IN INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA Nos. 1444 to 1450/Bang/2014 Assessment years : 2005-06 to 2011-12 Shri Gali Janardhana Reddy, Vs. Deputy Commissioner of No.8, Ashoknagar, Havamabavi, Income Tax, Siruguppa Road, Circle 1(3), Bellary - 583 101. Bangalore. PAN: AFBPR 9737D APPELLANT RESPONDENT Appellant by : S/Shri Mayank Jain & Madhur Jain, Advocates Respondent by : Ms. Neera Malhotra, CIT(DR) & Shri S. Praveen S., DCIT, CC, 1(3) Date of hearing : 26.08.2016 Date of Pronouncement : 17.10.2016 ORDER Per Bench All these 7 appeals are filed by assessee which are directed against combined order of ld. CIT(Appeals)-VI, Bangalore dated 25.8.2014 for assessment years 2005-06 to 2011-12. All these appeals were heard together and are being disposed of by way of this common order for sake of convenience. ITA Nos.1444 to 1450/Bang/2014 Page 2 of 19 2. Apart from raising various grounds along with appeal memo in all these 7 years, assessee has also raised common additional ground in all these years and hence, we first proceed to dispose of additional ground of assessee s appeal, which is as under:- 9. For that impugned additions are liable to be set aside since there is no satisfaction as contemplated under section 153C of Act of A.O. of searched persons in case of appellant. 3. It was submitted by ld. AR of assessee that as per provisions of section 153C of I.T. Act, AO of searched person has to record satisfaction and only after that, AO of any other person can initiate proceedings u/s. 153C against such other person. In support of this contention, he placed reliance on Tribunal s order rendered in case of Shri Vinod Kumar Chaurasia v. ACIT in ITA No.245 to 251/LKW/2012 dated 10.12.2014. He submitted copy of this Tribunal s order and pointed out that in this order, Tribunal has considered and followed judgment of Hon ble Apex Court rendered in case of CIT v. Calcutta Knitwears in Civil Appeal No.3958 of 2014 dated 12.03.2014. 4. As against this, it was submitted by ld. DR of revenue that written submissions has been filed by her on 10.08.2016 and same should be considered for deciding this additional ground because it is her submission that in present case, AO of assessee and AO of searched persons i.e., Shri K. Raghavacharyulu and Mrs. G. Renuka is ITA Nos.1444 to 1450/Bang/2014 Page 3 of 19 same i.e., Shri Shivanand H Kalakeri, DCIT, Central Circle 1(3), Bangalore and as per satisfaction note enclosed with written submissions, satisfaction was recorded on 14.12.2012 by same AO and therefore, requirements of section 153C are satisfied and there is no infirmity in assuming of jurisdiction u/s. 153C by AO of assessee. He also submitted that copy of assessment order in both those cases of searched persons is also enclosed with said written submissions in support of this contention that AO of assessee and AO of searched persons is one and same person. 5. We have considered rival submissions. First of all, we reproduce written submissions of ld. DR of revenue dated 10.08.2016. same is as under:- During course of hearing held on 03.08.2016 Hon'ble Bench had directed for production of search records of assesses in whose case search u/s 132 was conducted and seized material pertaining to Shri Gali Janardhan Reddy was found on basis of which satisfaction was recorded for initiating proceedings U/S 153C in case of assessee. On perusal of order sheet recording satisfaction note before issuance of notice u/s 153C of I.T Act for A.Ys 205-06 to 2011-12, it is noted that following premises were covered u/s 132 of LT Act: (a) Shri K. Raghavacharyalu, at flat No.402, Kakateeya Residency, Kappagal Road, Bellary. (b) Smt. G.Renuka, at "Rishikes", No.36, Goldsmith Street, Bellary. ITA Nos.1444 to 1450/Bang/2014 Page 4 of 19 DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT Vs CALCUTTA KNITWEARS 43 taxmann.com 446 (SC) 1. Firstly, decision of Hon'ble Supreme Court in case of CIT Vs Calcutta Knitwears 43 taxmann.com 446 (SC) , which is rendered in connection with search assessments under Chapter XIV-B (sections 158B to 158BI), which are different provisions compared to assessments of assessee which relate to new search assessment procedure as contained under sections 153A to 153A which are brought into statute w.e.f 1-6-2003. 