×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
11-01-2019, Sesha Sai Township, Section 292C, 153C, Tribunal Visakhapatnam
These appeals are filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-3, Visakhapatnam vide ITA No.629/2010-11/CIT(A)-1, Hyd/CIT(A)-3, Vsp/2015-16 and 630/CIT(A)-1,Hyd/2010-11/CIT(A)-3, Vsp/2015-16 dated 26.05.2015 for the Assessment Years (A.Y.)2007-08 and 2008-09. Since the grounds raised in these appeals are common, the appeals are clubbed, heard together and a common order is being passed for the sake of convenience as under.
2. A search u/s 132 of the Income Tax Act, 1961 (hereinafter called as ‘Act’) was conducted in the group cases of Sai Teja Builders, Vijayawada on 23.04.2008 and during the course of search, incriminating material relating to the assessee was found and seized in the premises of the searched person. Therefore, a notice u/s 153C r.w.s. 153A of the Act dated 25.02.2009 was issued to the assessee and the assessments were completed u/s 143(3) r.w.s. 153C of the Act for the A.Y. 2007-08 and 2008-09 on total income of Rs.2,04,28,114/ and Rs.6,28,89,893/- respectively. The assessee went on appeal before the CIT(A) and the Ld.CIT(A) allowed the appeal partly.
3. Against the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. Before us, the assessee has raised two additional grounds with a petition for admission of the additional grounds. The Ld.AR during the appeal hearing submitted that the AO of the searched person as well as the AO of the assessee have not recorded the satisfaction as required u/s 153C of the income tax act and as per the guidelines of Hon’ble Supreme Court in the case of CIT Vs. Calcutta Knitwears, 43 taxmann.com 446 (SC) dated 12.03.2014 followed by Board Circular No.24/2015 dated 31.12.2015 recording of satisfaction is mandatory and non recording the satisfaction renders the assessment made u/s 153C r.w.s. 143(3) as invalid.
The said ground was not taken before the Ld.CIT(A) since there was no information to the assessee with regard to non recording of satisfaction by assessing officer of the searched person and the satisfaction recoded by the AO of the assessee. The assessee further submitted that the said information was obtained from the AO under the Right to Information Act vide letter No.DCIT/CC-VJA/RTI/3/2017-18 dated 23.11.2017 and the same is placed in the paper book Thus the assessee came to know that there was no satisfaction recorded by the AO in the case of searched person or in the case of the assessee under Right to Information Act after the first appeal order and there was no occasion to the assessee to canvass the additional ground before the first appellate authority. Therefore a need has arisen to take up the ground of validity of assessments made without recording the satisfaction in the case of searched person as well as in the case of the assessee. Since the recording of satisfaction is crucial for initiating the proceedings u/s 153C and for issue of notice, the Ld.AR argued that the issue goes to the root of assessment and it is a purely legal ground, hence, requested to admit the same.
4. On the other hand, the Ld.DR has opposed the admission of the additional ground. The assessee has raised two additional grounds which read as under :
"(1) On the facts and in the circumstances of the case, and in law, whether the notice issued U/s 153C of the ACT without recording of satisfaction by the Assessing Officer of the searched person is invalid and consequently the notice U/s 153C is (Table to be quashed and consequently the entire assessment proceedings are liable to be held as void- ab-init/o.
(2) On the facts and in the circumstances of the case, and in law, whether the notice issued U/s 153C of the ACT on the basis of satisfaction recorded by the assessing Officer of the Appellant without signing the Order Sheet is liable tube quashed as Invalid and consequently the entire assessment proceedings are liable to be held as void- ab-initio"
5. The first additional ground is related to not recording the satisfaction by the AO of the searched person to transfer the incriminating material and to take up the assessment of such other person, i.e the assessee. In a nut shell, the contention of the assessee is that certain incriminating material was found during the course of search in the premises of Sai Teja Builders group relating to the assessee and as per the statutory requirement and as decided by the Hon’ble Supreme Court in Calcutta Knit Wears and the Board Circular dated 31.12.2015, the AO of Sai Teja Housing Estates required to