TaxTMI 
TaxTMI 
2018 (2) TMI 1148
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....ome Tax Act and therefore the notice issued by the A.O. u/s 153 A r.w.s. 153C of the Income Tax Act is illegal, void, bad in law and /or without jurisdiction and therefore the impugned order is liable to be quashed. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the action of the Assessing Officer issuing the notice dated 22/10/2010 u/s 153A r.w.s 153C without appreciating the fact that no incriminating material or document was found during the course of search therefore, the notice issued by A.O. u/s 153A r.w.s. 153C of the Income Tax Act is illegal, void, bad in law and /or without jurisdiction and therefore the impugned order is liable to be quashed. 3. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the action of the Assessing Officer in issuing notice dated 22/10/2010 u/s. 153C despite the fact that AO of M/s. Bhatia International Ltd. Group of Indore has not recorded his satisfaction. 4. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the action of the Assessing Officer in making an addition of Rs. 4,00,000/- on account of alleged unexplained....
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....y the assessee for A.Y. 2002-03, details of payment made through cheque amounting to Rs. 4,00,000/- dated 23.03.2003, application to Board of Directors of Bhatia International Ltd and copy of the resolution certifying the limit of making investments as per companies Act. All these papers were already part of audited books of account of the assessee and were available on record and would in no way affect the income of the assessee in those years to which these papers pertain to. The AO of the Bhatia International Ltd forwarded the said loose papers to the AO of the assessee in the month of May, 2010, almost 32 months from the date of search. Thereafter the AO of the assessee issued notice dated 15.10.2010 under Section 153C of the Act for assessment years 2002-03 to 2007-08. The assessee filed return of income on 01.11.2010 for A.Y. 2003-04 declaring total loss of Rs. 2,34,700/-. Thereafter statutory notices were issued and served upon the assessee. The assessee was provided copies of seized documents vide letter dated 02.09.2011 and asked to furnish various details in that respect. Different queries were raised on the assessee by the AO and information/details were extracted from t....
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....as any incriminating material. The said contention of the appellant is not supported by the provisions of law. The relevant provision of the Act only speaks of 'documents'; there is no mandate in the Act that the documents ought to be incriminating documents so as to enable the Assessing Officer to assume valid jurisdiction. If such an interpretation is accepted, it would result in the said provision being rendered otiose. As observed by the Hon'ble Delhi High Court in the case of S.S.P. Aviation Ltd., section 153C merely enables the revenue to investigate into the contents of the documents seized which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not escape assessment in the hands of any other person merely because he has not been searched under s. 132. It is only a first step to the enquiry which is to follow. In this view of the matter, the contention as raised by the appellant has to fail. A further contention raised by the appellant is that the said Profit & Loss Acc....
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....153C of the Act and the consequent assessment framed deserved to be knocked down and quashed. The learned A.R. also brought to the notice of the Bench the distinction between the provisions of Section 153A and 153C of the Act and submitted that they are totally on different footings. He submitted that in respect of section 153A of the Act no sooner the search action is carried out, applicability of the provisions of Section 153A of the Act are automatic and no satisfaction is required to be drawn for reassessment and notice under Section 153A is automatic whereas as far as issue of notice under Section 153C of the Act is concerned, the Act categorically provides that satisfaction has to be drawn by the AO of the searched person to the fact of the sized record/assets found of other person were having a bearing on the determination of total income of that other person. The ld AR finally prayed before the bench the in view of the non recording of satisfaction by the AO of the Searched person as to the seized materials relating to other person of having any impact on the determination of income of the other person, the proceedings u/s 153C of the Act and consequent assessment are bad i....
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....g that documents pertaining to the appellant herein were found at the time of search and that the act of forwarding of the material itself denotes satisfaction on the part of the Assessing Officer of the person searched." Thus, it is clear from the above that the CIT(A) on examination of the assessment records did not find any satisfaction recorded by the AO of the searched person and came to the conclusion that satisfaction was presumed and implied. We also noticed that the papers found pertaining the assessee comprised of copy of Balance Sheet as on 31.03.2002, return of income for A.Y. 2002-03, regular bank statement of disclosed bank account in March, 2003 and thus no incriminating evidence have been found remotely which have a bearing on determination of total income of the assessee. We also found from the combined reading of provisions of Sections 153A and 153C that they are totally on different para meters. Provisions of Section 153A clearly mention that when search is carried out and no satisfaction is required to be drawn for reassessment proceedings under Section 153A of the Act and thus the same is automatic. On the other hand, so far as the issue of notice under Secti....
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.... was a typographical error in such notice. We also presume that in the course of assessment proceedings section 153A was corrected as 153C after due consent by the accountant of the assessee ( in the notices as well as return filed by the assessee). We however hasten to add that we are not giving any finding on the claim of the Revenue or the Assessee regarding existence of satisfaction note or typographical error in the notice u/s.153-A of the Act. 12. The first aspect that has to be considered is as to whether any satisfaction at all is required to be arrived at by the AO of the person who was searched u/s.132 of the Act, regarding any undisclosed income of the person who was not subjected to a search to hand over the seized material to the AO of the person to whom the seized document belongs or is alleged to belong. 13. The ITAT Delhi in the case of M/S.Jindal Stainless Steel Vs. ACIT ITA No.3480 and 3481/Del/2006 in its order dated 25/4/2008 had dealt with this issue and have held that provisions of Sec.153-C of the Act are akin to Sec.158BD of the Act. (vide para 46 of the order). The Hon'ble Tribunal further held that the AO has to follow the condition precedent for pro....
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.... knowledge of the department. In fact this fact has been duly informed by the assessee in its letter dated 22/1/2007 to the DDIT (Inv.), Unit 7(2). The satisfaction note under section 153C of the Act merely says that the documents were being sent to verify the transaction of lease. On the facts of the case it cannot be said that the AO was satisfied regarding existence of any undisclosed income which would warrant initiation of proceedings under section 153C of the Act. In our view the satisfaction required for proceedings under section 153C cannot be reduced to a mere formality of forwarding the documents found in the course of search which did not belong to the person searched and which belonged to the person against whom proceedings under section 153C are sought to be initiated. In the case of Anil P.Khimani vs. DCIT ITA No.2855 to 2860/M/08 (Order dated 23.2.2010) this Tribunal had an occasion to deal with similar issue. The Tribunal held as follows: "13. A perusal of the assessment orders in all these cases, clearly demonstrate that the sole addition in question is on account of low withdrawals. This had not been made, based on any material found either during the course of....