The Commissioner Of Income Tax,Coimbatore v. R.krishnamurthy

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 27.01.2020 CORAMTHE HON'BLE DR.JUSTICE VINEET KOTHARIANDTHE HON'BLE MR.JUSTICE R.SURESH KUMAR Tax Case Appeal Nos.984 & 985 of 2010 The Commissioner of Income Tax,Coimbatore...Appellant in both appeals Vs. R.Krishnamurthy ..Respondent in both appeals Appeals filed under Section 260A of the Income Tax Act,1961 against the order of the Income Tax Appellate Tribunal 'D'Bench, Chennai dated 18.12.2009 in I.T.(SS)A.No.129/Mds/2004 andin C.O.No.71/Mds/2005 in IT.(SS)A. No.129/Mds/2004 respectively,preferred against the order of the Commissioner of Income Tax(Appeals), Coimbatore, in ITA.No.405/01-02, dated 25.06.2004filed against the Assessment order dated 28.09.2000 for theBlock Assessment year 89-90 to 99-2000 on the file of the DeputyCommissioner of Income Tax, Central Circle -I, Coimbatore.For Appellant : Mr.T.R.Senthilkumar Senior Standing Counsel Asst. by Mr.K.G.Usha Rani Standing Counsel for IT Department The learned counsel for the Appellant/Revenue submittedthat the Tribunal had quashed the block assessments for theAssessee for the following observations:".... In this case, un-disputably there is nosatisfaction recorded by the Assessee Officer beforeissuing the notice under sec.158BD. We have alsoperused the block assessment passed under sec.158BC inthe case of Veeraswamy Chettiar and found that theAssessing Officer has not even recorded any materialfound during the search showing the undisclosed incomeof the assessee. Therefore, in the absence of mandatoryrequirement of recording of satisfaction and moreoverthere was no material found during the search, theAssessing Officer was lacking the jurisdiction to https://hcservices.ecourts.gov.in/hcservices/ invoke the provisions of sec.158BD against theassessee. In view of these facts and circumstances aswell as the legal proposition, we hold that theproceedings initiated under sec.158BD in the case ofthe assessee is also invalid and void ab initio.Accordingly, we set aside the order of AssessingOfficer and cancel the block assessment in the case ofthe assessee." 2.He however submitted that the CBDT had recently issued aCircular No.24/2015 dated 31.12.2015, according to which, wheresatisfaction is not recorded by the competent authority thenappeals against such orders of Tribunal granting relief to theAssessee has to be withdrawn by the Revenue Department. The saidCircular No.24/2015 dated 31.12.2015 is also quoted below forready reference:"RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C OF THEACT. The issue of recording of satisfaction for the purposes ofsection I58BD/153C has been subject matter of litigation. 2. The Hon'ble Supreme Court in the case of M/s CalcuttaKnitwears in its detailed judgment in Civil Appeal No.3958 of2014 dated 12.3.2014 = 2014-TIOL-30-SC-IT has laid down that forthe purpose of Section 158BD of the Act, recording of asatisfaction note is a prerequisite and the satisfaction notemust be prepared by the AO before he transmits the record to theother AO who has jurisdiction over such other person u/s 158BD.The Hon’ble Court held that “the satisfaction note could beprepared at any of the following stages: 3. Several High Courts have held that the provisions of sectionl53C of the Act are substantially similar/pari-materia to theprovisions of section 158BD of the Act and therefore, the aboveguidelines of the Hon’ble SC, apply to proceedings u/s 153C ofthe lT Act, for the purposes of assessment of income of otherthan the searched person. This view has been accepted by CBDT. 4. The guidelines of the Hon’ble Supreme Court as referred to inpara 2 above, with regard to recording of satisfaction note, may https://hcservices.ecourts.gov.in/hcservices/ 3. Several High Courts have held that the provisions of sectionl53C of the Act are substantially similar/pari-materia to theprovisions of section 158BD of the Act and therefore, the aboveguidelines of the Hon’ble SC, apply to proceedings u/s 153C ofthe lT Act, for the purposes of assessment of income of otherthan the searched person. This view has been accepted by CBDT. 4. The guidelines of the Hon’ble Supreme Court as referred to inpara 2 above, with regard to recording of satisfaction note, may https://hcservices.ecourts.gov.in/hcservices/ be brought to the notice of all for strict compliance. It isfurther clarified that even if the AO of the searched person andthe “other person” is one and the same, then also he is requiredto record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue ofrecording of satisfaction note should also be decided in thelight of the above judgement. Accordingly, the Board herebydirects that pending litigation with regard to recording ofsatisfaction note under section 158BD/l53C shouldbewithdrawn/not pressed if it does not meet the guidelines laiddown bythe Apex Court. F.No.279/Misc./140 /2015/ITJSd/- (Ramanjit Kaur Sethi)DCIT (OSD)(ITJ)CBDT,New Delhi. 3.In view of the aforesaid Circular, Mr.T.R.Senthil Kumardoes not want to press the appeals on merits and seeks leave ofthis Court to withdraw the same. Mr.Venkat Narayanan, learnedcounsel for the Respondent/Assessee has not opposed the same.Accordingly, the appeals are dismissed as withdrawn. No costs.Sd/-Assistant Registrar(C.S.VIII) /True Copy/ Sub Assistant Registrar To 1.The Assistant Registrar,Income Tax Appellate Tribunal,'D' Bench, Chennai. 2.The Commissioner of Income Tax (Appeals),Coimbatore. 3.The Deputy Commissioner of Income Tax,Central Circle -I, Coimbatore. +1cc to Mr.T.R.Senthil Kumar, Advocate Sr.No.6048 +1cc to Mr.Subbaraya Aiyar Padmanabhan, Advocate Sr.No.6045 AKM/27.02.2020 /3p-6c/ https://hcservices.ecourts.gov.in/hcservices/ T.C.A.Nos.984 & 985 of 2010