REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.2006-2007 OF 2020 (Arising out of SLP(C) Nos. 8449-50/2017) M/S SUPER MALLS PRIVATE LIMITED APPELLANT VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX 8, NEW DELHI RESPONDENT WITH CIVIL APPEAL NOS.2008-2009 OF 2020 (Arising out of SLP(C) Nos. 8453-54/2017) CIVIL APPEAL NOS.2010-2011 OF 2020 (Arising out of SLP(C) Nos. 8451-52/2017) CIVIL APPEAL NOS.2012-2013 OF 2020 (Arising out of SLP(C) Nos. 8455-56/2017) JUDGMENT M.R. SHAH, J. As common question of law and facts arise in this group of appeals, and Signature Not Verified are with respect to common assessee, but with respect to different assessment Digitally signed by JAYANT KUMAR ARORA Date: 2020.03.05 16:42:03 IST Reason: 1 years, all these appeals are being decided together by this common Judgment and Order. 2. For sake of convenience, facts of Civil Appeals arising from Special Leave Petition (C) Nos. 8449-8450/2017 arising from I.T.A. No. 453/2016 & Review Petition No. 16/2017 for Assessment Year 2008-09 are stated and considered. facts in nutshell are as under: 2.1 By virtue of authorization of Director of Income Tax (Investigation), Chandigarh, search and seizure operation under Section 132(1) of Income Tax Act, 1961 (hereinafter referred to as Act ) was carried out on 8/9.04.2010 at residential/business premises of Shri Tejwant Singh and Shri Ved Prakash Bharti group of companies at Karnal, Panipat and Delhi. survey under Section 133A of Act was also carried out at business premises of M/s Super Mall (P) Limited assessee, at Karnal and New Delhi. That during course of search on 8/9.04.2010 at residence of Shri Ved Prakash Bharti, Director in assessee company M/s Super Mall (P) Limited, pen drive was found and seized from vehicle parked in front of Shri Ved Prakash Bharti s residence. That some documents were seized after taking out print from above said pen drive. said documents contained details of cash receipts on sale of shops/offices at M/s Super Mall, Karnal, also besides other concerns. That as consequence of aforesaid search and seizure operation, notice was issued to assessee M/s Super Mall (P) Limited (hereinafter referred to as Assessee ) under Section 2 153C of Act by Assessing Officer. At this stage, it is required to be noted that co-incidentally it so happened that Assessing Officer of assessee and Assessing Officer of search persons Tejwant Singh and Ved Prakash Bharti was same. assessee filed its return for assessment year 2008-09. assessment for assessment year 2008-09 was finalised by Assessing Officer and additions were made in assessment year 2008-09. assessment order was subject matter of appeal before Commissioner of Income Tax (Appeals). assessment order was challenged mainly on ground that satisfaction note recorded under Section 153C of Act in respect of assessee, i.e., third party, was invalid. That learned CIT (Appeals) dismissed assessee s appeal. However, learned Income Tax Appellate Tribunal (for short ITAT ) allowed appeal preferred by assessee and held that satisfaction note recorded under Section 153C of Act in respect of assessee, i.e., third party, was invalid. In appeal before High Court, by impugned Judgment and Order, High Court has allowed said appeal preferred by Revenue and has observed and held that there was compliance of Section 153C of Act. High Court also observed that Assessing Officer was justified in recording satisfaction that documents so seized belonged to assessee. Consequently, High Court has set aside order passed by learned ITAT and remanded matter to learned ITAT to hear appeals afresh on merits. At this stage, it is required to be noted that learned ITAT 3 set aside order passed by learned CIT(Appeals) solely on satisfaction note being invalid and did not enter into merits. Therefore, High Court set aside learned ITAT s decision with respect to satisfaction note recorded by Assessing Officer under Section 153C of Act. Hence, present appeal. 2.2 Therefore, short question which is posed for consideration of this Court is with respect to satisfaction note recorded by Assessing Officer, as required under Section 153C of Act. 3. Shri R.P. Bhatt, learned Senior Advocate appearing on behalf of assessee has made following submissions: 3.1 That in facts and circumstances of case, High Court has materially erred in observing and holding that Assessing Officer has complied with provisions of Section 153C of Act; 3.2 That in present case there was no satisfaction note by Assessing Officer of searched party. That as per scheme of Section 153C of Act, Assessing Officer of searched person, i.e., Directors in this case has to be firstly satisfied that any money, jewellery or other valuable articles, books of accounts or documents seized or requisitioned belong to , i.e., in this case, assessee company, person other than person referred to under Section 153A of Act. It is submitted that thereafter and on being satisfied that books of accounts or documents or assets so seized or requisitioned shall be handed over by Assessing Officer of searched person, i.e., 4 Directors in this case to Assessing Officer having jurisdiction over such other person i.e., assessee company. That aforesaid requirements before issuing notice under Section 153C of Act are held to be mandatory by this Court in catena of decisions. Reliance is placed upon decision of this Court in