Income Tax Appellate Tribunal - Allahabad
Smt. Asha Agrawal W/O Sri Mahendra Kumar ... vs Acit (Central Circle) , Allahabad on 7 December, 2022
MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017
Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P.
Assessment Year: Block Period 01.04.1988 to 23.08.1998
IN THE INCOME TAX APPELLATE TRIBUNAL
ALLAHABAD BENCH,ALLAHABAD
BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER
AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER
Miscellaneous Application (M.A.) No.15/Alld/2022
[Arising out of ITA No. 128 /Alld/2017]
Assessment Year: Block Period 01.04.1988 to 23.08.1998
Smt. Asha Agrawal, ACIT, Central Circle,
W/o Shri Mahendra Kumar Agrawal, v. AayakarBhawan
447, Malviya Nagar Allahabad-211001, U.P.
Allahabad-211003, U.P.
PAN: AARPA1322Q
(Appellant) (Respondent)
Miscellaneous Application (M.A.) No.16/Alld/2022
[Arising out of ITA No. 129 /Alld/2017]
Assessment Year: Block Period 01.04.1988 to 23.08.1998
Shri Mahendra Kumar Agrawal (HUF), ACIT, Central Circle,
447, Malviya Nagar, v. AayakarBhawan,
Allahabad-211003,U.P. Allahabad-211001,U.P.
PAN: AAGHM3561E
(Appellant) (Respondent)
Miscellaneous Application (M.A.) No.17/Alld/2022
[Arising out of ITA No. 130 /Alld/2017]
Assessment Year: Block Period 01.04.1988 to 23.08.1998
Shri Mahabir Prasad Agrawal (HUF), ACIT, Central Circle,
77, Kuldabad v. AayakarBhawan,
Allahabad-211003,U.P. Allahabad-211001,U.P.
PAN: AAEHM2447M
(Appellant) (Respondent)
Appellant by: Adv. K.K. Srivastava & Shri R C Agrawal,
CA
1
MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017
Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P.
Assessment Year: Block Period 01.04.1988 to 23.08.1998
Respondent by: Sh. A.K. Singh, Sr. D.R.
Date of hearing: 09.09.2022
Date of pronouncement: 07.12.2022
ORDER
[[[ PER: SHRIRAMIT KOCHAR, ACCOUNTANTMEMBER:
These three Miscellaneous Application's bearing M.A. No's. 15, 16 and 17/Alld/2022 have been filed by three different assessee's namely Mrs. Asha Agrawal, M/s Mahendra Kumar Agrawal(HUF) and M/s. Mahabir Prasad Agrawal(HUF) respectively , which have arisen out of ITA No. 128, 129 and 130/Alld/2017 respectively, all for the Block Period 01.04.1988 to 23.08.1998. These three MA's were heard by Division Bench(DB) of Income Tax Appellate Tribunal, Allahabad Bench, Allahabad in the physical hearing mode in the Open Court proceedings, and since all these three MA's involve common issues, they were heard together by DB and are disposed off by this common order. The tribunal has passed detailed appellate order in the case of these three assessee's vide common order in ITA No. 128, 129 and 130/Alld/2017 for Block Period 01.04.1988 to 23.08.1998, dated 29th April, 2022.
2. First we shall take up MA filed by Smt. Asha Agrawal in MA No. 15/Alld/2022 arising out of ITA No. 128/Alld/2017 for Block Period 01.04.1988 to 23.08.1998.
The MA filed by assessee is now reproduced hereunder:
"Application u/s 254(2) of the IT Act for rectifying the mistakes as crept in the Tribunal's order dated 29.04.2022 Hon'ble Sirs, Respectfully it is submitted as under.-
1. That the appellant Smt. Asha Agrawal is an "individual" and the jurisdiction at the time of passing the Block Assessment Order dated 30.5.2002, lied with Assistant Commissioner of Income tax. Central Circle, Allahabad. The appeal of the present applicant was decided by a 2 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 consolidated order dated 29.04.2022 along with the appeals of Mahendra Kumar Agrawal (HUF) (ITA No. 129/ALLD/2017) and Mahabir Prasad Agrawal (HUF) (ITA No. 130/ALLD/2017). Since the facts as involved in all the three appeals were almost similar, hence, the Hon'ble Tribunal passed a consolidated order dated 29.04.2022 in respect of all the three appellants. However, the applicant-assesse Smt. Asha Agrawal has been advised by her counsel to file a separate Miscellaneous Application before the Hon'ble Bench, hence, this Misc.
Application under section 254(2) is being filed in the case of Smt. Asha Agrawal (ITA No. 128/ Alld.2017) for rectifying the mistakes as crept in the order dated 29.04.2022 as detailed in succeeding paragraphs.
2. As per department's record, the applicant, who was not subjected to search, was only issued a notice u/s 158BC of the Income Tax Act, 1961 dated 05.05.2000 by the ld. Jt.CIT(Assessment), Spl. Range, Allahabad. Later on the jurisdiction in the case of the applicant was transferred to the Office of the ACIT, Central Circle, Allahabad, who passed the Block Assessment Order u/s 158BC(c) read with section 158BD of the Act dated 30.05.2002. Though it was a case of "other person not subjected to search" (before amendment w.e.f. 01.06.2002) but no notice under the provisions of Section 158BD of the IT.Act, 1961 as mandate under the relevant provisions, was ever issued to the applicantby the income tax authority either at the time assuming jurisdiction over the case of the applicant-assessee or lateron during the course of Block Assessment Proceedings.
3. The Ld. CIT(A) having jurisdiction over the case of the appellant dismissed appeal of the applicant vide order dated 16.02.2017, the crux of his order is common in all the cases and the same is reproduced in para 13(b) of the written submission filed on 07.09.2021 in the case of applicant (HUF). The Ld.CIT(A), Allahabad, in para 3.3 of his order dated 16.02.2017 has held that "it is clear that the impugned proceedings were, in fact proceedings u/s 158BD of the Act and the proceeding for initiating such proceedings against the assessee is also through the issue of notice u/s 158 BC itself not mentioning the fact that the said notice was issued read with section 158BD, would not vitiate the proceedings" As against the said order of the Ld. CIT(A), the applicant approached this Hon'ble Tribunal for justice.
4. As the case of the applicant related to block assessment under Chapter XIV-B of the Income Tax Act, hence, the Hon'ble Bench directed the ldSr.DR vide Order Sheet Entry dated 23.02.2021 to produce the Assessee's Record before the Bench with proof of service of Nature (Notice). On the request of Counsel Hon'ble Bench vide order sheet entry dated 24.03.2021, directed the ld. Departmental Representative to produce for inspection the Block Assessment Case Record of the applicant before his Counsel. On inspection of the case record, as produced by the ld. Dy.CIT(Assessment), Circle-1, Allahabad (Who held the jurisdiction over the case at that time), was found that the while issuing the jurisdictional Notice u/s 158BC dated 05.05.2000, the then original Assessing Officer did not comply with the mandatory provisions of Section 158BD of the I.T.Act, 1961 as it stood at the relevant time (in the year 2000). On the next date i.e. 09.09.2021 the Hon'ble Bench gave last opportunity to the ld. Sr.DR to produce the "Original Satisfaction Note" before the Court. Hon'ble Senior Member also observed in the Open Court that in the absence of "Satisfaction Note" it would not be possible for them to decide the appeal of the applicant, The Order Sheet Entry Reads as under:
"09.09.2021: On request of the Id.CIT(DR), hearing adjd. to 11.10.2021. Last opportunity is granted to produce "Satisfaction Note".
5. Even after repeated opportunities the Ld. Sr.DR did not produce any "Satisfaction Note"
before the Hon'ble Bench. That on 09.11.2021 Hon'ble Bench directed the ld. Sr.DR to comply 3 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 with earlier direction of the Bench. That on 07.12.2021 ld. CIT DR again sought time in the appeals. However, the ld. Bench vide Order Sheet Entry dated 07.12.2021 itself,granted last opportunity to the Ld. Sr. DR to file "Satisfaction Note". On this date Hon'ble Bench also expressed their displeasure and directed to file an Affidavit by the Ld. Commissioner of Income Tax to the effect that "Satisfaction Note" is not traceable with the Department. A certified copy of Order Sheet Entry of the Tribunal in the lead case of Smt. Asha Agrawal ITA No.128/Alld/2017 is common in all the three appeals and the same is enclosed herewith as ANNEXURE-I hereto.
6. From the inspection of Assessment Record and the Order Sheet Entry, it was manifestly clear that No "Satisfaction Note" as per provisions of Section 158BD of the Act was ever recorded before proceeding to issue very first Notice u/s 158BC dated 05.05.2000 by the then Jt.CIT(Assessment) Spl. Range, Allahabad, who was also the A.O. of the " main searched person"
as well as the A.O. of applicant the "other person". It is, therefore abundantly clear from the relevant record that the mandatory requirement as necessitated in Section 158BD itself and as explained by various Judicial Institutions of the Country, were not complied with by the concerned authority before issuing the "first jurisdictional notice under section 158BC dated 05.05.2000" to the applicant-assessee. Further, the ld. Dy Commissioner (Assessment) Circle-1, Allahabad (Having jurisdiction over the case of the applicant at present) inspite of various written requests also failed to produce any other "Satisfaction Note" recorded anywhere else. (ie. in the case of main searched person). Therefore, the applicant filed a petition for admission of "Additional Grounds of Appeal" before the Hon'ble Tribunal, who was pleased to admit the same as per finding recorded on page 32 of its order.
7. That along with the petition, the applicant in support of "Additional Grounds", also annexed the copies of orders of Hon'ble Allahabad High Court as delivered in the case of CIT (Central) Vs. Gopi Apartment dated 01.05.2014 and CIT vs. Anil Kumar Chaddha dated 18.02.2015, covering the legal issues as involved in the above said "Additional Grounds of Appeal" in favour of the applicant. The relevant observation of the Court has been given at appropriate places in this Misc. Application.
8. After considering final arguments of both the sides by the Hon'ble Bench on 15.03.2022, it summarised the main grievance of the applicant-assessee in nutshell which are quoted at page 33-34 of its order numbering (a) to (g). The applicant-assessee vehemently submits that the finding of the Hon'ble Bench as found recorded at pages 34 onwards on the issues as framed by it in its order dated 29.04.2022 is "incorrect and/or wholly unjustified" on facts as well as in law. Further the finding of the Hon'ble Tribunalin respect of alleged satisfaction dated 26.04.2000 is also "against the evidence on record" It is submitted that while doing so, the Hon'ble Tribunal did not follow its own direction as contained in the Tribunal's Order sheet Entry itself and the verdict of jurisdictional as well as other High Courts as submitted by the applicant in support of its case through written submissions as filed on various dates as well as at the time of Final Hearing before the Court.
9. Without prejudice to above, it is further most respectfully submitted that while summarizing the "grievance" of the assessee-applicant at page 33 & 34, of its order, the attention of the Hon'ble Bench was escaped and it did not frame any issue as to the "NATURE OF SATISFACTION" that whether the so-called satisfaction dated 26.04.2000 fulfilled all the conditions as required under the provisions of Section 158BD or not. The humble applicant submits that "so-called satisfaction" as found recorded in the Block Assessment Order could not be held to be sufficient compliance of law. However, the Hon'ble Tribunal has heavily relied upon on such "so-called satisfaction stated to be recorded on 26.04.2000" in its order while rejecting the applicant's Additional Grounds of Appeal. The importance for adjudication of 4 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 such "issue" as raised by the applicant in its pleadings dated 09.07.2021 became more necessary because the Hon'ble Bench has ultimately found that the alleged Satisfaction so recorded in the Block Assessment Order "Satisfies" all the conditions/requirement of Section 158BD of the Act. As against the above finding, the applicant-assessee most respectfully submits that said "alleged Satisfaction dated 26.04.2000" did not "Satisfy" the requirement of conditions as laid down in the relevant Section 158BD as stood explained by various Courts throughout the country. In this regard the attention of the Hon'ble Bench is invited by your humble applicant to a consolidated written submission filed on 09.07.2021 wherein at Paras 8 to 17, the extract of various cases as delivered by Hon'ble Supreme Court, High Courts and Benches of Hon'ble ITAT have been quoted alongwith copies thereof in the Paper Book which are available at pages 21 to 108. In all the aforesaid rulings, much emphasis has been given by the Courts that the word "satisfaction" as enacted in the Section 158 BD itself, has not been defined in the Act but mere use or mention of the word "Satisfaction" in the Satisfaction Note will not meet the requirement of concept of satisfaction as used in Section 158BD. It cannot be capricious satisfaction. Though, it is a subjective satisfaction, it must be capable of being tested on objective parameters. The alleged Satisfaction Note as found mentioned in the Block Assessment Order is reproduced in herein below for the sake of ready reference:
"Search was also conducted at the places where above noted persons were carryingout their business activities. During the course of search various books of accounts and/documents were found and seized. The jurisdiction over these cases lied with Joint Commissioner of Income tax(Assessment), Special Range, Allahabad. After examination of seized books of account and documents the Joint Commissioner of Income tax (Assessment) Special Range, Allahabad, was satisfied that undisclosed income as was recorded in some of such seized books of accounts pertained to Sri Smt. Asha Agrawal (Individual), the assessee and he therefore recorded the reasons for initiating proceedings under section 158BD of the I.T.Act, 1961 in the case of the assessee vide his Satisfaction Note dated 26.04.2000."
10. It is submitted with great respect that in the case of the applicant, the Hon'ble Tribunal omitted to "test/examine" the veracity of Satisfaction Note, alleged to be recorded on 26.04.2000 as quoted above on the other hand Hon'ble Bench has given undue favour to the said "Noting" in its order without adjudicating the issue with reference to contrary evidence as were available on the record and the parameters/ findings as pronounced in the rulings as submitted by the applicant in his pleadings before the Hon'ble Bench. For facility of immediate reference, the crux of the reports and the relevant orders/judgments are given in the chart below:-
Page No(s) of PB Para No. Name of the case Case law enclosed at pages 5 8 Tapan Kumar Dutta Vs CIT (SC) 21 to 27 6 9 Pepsi Food Pvt. Ltd. Vs ACIT (Delhi HC), 28 to 37 6 10 CIT Vs RadheyShyam Bansal (Delhi HC)38 to 66 8 11 CIT Vs M/s Mechmen (MP HC), Pages 67 to 79 11 12 ACIT CC-30, New Delhi Vs. Arintex, New Delhi, ITAT New Delhi Pages; 80 to 90.
12 13 SM Trading & Investment Pvt. Ltd. Vs. Dept. Of Tax, Income Tax ITAT Indore Bench.... Pages 91 to 102 13 14 Haryana Paneer Bhandar Vs. CIT, (Delhi HC) Page 103 to 108 5 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 13 15 ACIT Vs Global Estate, ITAT Agra Bench 144 to 161 of M.K. Arawal (HUF)P.B. 17 16 Vinay Pratap Singh Vs. ACIT, ITAT Lucknow Bench Pages 162 to 178 of M.K. Agrawal (HUF) P.B. 162- 178 17 19 Society for the promotion of Education adventure sports and conversation of environment Vs. DCIT, ITAT Alld Bench. Order dated 20.03.2009 (only ITA No. 44/Alld/2009 reference given coy of order not enclosed.
