TaxTMI 
TaxTMI 
2016 (6) TMI 30
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....er passed by the Ld. AO u/s 153C/ 143(3) is illegal, time barred, bad in law, without jurisdiction and wrong on facts. The additions made are unjust, unlawful and arbitrary and are made against the principles of natural justice. 2. That on the facts and circumstances of the case and the provisions of law, the Ld CIT Appeals has failed to appreciate that the Ld AO was not justified to ignore the submission of the appellant that the assessment proceedings for the year under appeal was not pending on the date of the recording of satisfaction u/s 153C and since the same didn't abate, the proceedings u/s 153C of the Income Tax Act in this case are bad in law and deserves to be quashed. 3. That on the facts and circumstances of the case and the provisions of law, the Ld CIT Appeals has failed to appreciate that the assessment framed by Ld AO is against the statutory provisions of the Act and without complying the procedures prescribed u/s 153C of the Act and as such the assessment being bad in law deserves to be quashed. 4. That on the facts and circumstances of the case and the provisions of law, the Ld CIT Appeals has failed to appreciate that the Ld AO was not justified to i....
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.... and the same do not justify the additions made. The additions have been sustained with preset mind of the Ld. CIT Appeals and her order is based on surmises, conjectures and suspicion. 9. That on the facts and the circumstances of the case and the provisions of law, the various observations and findings of the Ld CIT Appeals and Ld AO in the impugned appellate order and assessment order, respectively, are irrelevant and vitiated in the law. 10. That the Appellant craves the right to amend, append, delete any or all grounds of appeal." 4. In all other appeals of the assessee similar grounds are raised. The only difference is in the amount of sustenance of addition mentioned in Grounds No. 6 & 7. 5. At the first instance, the ld. Counsel for the assessee argued Grounds No. 1 to 4 vide which a legal issue has been raised challenging the validity of the assessment framed u/s 153C of the Income Tax Act, 1961 (hereinafter referred to as the Act), when no incriminating material was found during the course of search. 6. Facts related to this issue in brief are that a search & seizure action u/s 132 of the Act was carried out in the cases of Sh. B. K. Dhingra, Smt. Poonam Dhingra, ....
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....ground raised by the assessee before the learned CIT(A) with regard to validity of Section 153C was different than the ground raised before the ITAT. Therefore, in effect, the assessee is raising separate ground which is not permissible unless an additional ground is raised before the ITAT by duly seeking permission there for. We are unable to agree with this contention of learned CIT-DR. The assessee has raised the ground relating to validity of Section 153C before the CIT(A) which is evident from page 1 & 2 of learned CIT(A)'s order wherein grounds of appeal raised by the assessee are reproduced. From the plain reading of those grounds of appeal, it is clear that the assessee raised the ground relating to validity of initiation of proceedings u/s 153C as well as the consequential assessment order passed by the Assessing Officer. That once a ground is raised, then fresh arguments relating to such ground can always be taken at any stage. Therefore, the contention of learned CIT(A) that the assessee is raising the fresh ground is untenable. 7. Now, coming to the merit of the validity of notice u/s 153C, we find that the search had taken place at the residence of Shri B.K. Dhingra,....
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....- reg.- The issue of recording of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation. 2. The Hon'ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No.3958 of 2014 dated 12.3.2014 (available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of Section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person u/s 158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any 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; or (b) in the course of the assessment proceedings under section 158BC of the Act; or (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person." 3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/parimateria to the provisions of section 158BD of the Act and therefore, th....
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....d 31st December, 2015, we are of the opinion that the initiation of proceedings u/s 153C cannot be held to be valid. 10. Though the learned counsel for the assessee has raised several other objections with regard to validity of the notice u/s 153C but since, in our opinion, the first and foremost step for initiation of proceedings u/s 153C i.e., the recording of the satisfaction by the Assessing Officer of the person searched is missing, the proceedings are invalid and, therefore, the other arguments of the assessee need not be examined in detail. We, therefore, respectfully following the decision of Hon'ble Jurisdictional High Court in the case of RRJ Securities Ltd. (supra) and the Circular of CBDT No.24/2015 dated 31st December, 2015, hold the initiation of proceedings u/s 153C to be invalid and quash the same. Since the notice u/s 153C itself has been held to be invalid, the assessment order passed in pursuance thereto is also quashed. Once the assessment order is quashed, the appeals filed by the Revenue which are with regard to the additions deleted by the CIT(A), do not survive for adjudication on merits. Accordingly, all the appeals filed by the Revenue are dismissed ....