case of Commissioner of Income Tax v. Calcutta Knitwears (2014) 6 SCC 444; decision of Delhi High Court in case of Pepsi Food Pvt. Ltd. v. Assistant Commissioner of Income Tax 2014 (367) ITR 112 (Delhi); decision of Gujarat High Court in case of Commissioner of Incoem Tax v. Bipinchandra Chimanlal Doshi 2017 (395) ITR 632 (Gujarat); and decision of Delhi High Court in case of Ganpati Fincap Service Pvt. Ltd. v. Commissioner of Income Tax 2017 (395) ITR 692 (Delhi); 3.3 That even CBDT also issued Circular explaining requirements to be followed by Assessing Officer before issuing notice under Section 153C of Act. That said Circular has been referred to and considered by Delhi High Court in case of Ganpati Fincap (supra) and after considering various decisions of different High Courts, it is observed that when proceedings are proposed to be initiated under Section 153C of Act against other person , it has to be preceded by satisfaction note by Assessing Officer of searched person. It is further observed that he will record in his satisfaction note that seized documents belong to other person . That in present case there was no satisfaction note by Assessing Officer of searched person. That there is non-compliance of provisions of Section 5 153C of Act as well as even Circular issued by CBDT and therefore learned ITAT rightly set aside assessment order. 3.4 Making above submissions and relying upon aforesaid decisions, it is prayed to allow present appeals. 4. Shri Arijit Prasad, learned Senior Advocate appearing on behalf of Revenue, while opposing present appeal/s has vehemently submitted that in facts and circumstances of case and after considering satisfaction note recorded by Assessing Officer, High Court has rightly observed and held that there is sufficient compliance of Section 153C of Act. In support he has made following submissions: 4.1 That in present case, Assessing Officer of assessee and Assessing Officer of searched person was same and therefore if one looks at satisfaction note, it can be seen that there is satisfaction note by Assessing Officer of searched person also. It is submitted that as Assessing Officer was same, there was no question of thereafter transmitting documents so seized from searched person to another Assessing Officer as he himself was Assessing Officer of searched person as well as Assessing Officer of assessee. Therefore, there was sufficient compliance of requirements under Section 153C of Act. 4.2 That even as observed and held by Delhi High Court in case of Ganpati Fincap (supra), in case Assessing Officer of searched person and other person is same, there need not be two separate satisfaction 6 notes recorded by Assessing Officer of searched person, where he is also Assessing Officer of other person. 4.3 Making above submissions and relying upon aforesaid decision, it is prayed to dismiss present appeals. 5. We have heard learned counsel for respective parties at length. 5.1 As observed hereinabove, short question which is posed for consideration of this Court is, whether there is compliance of provisions of Section 153C of Act by Assessing Officer and all conditions which are required to be fulfilled before initiating proceedings under Section 153C of Act have been satisfied or not? 6. This Court had occasion to consider scheme of Section 153C of Act and conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of Act in case of Calcutta Knitwears (supra) as well as by Delhi High Court in case of Pepsi Food Pvt. Ltd. (supra). As held, before issuing notice under Section 153C of Act, Assessing Officer of searched person must be satisfied that, inter alia, any document seized or requisitioned belongs to person other than searched person. That thereafter, after recording such satisfaction by Assessing Officer of searched person, he may transmit records/documents/things/papers etc. to Assessing Officer having jurisdiction over such other person. After receipt of aforesaid satisfaction and upon examination of such other documents relating to such other person, jurisdictional Assessing Officer may proceed 7 to issue notice for purpose of completion of assessment under Section 158BD of Act and other provisions of Chapter XIV-B shall apply. 6.1 It cannot be disputed that aforesaid requirements are held to be mandatorily complied with. There can be two eventualities. It may so happen that Assessing Officer of searched person is different from Assessing Officer of other person and in second eventuality, Assessing Officer of searched person and other person is same. Where Assessing Officer of searched person is different from Assessing Officer of other person, there shall be satisfaction note by Assessing Officer of searched person and as observed hereinabove that thereafter Assessing Officer of searched person is required to transmit documents so seized to Assessing Officer of other person. Assessing Officer of searched person simultaneously while transmitting documents shall forward his satisfaction note to Assessing Officer of other person and is also required to make note in file of searched person that he has done so. However, as rightly observed and held by Delhi High Court in case of Ganpati Fincap (supra), same is for administrative convenience and failure by Assessing Officer of searched person, after preparing and dispatching satisfaction note and documents to Assessing Officer of