IN THE SUPREME COURT OF INDIA
\nCIVIL APPELLATE JURISDICTION
\nCIVIL APPEAL NOS.2006-2007 OF 2020
\n(Arising out of SLP(C) Nos. 8449-50\/2017)
\nM\/S SUPER MALLS PRIVATE LIMITED \u2026APPELLANT
\nVERSUS
\nPRINCIPAL COMMISSIONER OF INCOME
\nTAX 8, NEW DELHI \u2026RESPONDENT
\nWITH
\nCIVIL APPEAL NOS.2008-2009 OF 2020
\n(Arising out of SLP(C) Nos. 8453-54\/2017)
\nCIVIL APPEAL NOS.2010-2011 OF 2020
\n(Arising out of SLP(C) Nos. 8451-52\/2017)
\nCIVIL APPEAL NOS.2012-2013 OF 2020
\n(Arising out of SLP(C) Nos. 8455-56\/2017)
\nJ U D G M E N T
\nM.R. SHAH, J.
\nAs common question of law and facts arise in this group of appeals, and
\nare with respect to common assessee, but with respect to different assessment
\n1
\nyears, all these appeals are being decided together by this common Judgment
\nand Order.
\n2. For the sake of convenience, the facts of Civil Appeals arising from
\nSpecial Leave Petition (C) Nos. 8449-8450\/2017 arising from I.T.A. No.
\n453\/2016 & Review Petition No. 16\/2017 for Assessment Year 2008-09 are
\nstated and considered. The facts in nutshell are as under:
\n2.1 By virtue of the authorization of the Director of Income Tax
\n(Investigation), Chandigarh, a search and seizure operation under Section
\n132(1) of the Income Tax Act, 1961 (hereinafter referred to as the \u2018Act\u2019) was
\ncarried out on 8\/9.04.2010 at the residential\/business premises of Shri Tejwant
\nSingh and Shri Ved Prakash Bharti group of companies at Karnal, Panipat and
\nDelhi. A survey under Section 133A of the Act was also carried out at the
\nbusiness premises of M\/s Super Mall (P) Limited \u2013 the assessee, at Karnal and
\nNew Delhi. That during the course of the search on 8\/9.04.2010 at the residence
\nof Shri Ved Prakash Bharti, a Director in the assessee company \u2013 M\/s Super
\nMall (P) Limited, pen drive was found and seized from the vehicle parked in
\nfront of Shri Ved Prakash Bharti\u2019s residence. That some documents were seized
\nafter taking out the print from the above said pen drive. The said documents
\ncontained the details of the cash receipts on sale of shops\/offices at M\/s Super
\nMall, Karnal, also besides other concerns. That as a consequence of the
\naforesaid search and seizure operation, a notice was issued to the assessee \u2013 M\/s
\nSuper Mall (P) Limited (hereinafter referred to as the \u2018Assessee\u2019) under Section
\n2
\n153C of the Act by the Assessing Officer. At this stage, it is required to be
\nnoted that co-incidentally it so happened that the Assessing Officer of the
\nassessee and the Assessing Officer of the search persons \u2013 Tejwant Singh and
\nVed Prakash Bharti was the same. The assessee filed its return for the
\nassessment year 2008-09. The assessment for the assessment year 2008-09 was
\nfinalised by the Assessing Officer and additions were made in the assessment
\nyear 2008-09. The assessment order was the subject matter of appeal before
\nthe Commissioner of Income Tax (Appeals). The assessment order was
\nchallenged mainly on the ground that the satisfaction note recorded under
\nSection 153C of the Act in respect of the assessee, i.e., a third party, was
\ninvalid. That the learned CIT (Appeals) dismissed the assessee\u2019s appeal.
\nHowever, the learned Income Tax Appellate Tribunal (for short \u2018ITAT\u2019) allowed
\nthe appeal preferred by the assessee and held that the satisfaction note recorded
\nunder Section 153C of the Act in respect of the assessee, i.e., a third party, was
\ninvalid. In the appeal before the High Court, by the impugned Judgment and
\nOrder, the High Court has allowed the said appeal preferred by the Revenue and
\nhas observed and held that there was a compliance of Section 153C of the Act.
\nThe High Court also observed that the Assessing Officer was justified in
\nrecording the satisfaction that the documents so seized \u201cbelonged\u201d to the
\nassessee. Consequently, the High Court has set aside the order passed by the
\nlearned ITAT and remanded the matter to the learned ITAT to hear the appeals
\nafresh on merits. At this stage, it is required to be noted that the learned ITAT
\n3
\nset aside the order passed by the learned CIT(Appeals) solely on the satisfaction
\nnote being invalid and did not enter into the merits. Therefore, the High Court
\nset aside the learned ITAT\u2019s decision with respect to satisfaction note recorded
\nby the Assessing Officer under Section 153C of the Act. Hence, the present
\nappeal.
