Income Tax Act, 1961 – s.153C – Search and seizure operation carried out at residential/business premises of Director (the searched person) of assessee-company – A pen drive was found and seized – Some documents were seized containing details of cash receipts on sale of shops/offices at assessee-company – Notice issued to assessee u/s.153C by Assessing Officer who co-incidentally happened to be the same for the assessee and the searched person – Assessee filed return for assessment year 2008-09 – Assessment finalised by the Assessing Officer – Assessment order challenged contending that satisfaction note recorded u/s.153C w.r.t the assessee, i.e., a third party, was invalid – Dismissed by CIT (Appeals) – Assessee’s appeal allowed by ITAT – Revenue’s appeal allowed by High Court – Held: Before issuing notice u/s.153C, the Assessing Officer of the searched person must be “satisfied” that, inter alia, any document seized or requisitioned “belongs to” a person other than the searched person – After recording such satisfaction, he may transmit the records/documents/papers etc. to the Assessing Officer having jurisdiction over such other person – After receipt of the said satisfaction & on examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue notice for completion of assessment u/s.158BD – There can be two eventualities- Assessing Officer of the searched person is different from the Assessing Officer of the other person; the Assessing Officer of the searched person and the other person is the same – Where the Assessing Officer is different, there shall be a satisfaction note by the Assessing Officer of the searched person who then is required to transmit the documents so seized to the Assessing Officer of the other person – Simultaneously he shall forward his satisfaction note and is also required to make a note in the file of searched person that he has done so – However, in case where the Assessing Officer is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person – Once the note says so, then the requirement of s.153C is fulfilled – Second requirement of transmitting the documents so seized would not be there as he himself will be the Assessing Officer of the other person also – In the facts of the present case, it cannot be said that the mandatory requirements of s.153C were not complied – High Court justified in observing that requirement of s.153C was fulfilled – ITAT to decide and dispose of the appeals afresh on merits, at the earliest, in accordance with law.
Dismissing the appeals, the Court
HELD: 1.1 Before issuing notice under Section 153C of the Income Tax Act, 1961, the Assessing Officer of the searched person must be “satisfied” that, inter alia, any document seized or requisitioned “belongs to” a person other than the searched person. That thereafter, after recording such satisfaction by the Assessing Officer of the searched person, he may transmit the records/documents/things/papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue a notice for the purpose of completion of the assessment under Section 158BD of the Act and the other provisions of Chapter XIV-B shall apply. The aforesaid requirements are held to be mandatorily complied with. There can be two eventualities. It may so happen that the Assessing Officer of the searched person is different from the Assessing Officer of the other person and in the second eventuality, the Assessing Officer of the searched person and the other person is the same. Where the Assessing Officer of the searched person is different from the Assessing Officer of the other person, there shall be a satisfaction note by the Assessing Officer of the searched person and as that thereafter the Assessing Officer of the searched person is required to transmit the documents so seized to the Assessing Officer of the other person. The Assessing Officer of the searched person simultaneously shall forward his satisfaction note to the Assessing Officer of the other person and is also required to make a note in the file of a searched person that he has done so. However, in the case where the Assessing Officer of the searched person and the other person is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, then the requirement of Section 153C of the Act is fulfilled. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the Assessing Officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. It cannot be said that the mandatory requirements of Section 153C of the Act, in the facts and circumstances of the case, were not complied with. [Paras 6, 6.1 and 6.2][682-G-H; 683-B-H; 684-A-C] Commissioner of Income Tax v. Calcutta Knitwears (2014) 6 SCC 444 : [2014] 5 SCR 855 – relied on. Pepsi Food Pvt. Ltd. v. Assistant Commissioner of Income Tax 2014 (367) ITR 112 (Delhi) ; Ganpati Fincap Service Pvt. Ltd. v. Commissioner of Income Tax 2017
(395) ITR 692 (Delhi) – approved.
Commissioner of Income Tax v. Bipinchandra Chimanlal Doshi 2017 (395) ITR 632 (Gujarat) – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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