IN HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS 10 T H DAY OF OCTOBER, 2019 PRESENT HON BLE MR.JUSTICE ALOK ARADHE AND HON BLE MR.JUSTICE P.G.M. PATIL I.T.A. NO.100037 OF 2018 BETWEEN 1. PR COMMISSIONER OF IN COME TAX (CENTRAL), BEN GALURU. 2. DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, BELAGAVI . ... APPELLANTS (BY SRI. Y.V .RAVI RAJ, ADV OCATE) AND M/S STAR PV G EXPORTS, C/O PRASANNA V GHOTAGE, 202, CHIDAMBAR NAGAR, ANGOL, BELAGAVI- 590006, PAN: AAFFS 2661 H. ... RES PONDENT (BY SRI. SANGRA M S.KULKARNI , AD VOCATE) THIS ITA IS FILED UNDER SECTION 260A OF INCOME TAX ACT, 1961 PRAYING T O FORMULATE SUBSTANTIAL QUESTION OF LAW AS STATED ABOV E; ALLOW A PPEAL AND SET ASIDE ORDERS PASSED BY INCOME TAX PPELLATE TRIBUNAL, PANAJI BENCH, PANAJI IN C.O NO.11/ PAN/2017, DATED 07.12.2017 AND CONFIRM ORDER DATED -2- 21.03.2014 PA SSED BY T HE ASSISTANT COMMISSIONER OF INCOME TAX OFFICER, CENTRAL CIRCLE- 2, BELAGA VI FOR A.Y .2007- 08 AND ETC. THIS APPEAL COM ING ON F OR ADM ISSION THIS DAY, ALOK ARADHE, J, DELIVERED F OLLOWING: JUDGMENT Sri. Y. V. Raviraj learned counsel for Revenue. 2. Sri. Sangram S Kulkarni, learned counsel for respondent. 3. Heard on question of admission. 4. This is appeal under Section 260A of Income Tax Act, 1961, (hereinafter referred to as Act for short) against order dated 07.12.2017 passed by Income Tax Appellate Tribunal, Panaji Bench, Panaji. 5. facts giving rise to filing of appeal briefly stated that respondent-assessee is engaged in business of trading of iron ore. assessment was completed under Section 144 read with Section 153C of Act by making addition of -3- Rs.3,00,63,324/- and income of respondent was determined at Rs.8,05,87,220/-. Being aggrieved, respondent preferred appeal before Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) deleted addition on ground that addition cannot be made on items without any incriminating material found during course of search. Being aggrieved, Revenue approached Income Tax Appellate Tribunal by filing appeal, which has been dismissed by impugned order dated 07.12.2017. By way of cross-objection, Assessee raised issue with regard to non-recording of satisfaction before invoking provision of Section 153C of Act. In aforesaid factual background, this appeal has been filed. 6. Learned counsel for Revenue, while inviting attention of this Court to note dated 06.01.2014, submitted that on perusal of aforesaid note it is evident that conditions, prescribed under -4- Section 153C of Act, were satisfied by Assessing Officer. However, aforesaid fact has not been appreciated either by Commissioner of Income Tax or by Income Tax Appellate Tribunal. 7. On other hand, learned counsel for assessee has supported order passed by Tribunal and has placed reliance on decision of Hon ble Supreme Court in case of Commissioner of Income Tax III versus M/s.Calcutta Knitwears, Ludhiana rendered in Civil Appeal No.3958 of 2014 on 12th March, 1947 as well as judgment of this Court in ITA No.528/2014 c/w ITA Nos.529/2014, 530/2014 and 531/2014 dated 15th of December, 2015. 8. We have considered submissions made by learned counsel for parties and have perused records. 9. Ministry of Finance, Government of India has issued circular namely Circular No.24/2015, which -5- deals with recording of satisfaction note under Section 158BD/153C of Act. In view of decision of Hon ble Supreme Court in case of M/s.Calcutta Knitwears (supra) it has been held that guidelines laid down by Hon ble Supreme Court in aforesaid decision has to be strictly followed while recording of satisfaction note under Section 158BD/153C of Act. Thus, it is evident that before invoking proceedings under Section 153C of Act, following conditions are required to be complied with. (i) AO of such person has to be satisfied that no money, bullion, jewellery or any other valuable article or things or books of account of documents seized or requisitioned belongs or belonging to person other than persons with respect to whom search has been initiated, (ii) books of account, documents or assets seized or requisitioned shall be -6- handed over to AO having jurisdiction for such other person, and (iii) that AO shall proceed against such other person in same manner as person searched to make assessment or reassessment in accordance with provisions of Section 153A. 10. We have carefully gone through satisfaction note recorded by Assessing Officer dated 06th of January, 2014. aforesaid assessment note nowhere satisfies requirements referred to, in preceding paragraph. Before Tribunal, Revenue could not adduce any cogent material or evidence to prove that addition in all assessment years was made in case of Assessee in Assessment completed under Section 144 read with section 153C of Act on basis of any incriminating material or document being found during course of search. It is further noticed that even no such incriminating material or document has been referred to by -7- Assessing Officer during course of search while completing Assessment. order passed by Assessing Officer has been passed in contravention of law laid down by Hon ble Supreme Court in case of M/s. Calcutta Kintwears (supra). Therefore, appeal preferred by Assessee was rightly allowed by Commissioner of Income Tax (Appeals) and appeal preferred by Revenue was rightly dismissed by Income Tax Appellate Tribunal. No substantial question of law arises for consideration in this appeal. 11. In view of preceding analysis, we do not find any merit in this appeal. Same fails and hereby dismissed. Sd/- JUDGE Sd/- JUDGE yan Pr Commissioner of Income-tax (Central), Bengaluru / Dy Commissioner of Income-tax, Central Circle, Belagavi v. Star PVG Export