TaxTMI 
TaxTMI 
2024 (12) TMI 184
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.... 1. "That on the facts and circumstances of the case, assessment order passed under Section 153C of the Act as sustained by the Ld. CIT(A) is bad in law, illegal and void ab initio; 2. That without prejudice, considering the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in not rendering the notice issued under section 153C and consequent assessment bad in law as the satisfaction note recorded by the Ld. AO is invalid, bad in law and void ab initio; 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in not considering that the Ld. AO failed to dispose off the objections of the appellant against the satisfaction note vide a separate speaking order; 4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in not considering that the Ld. AO failed to provide the copy of the satisfaction note of the AO of the searched person to the appellant during the assessment proceedings; 5. That on the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in sustaining the order of the Ld. AO whereby impugned addition amounting to Rs....
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....h in the case of Pranjil Batra Group of cases. The addition of INR 75,08,750/- was made to the returned income on the basis of substituted sale consideration as emanating from the Agreement to Sale, found in the course of search. While making addition, the AO inter-alia observed that the total sale consideration of the property under consideration situated at 61, Vijay Block, Laxmi Nagar, Delhi-110092 is found to be at INR 4,49,50,000/- as against the amount of sale consideration shown to have been received by the joint owners of the property collectively at INR 1,49,15,000/-. The property was sold by the assessee alongwith other two persons namely, Shri Pradeep Singh (share of 25%) and Shri Tarun Gupta (share of 50%). The assessee holds 25% share in such property. The AO accordingly, carried out proportionate substitution of sale consideration having regard to the percentage share held in the property sold and consequently, additions were made which worked out to INR 75,08,750/- as under reporting of Short Term Capital gain ["STCG"]. 6. Aggrieved by the additions on account of alleged under reporting of sale consideration for the purposes of determination of capital gains, the ....
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....oses of assessment of a given assessment year. This is the marked distinction between the provision of section 153A and 153C of the Act. Since conditions have not been fulfilled; the 'satisfaction note' clearly suffers from the vice of non-application of mind as well as non-speaking 'satisfaction note'. Such 'satisfaction note' drawn sweepingly to cover all AYs and without making mention of specific document does not give rise to the jurisdiction available under section 153C of the Act. The Ld. Counsel for the assessee thus, submitted that in the absence of fulfillment of pre-requisites of section 153C of the Act, the jurisdiction to assess the returned income under section 153C of the Act is void, ab-initio and a nullity in law. 9. The Ld. Counsel for the assessee next submitted that at the time of drawing satisfaction for the purposes of assumption of jurisdiction under section 153C of the Act, the assessment for Assessment Year 2019-20 stood concluded/completed under the normal provisions of Act. Consequently, as per the judgement referred by Hon'ble High Court of Delhi in the case of Pr.CIT vs Ankush Saluja [2020] 115 taxmann.com 370 (Delhi), no addition could be made in the....
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....ity in law. The AO is entitled to prepare a common satisfaction note covering the various Assessment Years falling within the limitation period available for assessment under section 153C of the Act. 12.1. The Ld.CIT DR also defended the action of the AO in placing reliance over the Agreement to Sale found at the premises of Shri Pranjil Batra and submitted that on reading of Agreement to Sale, it will be evident that the understanding between the assessee, sellers and the corresponding buyer, Shri Pranjil Batra was to acquire the property at a higher consideration of INR 4,49,50,000/- and while registering the Sale Agreement, the assessee in collusion with the purchaser have drastically reduced the sale consideration depriving the Revenue of its lawful taxes. 12.2. The Ld.CIT DR thus pointed out that the lack of jurisdiction as pleaded on behalf of the assessee, is totally unjustified in the facts of the present case. The satisfaction note broadly provides the nature of undisclosed income emanating from the incriminating material found in the course of search. The Ld.CIT DR for the Revenue also submitted that report of DVO showing lesser fair market value as not bearing in t....
