The main legal point established in the judgment is the interpretation of the satisfaction note recorded under Section 153C of the Income Tax Act and the court's decision to set aside the ITAT's decision in this regard.

CM Nos.26463, 26464 & 26466/2016 (for exemption)

1. Allowed, subject to all just exceptions.

2. The applications are disposed off.

ITA Nos. 449-451 & 453 of 2016

3. Admit.

4. The question of law urged is whether in the circumstances of the case, the ITAT findings that the satisfaction note was flawed and could not withstand scrutiny under Section 153(C) of the Income Tax Act, 1961 (hereinafter to be referred as ‘the Act’) is correct.

5. This Court does not propose to advert the facts in detail except to state that the search and seizure operation was carried out in the premises of Shri Tejwant Singh and one Shri Ved Prakash Bharti. A survey too was conducted under Section 133A of the Act in the premises of the assessee. As a consequence of that, notice was issued to the assessee under Section 153C of the Act by the Assessing Officer (AO), who also co-incidentally happened to be the AO of the searched party i.e Tejwant Singh and Ved Prakash Bharti and had issued notice under Section 153A of the Act. The assessments and additions finally made in the block period were the subject matter of an appeal to the CIT(A), which upheld that. In the circumstances, the assessee’s appeal to the ITAT, which upheld it at the threshold stating that the satisfaction note recorded under Section 153C of the Act in respect of the assessee i.e., the third party was invalid.

6. At the outset, counsel for the assessee fairly conceded that since the AO in both the cases i.e. that of the searched party and the third party were the same, the question of transmitting or recording a separate note etc. could not have been insisted upon. He, however, stated that the findings of the ITAT with respect to the nature of satisfaction i.e. that the documents “belonged to the assessee”, should be sustained. For this, learned counsel relied upon the subsequent amendment to Section 153C of the Act, brought into force with effect from 01.06.2015 by the Finance Act, 2015. It was submitted that the legislature was conscious of the pitfalls that existed in the previous legislation and, therefore, deleted reference to the expression “belonging to” and instead substituting with “pertains or pertained to”.

7. Learned counsel also relied upon the decision reported as Pepsico India Holdings (P) Ltd. Vs. ACIT, (2014) 50 Taxman.com 299 (Delhi). It was, therefore, urged that in the present case the reference to certain documents reflecting a state of factual affairs did not justify a conclusion that the material or materials found in the pen drive “belonged” to the assessee i.e the respondent. It was also urged that the note itself pointed to the material found referable or relatable to other third parties as well.

8. This Court has considered the submissions. The reasons or satisfaction note that formed basis of the notice under Section 153C of the Act to the assessee in this case are extracted below:-

Name and address of the assessee	M/s Super malls (P) Ltd Sector- 12, HUDA, Karnal Regd Office at 51 - Transport Centre, Punjabi Bagh, New Delhi.
Asstt. Year	2005-06 to 2010-11
PAN	AAICS2163F
Status	Company

Reasons/Satisfaction note for taking up the case of M/s Super Malls (P) Ltd. Sector- 12, HUDA, Karnal Regd. Office at 51- Transport Centre, Punjahi Bagh, New Delhi under Section 153C of the Income Tax Act, 1961.

The jurisdiction of this case has been assigned to this office u/s 127 of Income Tax Act, 1961 by the worthy Commissioner of Income Tax-III New Delhi vide order F.No. CITIII/ Delhi/Centralization/2012-1312455, dated 15.01.2013.

By virtue of the authorization of the Director of Income Tax (Investigation), Chandigarh, a search & seizure operation u/s 132(1) of the Act was carried out on 08/09.04.2010 at the residential/business premises of Sh. Tejwant Singh & Sh. Ved Parkash Bharti Group of cases, Karnal, Panipat & Delhi and a su