11. That the Counsel respectfully prays that he may please be allowed to read the "Summary"
of such cases before the Hon'ble Bench at the time of hearing of Misc. Application as quoted in the Written Submission itself. Hence, the issue as raised above in the present Misc. Application under Section 254(2) of the I.T.Act, 1961, requires fresh consideration.
12. That the Hon'ble Bench further missed to summarize one more important issue which was argued with regard to applicability of a CBDT Circular No. 24/2015 dated 31.12.2015 on the subject matter of "recording of Satisfaction Note under Section 1588D". The counsel for the applicant drew the kind attention of the Hon'ble Bench to the aforesaid Circular with reference to respective pages of the Paper Book as found reproduced in various judgment/orders of the Courts and vehemently submitted that though this Circular was issued in the year 2015 but it lays down a guide line for the purpose of Section 158BD of the Act, after the pronouncement judgment by the Hon'ble Supreme Court in the case of M/s. Calcutta Knitwears. The Hon'ble Apex Court has held that recording of Satisfaction Note is a prerequisite and the Satisfaction Note must be prepared by the AO who has jurisdiction over such other person u/s 158BD. The reference of such Circular has been reproduced in various orders of Judicial Institutions, however few of the Cases have been quoted below wherein the said Circular has been followed:-
Title of the case Page No. where the circular has been relied upon Vinay Pratap Singh Vs. ACIT decided Page No. 17 of PB filed on 09.07.2021 by ITAT Lucknow Bench ACIT CC Vs. Arintex Ltd. Decided by Page No. 88 of PB filed on 09.07.2021 ITAT Delhi Bench CIT(Central) Vs. Gopi Apartment, Alld. Filed along with Petition for "Additional Grounds"
High Court That on account of omission to consider/adjudicate the applicability of the said Circular in the case in hand, the applicant has been denied justice from the Hon'ble Court. Hon'ble Tribunal be pleased to adjudicate the issue with reference to case laws as submitted above.
13. Further, the Hon'ble Bench while delivering the order in question, again omitted to consider the order/judgment of Allahabad Bench of the ITAT as delivered on similar set of facts in the case of Vishwanath Prasad Vs. ACIT): Extract of which is reproduced at page H of the P.B. Filed on 07.09.2021 and in the case of Mahabir Pd. Rungta (HUF) as delivered by ITAT Allahabad Bench and as filed in the Paper Book in the case of Smt. Asha Agrawal before the date of hearing 23.02.2021.
14. That on the issue of jurisdiction of the Assessing Officer (who issued first Notice U/s 158 BC dated 05.05.2000), Hon'ble Tribunal also completely over-looked the binding verdict of jurisdictional High Court as mentioned in preceding paragraph and decided the legal issue against the applicant and in favour of the Department after relying upon on an "unauthentic 6 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 note" as found mentioned in para 1 of the Block Assessment Order dated 30.05.2002 that too under the signature of an officer who did not have any jurisdiction over the case of the applicant for recording alleged Satisfaction at the relevant time. It is further submitted with great respect that the Hon'ble Tribunal reached on an unbelievable conclusion in its order dated 29.04.2022 which is not even based on after the perusal any "Original Satisfaction of such date". Moreover, such Satisfaction was also never produced by the ld. Sr. DR before the Hon'ble Bench in spite of specific directions vide order sheet entry dated 09.09.2021 and again vide order sheet entry dated 07.12.2021. Hence, the Hon'ble Bench committed a clear mistake in accepting such "Noting duly recorded in Para 1 of the Block Assessment Order dated 30.05.2002" as a "legally sustainable satisfaction" for the purpose proceeding under Section 158BD against the applicant- assessee. The Hon'ble Tribunal also omitted to take into account that such alleged "Satisfaction" was neither signed by the original A.O. nor it was found recorded anywhere in the Block Assessment Case Record of the applicant. No such satisfaction was also produced found to be recorded in the case of searched person. To support its unsustainable finding, the Hon'ble Tribunal suo-moto quoted few provisions of Evidence Act, 1872, which was never argued by any of the parties before it. Therefore, Hon'ble Bench is requested to re-consider its finding by resorting the provisions of Section 254(2) of the I.T.Act, 1961.
15(a). During the course of hearing of appeal on 15.03.2022 the Ld. CIT(DR) conceded for the first time before the Hon'ble bench that "Block assessment records" of the applicant- assessee is available with the department, but only the "Satisfaction Note is not available" This fact has been clearly noticed by the Hon'ble Bench in para 6.5 of its order under reference. However, the Hon'ble Tribunal completely omitted to take into consideration that had there been any such "Satisfaction Note" with the Department for proceeding under Section 158BD against the applicant-assessee, there was absolutely no ground and/or justification to seek various adjournments from the Court for the purpose of filing "Original Satisfaction Note" before it.. 15(b). Further, Hon'ble Bench also omitted to take into account that ld. ACIT, Central Circle, Allahabad, who mentioned the "alleged Satisfaction Note dated 26.04.2000 in Para1 of Block Assessment Order dated 30.05.2002 i.e. just after two years from the date 26.04.2000, must have personally seen or gone through such "Original Satisfaction Note" before giving a reference of the same in para 1 of the Block Assessment Order dated 30.05.2002 as passed by him in the case of the applicant. Further, complete Search Records (including Satisfaction Note) must have been sent to his custody vide letter No. Addl.CIT/Alld/R-1/Transfer of cases/2001-02 dated 05.11.2001 written by Addl. Commissioner of Income tax, Range-1, Allahabad. (Certified copy of letter is enclosed as ANNEXURE-II hereto). After receiving the relevant block assessment record of the assessee and the Satisfaction Note, by the ld., ACIT, Central Circle, Allahabad, he being a Senior Government Gazetted Officer/Assessing Officer, was duty bound to insure security/safety and/or to keep intact such an important Government Record of the applicant-assessee relating to Block Assessment Proceedings. It is a matter of great surprise rather unbelievable that complete Block Assessment Record of the assessee has been kept intact but only "Satisfaction Note" is missing in the concerned Ward/Circle of the Department. Therefore, the contention of the ld. Sr. DR before the Hon'ble Bench that after lapse of 21/22 years, only "Original Satisfaction Note" is not traceable is quite unbelievable/mis-leading and after thought statement as had been advanced by him before the Hon'ble Court on the date of final hearing of appeals. Such a statement was given before the Court, just to coverup the jurisdictional lapses as committed by the Original A,O. by not complying with the mandatory provisions of Section 158BD at the time of issuing very first Notice under Section 158BC dated 05.05.2000. Thus, it is proved beyond any doubt as well as 7 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 from the Order Sheet Entry that no such "Satisfaction" was ever recorded either in the relevant Order Sheet of the applicant-assessee or anywhere else by the original A.O. Hence, a closure look of sequence of events as took place in the case in hand further went to prove without referring to any other record/document that no "Satisfaction Note" as required under the law, was ever recorded by the original A.O. in the case record/ order sheet of applicant-assessee. Since the Hon'ble Tribunal did not take into account all the above attending facts/circumstances and further it also went beyond its own Order Sheet Entry dated 09.09.2021 and 07.12.2021 by which the Hon'ble Members had very specifically directed the ld.Sr. DR to produce "Original Satisfaction Note" before it, hence, it omitted to consider such "skillful events" in the order dated 29.04.2022, as such the appellant's Additional Ground stood rejected in an injudicious manner by the Hon'ble Bench.
15(c). That from a mere reading of the "language and wordings as mentioned in thealleged Satisfaction Note, it is also sufficient to conclude that it is not the "Reproductionand/or True Copy" of any actually recorded "Satisfaction Note" of the original A.O. 15(d). The contention of the assessee that no satisfaction was ever recorded by the original A.O. is further proved from the mere reading of the very first entry in the Order-Sheet which is available in the Block Assessment Case Record of the applicant-assesseeand the very first entry starts as under-
"8.05.2000: Notice us/158BC dt. 5.5.2000 issued and served on the assessee by ITI on 8.5.2000".
15(e). That the Hon'ble Bench further omitted to take into account that "Satisfaction" recorded by the original A.O. is the starting point of proceedings against the person not subjected to search as mentioned under Section 158BD of the Act, hence, the original A.O. was required to "RECORD SATIFACTION NOTE" in the Order Sheet of the assessee itself and not anywhere else before assuming jurisdiction over the case of "other person" by issuing very first Notice under Section 158BC of the IT.Act. Moreover, Chapter XIVB of the IT.Act/Rules does not lay down any such procedure/requirement that the "Satisfaction" should not be written in the Order Sheet (which is a most important part/record of the Block Assessment Case Record) of the assessee.
16. It has also not been considered by the Hon'ble Tribunal that the authorities below before whom various requests were made by the applicant from time to time to make available the copy of "Satisfaction Note", never communicated and/or informed the applicant (before passing the order under section 158BE dated 28.05.2002 and/or Block Assessment Order dated 30.05.2002) that the "Alleged Satisfaction Note" has already been recorded on 26.04.2000 but such Satisfaction Note is not traceable at the end of the Department. However, the Hon'ble Tribunal has proceeded to decide the legal/jurisdictional issue without having seen the "Original Satisfaction Note dated 26.04.2000" by itself on the contrary the Hon'ble Bench held that:-
"Thus, keeping in view the entire facts and circumstances, on the touchstone of preponderance of probabilities, it is crystal clear that the satisfaction was duly recorded by the AO of the searched persons (who incidentally was also the AO of the assessee) that the undisclosed income prima-facie reflecting from the incriminating material found and seized during the search operations conducted by Revenue u/s 132(1) of the 1961 Act on 23.08.2008 on the persons searched, belonged to the assessee, which culminated into recording of Satisfaction Note dated 26.04.2000, as is found recorded inthe assessment order and the order dated 28.05.2002 passed by AO 8 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 u/s 158BE, in pursuance to direction of Hon'ble High Court. The additions have also been made of undisclosed income in the case of the assessee based on seized material found and seized during the course of search operations. There is no reasons for us to accept that the AO being a Government Gazetted Officer while passing an order u/s 158BE, dated 28.05.2002 in pursuance to direction of Hon'ble High Court and also passing an assessment order dated 31.05.2002 u/s 158BC(c) and 158BD of the 1961Act, will have any reasons to falsify the records by falsely recording that satisfaction was recorded that income as is emanating from seized material from the persons searched, prima-facie belonged to the assessee. The matter being very old almost 21 years (Satisfaction Note dated 26.04.2000), there is every possibility that the said Satisfaction Note might have been misplaced or might have got tagged with other files (of the searched persons or the other 9 petitioners against whom also the proceedings u/s 158BD read with Section 158BC were initiated). There is also no merit in the contention of the assessee that the order sheet entries in the assessment file of the assessee does not mention about the Satisfaction Note and presumption should be drawn that no satisfaction was recorded. The assessment file is started with the issuance of notice u/s 158BC dated 5th May,2000 , which is post recording of Satisfaction Note dated 26.04.2000 and reflects the initiation of proceedings against the assessee under Chapter XIV B of the 1961 Act, there is nothing unusual about it, as the Satisfaction Note could have been recorded by AO in the files of the persons searched, or in a file specially created for the same. Thus, we reject the contentions of the assessee and hold that the Satisfaction Note was duly recorded by the AO of the person searched (who incidentally was also the AO of the assessee)."
NOTE: The search was conducted on 23.08.1998 and not on 23.08.2008 as written above in this paragraph)
17. It is apparently clear from the above finding as returned by the Hon'ble Tribunal that it has committed a mistake apparent on the face of record in deciding the issue in favour of the Revenue on the basis of an "alleged Satisfaction Note dated 26.04.2000" the "Original" of which was never found to be in existence at any stage of the proceedings in the applicant's case record or anywhere else (i.e.in the case of searched person). It is also pertinent to point out that such noting alleged to have been recorded on 26.04.2000 was also not supported by any other reliable and acceptable evidences on record. Hence, the finding as returned by the Hon'ble Tribunal treating the alleged "Note" of the ACIT, Central Circle, Allahabad, as a "legally sustainable Satisfaction Note" as sufficient compliance of provisions of Section 158BD of the Act, is wholly against the "evidence on record" and the law as laid down by jurisdictional High Court in the case of CIT(Central) Vs. GopiAparments. Hence, the issue is required to be re- adjudicated in the light of facts as mentioned in the above paragraphs. The above said mistakes in the Tribunal's order dated 29.04.2022, are apparently and brazenly visible on the face of record itself. The contention of the applicant is duly supported by the principles as laid down by jurisdictional High Court in the case of CIT(Central Vs.Gopi Apartments, wherein similar situation came up for consideration before the Hon'ble High Court. Kind attention of the Hon'ble Bench is invited to para 11 of theReport. The relevant extract is reproduced herein below:
11. "In the instant case, a categorical finding has been recorded by CIT(Appeal) and the I.T.A.T that there is no material showing the recording of satisfaction by the Assessing Officer of the "Searched Person" prior to issuance of notice under Section 153C to the respondent assessee, ie, the other person'. It was the admitted case of the 9 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Revenue before CIT(Appeals) and the IT.A.T that though the Assessing Officer (of the other person) in the 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 the Assessing Officer was not available. In view of the legal position, as already discussed above and the admitted factual position as aforesaid, we are unable to accept the contentions of Sri Agrawal.... "(emphasis added)
18. Thus, considering the overall summary/gist of the Tribunal's order dated 29.04.2022 (Running into 65 pages) the applicant has been advised that following mistakes have occurred in the order under reference which deserves to be rectified under Section 254(2) of the I.T.Act, 1961.
MISTAKE NO.1 That while dealing with the application of provisions of Section 158BD of the I.T.Act, 1961, the Hon'ble Tribunal wrongly placed its reliance on such a "Noting" (so- called satisfaction as found mentioned in the order under section 158BE dated 28.05.2002 and in the Block Assessment Order dated 30.05.2002") the "Original" of which was never shown to have been in "existence" by the Department before the Hon'ble Bench inspite of specific directions by it.
MISTAKE NO.2.
