AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 765
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....tion 153C of the Act in all the present appeals, noting the mistake of the issue having not been adjudicated in accordance with the decision of the Hon'ble Supreme Court as well as Hon'ble jurisdictional High Court, which was referred to by the assessee during the course of hearing before the ITAT. 4. Para-2 of the order in the MA notes the mistake pointed out by the assessee in the order of the ITAT, of having not considered the pleadings of the assessee challenging validity of the assessment framed under section 153C of the Act, to the effect that a valid jurisdiction to frame assessment under section 153C of the Act could have been assumed only on the fulfillment of the condition prescribed in lawof the AO of the searched person having recorded satisfaction of documents found during search belonging to the assessee; that in the present case, it was pleaded before the ITAT that there was no such satisfaction recorded by the AO of the searched person and this pleading of the assessee was rejected by the Tribunal on the ground that there was no requirement to record such satisfaction. The contents of para-2 in this regard are reproduced hereinunder: "....In brief, the grievance ....
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....e have duly considered rival submissions and gone through the record carefully. At this stage, before we embark upon an inquiry on the facts of the present case, in order to find out whether any apparent error was committed by the Tribunal or not while passing impugned order dated 29.3.2016, we think it appropriate to bear in mind certain basic principles for exercising powers contemplated in section 254(2) of the Income Tax Act. There are series of decisions at the end of the Hon'ble Supreme Court as well as Hon'ble High Court expounding scope of exercising powers under section 254(2) of the Act. We do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. During the course of hearing, the Tribunal has passed following interim order: "06.....
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.... 4. We have duly considered contentions of the ld.counsel for the assessee. However, at this stage without getting these details verified from the Revenue, we are not inclined to accept them on its face, because if these details were available, during the appeal hearing, they could have been considered on that time also. In proceedings under section 254(2) our jurisdiction is very limited. Therefore, we grant some more time to the Revenue, and direct the Assessing Officer to remain present on the date of next hearing with relevant record. Copy of this order be supplied to Administrative Commissioner for ensuring the compliance. 5. Matter now stands adjourned to 17th January, 2020. Sd/- Sd/- (AM) (JM) WASEEM AHMED RAJPAL Y....
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....009 for A.Y. 03-04, 04-05 & 05-06 - wherein Co- ordinate 'B' Bench, Ahmadabad held that proceeding u/s. 153C is held valid. vii. Vishnu Anant Mahajan vs. ACIT, Circle 5, Baroda - wherein salary and interest income of the partner is held business income in the hands of partner. viii. CIT vs. Late J. Chandrasekar (HUF) [2011] 338 ITR 61 (mad) - wherein proceeding u/s. 153C is held invalid as the Revenue do not possess any material to show that materials were available at the hand of the Assessing Officer at the time of issuing notice. Besides above, number of cases have also been referred by the ld. A.R. Therefore, he requested that the proceeding initiated u/s.153C is to be declared null and void. At the outset, ld. CIT D.R. argued that both the lower authorities were right in confirming the action u/s.153C of the IT Act as during the course of search at the residence premises of Shri Yakub A. Colddrink, books of the firm as per Annexure A/11 & A/12 were found and seized which were admitted by the partner belonging to the appellant firm in his statement dated 29.08.2003 recorded u/s. 132(4) of the IT Act. Thus, he prayed to confirm the action of the CIT(A). 5. We have he....
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....l position on this issue, we have considered view that CIT(A) was right in confirming the action of the A.O. u/s.153 of the IT Act. Thus, the first ground of appeal in all the years is dismissed." 6. The Hon'ble Supreme Court in the case of CIT Vs. Calcutta Knitwears, reported 362 ITR 673 (SC) has considered procedure required to be followed in assessment order under section 158BD of the Act. The conditions enumerated in section 158BD are identical to section 153C of the Act. In other words, section 153C is success or of section 158BD. In both these sections fundamental requirement is, before taking cognizance of section 153C, a satisfaction note is required to be recorded by the AO of the searched person exhibiting the fact that during the course of search certain incriminating material belonged to the assessee found and seized, who reveals escapement of taxable income. After recording the satisfaction, record would be transmitted to the AO of such other person who has territorial jurisdiction over other person. Hon'ble Supreme Court in the case of Calcutta Knitewear (supra) laid down when this satisfaction could be recorded. It has been summarized in paragraph-44 of the....
