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Saturday, 07 May 2016 15:59

Notice u/s 153 C - Satisfaction Note must display the Reason or Basis for the Conclusion that the Assessing Officer is Satisfied that these documents belong to the Assessee - Chandigarh Tribunal

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Notice issued u/s 153C Notice issued u/s 153C

Validity of Notice Issued u/s 153C

There must be some cogent material available with the Assessing Officer before he arrives at satisfaction that the seized document does not ‘belong’ to the searched person but to somebody else. The satisfaction note does not at all display the reason or basis for the conclusion that the Assessing Officer is satisfied that these documents ‘belong’ to the assessee

Facts

1. Assessee filed her return of income as on 28.7.2008 at total income of Rs.19,53,440/-

2. Search and seizure operation was conducted on Dr.Naresh Mittal Group of cases on 17.11.2010

3. Consequent to the search operation, notice under section 153C was issued to the assessee dated 17.8.2012 calling for filing of return

4. In pursuance of notice under section 153C, the assessee again filed return declaring income at Rs.19,53,440/- as on 30.9.2013

5. The assessee raised an objection against initiation of proceedings under section 153C of the Act before the Assessing Officer

6. After rejecting the said objection and discussing the case on merits, an assessment on an income of Rs.91,94,940/- was completed making an addition of an amount of Rs.72,41,500/-

7. Aggrieved by this, the assessee went in appeal before the learned Principal Commissioner of Income Tax (OSD)

8. Elaborate submissions with regard to the merits of the case as well as on legal issue were made before the learned Principal Commissioner of Income Tax (OSD)

9. The main argument advanced by the assessee before the learned Principal Commissioner of Income Tax (OSD) was that notice issued under section 153C of the Act is bad in law and against the provisions of law

10. It was stated that the satisfaction recorded by the Assessing Officer did not state that the material seized belongs to the assessee, the same merely referred to the property transaction of the assessee

11. It was also put-forth that this satisfaction cannot be the basis as the document found during the course of search is non-incriminating in nature, nor the assessee could be said to be the owner of the document

12. In other words, it was not conclusively proved that the loose documents belong to the assessee

13. Rejecting all the contentions of the assessee the learned Principal Commissioner of Income Tax (OSD) decided the issue of legality of notice under section 153C against the assessee and also distinguished the cases relied on by it

14. The appeal of the assessee against the merits of the case was allowed partially by the learned Principal Commissioner of Income Tax (OSD)

15. Aggrieved by this, both the assessee as well as the Department have come up in appeal before Tribunal

16. Honb. Tribunal quashed the Notice u/s 153C  and decided the issue in favour of the Asseessee 

Adjudication

There must be some cogent material available with the Assessing Officer before he arrives at satisfaction that the seized document does not ‘belong’ to the searched person but to somebody else. The Hon'ble Court also emphasized that surmise and conjecture cannot take the place of satisfaction....we see that there is nothing coming out of the satisfaction note that the seized documents belong to the assessee. Further, there is nothing which would indicate as to how the presumption which was to be raised against the person searched have been rebutted by the Assessing Officer. The satisfaction note does not at all display the reason or basis for the conclusion that the Assessing Officer is satisfied that these documents ‘belong’ to the assessee.....

In view of the above discussion, relying on the parameters as laid down by the Delhi High Court, we do not find that the ingredients of section 153C of the Act have been satisfied in the present case. Consequently, the notice issued under section 153C of the Act is held not to be as per law and the assessment framed in pursuance to the said notice is hereby quashed.

Cases referred to

1. Vijaybhai N. Chandrani Vs. ACIT (2011) 333 ITR 436 (Guj)

2. P.Srinivas Naik Vs. ACIT (2008) 306 ITR (AT) 411

3. Pepsico India Holdings Pvt. Ltd. Vs. ACIT, 270 CTR 467 (Del)

Additional Info

  • Order Date: Thursday, 05 May 2016
  • Court: Tribunals
  • Cout Name: Chandigarh Tribunal
  • Section: Section 153C, 132
  • Favouring: Assessee
Read 12942 times Last modified on Saturday, 07 May 2016 16:32
Anil B.

A practicing Chartered Accountant Anil B. acquired CA, CS and LL.B degrees with over 12 years of rich and diverse management experience across Banking & Financial Services, Insurance and the Logistics industry spanning various markets and geographies globally.

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