The Tribunal being a last fact finding authority should not solely rely on a so called "Satisfaction Noting" as the same was neither shown to have been signed by the Ld. Joint Commissioner of Income Tax (Assessment), Special Range Allahabad, who was the Assessing Officer of the person searched as well as the Assessing Officer of the above named applicant nor such noting appears to be true "reproduction" and/or "true copy" of any original "Satisfaction" alleged to have been recorded on 26.04.2000. In support of above contention, the averments as made by the applicant in Para 15(a) to 15(e) above, are again relied upon. MISTAKE NO.3 Further, from a mere reading of the language/contents of relevant alleged Satisfaction Note in the order under Section 158BE and Para 1 of the Block Assessment Order, it is crystal clear that it has been written by the Ld.ACIT, Central Circle, Allahabad, himself, who passed the above said two orders to cover up the jurisdictional lapses of his predecessor. In this regard it was also noticed by the Counsel from the inspection of Departmental Record that a letter containing direction for "recording satisfaction" in such cases wherein the provisions of Section 158BD were applicable, was issued by his superior i.e. Joint Commissioner of Income tax (Central), AaykarBhawan, Varanasi, bearing letter F.No.JCIT(C)/VNS/158BC/01-02/1287 dated 07.11.2001. This letter was issued at the time of transferring the records of various assesses (including the applicant named herein above) of the same group to the jurisdiction of Ld. ACIT, Central Circle, Allahabad, vide letter bearing F.No.Addl.CIT/Alld/R-1/Transfer of cases/2001-02 dated 5.11.2001 written by Addl. Commissioner of Income tax, Rang-1, Allahabad, addressed to Asstt. Commissioner of Income tax, Central Circle, Allahabad (Certified Copies of which are enclosed herewith as Annexure II (above) and III. respectively.
It, therefore, positively goes to prove that so-called satisfaction dated 26.04.2000 is an "ante-dated" and "post written" "Noting" by the ACIT Central Circle himself. It appears that Hon'ble Bench did not notice such letters at the time of perusal of Department's record by it. Omission to consider said "Authentic and "unrebuttable" evidences in favour of the applicant 10 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 in its order by the Hon'ble Bench, is a clear mistake apparent on the face of record and deserves to be considered and rectified accordingly.
MISTAKE NO.4 Further the Hon'ble Tribunal by an inadvertence omitted to take into account the pleadings vide Paragraph-7 of the written submission dated 09.07.2021 to the effect that even for the sake of argument only, if the said "noting stated to be recorded on 26.04.2000" is found to be genuine, even though it could not partake the character of valid and lawful "Satisfaction" as mandate under the provisions of Section 158BD of the I.T.Act and as explained by Hon'ble Apex Court, High Courts and various Benches of ITAT of the country in the rulings in our Paper Book filed on 09.07.2021. A summary of such rulings appeared at pages 5 to 20 of the consolidated Paper Book filed on 09.07.2021 the details of which has already been mentioned in para no. 10 of the present application. The copies of all such rulings as referred to and relied upon by the applicant in the said written submission, were also enclosed with the written submission dated 09.07.2021. However, the Hon'ble Tribunal omitted to consider such relevant case laws on the subject matter of"Nature of Satisfaction" thus it committed a mistake which deserves to be considered at the time of hearing present Misc. Application. MISTAKE NO.5 Further, it was argued by the applicant's counsel that in any of the communication as exchanged between the applicant and the department, the department never informed the applicant-assessee regarding alleged Satisfaction Note dated 26.04.2000. The Ld. Sr D.R. just to cover-up the lapse of the then Assessing Officer came with a new case just to twist the facts and to get favour of the Hon'ble Bench that required satisfaction was already recorded on 26.04.2000 by the original A.O. as mentioned in the Block Assessment Order dated 30.05.2002 but the same is not traceable at present. However, the Hon'ble Bench did not rely on the "so- called satisfaction dated 26.04.2000" and still directed ld. Sr.DR to produce the "Original" thereof before the Bench vide Order Sheet entry dated. 09.09.2021 and 07.12.2021. However, the direction of the Hon'ble Bench was never complied with by the Ld. Sr.DR but even though the "jurisdictional" issue has been decided by the Hon'ble Bench against the applicant without verifying the actual facts from the available records, thus it committed a mistake apparent on face of record.
MISTAKE NO.6 It is submitted with great respect that law required that the Assessing Officer who held the jurisdiction over the case of "other person" has to record the Satisfaction Note after reaching on a clear conclusion that good ground exists for the Assessing Officer of the third person to initiate proceedings on the basis of material before him or would establish "undisclosed income" of a third person. But all the aforesaid ingredients which is required to be established under Section 158BD of the Act and as directed to be recorded by the Supreme Court and High Courts in such cases, are found missing in the alleged satisfaction stated to be recorded on 26.04.2000. It is held by the Courts that the original A.O. must have applied his mind and recorded a cogent and specific reasons therein. However, there is no finding recorded by the Hon'ble Tribunal on the "Nature of Satisfaction' as detailed in Para 10 above. Hence, the order under reference deserves to be re-called and rectified on the basis principles as laid down by Apex Court, Jurisdictional Court and various Benches of ITAT throughout the country. The applicant again rely upon such rulings as mentioned in his pleadings. [ MISTAKE NO.7 In support of legal ground the counsel of the applicant also relied upon on CBDT Circular no. 24/2015 dated 31.12.2015 which specifically required that all theconcerned 11 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Officers to record Satisfaction u/s 158BD/153C of the Act before proceeding to assess any assessee under Section 158BD/153C of the I.T.Act,1961. The circular so issued by the CBDT was binding on all the concerned officers of the department. Further, the said circular has been followed by various Courts and benches of ITAT, the page Nos, and title of few of the cases wherein the aforesaid circular has been followed, appeared in the Paper Book as under:-.
Paper Book filed on 09.07.2021 Title of the case Page No. where the circular has referred and relied upon Vinay Pratap Singh Vs. ACIT decided by Page No. 17 of PB filed on 09.07.2021 ITAT Lucknow Bench ACIT CC Vs. Arintex Ltd. Decided by Page No. 88 of PB filed on 09.07.2021 ITAT Delhi Bench However, the Hon'ble Tribunal omitted to consider the rulings as quoted in the various written submissions and as cited at the Bar by the applicant's counsel at the time of final hearing on 15.03.2022. However, the Hon'ble Bench decided the issue in favour of the revenue and against the applicant without any discussion over the binding effect of Circular in the present case,thus, it committed a mistake apparent on the face of record which deserves to be rectified. Reliance in this regard is placed on the decision of Hon'ble Allahabad High Court in the case of Commissioner of Sales Tax Vs S/s Agrawal Rolling Mill, Mirzapur reported in [2003 UPTC- 1248].
MISTAKE NO.8 The applicant as well as the Hon'ble Bench came to know about the alleged "Satisfaction Note dated 26.04.2000" for the first time, when ld. Sr.DR. pointed out at the time of final argument on 15.03.2022 that Order under section 158BE dated 28.05.2002 and Para 1 of the Block Assessment Order dated 30.05.2002 contained the "alleged satisfaction note" as required under Section 158BD of the I.T.Act, 1961. Hon'ble Tribunal while dealing with the issue in its order dated 29.04.2022 at pages 43 and 44 accepted the argument of the department without any justification and/or without making any further enquiry in the matter with reference to Order Sheet Entries of the Tribunal itself through which a very clear and specific direction was given by the Hon'ble Bench to the ld. Sr.DR to produce the "Original Satisfaction Note" before the Bench for its perusal. On the earlier occasion ld. Sr. DR candidly admitted that "Original Satisfaction Note" is not traceable in the Office of the Assessing Officer. This fact is abundantly clear from thereading of Order Sheet Entries of the Tribunal itself. However, Hon'ble Tribunal while delivering its judgment omitted to notice the double standard of the Department that at one hand ld. DR pleaded that the Satisfaction Note is not traceable but all of a sudden on the date of final hearing he came with a new plea and argued that alleged "Satisfaction" is already recorded in Para 1 of the Block Assessment Order itself. It is submitted with great respect that the Hon'ble Tribunal went beyond its "Order Sheet Entries" through which the Department was specifically directed to produce the "Original Satisfaction Note" before it. The Tribunal also omitted to consider that without the service of "Satisfaction Note" (as found mentioned in Order Sheet entry of the Tribunal dated 23.02.2021 itself) on the applicant the department could not proceed to issue any Notice under chapter XIVB of the I.T.Act, 1961. The Rulings of the Apex Court and High Courts required that such "Satisfaction" was to be served on the assessee-applicant immediately before assuming jurisdiction over the case of the applicant by issuing very first Notice under the relevant provisions of Section. The Courts have further held that such "Satisfaction" should be served on the assessee either along with notice u/s 158BC or along with notice to be issued u/s 158BD 12 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 (which was never issued to the applicant). The observation and/or finding of the Hon'ble Tribunal as given in Page 48 of its order is incorrect and also against the evidence available on record, hence, the order under reference deserves to be amended/rectified accordingly. MISTAKE NO.9 It is further palpably clear that the ld. ACIT, Central Circle, Allahabad, has only copied this portion of alleged satisfaction note in Para 1 of the Block Assessment Order from the order u/s 158BE dated 28.05.2002 as passed by him in case of the applicant. It is submitted with great respect that the ld. Sr. D.R twisted the facts before the Hon'ble Tribunal and pleaded for the first time before the Court that the Satisfaction as required under the law is already appearing in para 1 of the Block Assessment Order. However, the Hon'ble Tribunal without verification of all the surrounding facts, original evidences/documents on record, and the department's internal correspondence, wrongly held that satisfaction under section 158BD already stood recorded on 26.04.2000 which is found mentioned in Para 1 of the Block Assessment Order itself. Thus, the finding of the Hon'ble Tribunal on the issue under consideration is wholly "against the evidence" on record and which is a clear mistake apparent on the face of record and required to berectified under section 254(2) of the 1.T.Act, 1961. The proceedings also stood time barred under the law from the date of Block Assessment Order. MISTAKE NO.10 No notice was ever issued to the appellants u/s 158BD.
(a) The law as stood at the relevant time required the department to invoke the provisions of section 158BD (prior to amendment w.e.f from 01.06.2002) while issuing the first notice under the provisions of chapter XIV-B which provides for special procedure for assessment of search cases. The Hon'ble Tribunal omitted to consider the binding judgments of jurisdictional High Court in the case of CIT Vs. Anil Kumar Chaddha vide order dated 18.02.2015 as filed along with petition for admission of "Additional Grounds" the relevant portion of the judgment is reproduced herein below:
(Extracted from page 28 of the Paper Book) "It is evident that there was no search warrant in the name of the assessee nor assets were requisitioned from the assessee. Therefore, the provisions of Section 158BC is not applicable in the instant case. Section 158BC reads as under:
"Where any search has been conducted under Section 132 or books of account, other documents or assets are requisitioned under section 132A in the case of any person, then......." Further, no warrant or requisition was issued in the name of the Firm or the assessee. In the instant case, at the best the seized amount might have been added in the hands of the assessee under section 158BD.
An opportunity was provided by this Hon'ble Court to the Department to produce the original records, but the Department expressed its inability to produce the records as stated by learned Senior Counsel of the Department It may be mentioned that Section 158BC and Section 158BD are not identical, both have the different purposes. The Hon'ble Supreme Court in the case of Manish Maheshwari Vs. Assistant Commissioner of Income tax and Another (2007) 289 ITR 341 (SC) observed that before the provisions of 13 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Section 158BD of the Income tax Act 1961, are invoked against a person other than the person whose premises have been searched under Section 132 or documents and other assets have been requisitioned under Section 132A, the conditions precedent have to be satisfied." (emphasis added)
(b). In view of the binding ruling of Hon'ble Allahabad High Court as cited above, the reliance as placed by the Hon'ble Tribunal at Page No.48 of its order on the cases of ITAT Special Bench on the cases of (1) Smt Mahesh KumariBatra Vs ICIT and LSaroja vs. ACIT (ITAT Madras), are of not attracted. The aforesaid view of the applicant further finds support from the case of M/s.Chirchid Hydro Power Limited -IT(SS)A No171,172 and 174/Ind/2008 and also M/s. Gwalior Tanks & Vessels Ltd. IT(SS) A.No.175 to 181/Ind/2008. (Paragraph 78 to 82) as have been quoted by Hon'ble M.P. High Court in the case of CTT Vs. M/s. Mechmen 11-C (Paper Book page-70) filed on 09.07.2021. Relevant Observations being as under:
......"Thereafter, the Assessing Officer having jurisdiction over the person other than the searched person shall issue a notice u/s 153C to such other person and assess his income in terms of Section 153A of the Act. Thus, the notice u/s 153C of the Act is to be issued only after recording of satisfaction. The assumption of jurisdiction to issue notice and frame assessment under Section 153C read with section 153A is acquired by the Assessing Officer only after having been satisfied and such satisfaction is recorded in writing. These provisions of Section 153C are in parimateria with the provisions of Section 158BD which provides that the Assessing Officer making the assessment of the searched person has to satisfy himself that some undisclosed income found by him belongs to some person other than searched person and then he or the Assessing Officer having jurisdiction over such other person after receipt of record from the Assessing Officer of the searched person has to issue notice u/s 158BD of the Act and has to assess income of such other person........."
(c) However, the Hon'ble Tribunal omitted to consider the above said Rulings of the High Court/ITAT in its order dated 29.04.2022 and wrongly confirmed the order of ld.
CIT(A), Allahabad, dated 16.02.2017 on the issue that there is no requirement under the law to issue any Notice u/s 158BD of the Act on the "Other Person" not subjected to search while assuming the jurisdiction over his case to proceed under Chapter XIV-B of the Act. Thus, the Hon'ble Tribunal committed a mistake in not following the judgment and orders of Jurisdictional High Court and Madhya Pradesh High Court while deciding the issue under consideration.
(d). That further the Hon'ble Tribunal while dealing with the ground of appeal regarding non-issuance of notice under section 158BD to the "person not subjected to search", also did not give any heed to the judgment of the Hon'ble ITAT Allahabad Bench, Allahabad, and to the judgment of Hon'ble ITAT, Delhi Bench, on the similar facts as delivered in the following cases:-
Consolidate Paper Book filed on 15.03.2022 Page No(s) of PB Para No. Name of the Case 1 to 11 NA Sukhdeo Prasad Vs. ACIT reported in (2004) 87 TTJ ALL page 604, ITAT Alld. Bench 12-22 NA Rakesh Kumar Jain Vs. ACIT reported in (2004) 14 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 89 TTJ Del. Page 203, ITAT Delhi Bench
(e) Hon'ble ITAT Allahabad Bench: Vishwanath Prasad Vs. ACIT 86 ITD P.516: Extract reproduced at page H of the P.B. Filed on 07.09.2021 in the case of Mahendra Kumar Agrawal (HUF).
(f). Hon'ble Supreme Court in the case of Manish MaheshwariVs. ACIT 289 ITR P341:
Extract reproduced at page H-1 of the Paper Book Filed on 07.09.2021 in the case of Applicant.
(g) Hon'ble Supreme Court in the case of Arun Kumar and Ors.vs. Union of India and Ors. (Reported in 286 ITR P.89 (SC) has held that "A" jurisdictional fact" is a fact which must exist before a Court, Tribunal or an Authority assumes jurisdiction over a particular matter........." The relevant para from the report is reproduced in Paper Book filed on 07.09.2021 as filed in the appellant's case.
(h) From the certified copy of Order Sheet entry dated 30.05.2002 it may kindly be seen by the Hon'ble Bench that at no point of time notice u/s 158BD was issued and assessee was given a surprise by writing in Col.No.9 of the proforma of the Block Asstt Order that the order is being passed u/s 158BC(c) "read with Section 158BD" of the I.T.Act, 1961. Therefore, it is very much clear that the word "read with Section 158BD"
has been added in the preamble of the Assessment Order in Col. No.9 to demonstrate that the jurisdictional lapses of the original A.O has been corrected in the Block Assessment Order dated 30.05.2002. This fact is also clearly from the Order Sheet Entry dated 30.05.2002.