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.... regard, it relied upon the decision of the Kerala High Court in the case of CIT v. Panchajanyam Management Agencies & Services [2011] 333 ITR 281. 7. Before that we have noted from para-5 of the ITAT order that the ITAT also recorded a finding of the fact that during search operation at the residential and business premises of Yakub AColddrink, the books of accounts of the firm as per Annexure A/11 and A/12 and list paper as per Annexures were found and seized. The relevant finding of the ITAT at para-5 is reproduced in the order passed by the ITAT in the MA filed by the assessee, which is reproduced hereinabove. 8. Therefore the limited issue for consideration before us in this recalled matter is, whether for a valid assumption of jurisdiction to frame assessment u/s 153C of the Act, the AO of the searched person has to record satisfaction that documents or material found during the course of search action related to the assessee, who was not subjected to search action u/s 132 of the Act. 9. During the course of hearing before us, the ld.counsel for the assessee fairly conceded that in view of the facts as noted by the ITAT,that the AO of the searched person and the assessee w....
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....d. As noted above, the only mistake which was noted by the ITAT was with regard to its finding that no satisfaction note of the AO of the searched person is required regarding documents relating to the assessee found during the course of search on some other persons for a valid assumption of jurisdiction to frame assessment u/s 153C of the Act. The ITAT in the order passed u/s 254(2) of the Act, found the same to be contrary to the law laid down by the Hon'ble Apex Court and Hon'ble jurisdictional High Court in this regard, and accordingly held that there was an error and mistake apparent from record in the order of the ITAT. Clearly the order of the ITAT was recalled for the limited purpose of adjudicating the challenge by the assessee to the validity of assessment framed u/s 153C of the Act in the absence of satisfaction of the AO of the searched person of any material belonging to the assessee found during search conducted on certain persons. Scope of adjudication, now, before us is to be confined only to this aspect. On this aspect, the ld.counsel for the assessee has conceded that it has no case in view of the decision of the Hon'ble Supreme Court in the case of Supermall P.L....
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....come eligible for deduction u/s.80IA for the A.Y. 05-06 and proceeding u/s. 153A is to be made on the basis of incriminating document found indicating undisclosed income. Then the addition was only be restricted to those documents/incriminating materials and clubbed only to the assessment remained originally as the law does not permit the A.O. to disturb already concluded issues whether it pertained to any income or expenditure or deduction by relying the Honoble Delhi High Court decision in case of CIT vs. Anil Kumar Bhatia. He submitted written reply vide letter dated 06th February, 2013, which is reproduced as under: (1) Nothing belonging to the assessee is found & same is confirmed by reply to RTI & Order also do not refer to any seized material. (2) The paper book filed by the department also do not contain any paper which is even alleged to belonging to the assessee. Those papers are used in case of Y.A. Colddrink but not in case of the assessee. (3) The issue was raised before C.I.T.(A). He has held that 153C applicable if undisclosed income of third persons is found. He has erroneously applied principles of 158 BD. The requirement u/s. 153C is that something belonging....
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.... account and other valuables were found belonging to the assessee. iv. Vijaybhai N. Chandrani vs. ACIT [2011] 333 ITR 436 (Guj.) - wherein proceeding u/s. 153C is held invalid on the basis of assessee's name referred in different columns. v. Shri Alkesh M. Patel vs. DCIT, Central Circle-1(1), Ahmadabad in IT(SS)A Nos. 144 to 146/Ahd/2010 & C.O. Nos. 90, 91, 105/Ahd/2010 - wherein Co-ordinate 'D' Bench, Ahmedabad held that diary belonging to the assessee was found, therefore, initiation proceeding u/s.153C is held valid. vi. DCIT, CC-1(2), Ahmadabad vs. Shri Abhalbhai Arjanbhai Jadeja in ITA Nos. 174, 175 & 176/Ahd/2009 for A.Y. 03-04, 04-05 & 05-06 - wherein Co- ordinate 'B' Bench, Ahmadabad held that proceeding u/s. 153C is held valid. vii. Vishnu Anant Mahajan vs. ACIT, Circle 5, Baroda - wherein salary and interest income of the partner is held business income in the hands of partner. viii. CIT vs. Late J. Chandrasekar (HUF) [2011] 338 ITR 61 (mad) - wherein proceeding u/s. 153C is held invalid as the Revenue do not possess any material to show that materials were available at the hand of the Assessing Officer at the time of issuing notice. Besides ....