other person, to make note in file of searched person, will not vitiate entire proceedings under Section 153C of Act against other person. At same time, satisfaction note by Assessing Officer of searched person 8 that documents etc. so seized during search and seizure from searched person belonged to other person and transmitting such material to Assessing Officer of other person is mandatory. However, in case where Assessing Officer of searched person and other person is same, it is sufficient by Assessing Officer to note in satisfaction note that documents seized from searched person belonged to other person. Once note says so, then requirement of Section 153C of Act is fulfilled. In case, where Assessing Officer of searched person and other person is same, there can be one satisfaction note prepared by Assessing Officer, as he himself is Assessing Officer of searched person and also Assessing Officer of other person. However, as observed hereinabove, he must be conscious and satisfied that documents seized/recovered from searched person belonged to other person. In such situation, satisfaction note would be qua other person. second requirement of transmitting documents so seized from searched person would not be there as he himself will be Assessing Officer of searched person and other person and therefore there is no question of transmitting such seized documents to himself. 6.2. Now let us consider from satisfaction note recorded by Assessing Officer, in present case. Whether there is sufficient compliance of Section 153C of Act or not. satisfaction note reads as under: 9 Name and address of assessee : M/s Super Malls (P) Ltd. Sector 12, HUDA, Karnal Regd. Office at 51, Transport Centre Punjabi Bagh, New Delhi. PAN : AAICS2163F Status : Company Reasons/Satisfaction note for taking up case of M/s Super Malls (P) Ltd. Sector-12, HUDA, Karnal Regd. Office at 51, Transport Centre, Punjabi Bagh, New Delhi under Section 153C of Income Tax Act, 1961. jurisdiction of this case has been assigned to this Office u/s 127 of Income Tax Act, 1961 by worthy Commissioner of Income Tax-III New Delhi vide order F. No. CITIII/Delhi/Centralization/1012-1312455 dated 15.01.2013. By virtue of authorization of Director of Income Tax (Investigation), Chandigarh, search & seizure operation u/s 132(1) of Act was carried out on 08/09.04.2010 at residential/business premises of Sh. Tejwant Singh & Sh. Ved Parkash Bharti Group of cases, Karnal, Panipat & Delhi and survey u/s 133A of IT. Act, 1961 was also carried out at business premises of M/s Super Mall (P) Ltd. Karnal & New Delhi. During course of search on 08/09.04.2010 at residence of Sh. Ved Parkash Bharti who is Director in assessee company M/s Super Mall (P) Ltd., Pen drives were found and seized as per Annexure-3 from vehicle No. HR06N-0063 parked in front of residence of Sh. Ved Parkash Bharti. Some documents as per Annexure A-1 were seized after taking print out of above said pen drives. These documents contain details of cash receipt on sale of shop/offices at M/s Super Mall, Karnal also beside other concerns. These documents are required for assessment proceedings. During statement of Sh. Ved Parkash Bharti at time of search, he has also stated that these documents pertain to him and M/s Super Mall (P) Ltd., Karnal in which he is Director. In view of above and as per provisions of sub-section 91 of Section 153C of Act, I am satisfied that document seized from residence of Sh. Ved Parkash Bharti belongs to person 10 i.e. Super Mall (P) Ltd., other than person referred in section 153A. Accordingly, it is directed to issue such person (M/s Super Mall (P) Ltd.) notice and assess and reassess income in accordance with provision of section 153A of Act. Dated: 22.02.2013 sd/- (VED PARKASH KALIA) From aforesaid satisfaction note, it emerges that Assessing Officer is satisfied that documents containing details of cash receipts on sale of shop/offices at M/s Super Mall, Karnal belonged to other person assessee M/s Super Mall. He is also satisfied that documents/pen drive are seized from searched person. He is also satisfied that documents so seized from residence of searched person/Ved Prakash Bharti belonged to assessee other person. Therefore, Assessing Officer was satisfied and it is specifically mentioned that documents so seized belonged to assessee other person. Therefore, it cannot be said that mandatory requirements of Section 153C of Act, in facts and circumstances of case, have not been complied with. satisfaction note by Assessing Officer clearly states that documents so seized belonged to other person assessee and not searched person. Thus, High Court is justified in observing that requirement of Section 153C has been fulfilled. On facts, we are in complete agreement with view taken by High Court on requirement of Section 153C of Act being fulfilled by Assessing Officer before initiating proceedings under Section 153C of Act. 11 7. In view of above and for reasons stated above, all these APPEALS fail and same deserve to be dismissed and are accordingly dismissed. Now, learned ITAT shall decide and dispose of appeals afresh on merits, at earliest, in accordance with law, as observed by High Court in impugned Judgment(s) and Order(s). J. [ASHOK BHUSHAN] NEW DELHI; J. MARCH 05, 2020. [M.R. SHAH] 12 Super Malls Private Limited v. Principal Commissioner of Income-tax 8, New Delhi