Shankar Park, New Delhi. This satisfaction note is recorded and is placed in the file before issuing notice u/s 153C.

ACIT, Central Circle - 17, New Delhi"

13. It can be seen from the assessment order that notice u/s 153C was issued to the assessee by the ACIT, Central Circle-17 on 08.09.2010, being the same date on which the above satisfaction was recorded. It is apparent that it was : 'Satisfaction Note for issuing Notice u/s 153C of the I.T. Act, 1961 in the case of M/s Tanveer Collection Pvt. Ltd.' It is further noticeable from the above that : 'This satisfaction note is recorded and is placed in the file before issuing notice u/s 153C.' The contents of the above satisfaction note leave nothing to doubt that it was recorded by the AO of the assessee before taking up the assessment u/s 153C of the Act pursuant to the search conducted on Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd. Pages 5-7 of the paper book are the copies of the reply furnished by the Dy. Commissioner of Income-tax, Central Circle-17, New Delhi to Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd., under the provisions of RTI Act, 2005. The relevant part of the reply dated 10.6.2013 given to Sh. B.K. Dhingra, is as under:—

"2. From the assessment records of Sh. Bhupesh Kumar Dhingra, which is covered under section 153A, for the Asst. years from 2003-04 to 2008-09 (Block period) it is noticed that there is no 'satisfaction note' available/recorded in respect of other entities."

14. Similar replies have been given to Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd. On a consideration of the above replies given by the Department to the persons searched, it is manifest that there is 'no satisfaction note available/recorded in respect of other entities'. On a conjoint reading of the Satisfaction note and replies given by the Department to the persons searched under the RTI Act, it clearly emerges that no satisfaction was recorded by the AO in the cases of the persons searched u/s 132(1) of the Act (i.e. Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd.) that some books of account or documents etc. belonging to the assessee were found which were handed over to the AO of the 'other person' (i.e. the assessee). The Satisfaction note as reproduced above has been prepared by the AO of the assessee.

15. The ld. DR vehemently accentuated on the point that since the AO of the persons searched and the assessee is same, it does not make any difference whether the satisfaction is recorded in the case of the persons searched or other person. She emphasized on the factum of recording satisfaction by the AO, which condition in her opinion stood satisfied, by virtue of it having been recorded by the common AO.

16. In our considered opinion, this contention advanced on behalf of the Revenue is devoid of merit. We fail to comprehend as to how the requirement of recording satisfaction by the AO of the person searched provided by the statute can be substituted with anything else. There is an underlying rationale in providing for recording of such satisfaction by the AO of the person searched. As the money, bullion, jewellery, books of account or documents etc. always come to the possession of the AO of the person searched who has to frame assessment, it is only he who can find out that which of such documents etc. do not belong to the person searched and are relevant for the assessment of the other person. It is not as if all the books of account and documents etc. found during the course of a search are evaluated by a separate authority to figure out that which of these documents belong to the person searched and to the others and thus handed over to the concerned AOs of the person searched and others for making assessment. As it is only the AO of the person searched who can reach a conclusion that some of the documents etc. do not belong to the person searched but to some other person, the legislature has provided for recording of such satisfaction by the AO of the person searched. It is not permissible under the law to require the AO of the other person to record such satisfaction by the AO.

17. As regards the other argument of the ld. DR that since the AO of both the persons searched and the assessee is the same person, hence the requirement of recording satisfaction by the AO of the persons searched should be deemed to have been fulfilled with the recording of satisfaction by the AO of the assessee. We are again unable to appreciate this contention that the commonness of the AO would make no difference in so far as the recording of satisfaction in the case of the persons searched is concerned. What is relevant for this purpose is not the identity of the person assessing but his position and the capacity. When the law requires the AO of the person searched to record the necessary satisfaction, it is the AO having jurisdiction over the person searched who is obliged to record such satisfaction in the capacity of that AO and that too in the case of the person searched. The mere fact that the AO of the person searched and the assessee is the same person, does not, in any manner, obliterate the requirement of law necessitating the recording of satisfaction in the case of the person searched that money, bullion, jewellery, etc., found from the person searched belongs to the 'other person.' What is crucial to note is capacity of the AO and not his identity. In view of the fact that when the statutory stipulation is for recording the satisfaction by the AO of the person searched, then, it cannot be substituted with the satisfaction of the AO of the 'other person.' This contention also fails.

18. At this stage, it is relevant to note that the legislature has substituted the latter part of section 153C(1) by the Finance (No.2) Act, 2014 w.e.f. 1.10.2014. The hitherto part of sub-section (1) : "and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person ………referred to in sub-section (1) of section 153A.' has been substituted as under : —

'and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section.'

