TaxTMI 
TaxTMI 
2022 (2) TMI 169
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....loss) for the Assessment Year under consideration i.e. 2011-12. 2.1 The AO completed the assessment and made the addition of Rs. 50 lakhs on account of unsecured loan and Rs. 1,08,65,000/- on account of share application. 2.2 Against the said additions, the Assessee preferred first appeal before ld. Commissioner who vide impugned order annulled the assessment order itself, against which being aggrieved the revenue department has preferred the instant appeal on the following grounds:- "1. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in law while holding that there was no incriminating material for the issuance of notice u/s 153C, without appreciating that in the satisfaction note the AO had clearly brought out all the facts and circumstances, which indicated that the names of the entities including the assessee, appearing on seized documents were in the nature of accommodation entries only for routing the undisclosed income of M/s Golf Link Hospitality Pvt. Ltd. and hence such documents constituted " incriminating material" for the purpose of the issue of notice u/s 153C in the context of assessee. 2. Whether on facts and ci....
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....6. The order of the CIT (A) is erroneous in law and on facts of the case and is liable to be set aside and the order of the AO be restored." 3. The ld. DR relied upon the assessment order passed by the AO, whereas the ld. AR supported the impugned order. 4. Heard the parties and perused the material available on record. Issue involved in the appeal under consideration relates to the issuance of notice u/s 153C without any incriminating material for the relevant assessment year. The Ld. Commissioner annulled the assessment order itself by holding that the findings of Hon"ble Supreme Court given in the case of PCIT-3, Pune Vs. Sinhgad Technical Education Society (201 7) 397ITR 344 (SC) is squarely applicable in present cases. 4.1 Our attention was drawn by the ld. AR to the Tribunal"s order dated 07/12/2021 in ITA no. 6414/Del/2018 DCIT VsGolf Link Hospitality Pvt. Ltd,which is the Assessee"s own case itself for the Assessment Year 2012-13, wherein impugned order herein came into scrutiny of the Hon"ble Co-ordinate Bench and the Hon"ble Co-Ordinate Bench upheld the same by observing as under :- 3. The facts, in brief, qua the issue involved, are that a search and se....
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.... that, notice issued by the A.O. u/s 153C of the Act is legally invalid as it does not contain any incriminating seized document belonging to the appellant company for these relevant assessment years. In fact, there does not exist any incriminating document as a result of search which "belong to" or "pertaining to" or "relate to" the appellant. The investments reflected in the balance sheet of M/s. Golflink Hospitality Pvt. Ltd. cannot be taken as incriminating because these are the part of its regular Books of account and already disclosed by the investing company as well as M/s. Golflink Hospitality Pvt. Ltd. in the return of income. All additions made by the Assessing Officer are either from balance sheet or from profit & loss account. For which no incriminating document was found ad seized during search action. Thus, there is clear absence of incriminating material; hence, it is concluded that there exist no incriminating seized material for these relevant assessment year to justify issue of notice u/s 153C of the Act. Further, it is settled preposition of law that notice u/s 153C of the Act is bad in law in absence of any undisclosed assets or incriminating documents found as ....
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....ar. (iii) Proper satisfaction is to be recorded by the AO for the relevant assessment year for issuance of notice u/s 153C. All the above three conditions are to be satisfied cumulatively and simultaneously as per provisions of section 153C of the Act. Non satisfaction of any of the pre-conditions mentioned here in above, would result in notice u/s 153C legally unsustainable or invalid. In the present facts of the case no incriminating documents or undisclosed assets were found as a result of search. Hence, imperative jurisdictional condition for issue of notice 153C of the Act is not Satisfied. 5.7 Hon"ble Supreme Court in the case of PCIT-3, Pune Vs Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) has held that the nexus between issue of notice u/s 153C and the incriminating material found as a result of search must exist. Hon"ble Supreme Court in para 13 of the order has observed that one of the jurisdictional conditions precedent to the issue of a notice u/s 153C of the Act is that "money, bullion, jewellery or other valuable article or thing" or any "books of account or' document must be seized or requisitioned for the relevant assessm....
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....CIT [2017] 394 ITR 569 (Del) also held that in order to justify the assumption of jurisdiction under section 153C of the Act the documents seized must be incriminating and must relate to each of the AYs whose assessments are sought to be reopened. " Thus, by now, it is a settled law that notice u/s 153C of the Act is ab-initio-invalid in absence of incriminating seized material. Thus, from the plain reading of language of section 153C of the Act and various judicial pronouncement ; cited here-in-above, it is abundantly clear that in order to reopen the assessment of other person u/s. 153C of the Act for the assessment year earlier to the year of search, direct correlation must exist between existence of incriminating material and relevant assessment years. In the instance case, admittedly, additions are not based on any incriminating document found as a result of search. In fact, no seized or incriminating document is mentioned in the satisfaction recorded by Assessing Officer for the assessment years involved in these appeals. Further, AO has not recorded the satisfaction for these relevant assessment years, as envisaged u/s 153C of the Act. 5.9 In view of the de....