\n2.2 Therefore, the short question which is posed for the consideration of this
\nCourt is with respect to the satisfaction note recorded by the Assessing Officer,
\nas required under Section 153C of the Act.
\n3. Shri R.P. Bhatt, learned Senior Advocate appearing on behalf of the
\nassessee has made the following submissions:
\n3.1 That in the facts and circumstances of the case, the High Court has
\nmaterially erred in observing and holding that the Assessing Officer has
\ncomplied with the provisions of Section 153C of the Act;
\n3.2 That in the present case there was no satisfaction note by the Assessing
\nOfficer of the searched party. That as per the scheme of Section 153C of the
\nAct, the Assessing Officer of searched person, i.e., the Directors in this case has
\nto be firstly \u201csatisfied\u201d that any money, jewellery or other valuable articles,
\nbooks of accounts or documents seized or requisitioned \u201cbelong to\u201d, i.e., in this
\ncase, the assessee company, a person other than the person referred to under
\nSection 153A of the Act. It is submitted that thereafter and on being satisfied
\nthat the books of accounts or documents or assets so seized or requisitioned
\nshall be handed over by the Assessing Officer of searched person, i.e., the
\n4
\nDirectors in this case to the Assessing Officer having jurisdiction over such
\nother person i.e., the assessee company. That the aforesaid requirements before
\nissuing notice under Section 153C of the Act are held to be mandatory by this
\nCourt in catena of decisions. Reliance is placed upon the decision of this Court
\nin the case of Commissioner of Income Tax v. Calcutta Knitwears (2014) 6 SCC
\n444; decision of the Delhi High Court in the case of Pepsi Food Pvt. Ltd. v.
\nAssistant Commissioner of Income Tax 2014 (367) ITR 112 (Delhi); decision of
\nthe Gujarat High Court in the case of Commissioner of Incoem Tax v.
\nBipinchandra Chimanlal Doshi 2017 (395) ITR 632 (Gujarat); and the decision
\nof the Delhi High Court in the case of Ganpati Fincap Service Pvt. Ltd. v.
\nCommissioner of Income Tax 2017 (395) ITR 692 (Delhi);
\n3.3 That even the CBDT also issued a Circular explaining the requirements to
\nbe followed by the Assessing Officer before issuing notice under Section 153C
\nof the Act. That the said Circular has been referred to and considered by the
\nDelhi High Court in the case of Ganpati Fincap (supra) and after considering
\nthe various decisions of different High Courts, it is observed that when
\nproceedings are proposed to be initiated under Section 153C of the Act against
\nthe \u201cother person\u201d, it has to be preceded by a satisfaction note by the Assessing
\nOfficer of the searched person. It is further observed that he will record in his
\nsatisfaction note that the seized documents belong to \u201cother person\u201d. That in
\nthe present case there was no satisfaction note by the Assessing Officer of the
\nsearched person. That there is a non-compliance of the provisions of Section
\n5
\n153C of the Act as well as even the Circular issued by the CBDT and therefore
\nthe learned ITAT rightly set aside the assessment order.
\n3.4 Making the above submissions and relying upon the aforesaid decisions,
\nit is prayed to allow the present appeals.
\n4. Shri Arijit Prasad, learned Senior Advocate appearing on behalf of the
\nRevenue, while opposing the present appeal\/s has vehemently submitted that in
\nthe facts and circumstances of the case and after considering the satisfaction
\nnote recorded by the Assessing Officer, the High Court has rightly observed and
\nheld that there is a sufficient compliance of Section 153C of the Act. In support
\nhe has made the following submissions:
\n4.1 That in the present case, the Assessing Officer of the assessee and the
\nAssessing Officer of the searched person was the same and therefore if one
\nlooks at the satisfaction note, it can be seen that there is a satisfaction note by
\nthe Assessing Officer of the searched person also. It is submitted that as the
\nAssessing Officer was the same, there was no question of thereafter transmitting
\nthe documents so seized from the searched person to another Assessing Officer
\nas he himself was the Assessing Officer of the searched person as well as the
\nAssessing Officer of the assessee. Therefore, there was a sufficient compliance
\nof the requirements under Section 153C of the Act.
\n4.2 That even as observed and held by the Delhi High Court in the case of
\nGanpati Fincap (supra), in case the Assessing Officer of the searched person
\nand the other person is the same, there need not be two separate satisfaction
\n6
\nnotes recorded by the Assessing Officer of the searched person, where he is also
\nthe Assessing Officer of the other person.