2. Secondly, facts in case of CIT Vs Calcutta Knitwears 43 taxmann.com 446 (SC) are different from that of assessee as officer of person covered under provisions of Section 158BC was different from officer of person covered under provisions of Section 158BD and therefore issue of "transmission of records" (refer Para 39) came up before Hon'ble Court and consequently issue of "who should recording of satisfaction" and "at what point of time satisfaction should be recorded was also considered". In this context Hon'ble court stated that satisfaction can be recorded at any of 3 stages - (1) At time of initiation of proceedings u/s 158BC, (2) along with proceedings U/S 158BC and (3) immediately after concluding proceedings U/S 158BC. 3. aforesaid decision of CIT Vs Calcutta Knitwears 43 taxmann.com 446 (SC) is NOT applicable to case of assesse for following reasons: (i) as assessments of assessee are completed under different provisions of statute as they which relate to new search assessment procedure as contained under sections 153A to 153A which are brought into statute w.e.f 1-6-2003. (ii) assessing officer of person covered under provisions of Section 153 is same as officer of person covered under provisions of Section 153C and ,therefore, there is NO issue of "transmission of records". Copies of assessment ITA Nos.1444 to 1450/Bang/2014 Page 5 of 19 orders in cases of Shri K. Raghavacharyalu and Smt. G.Renuka are enclosed to establish that assessments are completed by same assessing officer i.e Shri, Shivanand H. Kalakeri, DCIT Central Circle 1(3) who had done assessments in case of assessee. (iii) assessing officer has recorded satisfaction in case of assessee. (iv) eventuality of assessing officer of person covered under provisions of Section 153BC being same as officer of person covered under provisions of Section 153 BD is not examined by Hon'ble Supreme Court in case of CIT Vs Calcutta Knitwears 43 taxmann.com 446 (SC). (v) It is humbly submitted that judgments must be read as whole and observations in judgments should be considered in context in which they are made and in light of questions that were before court. In CIT v. Sun Engineering Works Pvt. Ltd.(198 ITR 297) Supreme Court observed: It is neither desirable nor permissible to pick out word or sentence from judgment of Supreme Court divorced from context of question under consideration and treat it to be complete law declared by court. judgment must be read as whole and observations from judgment have to be considered in light of questions which were before court. decision of Supreme Court takes its colour from questions involved in case in which it is rendered and, while applying decision to later case, courts must carefully try to ascertain true principle laid down by decision. This has been reiterated by Hon'ble Supreme Court in its decision of CIT Vs Calcutta Knitwears 43 taxmann.com 446 (SC). 4. Therefore, in view of fact that assessing officer of person covered under provisions of Section 153 being same as officer of person covered under provisions of Section 153 C and assessing officer having recorded ITA Nos.1444 to 1450/Bang/2014 Page 6 of 19 satisfaction before issuing notice u/s 153C, sufficient compliance has been made by A.O as required under provisions of statute. Submitted for kind consideration. 6. We also reproduce satisfaction note dated 14.12.2012 which has been submitted by ld. DR of revenue along with her written submissions. same is as under:- Recording of satisfaction note before issuance of notice under section 153C: Name of assessee: Sri Gali Janardhana Reddy (Ay: 2005-06 to 2010-11) search u/s. 132 was conducted on 25/10/2010 in case of Mr K. Raghvacharyulu at flat No.402, Kakateeya Residency, Kappagal Road, Bellary. During course of search, following documents/books of account belonging to Sri Gali Janardhana Reddy were seized and contents are explained in brief as below- RB/1 Page No.2 This page contains application filed by Mr G Janardhana Reddy before Returning Officer while contesting for election to Member of Legislative Council in State of Karnataka. RB/1 Pages 27-32 These pages contain details of Assets (movable, immovable, assets etc) belonging to Mr Janardhana Reddy, his spouse and dependents. RB/1Pages 116-121 This contain instruments of Partnership deed entered on 8.1.2006 between Sri B Srininivas Reddy, Sri Parameshwara Reddy, Sri B ITA Nos.1444 to 1450/Bang/2014 Page 7 of 19 Sreeramulu, Sri G Karunakar Reddy, Sri Somashekhar Reddy, Smt G Lakshmi Aruna in name and style of Hotel Nagarjun. search u/s. 132 was also conducted on 25/10/2010 in case of Smt G Renuka at 'Rishikesh' #36, Goldsmith Street, Bellary on 25-10-2010. During course of search, following documents/books of account belonging to Sri Gali Janardhana Reddy were seized and contents are explained in brief as below- RN/1 Pages 179-181. These pages contain trial balance of Gali Janardhana Reddy for F.Y.2009-10. RN/1 Pages 184-185. These pages contain trial balance of Gali Janardhana Reddy for F.Y.2009-10 RN/1 Pages 129 to 139. These pages contain sale deed dated 22-10-2005 between Sri Sunil Kumar Gupta (seller) and Sri G Janardhana Reddy (purchaser) in respect of property at Plot no.1121 at Jubilee Hills, Hyderabad. In view of above, I am satisfied that documents and books of account belonging to Sri Gali Janardhana Reddy have been found and seized from searched premises of Sri Raghavacharyulu and Smt G Renuka. Issue notice u/s. 153C of Income tax Act, 1961. Sd/- (SHIVANAND H KALAKERI) Deputy Commissioner of Income-tax, Date: 14.12.2012 Central Circle 1(3), Bangalore." 