19. The above substitution has the effect of now making it mandatory for the AO of the 'other person' also to record satisfaction that the books of account or documents, etc., have a bearing on the determination of the total income of such 'other person' before embarking upon the exercise of his assessment or reassessment. Therefore, now under the law, w.e.f. 1.10.2014 it has become obligatory not only for the AO of the person searched to record satisfaction before handing over books of account or documents, etc., to the AO of the 'other person', but, such AO of the 'other person' is also required to record satisfaction that the books of account or documents, etc. have a bearing on the determination of the total income of such other person. In the pre-substitution era of the relevant part of sub-section (1) of section 153C covering the period under consideration, the jurisdictional condition remains that the satisfaction is required to be recorded by and in the case of the person searched so as to enable the AO of the 'other person' to start with the proceedings for making assessment or reassessment.

20. The ld. DR contended that recording of satisfaction by the AO of the assessee at the most can be treated as a technical mistake and hence should not eclipse the assessment. Relying on certain judgments, the ld. DR submitted that the technicalities cannot be allowed to prevail in the course of indulgence of justice.

21. We agree in principle that technicalities cannot come in the way of dispensation of justice. However, it is important to note that the lack of jurisdiction by the AO cannot be put under the carpet in the guise of a technical defect. It goes without saying that no assessment or other proceedings can be lawfully taken up and completed unless the concerned authority has jurisdiction to do so. Lack of jurisdiction goes to the very root of the matter and cuts the tree of assessment if the foundation of jurisdiction is missing.

22. The ld. AR has brought to our notice two orders passed by the Delhi Benches of the Tribunal, namely, Asstt. CIT v. Inlay Marketing (P.) Ltd. [IT Appeal No.4200 (Delhi) of 2012], and Dy. CIT v. Aakash Arogya Mandir (P.) Ltd. [IT Appeal No.5437(Delhi) of 2013], in which the notices and the consequential assessments u/s 153C, under identical circumstances, have been quashed. The ld. DR contended that the above referred two Tribunal orders are per incurium and should not be followed. The main reason for declaring the tribunal orders as per incurium was the non-consideration of the judgment of the Hon'ble jurisdictional High Court in judgment in the case of Ssp Aviation Ltd…. v. Deputy Commissioner Of Income Tax [2012] 346 ITR 177/207 Taxman 260/20 taxmann.com 214 (Delhi) .

23. Let us examine the case of SSP Aviation Ltd. (supra) for evaluating the contention that the instant assessment be declared as per law. The Hon'ble High Court in that case has held that the Assessing Officer having jurisdiction over the searched person should be satisfied that the valuable article or books of account or documents seized during the search belong to a person other than the searched person and there is no requirement in section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must conclusively reflect or disclose any undisclosed income. We find that there is no such controversy before us as was there before the Hon'ble High Court. It is not the case of the assessee before us in this ground that the documents etc. found from the persons searched did not positively indicate the existence of some income in the hands of the assessee. The argument is simply confined to non-recording of satisfaction by the AO of the persons searched. Instead of supporting the Department's case, we find that this judgment strengthens the assessee's case by making it clear in no uncertain terms that the AO of the person searched is obliged to record the satisfaction. The relevant observations of the Hon'ble High Court contained in para 15 merit reproduction as under: —

'It needs to be appreciated that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in Section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income.'

24. It is pretty clear from the above extraction that the satisfaction as referred to it in this case is that of the Assessing Officer having jurisdiction over the searched person. As such, we are of the considered opinion that this judgment does not support the Revenue's case. Resultantly, the characterization of the above Tribunal orders as per incurium by the ld. DR, is absolutely without any legally sustainable basis.

25. Even otherwise, the judicial discipline requires a subsequent bench to the follow an earlier order of a co-ordinate bench on the point. It is only if the subsequent bench feels itself unable to concur with the view taken earlier that it is required to refer the case for consideration by a special bench. In our considered opinion, these two orders of the co-ordinate benches are perfectly in accordance with law.

26. Coming back to facts of the instant case, it is palpable that the AO of Shri B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd., did not record any satisfaction that some money, bullion, jewellery or books of accounts or other documents found from these persons belonged to the assessee. The absence of such satisfaction, in our considered opinion, failed to confer any valid and lawful jurisdiction on the AO of the assessee to proceed with the matter of the assessment u/s 153C of the Act. We, ergo, set aside the initiation and the ensuing assessment on the assessee as void ab initio.

27. The reliance of the ld. DR on some decisions on other legal issues or merits is of no consequence in view of the lack of jurisdiction of the AO to proceed with the assessments u/s 153C of the Act. In view of our decision on the first legal issue, there is no need to espouse the other grounds taken by the assessee dealing with other legal issues or merits.

28. In the result, the appeal is allowed.

RAHUL

Tanvir Collections P... v. Acit, Central Circle...