\n4.3 Making the above submissions and relying upon the aforesaid decision, it
\nis prayed to dismiss the present appeals.
\n5. We have heard the learned counsel for the respective parties at length.
\n5.1 As observed hereinabove, the short question which is posed for the
\nconsideration of this Court is, whether there is a compliance of the provisions of
\nSection 153C of the Act by the Assessing Officer and all the conditions which
\nare required to be fulfilled before initiating the proceedings under Section 153C
\nof the Act have been satisfied or not?
\n6. This Court had an occasion to consider the scheme of Section 153C of the
\nAct and the conditions precedent to be fulfilled\/complied with before issuing
\nnotice under Section 153C of the Act in the case of Calcutta Knitwears (supra)
\nas well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd. (supra).
\nAs held, before issuing notice under Section 153C of the Act, the Assessing
\nOfficer of the searched person must be \u201csatisfied\u201d that, inter alia, any document
\nseized or requisitioned \u201cbelongs to\u201d a person other than the searched person.
\nThat thereafter, after recording such satisfaction by the Assessing Officer of the
\nsearched person, he may transmit the records\/documents\/things\/papers etc. to
\nthe Assessing Officer having jurisdiction over such other person. After receipt
\nof the aforesaid satisfaction and upon examination of such other documents
\nrelating to such other person, the jurisdictional Assessing Officer may proceed
\n7
\nto issue a notice for the purpose of completion of the assessment under Section
\n158BD of the Act and the other provisions of Chapter XIV-B shall apply.
\n6.1 It cannot be disputed that the aforesaid requirements are held to be
\nmandatorily complied with. There can be two eventualities. It may so happen
\nthat the Assessing Officer of the searched person is different from the Assessing
\nOfficer of the other person and in the second eventuality, the Assessing Officer
\nof the searched person and the other person is the same. Where the Assessing
\nOfficer of the searched person is different from the Assessing Officer of the
\nother person, there shall be a satisfaction note by the Assessing Officer of the
\nsearched person and as observed hereinabove that thereafter the Assessing
\nOfficer of the searched person is required to transmit the documents so seized to
\nthe Assessing Officer of the other person. The Assessing Officer of the searched
\nperson simultaneously while transmitting the documents shall forward his
\nsatisfaction note to the Assessing Officer of the other person and is also required
\nto make a note in the file of a searched person that he has done so. However, as
\nrightly observed and held by the Delhi High Court in the case of Ganpati
\nFincap (supra), the same is for the administrative convenience and the failure
\nby the Assessing Officer of the searched person, after preparing and dispatching
\nthe satisfaction note and the documents to the Assessing Officer of the other
\nperson, to make a note in the file of a searched person, will not vitiate the entire
\nproceedings under Section 153C of the Act against the other person. At the
\nsame time, the satisfaction note by the Assessing Officer of the searched person
\n8
\nthat the documents etc. so seized during the search and seizure from the
\nsearched person belonged to the other person and transmitting such material to
\nthe Assessing Officer of the other person is mandatory. However, in the case
\nwhere the Assessing Officer of the searched person and the other person is the
\nsame, it is sufficient by the Assessing Officer to note in the satisfaction note that
\nthe documents seized from the searched person belonged to the other person.
\nOnce the note says so, then the requirement of Section 153C of the Act is
\nfulfilled. In case, where the Assessing Officer of the searched person and the
\nother person is the same, there can be one satisfaction note prepared by the
\nAssessing Officer, as he himself is the Assessing Officer of the searched person
\nand also the Assessing Officer of the other person. However, as observed
\nhereinabove, he must be conscious and satisfied that the documents
\nseized\/recovered from the searched person belonged to the other person. In
\nsuch a situation, the satisfaction note would be qua the other person. The second
\nrequirement of transmitting the documents so seized from the searched person
\nwould not be there as he himself will be the Assessing Officer of the searched
\nperson and the other person and therefore there is no question of transmitting
\nsuch seized documents to himself.
\n6.2. Now let us consider from the satisfaction note recorded by the Assessing
\nOfficer, in the present case. Whether there is a sufficient compliance of Section
\n153C of the Act or not. The satisfaction note reads as under:
\n9
\n\u201cName and address of
\nthe assessee : M\/s Super Malls (P) Ltd.
\nSector 12, HUDA, Karnal
\nRegd. Office at 51, Transport
\nCentre
\nPunjabi Bagh, New Delhi.
\nPAN : AAICS2163F
\nStatus : Company
\nReasons\/Satisfaction note for taking up the case of M\/s Super
\nMalls (P) Ltd. Sector-12, HUDA, Karnal Regd. Office at 51,
\nTransport Centre, Punjabi Bagh, New Delhi under Section 153C of
\nthe Income Tax Act, 1961.