7. We find that as per satisfaction note dated 14.12.2012, satisfaction note has been recorded by Shri Shivanand H. Kalakeri, DCIT, Central ITA Nos.1444 to 1450/Bang/2014 Page 8 of 19 Circle 1(3), Bangalore and as per copy of two assessment orders for AY 2005-06 u/s. 153A dated 27.3.2013 and 30.3.2013 in case of Shri K. Raghavacharyalu and Smt. G. Renuka respectively, AO is same person with same designation and hence, this is admitted position that AO of assessee and of searched persons is one and same person and satisfaction note has been recorded by him on 14.12.2012 before issue of notice u/s. 153C of I.T. Act. In same satisfaction note, he has noted in last that Issue notice u/s. 153C of Income Tax Act, 1961. This last line of satisfaction note proves beyond doubt that such satisfaction note has been recorded by same Officer who is AO of assessee as well as of searched persons in his capacity as AO of assessee and not in his capacity as AO of searched persons, because if satisfaction note is recorded by AO of searched person, it cannot be said in said satisfaction note that Issue notice u/s. 153C of Income-tax Act , because such notice u/s. 153C of Act is not required to be issued in case of searched person, but in case of other person i.e., present assessee. In our considered opinion, even if AO of assessee and searched person is one and same, then also, satisfaction note has to be recorded by AO in his capacity as AO of searched person and not in his capacity as AO of other person in whose case notice u/s. 153C is required to be issued. 8. In light of above facts, now we examine applicability of Tribunal s order cited by ld. AR of assessee having been rendered ITA Nos.1444 to 1450/Bang/2014 Page 9 of 19 in case of Shri Vinod Kumar Chaurasia v. ACIT (supra). In that case, judgment of Hon ble Allahabad High Court has been cited before Tribunal rendered in case of CIT v. M/s. Gopi Apartment in ITA No.60 of 2014. relevant portion of judgment of Hon ble Allahabad High Court rendered in case of CIT v. M/s. Gopi Apartment has been reproduced by Tribunal in that case on pages 5 & 6 of that order and same is reproduced hereinbelow for sake of ready reference:- 5. Having given thoughtful consideration to rival submissions and from careful perusal of orders of authorities below, we find that ld. CIT(A) has not given any specific finding with regard to recording of satisfaction by Assessing Officer of searched person before initiating proceedings under section 153C of Act. ld. CIT(A) has rather rejected contentions of assessee in this regard by holding that Assessing Officer of searched person was not required to record satisfaction as required under section 158BD of Act before initiating proceedings under section 153C of Act. During course of hearing, various opportunities were afforded to Revenue to place some evidence in order to demonstrate that before initiating proceedings under section 153C of Act against assessee, satisfaction was recorded by Assessing Officer of searched person that incriminating material found during course of search in fact relate to assessee. But nothing has been placed on record by Revenue. Moreover, from orders of lower authorities, it is apparent that satisfaction was not recorded by Assessing Officer of searched person before initiating proceedings under section 153C of Act. Now question arises whether in absence of satisfaction recorded by Assessing Officer of searched person, assessment framed under section 153C of Act, is sustainable in eyes of law? This question was answered by Hon'ble jurisdictional High Court in case of CIT (Central) vs. M/s Gopi Apartment (supra) by holding that clear and plain reading of section 153C leaves no doubt that recording of satisfaction by Assessing Officer of person searched is mandatory and it has to precede initiation of proceedings against other person (not searched). relevant ITA Nos.1444 to 1450/Bang/2014 Page 10 of 19 observations of jurisdictional High Court are extracted hereunder:- "We have heard Sri Bharat Ji Agrawal, learned senior counsel assisted by Sri Ashok Kumar, learned counsel for appellant and Sri Ashish Bansal, learned counsel for respondent assessee and have perused records. contention