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....ntrolled and managed by Sh. Pranjil Batra. However, in sake of name Sh. Pranjil Batra has appointed his relatives/employees as directors/share holders in these entities. On perusal of such documents/information it has been observed that many of such information/ documents belongs to or pertains to the assessee as per brief description given under:- S.No. Premise/Party/Annexure /Page No. Description of document seized 1. Premise of Shri Pranjil Baua. F 193 Laxmi Nagar, New Delhi Sh. Pranjil Batra has entered into a transaction of sale/purchase of property with the assessee. As per incriminating documents and of sale deed agreement. has been evident that there is a huge difference in the consideration price as per agreement and sale deed. Further, cash exchange is also involved in this transaction. As per incriminating documents there is a difference of Rs. 300 Lacs and cash exchange of Rs. 90 Lacs. Panchnama was signed on 18/08/2020. The above documents have been examined and I am, being the assessing officer of the searched person. satisfied that the information contained in documents seized during the course of search u/s 132 of the 1.T. Act, 19....
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....rson. In summary, such Note should set the narrative in an objective manner, as far as possible, to enable judicial scrutiny of such document, if so called for. 20. The assessee contends that 'satisfaction note' which is the first step for assumption of jurisdiction under section 153C of the Act and provides foundation for conferment of jurisdiction is plagued with multiple legal infirmities. Viz: [i] the 'satisfaction note' has been recorded by the AO of searched person and that of assessee collectively for the period AY 2015-16 to AY 2021-22 without identifying the incriminating material in respect of any particular Assessment Year; [ii] the AO has thrown open the whole basket of six years without giving reference to any concrete incriminating material of a particular assessment Year; [iii] the act of the AO making sweeping averment in the satisfaction note that documents have bearing on determination of total income of Smt.Renu Singh for AY 2015-16 to 2020-21, is without legal foundation as the AO has even failed to name the alleged documents and further failed to mention as to how it is related /pertained to which Assessment Year; [iv] the....
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....ticular AY will not automatically confer jurisdiction to invoke section 153C of the Act in respect of all the AYs mentioned therein. The Hon'ble Delhi High Court further observed that discovery of material for a particular AY is not intended to trigger a chain reaction or have a water fall effect on all the AYs which can form part of the 'relevant AYs' under section 153C Of the Act. The Hon'ble Delhi High Court underscored well settled distinction which the law recognizes between the existence of power and the exercise thereof and thus, held that unless the AO is satisfied that the material gathered can potentially impact the determination of total income, it will be abrupt exercise of powers in mechanically re-opening or assessing all over again of the AYs covered in the block that could possibly form part of block of relevant AYs. For holding so, the Hon'ble Delhi High Court relied upon the judgement delivered by the Hon'ble Supreme Court in the case of Sinhgad Technical Education Society wherein the Hon'ble Supreme Court held that 'the assessment under section 153C could be made only for the year to which material relates to and exercise of power under section 153C of the Act in....
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.... meeting basic ingredients of providing some tangible & descript information and application of mind thereon has no standing in law and would not confer drastic jurisdiction of assessment u/s 153C of the Act on a person other than searched person. The jurisdiction assumed based on such lackadaisical 'satisfaction note' beset with vital infirmities cannot be countenanced in law. The objection raised on behalf of the assessee towards lack of jurisdiction based on cryptic and non-descript satisfaction thus deserves to be sustained. While recording a consolidated 'satisfaction note' is not a bar in law per se as rightly contended on behalf of the revenue, but however, in the same vain, the documents/assets searched need to be specified against each year covered in the satisfaction note to depict application of mind and initiation of action under section 153C of the Act qua such assessment years. The AO has failed to do so. As a corollary, the notice issued under section 153C of the Act and consequent assessment order passed under section 153C of the Act is vitiated in law and requires to be quashed. 23. We however, also advert to the objections raised on merits of the additions made....