\nThe jurisdiction of this case has been assigned to this Office u\/s
\n127 of the Income Tax Act, 1961 by the worthy Commissioner of
\nIncome Tax-III New Delhi vide order F. No.
\nCITIII\/Delhi\/Centralization\/1012-1312455 dated 15.01.2013.
\nBy virtue of the authorization of the Director of Income Tax
\n(Investigation), Chandigarh, a search & seizure operation u\/s
\n132(1) of the Act was carried out on 08\/09.04.2010 at the
\nresidential\/business premises of Sh. Tejwant Singh & Sh. Ved
\nParkash Bharti Group of cases, Karnal, Panipat & Delhi and a
\nsurvey u\/s 133A of the IT. Act, 1961 was also carried out at the
\nbusiness premises of M\/s Super Mall (P) Ltd. Karnal & New Delhi.
\nDuring the course of search on 08\/09.04.2010 at residence of Sh.
\nVed Parkash Bharti who is a Director in the assessee company M\/s
\nSuper Mall (P) Ltd., Pen drives were found and seized as per
\nAnnexure-3 from vehicle No. HR06N-0063 parked in front of the
\nresidence of Sh. Ved Parkash Bharti. Some documents as per
\nAnnexure A-1 were seized after taking print out of the above said
\npen drives. These documents contain the details of cash receipt on
\nsale of shop\/offices at M\/s Super Mall, Karnal also beside other
\nconcerns. These documents are required for assessment
\nproceedings. During the statement of Sh. Ved Parkash Bharti at
\nthe time of search, he has also stated that these documents pertain
\nto him and M\/s Super Mall (P) Ltd., Karnal in which he is Director.
\nIn view of the above and as per the provisions of sub-section 91 of
\nSection 153C of the Act, I am satisfied that the document seized
\nfrom the residence of Sh. Ved Parkash Bharti belongs to a person
\n10
\ni.e. Super Mall (P) Ltd., other than the person referred in section
\n153A. Accordingly, it is directed to issue such person (M\/s Super
\nMall (P) Ltd.) notice and assess and reassess income in accordance
\nwith the provision of section 153A of the Act.
\nDated: 22.02.2013 sd\/-
\n(VED PARKASH KALIA)\u201d
\nFrom the aforesaid satisfaction note, it emerges that the Assessing Officer
\nis satisfied that the documents containing the details of the cash receipts on sale
\nof shop\/offices at M\/s Super Mall, Karnal belonged to the other person \u2013
\nassessee \u2013 M\/s Super Mall. He is also satisfied that the documents\/pen drive are
\nseized from the searched person. He is also satisfied that the documents so
\nseized from the residence of the searched person\/Ved Prakash Bharti belonged to
\nthe assessee \u2013 the other person. Therefore, the Assessing Officer was satisfied
\nand it is specifically mentioned that the documents so seized belonged to the
\nassessee \u2013 the other person. Therefore, it cannot be said that the mandatory
\nrequirements of Section 153C of the Act, in the facts and circumstances of the
\ncase, have not been complied with. The satisfaction note by the Assessing
\nOfficer clearly states that the documents so seized belonged to the other person \u2013
\nthe assessee and not the searched person. Thus, the High Court is justified in
\nobserving that the requirement of Section 153C has been fulfilled. On facts, we
\nare in complete agreement with the view taken by the High Court on the
\nrequirement of Section 153C of the Act being fulfilled by the Assessing Officer
\nbefore initiating the proceedings under Section 153C of the Act.
\n11
\n7. In view of the above and for the reasons stated above, all these APPEALS
\nfail and the same deserve to be dismissed and are accordingly dismissed. Now,
\nthe learned ITAT shall decide and dispose of the appeals afresh on merits, at the
\nearliest, in accordance with law, as observed by the High Court in the impugned
\nJudgment(s) and Order(s).
\n\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026J.
\n[ASHOK BHUSHAN]
\nNEW DELHI; \u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026J.
\nMARCH 05, 2020. [M.R. SHAH]
\n12<\/p>\n","protected":false},"excerpt":{"rendered":"
This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled\/complied with before issuing notice under Section 153C of the Act in the case of Calcutta Knitwears (2014) 6 SCC 444 as well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd (367) ITR 112 (Delhi). As held, before issuing notice under Section 153C of the Act, the Assessing Officer of the searched person must be \u201csatisfied\u201d that, inter alia, any document seized or requisitioned \u201cbelongs to\u201d 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 7 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.<\/p>\n