of Sri Agrawal is two fold. Firstly, he contends that in instant case, Assessing Officer of 'searched person' and 'other person' being same, there was no requirement of handing over of books of account or documents or assets seized or requisitioned, as is mentioned in Section 153C nor there was any necessity of recording prior satisfaction before proceeding to assess 'other person'. satisfaction subsequently recorded in assessment order in respect of 'other person' was sufficient compliance of provisions of Section 153C, which, in any case, was procedural in nature. A.O. of both proceedings, being same, he was neither required to handover documents to another Assessing Officer nor he had to record any satisfaction for purpose of any other Assessing Officer since same Assessing Officer of same designation is having jurisdiction over both persons, i.e. 'searched person' and 'other person' (not searched). Sri Agrawal relied upon Division Bench judgment of this Court rendered in case of Commissioner of Income Tax Vs. Classic Enterprises, (2013) 358 ITR 465. It was contended that Tribunal was not justified in quashing notice under Section 153C, instead of deciding question on merits as to whether additions are to be made and/ or to what extent income is to be assessed in hands of Gopi Apartments. Sri Agrawal also contended that by Finance Act, 2003, Amendment in Section 153A w.e.f. 01.06.2003 was made and Sections 153A and 153C were added in place of Sections 153BC and 153BD. Section 158BC is equivalent to Section 153A and Section 158BD is equivalent to Section 153C. He also contended that reliance placed by I.T.A.T. upon judgment of Supreme Court in Manish Maheshwari (supra) was misplaced and case, at hand, was squarely covered by Division Bench of this Court in case of Classic Enterprises ITA Nos.1444 to 1450/Bang/2014 Page 11 of 19 (supra). In this regard, Sri Agrawal referred to observation in Manish Maheshwari's case to effect that "No proceeding under Section 158BC had been initiated. There is, thus, patent non- application of mind . Sri Ashish Bansal, learned counsel for respondent assessee, on other hand, contended that initiation of proceedings under Section 153C against respondent assessee itself was illegal, as no satisfaction was recorded by Assessing Officer of 'searched person' prior to initiation of such proceedings against respondent assessee as was mandatory. He invited attention of court to specific finding recorded by learned C.I.T. (Appeals), as upheld by I.T.A.T., based on admission by A.O. before it, which has already been taken note of by us in earlier part of judgment. Sri Bansal relied upon recent judgment of Apex Court in case of Commissioner of Income Tax-III Vs. M/s Calcutta Knitwears, Ludhiana passed in Civil Appeal No.3958 of 2014 decided on 12.03.2014 in support of his contention. Apart from arguments, as noted above, no other argument was raised by learned counsel for either of parties nor any other judgment was cited before us in support of their respective contentions. relevant provision in instant case, i.e. Section 153C is 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 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 person other than person referred to in section 153A, then books of account or documents or assets seized or requisitioned shall be handed over to 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 provisions of section 153A." aforesaid provision is contained in Chapter- XIV of Income Tax Act, which contains procedure for assessment. ITA Nos.1444 to 1450/Bang/2014 Page 12 of 19 somewhat similar provision exists in Section 158BD under Chapter XIV-B, which contains procedure for assessment of searched cases, which reads as under: "158BD. Where Assessing Officer is satisfied that any undisclosed income belongs to any person, other than 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, books of account, other documents or assets seized or requisitioned shall be handed over to Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed [under section 158BC] against such other person and provisions of this Chapter shall apply accordingly." meaning and scope of aforesaid provision contained in Section 158BD came up for consideration before Supreme Court in case of Commissioner of Income Tax-III Vs. M/s Calcutta Knitwears, Ludhiana (supra). issue that fell for consideration before Supreme Court, as mentioned in paragraph-3 of judgment is being quoted hereinbelow: "3. issue that falls for our consideration and decision in all these appeals is: at what stage of proceedings under Chapter XIV-B does assessing authority require to record his satisfaction for issuing notice under Section 158BD