Judgment in TCA Nos.984 & 985/2010 dated 27.01.2020 (The Commissioner of Income Tax V. R.Krishnamurthy) 1/6 IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.01.2020 CORAM HON'BLE DR.JUSTICE VINEET KOTHARI AND HON'BLE MR.JUSTICE R.SURESH KUMAR Tax Case Appeal Nos.984 & 985 of 2010 Commissioner of Income Tax, Coimbatore. Appellant in both appeals Vs. R.Krishnamurthy Respondent in both appeals Appeals filed under Section 260A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal 'D' Bench, Chennai dated 18.12.2009 in C.O.No.71/Mds/2005 in IT.(SS)A. No.129/Mds/2004. For Appellant : Mr.T.R.Senthilkumar Senior Standing Counsel Asst. by Mr.K.G.Usha Rani Standing Counsel for IT Department For Respondent : Mr.Venkat Narayanan For Subharaya Aiyar Padmanaban http://www.judis.nic.in Judgment in TCA Nos.984 & 985/2010 dated 27.01.2020 (The Commissioner of Income Tax V. R.Krishnamurthy) 2/6 COMMON JUDGMENT (Judgment of Court was delivered by DR.VINEET KOTHARI, J.) learned counsel for Appellant/Revenue submitted that Tribunal had quashed block assessments for Assessee for following observations: ".... In this case, un-disputably there is no satisfaction recorded by Assessee Officer before issuing notice under sec.158BD. We have also perused block assessment passed under sec.158BC in case of Veeraswamy Chettiar and found that Assessing Officer has not even recorded any material found during search showing undisclosed income of assessee. Therefore, in absence of mandatory requirement of recording of satisfaction and moreover there was no material found during search, Assessing Officer was lacking jurisdiction to invoke provisions of sec.158BD against assessee. In view of these facts and circumstances as well as legal proposition, we hold that proceedings initiated under sec.158BD in case of assessee is also invalid and void ab initio. Accordingly, we set aside order of Assessing Officer and cancel block assessment in case of assessee." http://www.judis.nic.in Judgment in TCA Nos.984 & 985/2010 dated 27.01.2020 (The Commissioner of Income Tax V. R.Krishnamurthy) 3/6 2.He however submitted that CBDT had recently issued Circular No.24/2015 dated 31.12.2015, according to which, where satisfaction is not recorded by competent authority then appeals against such orders of Tribunal granting relief to Assessee has to be withdrawn by Revenue Department. said Circular No.24/2015 dated 31.12.2015 is also quoted below for ready reference: "RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C OF ACT. issue of recording of satisfaction for purposes of section I58BD/153C has been subject matter of litigation. 2. Hon'ble Supreme Court in case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No.3958 of 2014 dated 12.3.2014 = 2014-TIOL-30-SC-IT has laid down that for purpose of Section 158BD of Act, recording of satisfaction note is prerequisite and satisfaction note must be prepared by AO before he transmits record to other AO who has jurisdiction over such other person u/s 158BD. Hon ble Court held that satisfaction note could be prepared at any of following stages: a) at time of or along with initiation of proceedings against searched person under section 158BC of Act: or (b) in course of assessment proceedings under section 158BC of Act; or (c) immediately after assessment proceedings are completed under section 158BC of Act of searched person." http://www.judis.nic.in Judgment in TCA Nos.984 & 985/2010 dated 27.01.2020 (The Commissioner of Income Tax V. R.Krishnamurthy) 4/6 3. Several High Courts have held that provisions of section l53C of Act are substantially similar/pari-materia to provisions of section 158BD of Act and therefore, above guidelines of Hon ble SC, apply to proceedings u/s 153C of lT Act, for purposes of assessment of income of other than searched person. This view has been accepted by CBDT. 4. guidelines of Hon ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to notice of all for strict compliance. It is further clarified that even if AO of searched person and other person is one and same, then also he is required to record his satisfaction as has been held by Courts. 5. In view of above, filing of appeals on issue of recording of satisfaction note should also be decided in light of above judgement. Accordingly, Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD /l53C should be withdrawn/not pressed if it does not meet guidelines laid down by Apex Court. F.No.279/Misc./140 /2015/ITJ Sd/- (Ramanjit Kaur Sethi) DCIT (OSD)(ITJ) CBDT,New Delhi. http://www.judis.nic.in Judgment in TCA Nos.984 & 985/2010 dated 27.01.2020 (The Commissioner of Income Tax V. R.Krishnamurthy) 5/6 3.In view of aforesaid Circular, Mr.T.R.Senthil Kumar does not want to press appeals on merits and seeks leave of this Court to withdraw same. Mr.Venkat Narayanan, learned counsel for Respondent/Assessee has not opposed same. Accordingly, appeals are dismissed as withdrawn. No costs. (V.K.J.) (R.S.K.J.) 27.01.2020 Sgl To Income Tax Appellate Tribunal, 'D' Bench, Chennai. http://www.judis.nic.in Judgment in TCA Nos.984 & 985/2010 dated 27.01.2020 (The Commissioner of Income Tax V. R.Krishnamurthy) 6/6 DR.VINEET KOTHARI, J. And R. SURESH KUMAR, J. Commissioner of Income-tax, Coimbatore v. R. Krishnamurthy