It is submitted with utmost request that closure scrutiny of sequence of events as mentioned above, goes to prove beyond any doubt that the Hon'ble Tribunal has not properly dealt with the "actual events" as took place in this case and as high-lighted above in the present Misc. Application, while delivering its order against the assessee, hence, the same deserves to be reconsidered. Further, no reasons have been given in the impugned order to differ from the said orders of coordinate bench of ITAT, Allahabad and Rakesh Kumar Jain Vs. ACIT reported in (2004) 89 TTJ Del. Page 203, ITAT Delhi Bench. Non-consideration of such judgments of ITAT and the judgment of Hon'ble Supreme Court, which are in favour of the applicant, amounts to a mistake apparent on the face of record as held by Hon'ble Supreme Court in the case of ACIT, Rajkot vs.Saurashtra Kutch Exchange Ltd reported in 2010(18) STR P.84 (SC). Moreover, since issuance of a legal/jurisdictional notice under Section 158BD is requirement of law itself before assuming jurisdiction over the case of the applicant- assessee, hence, the order dated 29.04.2022 deserves to be rectified by recalling the same.
MISTAKE NO. 11.
It is submitted with great respect that the observations and findings as delivered by the Hon'ble Supreme Court in the case of Calcutta Knitwears has wrongly been interpreted by the Hon'ble Tribunal at pages 35 and 36 of its order. Hon'ble Supreme Court has dealt with two situations in this case. First, is that the recording of Satisfaction by the original A.O. is must before proceeding to issue first jurisdictional notice to the assessee not subjected to search; Secondly; the Hon'ble Apex Court has dealt with the situations that at what stages of time the required "SATISFACTION" has to be recorded by the Original A.O. Whereas in the case of applicant-assessee it has 15 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 been noticed from the Department's record itself that the so-called satisfaction dated 26.04.2000 is not the true "reproduction" of any "Original Satisfaction dated 26.04.2000", but it has been written by the ACIT, Central Circle, Allahabad, himself after he received instructions from his superiors. Hence, at what stage it has been recorded by the original A.O., does not have any bearing over the case of the applicant. On the other hand the ruling of the Apex Court favours the contention of the applicant to the effect that "Original A.O. never recorded any such satisfaction dated 26.04.2000"
in any of the Block Assessment Record of group cases available with the Department. Hence, with due respect, it is submitted that reliance as placed by the Hon'ble Bench on the case of M/s. Calcutta Knitwears in favour of the Department, is mis-placed to the extent mentioned above. Accordingly the impugned order under reference deserves to be recalled and rectified.
MISTAKE NO.12 Without Prejudice to above, that there is no provision either under the I.T.Act, 1961 or under the Income tax (Appellate Tribunals) Rules 1963 to "Tax" the applicant- assessee at a higher rate for failure on the part of the Income tax department and/or its Officers to insure safety/security of relevant "Search Records" and/or to produce the alleged "Original Satisfaction dated 26.04.2000" before the Hon'ble Bench, on the ground that now after a gap of 21/22 years, the "Original Satisfaction" note is not available/traceable with the Department as pleaded by the ld. Sr.DR. Whereas in view of the averments as mentioned in the Misc. Application particularly in Para 15 (a),(b),
(c), (d) and (e) above, it goes to prove beyond any doubt that no such satisfaction dated26.04.2000 was ever recorded by the concerned authority in the case of the applicant- assessee at the time of assuming jurisdiction. The contention/argument of the ld.Sr.Dr before the Court that "Original Satisfaction Note" is not traceable at present" is far from truth. In any case, for the lapses of Department applicant-assessee should not be penalised rather the benefit of doubt should go in favour of the assessee- applicant and notin favour of the Revenue.
The present application for rectification is submitted as there are various mistakes apparent on the face of record in the order of Hon'ble Tribunal dated 29.04.2022. However, no long drawn argument is involved in the present case.
That along with the application a paid challan of Rs.50/- is also being enclosed herewith towards Fee for filing Misc. Application. The applicant is also requesting to the Hon'ble Court that an opportunity of personal hearing may please be allowed.
The applicant is also filing an Affidavit along with the said Misc. Application in support of its contention as raised in the above said paragraphs of this application. A true copy of Hon'ble Tribunal's (Consolidated) order dated 29.04.2022 as passed in the case of the applicant-assessee is enclosed herewith.
PRAYER It is, therefore, most respectfully prayed that order dated 29.04.2022 as passed in ITA no.128/Alld/2017, may please be recalled and the "Additional Grounds of Appeal" may please be re-decided on the basis of facts and law as mentioned in the above said Misc. Application."
16MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998
3. The learned Counsel for the assessee opened arguments before Division Bench, and submitted that the assessee has raised additional ground of appeal on 17.06.2021 that no Satisfaction Note was recorded by the AO, and in the absence thereof assessment framed by AO for Block Period is liable to be quashed. It was submitted that no satisfaction note was found in the file of the assesse ,when inspection was conducted by assessee in the year 2021. It was submitted that satisfaction is claimed to be recorded by Revenue on 26.04.2000 which found recorded in block assessment order , but infact there was no satisfaction note recorded by the AO of the searched person . It was submitted that Hon'ble Allahabad High Court judgment and order in the case of CIT v.Gopi Apartment in ITA no. 287 & 1329 /2009 dated 30.01.2015 was not considered by tribunal while deciding this issue in favour of Revenue , vide appellate order dated 29.04.2022 . It was submitted that Hon'ble Allahabad High Court dismissed the appeal filed by Revenue in the case of Gopi Apartment(supra) as no satisfaction was recorded by the AO of the searched person . Our attention was drawn to page 34 of the appellate order dated 29.04.2022 passed by tribunal, which is an impugned order in this MA proceedings. It was submitted by ld. Counsel for the assessee that the satisfaction note as recorded in assessment order dated 30.05.2002 passed by AO u/s 158BC read with Section 158BD, was antedated. It was submitted that in the order dated 28.05.2022 passed by AO u/s 158BE disposing off objection of the 17 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 assessee as to limitation as per direction of the Hon'ble Allahabad High Court, the noting is there in the aforesaid order that satisfaction note was recorded on 26.04.2000. Our attention was drawn to Page Nos. 34 to 45 of the tribunal order dated 29.04.2022, and it was submitted that no satisfaction was recorded by the AO of the searched person. It was submitted that this issue of not recording of Satisfaction Note was raised by assessee on 24th March, 2021 before the Division Bench of the tribunal during the course of hearing and inspection of records of the Revenue were requested , but in-fact however, on 16th August, 2000 in the case of Mahendra Kumar Agarwal(HUF), this issue of non recording of satisfaction was raised by the said assesse, and our attention was drawn to Page No. 5 of the paper-
book in the case of Mahendra Kumar Agarwal(HUF) in ITA No. 129/Alld/2017, wherein as per para 2, the following objections were raised by the assessee, which are reproduced hereinunder:
"2. As the objections raised above go to the very root of the proceedings. I respectfully pray that your goodself be pleased to issue -
a) a certified copy of search warrant if at all there is any, which should be available in your records as well:
b) call for the records of the authority issuing the warrant of authorisation so as to examine as to whether the search operations have been carried out in the manner and for the purposes for which such an action has been authorised by the statute;
c) make me available relevant extracts of the Satisfaction Note if any so as to enable me to make further submissions.
Our attention was also drawn to Para 15(a),15(b),15(c),15(d) and 15(e) of the MA application filed by the assessee. Our attention was also drawn to the judgment and order of Hon'ble Allahabad High Court in the case of Gopi Apartment(supra).
18MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Our attention was also drawn to page no. 34-35 of paper-book (filed in MA proceedings), and learned counsel for the assessee submitted that these are departmental correspondences dated 07.11.2001 and 5.11.2002, and it reflects that no such satisfaction was recorded by the AO of the person searched , before invoking assessment proceedings u/s 158BD against the assessee . The ld. Counsel for the assessee placed reliance on CBDT Circular No. 24/2015 dated 31.12.2015.
Reliance was also placed by assessee on the decision of ITAT, Lucknow Bench in the case of Shri Vinay Pratap Singh v.ACIT ,Lucknow , in ITA No. 682 to 687/Lkw/2015, order dated 22.02.2021. Reliance was also placed by assessee on the decision of ITAT, Lucknow Bench in the case of Smt. Putul Choubey v. DCIT, Central , NOIDA, in ITA No. 91 & 92/Lkw/2017, order dated 22.08.2019. The ld.
Counsel for the assessee relied upon the judgment and order of Hon'ble Supreme Court in the case of Tapan Kumar Dutta v. CIT in Civil Appeal no. 2014 of 2007.
It was also submitted by ld. Counsel for the assessee that tribunal has not seen whether the so called Satisfaction Notes dated 26.04.2000 as found mentioned in the assessment order meets the requirement of a valid satisfaction note .The ld.
Counsel for the assessee relied upon the decision of Hon'ble Delhi High Court, in the case of Pepsi Foods Private Limited v. ACIT, in W.P.(C) No. 415/2014 & CM 823/2014 &Ors. The ld. Counsel for the assessee also relied upon judgment and order dated 30.05.2011 of Hon'ble Delhi High Court in the case of CIT v. Radhey 19 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Shyam Bansal & Ors., in ITA No. 582/2008 &Ors. It was also submitted by ld.
Counsel for the assessee that the AO of the assessee as well of the persons searched was same , prior to search, as well post search after centralization of the cases, the AO of the assessee as well that of the searched persons was same. It was submitted by ld. Counsel for the assessee that it is true that the additions were made by the AO in the hands of the assessee , based on seized material . The ld.
Counsel for the assessee also relied upon the decision of Hon'ble High Court of Madhya Pradesh in the case of CIT v. Mechmen , in ITA no. 44/2011 & Ors., dated 10.07.2015.The ld. Counsel for the assessee relied upon the judgment and order of Hon'ble Delhi High Court in the case of Haryana Paneer Bhandar, in ITA no. 537/2015, dated 05.11.2015. The ld. Counsel for the assesee also relied upon decision of Hon'ble Supreme Court in the case of G K Driveshafts India Limited v.
ITO , reported in (2003) 259 ITR 19(SC).The ld. Counsel for the assessee relied upon decision of Hon'ble Supreme Court in the case of ACIT v. Saurashtra Kutch Stock Exchange Limited , reported in 2010(18) STR 84(SC). It was submitted by ld. Counsel for the assessee that the decision of Hon'ble Allahabad High Court in the case of CIT v. Anil Kumar Chaddha in ITA no. 86 of 2011, order dated 18.02.2015 and decision of Hon'ble Allahabad High Court in the case of Gopi Apartment(supra) has not been considered by tribunal while passing appellate order dated 29.04.2022. The ld. Counsel for the assessee relied upon decision of 20 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Hon'ble Allahabad High Court in the case of CST v. Agrawal Rolling Mills, Mirzapur (2003 U.P.T.C. -1248). The ld. Counsel for the assessee submitted that CBDT circular no. 24/2015, dated 31.12.2015 is binding of the authorities, and hence satisfaction note ought to have been prepared by the AO of the person searched. The ld. Counsel for the assessee relied upon decision of Hon'ble Gujarat High Court in the case of CIT v. Subodhchandra S Patel (2004) 138 Taxman 185(Guj.). The ld. Counsel for the assessee relied upon decision of Hon'ble Supreme Court in the case of Arun Kumar & Ors. v. Union of India & Ors. in Appeal(Civil) 3270 of 2003, dated 15.09.2006. The ld. Counsel for the assessee submitted that tribunal erred in relying on preponderance of probabilities in coming to conclusion that the satisfaction note was duly prepared by Revenue , while the said satisfaction note was never produced by Revenue before the tribunal. It was submitted that existence of satisfaction note is a jurisdictional fact, and tribunal could not have assumed jurisdiction and proceeded further to adjudicate the appeal without seeing for itself the existence of satisfaction note.
The ld. Counsel for the assessee relied upon the decision of Allahabad-tribunal in the case of Vishwanath Prasad v. ACIT, reported in 86 ITD 516. The ld. Counsel for the assessee submitted that the decision of Hon'ble Supreme Court in the case of Manish Maheshwari v. ACIT, reported in (2007) 289 ITR 341(SC) was not considered by tribunal while passing the impugned order dated 29.04.2022.It was 21 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 submitted that satisfaction note has to be recorded and condition precedent before invoking provision of Section 158BD has to be fulfilled/complied with. It was also submitted that in the instant case, no notice u/s 158BD was issued by the department, and notice issued by Revenue was under Section 158BC. It was submitted that why the assessee should suffer because of deficiency of department.
It was submitted that the assessee is arguing on legal issues and not going into the merits of the additions. It was submitted that the assessee is not seeking review of the tribunal order dated 29.04.2022 and merely seeking rectification of mistakes which are apparent from record, and hence this MA is covered by Section 254(2).
It was submitted that the issue raised in this MA are all law points , and hence it could not be said that there is any review of decision of the tribunal is sought for by the assessee, and prayers were made that the contention of the AO in the assessment order that there was satisfaction note dated 26.04.2000 should not be accepted. It was submitted by the ld. Counsel for the assessee Shri R C Agrawal, that the AO of the searched persons as well the AO of the assessee, were same both at the time when search took place, as well even after centralization of the cases when jurisdiction stood transferred, the AO of the searched person as well of the assessee were the same.
3b. The ld. Sr. DR submitted that the AO of the searched persons as well AO of the assessee were same. It was submitted that restructuring of the department was done 22 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 in June, 2001 and the cases were assigned to ACIT. It was submitted that the AO has duly recorded in the assessment order that the satisfaction note was recorded , and date of recording of satisfaction note was 26.04.2000 as mentioned . It was submitted that the assessee never raised any objection as to non recording of satisfaction note earlier, and after almost 21 years the assessee has raised this plea of non recording of satisfaction is raised by the assessee vide additional grounds of appeal filed for the first time before tribunal. It was submitted that this issue was not raised by assessee even before ld. CIT(A). It was submitted that the assessee even sought seized material from AO, and this fact is mentioned in the assessment order. It was submitted that the fact about satisfaction note dated 26.04.2000 was recorded in the assessment order. The ld. Sr. DR submitted that the assessee has raised wrong contentions before the Bench that Mahendra Kumar Agrawal(HUF) vide letter dated 16.08.2000 raised the issue of supplying satisfaction note, rather the assessee only raised issues concerning existence of search warrant and the satisfaction note demanded by the said assessee was in context of warrant of authorization and with respect to conducting of search by Revenue u/s 132(1). He drew our attention to the letter dated 16.08.2000 filed by said assessee Mahendra Kumar Agrawal(HUF), which is placed in paper book at page 4-5 filed by said assessee, and it was contended that the assessee is trying to mislead the Bench by raising wrong contentions .Our attention was also drawn to assessment order 23 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 passed by AO , and it was submitted that the AO has categorically and specifically mentioned the date of recording of satisfaction note . It was also submitted by ld.