of Income Tax Act, 1961 ('the Act' for short)." After considering rival contentions, relevant provisions of Income Tax Act and authorities on subject, their Lordships held as under: "41. We would certainly say that before initiating proceedings under Section 158BD of Act, assessing officer who has initiated proceedings for completion of assessments under Section 158BC of Act should be satisfied that there is undisclosed income which has been traced out when person was searched under Section 132 or books of accounts were requisitioned under Section 132A of Act. This is in contrast to provisions of Section 148 of Act where recording of reasons in writing are sine qua non. Under Section 158BD existence of cogent and demonstrative material is germane to ITA Nos.1444 to 1450/Bang/2014 Page 13 of 19 assessing officers' satisfaction in concluding that seized documents belong to person other than searched person is necessary for initiation of action under Section 158BD. bare reading of provision indicates that satisfaction note could be prepared by assessing officer either at time of initiating proceedings for completion of assessment of searched person under Section 158BC of Act or during stage of assessment proceedings. It does not mean that after completion of assessment, assessing officer cannot prepare satisfaction note to effect that there exists income tax belonging to any person other than searched person in respect of whom search was made under Section 132 or requisition of books of accounts were made under Section 132A of Act. language of provision is clear and unambiguous. legislature has not imposed any embargo on assessing officer in respect of stage of proceedings during which satisfaction is to be reached and recorded in respect of person other than searched person. 44. In result, we hold that for purpose of Section 158BD of Act satisfaction note is sine qua non and must be prepared by assessing officer before he transmits records to other assessing officer who has jurisdiction over such other person. satisfaction note could be prepared at either of following stages: (a) at time of or along with initiation of proceedings against searched person under Section 158BC of Act; (b) along with assessment proceedings under Section 158BC of Act; and (c) immediately after assessment proceedings are completed under Section 158BC of Act of searched person. 45. We are informed by Shri Santosh Krishan, who is appearing in seven of appeals that assessing officer had not recorded satisfaction note as required under Section 158BD of Act, therefore, Tribunal and High Court were justified in setting aside orders of assessment and orders passed by first appellate authority. We do not intend to examine aforesaid contention canvassed by learned counsel since we are remanding matters to High Court for consideration of individual cases herein in light of observations made by us on scope and possible interpretation of Section 158BD of Act. 46. With these observations, appeals are disposed of." ITA Nos.1444 to 1450/Bang/2014 Page 14 of 19 provisions of Section 158BD being pari materia with provisions of Section 153C, ratio of aforesaid judgment clearly applies to present case also. reference to assessment proceedings under Section 158BC by Supreme Court in extracts quoted above is with regard to 'assessment proceedings' in relation to 'searched person' and not 'other person' as referred to in Section 158BD. bare perusal of provision contained in Section 153C of I.T. Act leaves no doubt that, as is provided under Section 158BD, where Assessing Officer, while proceeding under Section 153A against person who has been subjected to search and seizure under Section 132(1) or has been proceeded under Section 132A, 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 person other than person referred to in section 153A, then books of account or documents or assets seized or requisitioned shall be handed over to 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 provisions of section 153A. Thus, there are two stages: (1) first stage comprises of search and seizure operation under Section 132 or proceeding under Section 132A against person, who may be referred as 'the searched person'. Based on such search and seizure, assessment proceedings are initiated against 'searched person' under Section 153A. At time of initiation of such proceedings against 'searched person' or during assessment proceedings against him or even after completion of assessment proceedings against him, Assessing Officer of such 'searched person', may, if he is satisfied, that any money, document etc. belongs to person other than searched person, then such money, documents etc. are to be handed