Revenue's Appeals Dismissed: Invalid Section 153C Proceeding

The ITAT dismissed the Revenue's appeals and allowed the assessee's cross-objections, declaring the initiation of proceedings u/s 153C as invalid due to the absence of the Assessing Officer's satisfaction note. This led to the quashing of the assessment order, rendering the Revenue's appeals moot.

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Issues:
Validity of notice u/s 153C and assessment order based on it.

Analysis:
The appeals and cross-objections were against the CIT(A)'s order. The assessee challenged the notice u/s 153C and the subsequent assessment order. The assessee cited precedents where the recording of satisfaction note by the Assessing Officer of the person searched was deemed necessary for jurisdiction under section 153C. The absence of incriminating material and reliance on seized material were also highlighted. The CIT-DR argued that all conditions for initiating proceedings u/s 153C were fulfilled, including the satisfaction being recorded by the Assessing Officer before issuing the notice.

The ITAT found that the assessee's ground on the validity of Section 153C was raised before the CIT(A) and thus could be argued at any stage. The jurisdictional High Court's requirement of the Assessing Officer's satisfaction regarding seized assets belonging to the assessee was emphasized. The CBDT's Circular No.24/2015 clarified the necessity of recording a satisfaction note before transferring records to the AO having jurisdiction over the assessee. As no such satisfaction was recorded in this case, the initiation of proceedings u/s 153C was deemed invalid.

Despite other objections raised by the assessee, the absence of the crucial step of the Assessing Officer's satisfaction rendered the proceedings invalid. Following the High Court's decision and the CBDT's circular, the ITAT held the initiation of proceedings u/s 153C and the subsequent assessment order as invalid, leading to the dismissal of the Revenue's appeals and allowing the assessee's cross-objections. The assessment order was quashed, rendering the appeals by the Revenue moot.

In conclusion, the ITAT dismissed the Revenue's appeals and allowed the cross-objections of the assessee, declaring the initiation of proceedings u/s 153C as invalid due to the lack of the Assessing Officer's satisfaction note, ultimately leading to the quashing of the assessment order.

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