SR DR that the assessee filed writ petition before Hon'ble Allahabad High Court on 09.05.2002 , and even in the said Writ Petition filed by the assessee , the issue of non recording of satisfaction note was not raised by the assessee before Hon'ble Allahabad High Court. Our attention was drawn to provisions of Section 158BD. It was submitted by ld. Sr. DR that the AO of the searched persons and of the assessee is the same AO , at the time of search as well when jurisdiction stood transferred owing to centralization and also at the time of passing of assessment order. It was submitted by ld. Sr. DR that the assessee raised the issue of limitation in the aforesaid writ petition filed before Hon'ble High Court, and the AO passed an order dated 28.05.2002 u/s 158BE disposing of the limitation issue as directed by Hon'ble Allahabad High Court , and the assessee never filed any writ petition before Hon'ble High Court against the order passed by AO u/s 158BE, and further the assessee never challenged before Hon'ble High Court issue of non recording of satisfaction note before Hon'ble High Court . It was submitted that even in this order passed u/s 158BE, the factum of recording of satisfaction note dated 26.04.2000 is duly mentioned , as also this fact of recording of satisfaction note dated 26.04.2000 is also mentioned in the assessment order. It was submitted that in the assessment framed by AO against the assessee, all the additions were made 24 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 by AO based on incriminating material seized during search.It was submitted by ld. Sr. DR that the assessment order duly recorded that the order was passed u/s 158-BC(c) read with Section 158BD of the 1961 Act, and that notice u/s 158BC was duly issued by AO .The ld. Sr DR contended that the tribunal rightly decided the issue as to issue of notice u/s 158BC, and the scope of Section 254(2) is limited to only rectification of mistakes apparent from record, and the tribunal cannot review its own decision under limited mandate of Section 254(2) in the garb of rectifying mistake apparent from record. The ld. Sr DR has filed paper book, and reliance was placed by ld. Sr DR on following decisions:
a) CIT v. Reliance Telecom Limited , (2021) 133 taxmann.com 41(SC)
b) Hycons Infrastructure India Limited v. DCIT, (2013) 36 taxmann.com 92 (Mum-trib.)
c) ITO v. Mohd. Akram , (2021)190 ITD 575(Lucknow-trib.)
d) DCIT v. Sanjay Singal , (2021) 126 taxmann.com 225(Chd.-trib.)
e) Kanpur Electricity Supply Company Limited v. DCIT, (2015) 63 taxmann.com 192(Lucknow-trib.)
f) U P Forest Corporation v. DCIT , (2018) 93 taxmann.com 437(Lucknpw-
trib.)
g) CIT v. Bannalal Jat , (2005) 273 259(Raj.HC)
h) ACIT v. Dr. Ved Prakash , (1994) 209 ITR 448(A.P.) 25 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 3c. The ld. Counsel for the assessee submitted in rejoinder that if satisfaction was recorded in the assessment order, then the assessment is time barred.The ld.
Counsel for the assessee submitted that Section 158BD can be invoked when there is a seized material , and Section 158BC procedure shall apply , as mandated u/s 158BD.
4.We have considered rival contentions and carefully perused the material on record including cited case laws. The tribunal passed an appellate order dated 29.04.2022 in the appellate proceedings conducted with respect to appeal filed by the assessee against the appellate order dated 16.02.2017 passed by ld. CIT(A), the appellate proceedings before ld. CIT(A) has arisen from Block Period Assessment Order dated 30.05.2002 passed by AO u/s 158BC(c) read with Section 158BD of the 1961 Act. The assessee is now aggrieved by aforesaid tribunal order dated 29.04.2022, and has now filed an MA with tribunal, as in view of the assessee there are mistakes apparent from record in the appellate order dated 29.04.2022 passed by tribunal , which as per assessee are amenable to correction u/s 254(2) of the 1961 Act. This MA was heard in open court proceedings in physical mode. The main grievance of the assessee in her MA is that the tribunal has accepted the contention of the Department that Satisfaction Note dated 26th April, 2000 was duly prepared by the Revenue based upon incriminating material found during the course of search conducted by Revenue u/s 132(1) of the 1961 Act on 23rd August, 26 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 1998 at various residential and business premises of Sri Surendra Prasad Agarwal, Sri Manoj Kumar Agarwal , Sri Mukesh Kumar Agarwal, Sri Amar Nath Agarwal, Sri Pramod Kumar Agarwal and Sri Mahabir Prasad Agarwal, while original Satisfaction Note was never produced by Department before the tribunal, despite being called upon by tribunal to produce the same before the Division Bench. The second grievance of the assessee is that the tribunal never tested the nature of satisfaction note dated 26.04.2000 , as to whether it satisfy the mandate of the 1961 Act. The third main grievance of the assessee is that the tribunal has accepted the notice issued by AO u/s 158BC as valid notice , while no notice u/s. 158BD was ever issued by AO while invoking proceedings u/s 158BD against the assessee.
The assessee has claimed that even case laws in favour of the assessee being brought to the notice of tribunal in appellate proceedings, yet the issues were decided against the assessee. It is an admitted position that the assessee was never searched , although search and seizure operations were conducted by Revenue under Section 132(1) of the 1961 Act, on 23rd August, 1998 at various residential premises in the following cases, detailed as hereunder:
Residential premises i. Sri Surendra Prasad Agarwal, Sri Mahendra Prasad Agarwal 447,Malviya Nagar, Allahabad.
ii Sri Manoj Kumar Agarwal, K.P. Kakkar Road, Allahabad.27
MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 iii. Sri Mukesh Kumar Agarwal, K 104-HIG, Preetam Nagar, Allahabad ` iv. Sri Amar Nath Agarwal/ Sri Behari Lal Agarwal, Lakhpat Rai Road, Allahabad v. Sri Pramod Kumar Agarwal, Zero Road, Allahabad vi. Sri Mahabir Prasad Agarwal, Roashan Bagh, Allahabad 4b The search operations under provisions of Section 132(1) of the 1961 Act were also conducted by Revenue at places where above noted person(s) were carrying out their business activities.
4c The above are in nut-shell three main grievances of the assessee in this MA proceedings.
4d With above background, let us proceed further. We are in MA proceedings, and let us first see as to what is the scope of MA proceedings being conducted u/s 254(2) of the 1961 Act. It will be profitable at this stage to refer to provisions of Section 254(2) of the 1961 Act, which is reproduced hereunder:
"Orders of Appellate Tribunal.
254. (1) ****** (2) The Appellate Tribunal may, at any time within [six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing] Officer :
Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made 28 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard :
[Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees.]"
(Emphasis supplied) 4e Thus, as could be seen from the language of statute , only mistakes apparent from records are amenable for rectification within the scope of Section 254(2) of the 1961 Act, and the tribunal has no powers to review its own decision within limited mandate of Section 254(2). However, the tax-payer or even Revenue aggrieved by tribunal appellate order passed u/s 254(1) is not remedy less, as the aggrieved party be it assessee or Revenue can always file an appeal with Hon'ble High Court as provided u/s 260A of the 1961 Act. Reference is drawn to the decision of Hon'ble Supreme Court in the case of Reliance Telecom Limited(supra), the relevant extract are as under:
"3.1 We have considered the order dated 18-11-2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under section 254(2) of the Act and recalling its earlier order dated 6-9-2013 as well as the original order passed by the ITAT dated 6-9-2013.
3.2 Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act. While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9-2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier 29 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record.
4. In the present case, a detailed order was passed by the ITAT when it passed an order on 6-9-2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of powers under section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-
9-2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 6-9-2013 which has been passed in exercise of powers under section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under section 254(2) of the Act. Therefore, the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is unsustainable, which ought to have been set aside by the High Court.
5. From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT.
6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors section 254(2) of the Act. As observed hereinabove, the powers under section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that.
Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case.
7. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court as well as the common order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by 30 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 the ITAT dated 6-9-2013 passed in the respective appeals preferred by the Revenue are hereby restored.
***"
4f Thus, Hon'ble Supreme Court held in Reliance Telecom Limited(supra) that powers of the tribunal u/s 254(2) are limited to rectify any mistake which is apparent from records , and the tribunal cannot review its own appellate order passed u/s 254(1). Even if the appellate order passed by tribunal u/s 254(1) is erroneous , on facts and/or law, the remedy available with tax-payer or Revenue is to file an appeal with Hon'ble High Court u/s 260A of the 1961 Act. Reference is also drawn to decision of Hon'ble Supreme Court in the case of T S Balaram , ITO v. Volkart Bros , reported in (1971) 82 ITR 50(SC), wherein Hon'ble Supreme Court observed in context of Section 154, as under:
"It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under section 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question. In Satyanarayan Laxminarayan Hegde v. MallikarjunBhavanappa Tirumale [I960] 1 SCR 890, this court while spelling out the scope of the power of a High Court under article 226 of the Constitution ruled that an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record--see Sidhramappa AndannappaManvi v. Commissioner of Income- tax [1952] 21 ITR 333 (Bom.). The power of the officers mentioned in section 154 of the Income-tax Act, 1961, to correct "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record." In this case it is not necessary for us to spell out the distinction between the expressions "error apparent on the face of the record" and 31 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 "mistake apparent from the record". But suffice it to say that the Income-tax Officer was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent."
4g. Reference is also drawn to decision of Hon'ble Allahabad High Court in the case of CIT v. ITAT, reported in (1997) 93 Taxman 123(Alld. HC), wherein Hon'ble Allahabad High Court observed as under:
"5. Heard the learned counsels for the parties! A bare perusal of section 254 reveals that sub-section (1) of section 254 confers ample powers on the Tribunal to pass such orders on any appeal filed before it as it thinks fit. Sub-section (2) of section 254 postulates that the Tribunal may amend any order passed by it under sub-section (1) of section 254 with a view to rectifying any mistake apparent from the record. Thus, the power exer-cisable under sub-section (2) of section 254 is subject to two limitations. Firstly, it has to be confined to rectifying any mistake apparent from the record and secondly, it has to be confined to an order passed under sub section (1) of section 254. Accordingly, it is apparent that the power exercisable under sub-section (2) of section 254 is not available to be exercised for amending any order passed by it under any section other than sub- section (1) of section 254. In other words, the power of the Tribunal conferred by sub- section (2) of section 254 for rectifying any mistake apparent from the record cannot be exercised by the Tribunal to recall any order passed by it under section 256.
6. For ready reference the provisions of section 254(1) and (2) are quoted below:
"Orders of Appellate Tribunal--(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.
(2) The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer;"
Further, reviewing and recalling an order is one thing and rectifying a mistake in the order which is apparent from the record is quite another. In exercise of power to review and recall an order, even the whole result can be reversed whereas in exercise of power to rectify a mistake apparent from the record arithmetical or clerical mistakes can be corrected.
32MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998
7. In Jose T. Mooken v. CIT [1979] 117 ITR 921/ 1 Taxman 231 (Ker.), CIT v. Suresh Kumar [1990] 186 ITR 114 (Punj.&Har.), CIT v. Globe Transport Corpn. [1992] 195 ITR 311 (Raj.), CWTv. R.S. Seth GhisalalModi Family Trust [1988] 169 ITR 530 (MP), CWT v. Devi Chand Sawhney [1991] 187 ITR 43 (SC) (sic), CIT v. K.L. Bhatia [1990] 182 ITR 361 (Delhi) and Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji AIR 1970 SC 1273 it is ruled that the Tribunal has no power to review or recall its order.
8. In view of the discussions made above keeping in view the ratio laid down in the aforesaid cases and in the absence of any statutory provision for review by the Tribunal, we are of the considered opinion that the impugned order passed by the Tribunal recalling its earlier order which was passed under section 256 deserves to be quashed."
4h The ld. SR. DR has also relied upon several case laws to support that powers of tribunal u/s 254(2) is limited to rectify mistake apparent from records , and the tribunal under the garb of rectification of mistake cannot review its own appellate order passed u/s 254(1). The said authorities relied by ld. Sr. DR are reproduced by us in the preceding para's of this order, and same are not repeated. We can multiply authorities on the powers of tribunal u/s 254(2) , but we donot want to burden this order , but it can be observed that the Courts/tribunal across India have taken consistent view that powers of the tribunal u/s 254(2) are limited to rectify any mistake which is apparent from records , and the tribunal cannot review its own appellate order passed u/s 254(1) under the garb of rectification of mistake apparent from records. Even if the appellate order passed by tribunal u/s 254(1) is erroneous , on facts and/or law, the remedy available with tax-payer or Revenue is to file an appeal with Hon'ble High Court u/s 260A of the 1961 Act.
33MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 4i Now, we proceed to consider grievance of the assessee in this MA. In nutshell there are three grievances raised by the assessee. The first main grievance of the assessee in this MA is that the tribunal has accepted the contention of the Department that Satisfaction Note dated 26th April, 2000 was duly prepared by the Revenue based upon incriminating material found during the course of search conducted by Revenue u/s 132(1) of the 1961 Act , on 23rd August, 1998 at various residential and business premises of Sri Surendra Prasad Agarwal, Sri Manoj Kumar Agarwal , Sri Mukesh Kumar Agarwal, Sri Amar Nath Agarwal, Sri Pramod Kumar Agarwal and Sri Mahabir Prasad Agarwal, while original Satisfaction Note was never produced by Department before the tribunal, despite being called upon by tribunal to produce the same before the Division Bench. The assessee has stated that there was no Satisfaction Note which was prepared by Department while initiating proceedings against the assessee under Section 158BD of the 1961 Act. It was submitted that the assessee was not searched but the search and seizure operations were conducted by Revenue under Section 132(1) of the 1961 Act, on 23rd August, 1998 at various residential premises in the following cases, detailed as hereunder:
Residential premises i. Sri Surendra Prasad Agarwal, Sri Mahendra Prasad Agarwal 447,Malviya Nagar, Allahabad.
ii Sri Manoj Kumar Agarwal, K.P. Kakkar Road, Allahabad. iii. Sri Mukesh Kumar Agarwal, K 104-HIG, Preetam Nagar, Allahabad ` iv. Sri Amar Nath Agarwal/ Sri Behari Lal Agarwal, Lakhpat Rai Road, Allahabad v. Sri Pramod Kumar Agarwal, Zero Road, Allahabad 34 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 vi. Sri Mahabir Prasad Agarwal, Roashan Bagh, Allahabad 4j The search operations under provisions of Section 132(1) of the 1961 Act were also conducted by Revenue at places where above noted person(s) were carrying out their business activities. The assessee has contended in this MA that the tribunal vide its appellate order dated 29.04.2022 held that satisfaction note dated 26.04.2000 was duly prepared by AO ( it is to be noted that AO of the searched person and AO of the assessee were same, both at the time when search took place as well when jurisdiction stood transferred due to centralization of the cases as well when assessments for Block Period were framed) , although department failed to produce the aforesaid so called satisfaction note dated 26.04.2000 despite being called upon by tribunal to produce the same. The assessee has submitted in her MA filed with tribunal that the tribunal while passing appellate order dated 29.04.2022 also failed to test 'nature of satisfaction' so allegedly recorded by the AO and whether the same constitute valid satisfaction as is required under law , and hence mistake has allegedly crept in the appellate order dated 29.04.2022 passed by tribunal which is amenable to recall u/s 254(2) of the 1961 Act. Before proceeding further , it is important to reproduce finding of the tribunal , vide its order dated 29.04.2022 , with respect to the satisfaction note dated 26.04.2000, which finding of the tribunal is reproduced hereunder:
"
a) That no satisfaction note was recorded by AO, while initiating proceedings under Chapter XIV-B against the assessee, and hence the proceedings are bad in law liable to be quashed.