over to Assessing Officer having jurisdiction over 'such other person'. (2) second stage commences from recording of such satisfaction by Assessing Officer of 'searched person' followed by handing over of all requisite documents etc. to Assessing Officer of such 'other person', thereafter followed by issuance of ITA Nos.1444 to 1450/Bang/2014 Page 15 of 19 notice of proceedings under Section 153C read with section 153A against such 'other person'. initiation of proceedings against 'such other person' are dependant upon satisfaction being recorded. Such satisfaction may be during search or at time of initiation of assessment proceedings against 'searched person', or even during assessment proceedings against him or even after completion of same, but before issuance of notice to 'such other person' under Section 153C. Even in case, where Assessing Officer of both persons is same and assuming that no handing over of documents is required, recording of 'satisfaction' is must, as, that is foundation, upon which subsequent proceedings against 'other person' are initiated. handing over of documents etc. in such case may or may not be of much relevance but recording of satisfaction is still required and in fact it is mandatory. In this regard, ratio of judgment of Supreme Court in case of Commissioner of Income Tax-III Vs. M/s Calcutta Knitwears, Ludhiana (supra), as noted above, clearly applies to proceedings under Section 153C also. 'satisfaction' has to be in writing and can be gathered from assessment order passed in respect of 'searched person', if it is so mentioned/ recorded or from any other order, note or record maintained by Assessing Officer of 'searched person'. word 'satisfaction' refers to state of mind of Assessing Officer of person searched, which gets reflected in tangible shape/ form, when it is reduced into writing. It is conclusion drawn or finding recorded on foundation of material available. In this regard, reference may be made to pronouncements in case of C.I.T. Vs. Radhey Shyam Bansal, (2011) 337 ITR 217 (Delhi) and Division Bench judgment of this Court in case of C.I.T. Vs. Classic Enterprises reported in (2013) 358 ITR 465 (Allahabad). In case of Manish Maheshwari Vs. Assistant Commissioner of Income Tax and another, (2007) 289 ITR 341 (SC) , their Lordships had occasion to consider provisions of Sections 158BC and 158BD and held that conditions precedent for taking recourse to block assessment in terms of Section 158BC and 158BD (i) were as under: ITA Nos.1444 to 1450/Bang/2014 Page 16 of 19 "(i) Satisfaction must be recorded by Assessing Officer that any undisclosed income belongs to any person, other than person with respect to whom search was made under Section 132 of Act; (ii) books of account or other documents or assets seized or requisitioned had been handed over to Assessing Officer having jurisdiction over such other person; and (iii) Assessing Officer has proceeded under Section 158BC against such other person. 11. conditions precedent for invoking provisions of Section 158BD, thus, are required to be satisfied before provisions of said chapter are applied in relation to any person other than person whose premises had been searched or whose documents and other assets had been requisitioned under Section 132A of Act." ratio of judgment in Manish Maheshwari's case also applies to provisions of Section 153C and to facts of this case. In instant case, categorical finding has been recorded by C.I.T. (Appeals) and I.T.A.T. that there is no material showing recording of satisfaction by Assessing Officer of 'searched person' prior to issuance of notice under Section 153C to respondent assessee, i.e. 'the other person'. It was admitted case of Revenue before C.I.T. (Appeals) and I.T.A.T. that though Assessing Officer (of other person) in assessment order had stated that satisfaction for issuing notice under Section 153C was recorded, however, on examination, recording of such satisfaction alleged to be recorded by Assessing Officer was not available. In view of legal position, as already discussed above and admitted factual position as aforesaid, we are unable to accept contentions of Sri Agrawal. We are also of view that plea, which is being raised in this appeal, was not raised in grounds of appeal before I.T.A.T., however, even otherwise such plea does not have any merit. contention of Sri Agrawal that Section 153C is only procedural in nature, therefore, non-recording of prior satisfaction does not vitiate assessment order, as, such satisfaction, has been recorded ITA Nos.1444 to 1450/Bang/2014 Page 17 of 19 in assessment order passed subsequently with regard to other person, is also not acceptable for reason that