The assessee has claimed that after it made inspection of the assessment record maintained by Revenue, it transpired that there was no 'satisfaction note' folder found in the said assessment record, which conclusively proves that no 35 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 satisfaction note was ever recorded by AO, before initiating proceedings u/s 158BD of the 1961 Act, against the assessee. The inspection of the assessment record was carried out by assessee in the year2021 , while the proceedings were initiated against the assessee under Chapter XIV-B by Revenue by issuance of notice u/s 158BC, on 05.05.2000. Thus, around 21 years have elapsed in-between, when the proceedings were initiated by Revenue against the assessee and the inspection carried out by the assessee of the assessment records. The Revenue has taken a stand that the satisfaction was duly recorded by the then AO viz. Joint Commissioner of Income Tax(Assessment), Special Range, Allahabad, on 26.04.2000 , which found mentioned in the assessment order dated 30.05.2002 passed by AO u/s 158BC(c) read with Section 158BD of the 1961 Act, but the satisfaction folder is presently not readily available mainly owing to long gap of time of almost 21 years. The law as laid down by Superior Courts as also plain reading of Section 158BD is very clear that if no satisfaction was recorded by the AO of the person searched that any undisclosed income as is reflected in the seized material prima-facie belonged to some other person , proceedings under Chapter XIV-B against such other person cannot be lawfully invoked. Reference is drawn to provisions of Section 158BD of the 1961 Act, as it stood at relevant time, which reads as under:
"Undisclosed income of any other person.
158BD. Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the 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, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly."
Reference is drawn to the judgment and orders of Hon'ble Supreme Court in the case of CIT v. Calcutta Knitwears , reported in (2014) 43 36 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 taxmann.com 115(SC), the relevant extract concerning satisfaction note are reproduced as hereunder:
"39. The opening words of Section 158BD of the Act are that the assessing officer must be satisfied that "undisclosed income" belongs to any other person other than the person with respect to whom a search was made under Section 132 of the Act or a requisition of books were made under Section 132A of the Act and thereafter, transmit the records for assessment of such other person. Therefore, the short question that falls for our consideration and decision is at what stage of the proceedings should the satisfaction note be prepared by the assessing officer: whether at the time of initiating proceedings under Section 158BC for the completion of the assessments of the searched person under Section 132 and 132A of the Act or during the course of the assessment proceedings under Section 158BC of the Act or after completion of the proceedings under Section 158BC of the Act.
40. ****
41. We would certainly say that before initiating proceedings under Section 158BD of the Act, the assessing officer who has initiated proceedings for completion of the assessments under Section 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched under Section 132 or the books of accounts were requisitioned under Section 132A of the Act. This is in contrast to the provisions of Section 148 of the Act where recording of reasons in writing are a sine qua non. Under Section 158BD the existence of cogent and demonstrative material is germane to the assessing officers' satisfaction in concluding that the seized documents belong to a person other than the searched person is necessary for initiation of action under Section 158BD. The bare reading of the provision indicates that the satisfaction note could be prepared by the assessing officer either at the time of initiating proceedings for completion of assessment of a searched person under Section 158BC of the Act or during the stage of the assessment proceedings. It does not mean that after completion of the assessment, the assessing officer cannot prepare the satisfaction note to the effect that there exists income tax belonging to any person other than the searched person in respect of whom a search was made under Section 132 or requisition of books of accounts were made under Section 132A of the Act. The language of the provision is clear and unambiguous. The legislature has not imposed any embargo on the assessing 37 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person.
42. ****
43. ****
44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages:
(a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person.
45. We are informed by Shri Santosh Krishan, who is appearing in seven of the appeals that the assessing officer had not recorded the satisfaction note as required under Section 158BD of the Act, therefore, the Tribunal and the High Court were justified in setting aside the orders of assessment and the orders passed by the first appellate authority. We do not intend to examine the aforesaid contention canvassed by the learned counsel since we are remanding the matters to the High Court for consideration of the individual cases herein in light of the observations made by us on the scope and possible interpretation of Section 158BD of the Act."
These are two different things altogether, firstly that no satisfaction was recorded at all by the AO of the searched person that undisclosed income prima facie appearing from the seized material belonged to some other person and consequently no satisfaction note was at all prepared, secondly that satisfaction was duly recorded and satisfaction note was prepared that undisclosed income prima facie appearing from the seized material belonged to some other person, but now after a gap of 21 years, the satisfaction note is not available/traceable in the file . Under these circumstances, on the touchstone of preponderance of probabilities , we have to see whether satisfaction was recorded by AO of the persons searched that undisclosed income as is prima-facie reflected in the seized material belonged to the assessee or there was no satisfaction ever recorded by 38 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 the AO of the persons searched before invoking provisions of Chapter XIV-B of the 1961 Act, against the assessee. Admittedly, satisfaction note could not be produced by Revenue in the proceedings before us in the year 2021-22. There was a search and seizure operations conducted by the Revenue under Section 132(1) of the 1961 Act, on 23rd August, 1998 at various residential premises in the following cases, detailed as hereunder:
Residential premises i. Sri Surendra Prasad Agarwal, Sri Mahendra Prasad Agarwal 447,Malviya Nagar, Allahabad.
ii Sri Manoj Kumar Agarwal, K.P. Kakkar Road, Allahabad. iii. Sri Mukesh Kumar Agarwal, K 104-HIG, Preetam Nagar, Allahabad ` iv. Sri Amar Nath Agarwal/ Sri Behari Lal Agarwal, Lakhpat Rai Road, Allahabad v. Sri Pramod Kumar Agarwal, Zero Road, Allahabad vi. Sri Mahabir Prasad Agarwal, Roashan Bagh, Allahabad The search operations under the provisions of Section 132(1) of the 1961 Act were also conducted by Revenue at the places whereabove noted person(s) were carrying out their business activities. During the course of search operation conducted by Revenue u/s 132(1) of the 1961 Act, various books of accounts and documents were found and seized by Revenue . The jurisdiction of the above cases were with the Joint Commissioner of Income Tax (Assessment)Special Range, Allahabad. The assessee was not searched by Revenue u/s 132(1) of the 1961 Act. But admittedly the AO of the searched persons viz. Joint Commissioner of Income Tax (Assessment)Special Range, Allahabad, was also the AO of the assessee. It is recorded in the assessment order dated 30.05.2002 in para 2/page 1 as under:
"After examination of seized books of accounts and documents, the Joint Commissioner of Income-tax(Assessment), Special Range, Allahabad was satisfied that the undisclosed income as was recorded in some of such 39 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 seized books of accounts pertained to Smt. Asha Agarwal, (Individual), the assessee and he therefore recorded the reasons for initiating proceedings under Section 158BD of the I.T. Act , 1961 Act, in the case of the assessee vide his satisfaction note dated 26.04.2000."
Thus, the assessment order was passed in the year 2002, wherein the factum of recording of satisfaction and preparation of satisfaction note in April, 2000 is clearly mentioned, we have no reasons to doubt that the AO being a Government Gazetted Officer will have any reasons to falsify the accounts. Reference is drawn to provisions of Section 11, 16 and 35 of Indian Evidence Act, 1872, which read as under:
"11. When facts not otherwise relevant become relevant.--Facts not otherwise relevant are relevant--
(1) if they are inconsistent with any fact in issue or relevant fact; (2) if by themselves or in connection with other facts they make the existence or non-existence of any fact in issue or relevant fact highly probable or improbable.
16. Existence of course of business when relevant.--When there is a question whether a particular act was done, the existence of any course of business, according to which it naturally would have been done, is a relevant fact.
35. Relevancy of entry in public record made in performance of duty.-- An entry in any public or other official book, register or 2 [record or an electronic record], stating a fact in issue or relevant fact, and made by a public servant in the discharge of his official duty, or by any other person in performance of a duty specially enjoined by the law of the country in which such book, register or 2 [record or an electronic record], is kept, is itself a relevant fact."
Now, coming to an order passed by the AO u/s 158BE, dated 28.05.2002, which was passed by AO in compliance with directions of the judgment and order of Hon'ble Allahabad High Court , dated 09th May, 2002, in a writ petition filed by the assessee along-with 9 other persons of this group before the Hon'ble 40 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Allahabad High Court on 09th May, 2002, which was decided by Hon'ble Allahabad High Court on 9th May, 2002 itself, and the order passed by Hon'ble Allahabad High Court , read as under:
"the question of limitation raised by the petitioners shall be decided as a preliminary one before passing any further order in the proceedings pending before the Respondents. The Respondents shall dispose off the case after hearing the Writ Petitioners recording reasons. The Writ Petition stands disposed off with the above observations. It is made clear that -we have not adjudicated on merits and contentions raised in the Writ Petition.
Sd/- C.J.
Dated : 09.05.2002 Sd/- J."
Thus, the Hon'ble High Court directed the AO to adjudicate firstly the question of limitation issue as raised by the assessee, before adjudicating on the merits of the issue. There were 10 taxpayers (including assessee) in whose case the proceedings were initiated by the AO under Chapter XIV-B by invoking provisions of Section 158BD read with Section 158BC, although these ten assessee's were not searched by Revenue u/s 132(1) on 23.08.1998, as detailed hereunder, and the following tenassessee's approached Hon'ble Allahabad High Court by filing writ petition under Article 226 of the Constitution of India bearing number 1708 of 2002 in Agarwal Brothers &Ors. v. ACIT, Central Circle, Allahabad , on 09th May , 2002 , raising question of limitation before Hon'ble High Court:
1. M/s Agarwal Brothers , 174 , Meerganj , Allahabad , U.P.(Partnership firm)
2. Surendra Prasad Agarwal, HUF, 514/447, Malviya Nagar, Allahabad, U.P.
3. Mahabeer Prasad Agarwal, HUF, 77, Khuldabad, Allahabad, U.P.
4. Mahendra Kumar Agarwal , HUF, 514/447, Malviya Nagar, Allahabad, U.P.
5. Manoj Kumar Agarwal, HUFm, 514/447, Malviya Nagar, Allahabad, U.P. 41 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998
6. Mukesh Kumar Agarwal, HUf, 193-B/151-A, Meerganj,Allahabad, U.P.
7. Lav Kush Agarwal, 14, GariwanTola, Allahabad, U.P.
8. Smt. Asha Agarwal , 514/447, Malviya Nagar, Allahabad, U.P.
9. Smt. Sadhna Agarwal, 514/447, Malviyanagar, Allahabad, U.P.
10. Smt. Deepa Agarwal, 514/447, Malviyanagar, Allahabad, U.P. In compliance thereof of the directions of Hon'ble Allahabad High Court, the ld.
AO passed an order dated 28th May, 2002 , u/s 158BE of the 1961 Act in the case of the assessee namely Mrs. Asha Agrawal, deciding question of limitation raised by the assessee before Hon'ble High Court . In this order u/s 158BE , dated 28.05.2002, it is mentioned that satisfaction note in the case of ten petitioners who were before Hon'ble High Court was prepared by the AO of the searched persons. It is also recorded in this order that the AO of the searched persons and the AO of the ten petitioners were the same. The relevant para's at page 3 of the order dated 28.05.2002, are reproduced hereunder:
"So section 158 BC of l.T. Act is very clear that it comes into play in a case where a search had been conducted u/s 132 etc. The assessee is fully aware that in his case no warrant was issued u/s 132(1) of the I.T. Act. In fact Search and seizure action U/S 132(1) of the Income Tax Act, 1961, was conducted on 23.08.98 at various premises pertaining to Sri Surendra Prasad Agrawal Group of cases and warrant under Section 132(1) of the I.T. Act were issued in following cases :
Residential Premises
(i) Sri Surendra Prasad Agrawal, Sri Mahendra Prasad Agarwal 447, Malgviya Nagar, Allahabad.
(ii) Sri Manoj Kumar Agarwal, K.P. Kakkar Road, Allahabad.
(iii) Sri Mukesh Kumar Agarwal, K 104-HIG, Preetam Nagar, Allahabad.
(iv) Sri Amar Nath Agarwal/Sri Behari Lal Agarwal, Lakhpat Rai Road, Allahabad.
(v) Sri Promod Kumar Agarwal, Zero Road, Allahabad
(vi) Sri Mahabir Prasad Agarwal, Roshan Bagh, Allahabad.42
MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Search was also conducted at the places where above noted persons were carrying out their business activities.During the course of search various books of accounts and documents were found and seized. The jurisdiction over these case lied with Joint Commissioner of Income-
tax,(Assessment)Special Range , Allahabad. After examination of seized books of accounts and documents the Joint Commissioner of Income- tax,(Assessment) Special Range, Allahabad was satisfied that undisclosed income as was recorded in some of such seized books of accounts pertained to M/s Agrawal Bros, and 9 others ( petitioners in the writ) and he therefore recorded the reasons for initiating proceedings under section 158BD of the l. T. Act ,1961 . In all these 10 cases of the petitioners vide his satisfaction note dated 26.04.2000.
Notice under section 158BC of l.T. Act was, accordingly, issued on 5.5.2000 and was served, with the request to file a true and correct return of total income including undisclosed Income within 16 days of service of notice . The assessee moved application dated 01.06.2000 seeking copy of seized materials, copy of Income-tax records etc.In reply vide letter dated 12.06.2000 it was intimated to assessee that copy of seized material had already been provided and with regard to certified copy of Income-tax records he was requested to furnish zerox copy of acknowledgement receipt of returns filed by her. The assessee did not furnish the return for the block period. Thereafter detailed notice and notice under section 142(1) was issued and , subsequently on 16.8.2000 return for block period was filed showing total undisclosed income at NIL Thus it is clear that the proceedings were initiated u/s 158 BD of the l.T. Act on the basis of seized materials which were found and seized during the course of search initiated in the cases as noted above. Section 158BD of l.T. Act is very clear and it speaks that where the A.O is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 or whose books of account or other documents or any asset were requisitioned u/s 132A then, such books of account or assets etc. shall be handed over to the A.O having jurisdiction over such other person and that A.O shall proceed against such other persons and the provisions of this chapter shall applied accordingly. Presently in these cases the jurisdiction vested with the same A.O namely Joint C.I.T., (Assessment) Special Range, Allahabad who had initiated proceedings u/s 158 BD of l.T. Act."
43MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 This order u/s 158BE was passed in the year 2002, wherein the factum of recording of satisfaction and preparation of satisfaction note in April, 2000 is clearly mentioned, we have no reasons to doubt that the AO being a Government Gazetted Officer will have any reasons to falsify the accounts. Reference is drawn to provisions of Section 11, 16 and 35 of Indian Evidence Act, 1872, which read as under:
"11. When facts not otherwise relevant become relevant.--Facts not otherwise relevant are relevant--
(1) if they are inconsistent with any fact in issue or relevant fact; (2) if by themselves or in connection with other facts they make the existence or non-existence of any fact in issue or relevant fact highly probable or improbable.
16. Existence of course of business when relevant.--When there is a question whether a particular act was done, the existence of any course of business, according to which it naturally would have been done, is a relevant fact.
35. Relevancy of entry in public record made in performance of duty.-- An entry in any public or other official book, register or 2 [record or an electronic record], stating a fact in issue or relevant fact, and made by a public servant in the discharge of his official duty, or by any other person in performance of a duty specially enjoined by the law of the country in which such book, register or 2 [record or an electronic record], is kept, is itself a relevant fact."
It is also pertinent to mention here that the additions in the hands of the assessee were mainly made by AO based on seized material, Seized Annexure A- 109, page 24 to 29, 53 to 69, Seized Annexure A-11, page 4-6, Seized Annexure A-11, page 14, Seized Annexure A-11, page 17 , Seized Annexure A-180, page 6. It is also pertinent to mention here that in the assessment order as well order passed u/s 158BE it is mentioned that the copies of seized material were provided to the assessee. The assessee has not disputed or denied that copies of seized material were not furnished to it. One more important aspect is that the 44 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 assessee is wife of Mr. Mahendra Prasad Agrawal. It is an admitted position that Mr. Mahendra Prasad Agrawal was searched by Revenue on 23.08.1998 , u/s 132(1) of the 1961 Act. Incidentally the residence address of Mr. Mahabir Prasad Agrawal is 447, MalviyaNagar , which property is owned by the assessee, namely Mrs. Asha Agrawal, and the address of the assessee as emanating from the records is also 447, Malviya Nagar, Allahabad, U.P.. Even, address of Shri Surender Prasad Agrawal as emanating from records is 447, Malviya Nagar, Allahabad, U.P. The said residential premises 447, Malviya Nagar, Allahabad, U.P. , was searched by Revenue. Once , all these aforesaid assessee's are residing together and are related to each other, there is a natural phenomenon as well strong possibility that incriminating material pertaining to assessee namely Mrs. Asha Agrawal was found from possession of these aforesaid persons who were searched by Revenue and who are related to each other and living together in the same premises. Thus, keeping in view the entire facts and circumstances, on the touchstone of preponderance of probabilities, it is crystal clear that the satisfaction was duly recorded by the AO of the searched persons ( who incidentally was also the AO of the assessee) that the undisclosed income prima-facie reflecting from the incriminating material found and seized during the search operations conducted by Revenue u/s 132(1) of the 1961 Act on 23.08.2008 on the persons searched, belonged to the assessee, which culminated into recording of satisfaction note dated 26.04.2000, as is found recorded in the assessment order and the order dated 28.05.2002 passed by AO u/s 158BE, in pursuance to direction of Hon'ble High Court. The additions have also been made of undisclosed income in the case of the assessee based on seized material found and seized during the course of search operations. There is no reasons for us to accept that the AO being a Government Gazetted Officer while passing an order u/s 158BE , dated 28.05.2002 in pursuance to direction of Hon'ble High Court and also passing an assessment order dated 31.05.2002 45 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 u/s 158BC(c) and 158BD of the 1961 Act , will have any reasons to falsify the records by falsely recording that satisfaction was recorded that income as is emanating from seized material from the persons searched, prima-facie belonged to the assessee. The matter being very old almost 21 years ( satisfaction note dated 26.04.2000), there is every possibility that the said satisfaction note might have been misplaced or might have got tagged with other files ( of the searched persons or the other 9 petitioners against whom also the proceedings u/s 158BD read with Section 158BC were initiated). There is also no merit in the contention of the assessee that the order sheet entries in the assessment file of the assessee does not mention about the satisfaction note and presumption should be drawn that no satisfaction was recorded. The assessment file is started with the issuance of notice u/s 158BC dated 5thMay ,2000 , which is post recording of satisfaction note dated 26.04.2000 and reflects the initiation of proceedings against the assessee under Chapter XIV B of the 1961 Act, there is nothing unusual about it, as the satisfaction note could have been recorded by AO in the files of the persons searched, or in a file specially created for the same. Thus, we reject the contentions of the assessee and hold that the satisfaction note was duly recorded by the AO of the person searched(who incidentally was also the AO of the assessee). Reference is also drawn to provisions of Section 11,16 and 35 of The Indian Evidence, 1872. We have also observed that the search was conducted by Revenue u/s 132(1) , on 23.08.1998. The assessment in the case of searched persons were completed by Revenue , in the month of August , 2000 (please see AO letter No. F.No. ACIT/Circle-1/Alld/Mahendra Agarwal Group/2021-22/154, dated 23.12.2021 marked to The Ld. CIT-DR, ITAT , Allahabad , which letter is enclosed by ld. CIT- DR along with its letter dated 15.03.2022 marked to ITAT, Allahabad Bench, Allahabad, in the matter of the assessee in ITA no. 128/Alld/2017). Thus, the assessment in the case of searched persons were completed by the Revenue in 46 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 the month of August, 2000, while satisfaction note in the case of the assessee was prepared by AO on 26th April, 2000 , which is prior to completion of assessment in the case of searched persons. Thus, the satisfaction note was prepared in the case of the assessee, even before the assessment was completed in the case of searched persons, and hence the same comply with the interpretation of Hon'ble Supreme Court in the case of Calcutta Knitwears(supra), and is held to be a valid satisfaction note prepared by the AO of the searched persons(incidentally AO of the assessee is the same as the AO of searched persons), invoking proceedings under Chapter XIV-B of the 1961 Act. Thus, the grievance of the assessee on this count stood rejected. We order accordingly."
4k It could be seen that the tribunal while deciding the above issue by accepting that Satisfaction Note dated 26.04.2000 was duly prepared by the AO, considered the surrounding facts and circumstances , and then decided the issue in favour of Revenue.
The following facts and circumstances are relevant :
a) The tribunal noted in its appellate order dated 29.04.2022 that the department is averring that satisfaction note dated 26.04.2000 was duly recorded by AO, before initiating proceedings u/s 158BD of the 1961 Act , against the assessee,.
The tribunal also noted that the said satisfaction note was not produced by department before the tribunal when called upon to produce in the year 2021.
b) The tribunal also noted in its appellate order dated 29.04.2022 that the said satisfaction note was claimed to be recorded by AO on 26.04.2000 , while the assessee has raised this issue before tribunal in 2021 for the first time, i.e. after 47 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 almost after a long gap of 21 years. The assessee never raised this issue before any of the authorities, prior to raising it for the first time before tribunal in 2021.
c) The tribunal also noted in its appellate order that there is a requirement both under the plain reading of Section 158BD as well law as laid down by Hon'ble Supreme Court in CIT v. Calcutta Knitwear, reported in (2014) 43 taxmann.com 115(SC), that there is a requirement of recording of satisfaction note by the AO of the persons searched that any undisclosed income as is reflected ins seized material prima-facie belonged to some other person.
d) The tribunal in its appellate order dated 29.04.2022 distinguished between two different things, firstly that no satisfaction was at all recorded by the AO of the searched person that undisclosed income prima facie appearing from the seized material belonged to some other person and consequently no satisfaction note was at all prepared, and second situation is that where satisfaction note was duly prepared but now after gap of 21 years, the same is not traceable/available in the file and hence could not be produced for verification before the authorities.
e) The tribunal in its appellate order dated 29.04.2022, considered the facts and circumstances surrounding the case, by observing that a search and seizure operations u/s 132(1) was conducted by Revenue u/s 132(1) , on 23.08.1998 at various residential premises in the following cases, detailed as hereunder:
48MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 Residential premises i. Sri Surendra Prasad Agarwal, Sri Mahendra Prasad Agarwal 447,Malviya Nagar, Allahabad.
ii Sri Manoj Kumar Agarwal, K.P. Kakkar Road, Allahabad. iii. Sri Mukesh Kumar Agarwal, K 104-HIG, Preetam Nagar, Allahabad iv. Sri Amar Nath Agarwal/ Sri Behari Lal Agarwal, Lakhpat Rai Road, Allahabad v. Sri Pramod Kumar Agarwal, Zero Road, Allahabad vi. Sri Mahabir Prasad Agarwal, Roashan Bagh, Allahabad The search operations under the provisions of Section 132(1) of the 1961 Act were also conducted by Revenue at the places where above noted person(s) were carrying out their business activities. There was no search operations conducted against the assessee
f) The tribunal also observed that during the course of search operation conducted by Revenue u/s 132(1) of the 1961 Act, various books of accounts and documents were found and seized by Revenue . The jurisdiction of the above cases were with the Joint Commissioner of Income Tax (Assessment)Special Range, Allahabad. The assessee was not searched by Revenue u/s 132(1) of the 1961 Act. But admittedly the AO of the searched persons viz. Joint Commissioner of Income Tax (Assessment)Special Range, Allahabad, was also the AO of the assessee.
g) The tribunal further noted that factum of recording satisfaction is recorded in the assessment order dated 30.05.2002 in para 2/page 1 as under:49
MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 "After examination of seized books of accounts and documents, the Joint Commissioner of Income-tax(Assessment), Special Range, Allahabad was satisfied that the undisclosed income as was recorded in some of such seized books of accounts pertained to Smt. Asha Agarwal, (Individual), the assessee and he therefore recorded the reasons for initiating proceedings under Section 158BD of the I.T. Act , 1961 Act, in the case of the assessee vide his satisfaction note dated 26.04.2000."
h) The tribunal also noted in its appellate order dated 29.04.2022 that assessment order was passed in the year 2002 , wherein factum of recording of satisfaction and preparation of satisfaction note in April, 2000 is clearly mentioned . The tribunal did not doubted as there was no reason to doubt that the AO will have any reasons to falsify record. The tribunal relied upon the provisions of Section 11, 16 and 35 of Indian Evidence Act, 1872.
i) The tribunal also noted in its appellate order dated 29.04.2022 that the AO passed an order u/s 158BE dated 28.05.2002 adjudicating question of limitation wherein factum of recording of satisfaction note dated 26.04.2000 by the AO of the searched person was duly recorded , which order u/s 158BE was passed by the AO in compliance with directions of Hon'ble Allahabad High Court vide judgment and order dated 09.05.2002 , in a writ petition(bearing number 1708 of 2002) filed by the assessee along with the 9 other persons of this group who were not searched by Revenue u/s 132(1) but against whom proceeding were initiated under Chapter XIV-B by invoking provisions of Section 158BD read with Section 158BC . There was no reason for AO to falsify record , while passing order 50 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 u/s 158BE, dated 28.05.2002, which was passed in compliance of directions of Hon'ble High Court.
j) It is an admitted fact that the assessee never raised the issue of non recording of satisfaction note in the writ petition filed by the assessee before Hon'ble Allahabad High Court.
k) It is also an admitted position that the assessee never filed any writ petition before the Hon'ble High Court challenging order u/s 158BE dated 28.05.2002 passed by AO disposing of limitation concerning the passing of Block Period Assessment order .
l) The assessee in this MA proceedings made an attempt to mislead the Bench , by stating/averring during the course of hearing , that in the case of Mahendra Kumar Agarwal(HUF) the said assessee vide letter dated 16.08.2000 filed with AO raised the issue of providing satisfaction note , but on careful perusal of aforesaid letter dated 16.08.2000, it transpired that the assessee requested to provide satisfaction note for issuing warrant of authorization/search warrant against the assessee, while the fact of the matter is that there was no search conducted by Revenue against the said assessee u/s 132(1).Thus, an attempt was made to mislead the Bench.
m) It is also pertinent to mention that many of the additions were made by the AO in the Block assessment order dated 30.05.2002 passed u/s 158BC(c) read with Section 158BD of the 1961 Act, based on seized material during search operations , which is evident from the Block Period assessment order , dated 30.05.2002. The tribunal noted in its order dated 29.04.2022 that additions were made by the AO in the hands of the assessee mainly based on seized material, Seized Annexure A-109, page 24 to 29, 53 to 69, Seized Annexure A-11, page 4-6, Seized Annexure A-11, page 14, Seized Annexure A-11, page 17 , Seized Annexure A-180, page 6.
51MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998
n) That the assessee has so far not submitted any reply whatsoever on the merits of the additions in any of the proceedings conducted by statutory authorities including tribunal .
o) That the tribunal also noted in its appellate order dated 29.04.2022 , that in the assessment order as well order passed u/s 158BE , it is mentioned that the copies of seized material were provided to the assessee. The assessee has not disputed or denied that copies of seized material were not furnished to it.
p) The tribunal also noted in its appellate order dated 29.04.2022 , that the assessee is wife of Mr. Mahendra Prasad Agrawal. It is an admitted position that Mr. Mahendra Prasad Agrawal was searched by Revenue on 23.08.1998 , u/s 132(1) of the 1961 Act. Incidentally the residence address of Mr. Mahabir Prasad Agrawal is 447, Malviya Nagar , which property is owned by the assessee, namely Mrs. Asha Agrawal, and the address of the assessee as emanating from the records is also 447, Malviya Nagar, Allahabad, U.P.. Even, address of Shri Surender Prasad Agrawal as emanating from records is 447, Malviya Nagar, Allahabad, U.P. The said residential premises 447, Malviya Nagar, Allahabad, U.P. , was searched by Revenue. Once , all these aforesaid assessee's are residing together and are related to each other, there is a natural phenomenon as well strong possibility that incriminating material pertaining to assessee namely Mrs. Asha Agrawal was found from possession of these aforesaid persons who were searched by Revenue and who are related to each other and living together in the same premises. Thus, we duly considered the nature of satisfaction note , before passing appellate order.