Supreme Court in case of M/s Calcutta Knitwears (supra) has already considered this aspect of matter in context of Section 158BD, and after taking note of fact that said provision is machinery provision has interpreted same. In light of interpretation given by it and in view of ratio laid down therein, contention of Sri Agrawal does not hold ground. clear and plain reading of Section 153C leaves no doubt that recording of satisfaction by Assessing Officer of person searched is mandatory and it has to precede initiation of proceedings against other person (not searched). specific query was put to Sri Agrawal as to whether, on basis of material collected during search and seizure operation or during assessment, proceedings against 'searched person' or thereafter, any proceeding could be initiated against 'other person' under any other provision of Income Tax Act, he categorically replied that except Section 153C, there was no other provision under which action could be initiated against him. reliance placed by Sri Agrawal upon Division Bench judgment of this Court in case of C.I.T. Vs. Classic Enterprises (supra) far from helping his cause goes against him. We have already relied upon said judgment to explain concept of 'satisfaction' under Section 153C, which is required to be recorded in writing. However, on other issues, said judgment is distinguishable for reason that in said case, Assessing Officer had recorded his 'satisfaction' and after recording satisfaction on subject matter on 02.08.2006 handed over books of account and seized material, thus, issue, which falls for consideration in this appeal, in fact, did not arise for consideration in said appeal. In any case, case at hand being squarely covered by pronouncements of Supreme Court, as already referred, reliance placed by Sri Agrawal on aforesaid judgment does not cut much ice." 6. Now it is clear from record that satisfaction by Assessing Officer of searched person was not recorded before initiating proceedings under section 153C of Act against assessee and impugned issue is squarely covered by aforesaid judgment of jurisdictional High Court. We, therefore, have no hesitation in holding that since assessment was framed consequent to proceedings initiated under section 153C of Act, without recording satisfaction by Assessing Officer of searched ITA Nos.1444 to 1450/Bang/2014 Page 18 of 19 person, assessment is bad in law and deserves to be quashed. We accordingly set aside order of ld. CIT(A) and quash assessment framed under section 153C read with 143(3) of Act. 9. From above Tribunal s order, it is seen that Tribunal has not only followed judgment of Hon ble Allahabad High Court rendered in case of M/s. Gopi Apartment (supra), but Tribunal has also considered and followed judgment of Hon ble Apex Court reported in case of Calcutta Knitwears (supra) and judgment of Hon ble Apex Court in case of Manish Maheshwari as reported in 289 ITR 341. facts of present case as discussed above shows that in present case also, no satisfaction was recorded by AO in his capacity as AO of searched person because it is seen that so-called satisfaction note prepared by AO is in his capacity as AO of assessee, although he happens to be AO of searched persons also, it could not be shown by revenue that any satisfaction note was prepared by him as AO of searched persons and therefore, under these facts, this is to be accepted that no satisfaction was recorded by AO of searched person and therefore, this Tribunal order and those judgments of Hon ble Allahabad High Court rendered in case of M/s. Gopi Apartment (supra) and of Hon ble Apex Court rendered in case of Calcutta Knitwears (supra) and Manish Maheshwari (supra) are applicable and therefore, respectfully following these judgments, we hold that in present case, notice issued by AO u/s. 153C of I.T. Act deserves to be quashed and ITA Nos.1444 to 1450/Bang/2014 Page 19 of 19 accordingly, we quash these assessment orders framed by AO u/s. 153C r.w.s. 143(3) of I.T. Act. Accordingly, additional ground is allowed in all seven years. 10. In view of our decision with regard to additional ground as above, other grounds raised by assessee in these appeals do not require any separate adjudication. 11. In result, all seven appeals of assessee are allowed. Pronounced in open court on this 17th day of October, 2016. Sd/- Sd/- ( SUNIL KUMAR YADAV ) (A.K. GARODIA ) Judicial Member Accountant Member Bangalore, Dated, 17th October, 2016. /D S/ Copy to: 1. Appellant 2. Respondents 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file By order Assistant Registrar, ITAT, Bangalore. Gali Janardhana Reddy v. Deputy Commissioner of Income Tax, Circle 1(3), Bangalore