q) Thus, keeping in view the entire facts and circumstances, on the touchstone of preponderance of probabilities, the tribunal in its appellate order observed that it is crystal clear that the satisfaction was duly 52 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 recorded by the AO of the searched persons ( who incidentally was also the AO of the assessee) that the undisclosed income prima-facie reflecting from the incriminating material found and seized during the search operations conducted by Revenue u/s 132(1) of the 1961 Act on 23.08.2008 on the persons searched, belonged to the assessee, which culminated into recording of satisfaction note dated 26.04.2000, as is found recorded in the assessment order dated 30.05.2002 and the order dated 28.05.2002 passed by AO u/s 158BE, in pursuance to direction of Hon'ble High Court. The tribunal noted in its appellate order dated 29.04.2022 that the additions have also been made of undisclosed income in the case of the assessee based on seized material found and seized during the course of search operations. The tribunal noted that there is no reasons for it to accept that the AO being a Government Gazetted Officer while passing an order u/s 158BE , dated 28.05.2002 in pursuance to direction of Hon'ble High Court and also passing an assessment order dated 31.05.2002 u/s 158BC(c) and 158BD of the 1961 Act , will have any reasons to falsify the records by falsely recording that satisfaction was recorded that income as is emanating from seized material from the persons searched, prima-facie belonged to the assessee. The matter being very old almost 21 years ( satisfaction note dated 26.04.2000), there is every possibility that the said satisfaction note might have been misplaced or might have got tagged with other files ( of the searched persons or the other 9 petitioners against whom also the proceedings u/s 158BD read with Section 158BC were initiated). The tribunal observed that there is also no merit in the contention of the assessee that the order sheet entries in the assessment file of the assessee does not mention about the satisfaction note and presumption should be drawn that no satisfaction was recorded. The assessment file is started with the issuance of notice 53 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 u/s 158BC dated 5th May , 2000 , which is post recording of satisfaction note dated 26.04.2000 and reflects the initiation of proceedings against the assessee under Chapter XIV B of the 1961 Act, there is nothing unusual about it, as the satisfaction note could have been recorded by AO in the files of the persons searched, or in a file specially created for the same. Thus, the tribunal rejected the contentions of the assessee and held that the satisfaction note was duly recorded by the AO of the person searched(who incidentally was also the AO of the assessee). Reference was also drawn to provisions of Section 11,16 and 35 of The Indian Evidence, 1872. The tribunal further observed in its order dated 29.04.2022 that the search was conducted by Revenue u/s 132(1) , on 23.08.1998. The assessment in the case of searched persons were completed by Revenue , in the month of August , 2000 (please see AO letter No. F.No. ACIT/Circle- 1/Alld/Mahendra Agarwal Group/2021-22/154, dated 23.12.2021 marked to The Ld. CIT-DR, ITAT , Allahabad , which letter is enclosed by ld. CIT-DR along with its letter dated 15.03.2022 marked to ITAT, Allahabad Bench, Allahabad, in the matter of the assessee in ITA no. 128/Alld/2017). Thus, the tribunal noted in its appellate order that assessment in the case of searched persons were completed by the Revenue in the month of August, 2000, while satisfaction note in the case of the assessee was prepared by AO on 26th April, 2000 , which is prior to completion of assessment in the case of searched persons. Thus, the satisfaction note was prepared in the case of the assessee, even before the assessment was completed in the case of searched persons, and hence the same comply with the interpretation of Hon'ble Supreme Court in the case of Calcutta Knitwears(supra), and the tribunal held to be a valid satisfaction note prepared by the AO of the searched persons(incidentally AO of the assessee is the same as the AO of searched persons), invoking proceedings 54 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 under Chapter XIV-B of the 1961 Act. Thus, the grievance of the assessee on this count was rejected by tribunal vide appellate order dated 29.04.2022. The tribunal in its appellate order dated 29.04.2022, duly noted and considered the judicial decisions relied upon by the assessee, which are recorded in the contentions of the ld. Counsel for the assessee in page number 26-28 of the tribunal order dated 29.04.2022, and it will not be correct to say that the judicial decisions were not considered by tribunal while adjudicating this issue raised by the assessee. It is a different matter that the tribunal while adjudicating this issue relied upon the entire facts and circumstances of the case , to arrive at irresistible conclusion that the contentions raised by the assessee after a long gap of 21 years that no satisfaction note was recorded , lacks merit and infact satisfaction note was duly recorded , and with a gap of 21 years , the same may not be available to be produced by department before the Bench. The plea raised by the assessee as to non recording of satisfaction note may involve mixed question of law and fact, and the assessee may be entitled to raise the same at any stage of proceedings, but it is equally true that the said plea raised after 21 years , is definitely suffering from delays and latches on the part of the assessee, which is fatal to the assessee. The assessee will always be entitled to raise the plea before higher courts that the tribunal order on this issue suffers from un-sustainability , but we are presently seized in MA Proceedings, and the scope of our interference in MA proceedings is very limited to rectifying mistakes apparent from records within limited mandate of Section 254(2), as also held consistently by all the Courts/tribunal , as we are not entitled to review our own decision. The manner in this MA was filed and argued, leave us with no doubt that the assessee under the garb of MA intended to re-argue the entire matter and expected us to review our own decision, which is not 55 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 permissible . Thus , we donot find any merit of the assessee's MA , and we dismiss the same.
4l. The next main grievance of the assessee in this MA is that no notices under Section 158BD was issued by the Revenue in the proceedings carried on by the Revenue against the assessee, as there was no search and seizure operations conducted by Revenue u/s 132(1) against the assessee, while admittedly AO issued notice u/s 158BC. The assessee has claimed that the tribunal allegedly erred in its decision while adjudicating this issue by holding that notice u/s 158BC is valid even in proceedings initiated u/s 158BD , and as per assessee Block Assessment Order is liable to be quashed in the absence of notice u/s 158BD . The decision of tribunal on this issue , vide appellate order dated 29.04.2022, is reproduced hereunder:
"c)That no notice u/s 158BD of the 1961 Act was issued by AO. That notice dated 05.05.2000 , u/s 158BC was issued without mentioning section 158BD in the notice , nor the assessee was informed by AO that proceedings were initiated against the assessee u/s 158BD of the 1961 Act, and hence the proceedings are bad in law liable to be quashed.
This argument of the assessee is again fallacious . The provisions of Section 158BD are substantive provision which provides that where the AO is satisfied that any undisclosed income belongs to any person, other than the 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, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the 56 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 provisions of this Chapter shall apply accordingly. Thus, once AO is satisfied that undisclosed income as is discernible from the seized material belonged to other persons , the AO has to record satisfaction and then hand over such seized material to the AO of such other person, to enable to proceed to frame Assessment against such other person, and in that eventuality Section 158BD itself provide that the provisions of Chapter XIVB shall apply accordingly. Section 158BD does not refer to any notice, while it is Section 158BC which provides that notice is to be served to such person requiring him to furnish return of income for the Block Period in the prescribed form. Section 158BD as was prevalent at the relevant time , read as under:
"Undisclosed income of any other person.
158BD. Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the 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, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly."
Thus, even in the case of proceedings initiated u/s 158BD , because of clear mandate in Section 158BD , that the provisions of this Chapter shall apply accordingly, the notice is to be issued by AO u/s 158BC , which was rightly done by the AO. Infact this is an admitted position that Notice u/s 158BC, dated 05.05.2000 was issued by the AO, which was served on the assessee on 08 th May, 2000 , requesting assesse to prepare a true and correct return of total income including undisclosed income for the Block Period ending 23.08.1998, in 57 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 prescribed form and be delivered to the office of AO within 16 days of service of notice u/s 158BC , dated 05.05.2000. Even , if it is accepted that provision of Section 158BD was not mentioned in the said notice, but still the proceedings cannot be held to bad in law , as the assesse was fully aware of the proceedings initiated against her under Chapter XIV-B to compute total income including undisclosed income , for the Block Period from 01.04.1988 to 23.08.1998 , as she regularly participated in the proceedings before the AO. The assesse filed her return of income for Block Period of ten year of total income including undisclosed income in prescribed form, from assessment year 1989-99 to assessment year 1999-00(until date of search 23.08.1998)(placed in paper book filed on 22.02.2021/ page 9). The assessee also filed letter before the AO, dated 24.05.2000 (placed at paper book filed on 22.02.2021/page 10) , seeking extension of time for filing the Block Period return. The assesse had also filed writ petition before Hon'ble Allahabad High Court under Article 226 , challenging on the question of limitation in framing of Block Period assessment . Admittedly, the assesse was also furnished seized material by Revenue. Thus , even if Section 158BD is not mentioned in the notice issued u/s 158BC , the proceedings are not vitiated as first of all there is no requirement of mentioning Section 158BD in the notice u/s 158BC because for proceedings initiated u/s 158BD , notice is required to be issued u/s 158BC, secondly , the assesse was fully aware of the proceedings initiated against her by Revenue under provisions of Chapter XIV-B of the 1961 Act and the assesse duly participated in the assessment proceedings , and no such objections were raised by the assesse during the course of assessment proceedings. Moreover, the assesse could not bring any material on record to justify that there was any prejudice cause to her or there was failure of justice, by merely not mentioning of Section 158BD in the notice dated 05th May, 2000 issued by AO under the provisions of Section 158BC. Further, even if it is presumed to be a defect in the issuance of notice u/s 158BC owing to non mentioning of Section 58 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 158BD in the said notice, it is a curable defect as Section 158BC is a procedural section , Reference is drawn to provisions of Section 292B of the 1961 Act . Refernece is also drawn to decision of Special Bench-Amritsar-tribunal decision in the case of Smt. Mahesh KumariBatra v. JCIT, reported in (2005) 95 ITD 152(ASR)(SB) and decision of Madras-tribunal in the case of L. Saroja v. ACIT, reported in (2001) 76 ITD 344(Mad.) . Thus, there is no merit in the contentions of the assesse which are hereby rejected , and we hold that Notice u/s 158BC, dated 05th May, 2000 issued by AO , without mentioning Section 158BD , was a valid notice. We order accordingly."
4m Thus, as could be seen that the tribunal held in its appellate order dated 29.04.2022 that provisions of Section 158BD are the substantive provision which provide that where the AO is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made u/s 132 , then the books of accounts or other documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and the AO shall proceed against such other person and the provisions of Chapter XIV-B shall apply accordingly. Section 158BD itself provides that provisions of Chapter XIV-B shall apply accordingly. Section 158BD does not refer to any notice , while Section 158BC provides for notice to be served to such person requiring him to furnish return of income for the block period. Section 158BC is a procedural section . Section 158BD is reproduced hereunder:
"Undisclosed income of any other person.
158BD. Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the 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, the 59 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly"
4n The tribunal, thus, held vide its appellate order dated 29.04.2022, that notice u/s 158BC dated 05.05.2000 was rightly issued by AO which was served on the assessee on 08.05.2000, requesting assesse to prepare a true and correct return of total income including undisclosed income for the Block Period ending 23.08.1998, in prescribed form and be delivered to the office of AO within 16 days of service of notice u/s 158BC , dated 05.05.2000. The tribunal also observed that even if it is assumed that provision of Section 158BD was not mentioned in the said notice, but still the proceedings cannot be held to bad in law , as the assesse was fully aware of the proceedings initiated against her under Chapter XIV-B to compute total income including undisclosed income , for the Block Period from 01.04.1988 to 23.08.1998 , as she regularly participated in the proceedings before the AO. The tribunal observed that the assesse filed her return of income for Block Period of ten year of total income including undisclosed income in prescribed form, from assessment year 1989-99 to assessment year 1999-00(until date of search 23.08.1998). The tribunal also observed that the assessee also filed letter before the AO, dated 24.05.2000) , seeking extension of time for filing the Block Period return. The assesse had also filed writ petition before Hon'ble Allahabad High Court, challenging on the question of limitation in framing of Block Period assessment . Admittedly, the assesse was also furnished seized material by Revenue. Thus , even if Section 158BD is not mentioned in the notice issued u/s 158BC , the proceedings are not vitiated as first of all there is no requirement of mentioning Section 158BD in the notice u/s 158BC because for proceedings initiated u/s 158BD , notice is required to be issued u/s 158BC, secondly , the assesse was fully aware of the proceedings initiated against her by Revenue under provisions of Chapter XIV-B of the 1961 Act and the assesse duly 60 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 participated in the assessment proceedings , and no such objections were raised by the assesse during the course of assessment proceedings. Moreover, the assesse could not bring any material on record to justify that there was any prejudice cause to her or there was failure of justice, by merely not mentioning of Section 158BD in the notice dated 05th May, 2000 issued by AO under the provisions of Section 158BC. Further, tribunal observed that even if it is presumed to be a defect in the issuance of notice u/s 158BC owing to non mentioning of Section 158BD in the said notice, it is a curable defect as Section 158BC is a procedural section , Reference is drawn to provisions of Section 292B of the 1961 Act . The tribunal also relied upon decision of Special Bench- Amritsar-tribunal decision in the case of Smt. Mahesh KumariBatra v. JCIT, reported in (2005) 95 ITD 152(ASR)(SB) and decision of Madras-tribunal in the case of L. Saroja v. ACIT, reported in (2001) 76 ITD 344(Mad.) . Thus, the tribunal rejected the plea of the assesse and held that Notice u/s 158BC, dated 05th May, 2000 issued by AO , without mentioning Section 158BD , was a valid notice. The assessee is always entitled to raise this plea before higher courts that the tribunal order on this issue suffers from un-sustainability , but we are presently seized in MA Proceedings, and the scope of our interference in MA proceedings is very limited to rectifying mistakes apparent from records within limited mandate of Section 254(2), as also held consistently by all the Courts/tribunal , as we are not entitled to review our own decision. The manner in this MA was filed and argued, leave us with no doubt that the assessee under the garb of MA intended to re-argue the entire matter and expected us to review of our own decision, which is not permissible . Thus , we donot find any merit in MA filed by the assessee , and we dismiss the same.
5. In the result, M.A. No. 15/Alld/2022 arising out of ITA nos. 128/Alld/2017 respectively, for ay: Block Period 01.04.1988 to 23.08.1998 , stands dismissed. We order accordingly.
6. Since the facts in MA no. 15/Alld/2022 arising out of ITA nos. 128/Alld/2017 respectively, for ay: Block Period 01.04.1988 to 23.08.1998 are same as in MA no. 16 & 61 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 17/Alld/2022, arising out of ITA nos. 129 & 130/Alld/2017 respectively, for ay: Block Period 01.04.1988 to 23.08.1998, our decision in MA no. 15/Alld/2022 shall apply mutatis mutandis to the MA's no. 16 & 17/Alld/2022 for ay: Block Period 01.04.1988 to 23.08.1998, and hence both the MA's No. 16 & 17/Alld/2022 stand dismissed.
7. In the result, M.A. No. 15, 16 and 17/Alld/2022 arising out of ITA nos. 128-130 /Alld/2017 respectively, for ay: Block Period 01.04.1988 to 23.08.1998 , stands dismissed. We order accordingly.
Order pronounced on 07/12/2022 at Allahabad, U.P. in accordance with Rule 34(4) of Income Tax Appellate Tribunal Rules, 1963.
SSd/-/- SSd/-/-Sd/-Sd/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07/12/2022 K.D. Azmi Allahabad Copy forwarded to:
1. Appellant -. Smt. Asha Agrawal, M/s. Mahendra Kumar Agrawala(HUF) and M/s. Mahabir Prasad Agrawal(HUF), Allahabad, U.P.
2. Respondent -ACIT, CC, Allahabad, U.P.
3. CIT(A) , Allahabad
4. CIT, Allahabad, U.P.
5. Sr. DR, ITAT, Allahabad //True Copy// By order Assistant Registrar 62 MA Nos. 15, 16 & 17/Alld/2022 arising out of ITA Nos. 128, 129 & 130/ALLD/2017 Smt. Asha Agrawal, Shri Mahendra Kumar Agrawal(HUF) & M/s. Mahabir Prasad Agrawal(HUF), Allahabad,U.P. Assessment Year: Block Period 01.04.1988 to 23.08.1998 63