TaxTMI 
TaxTMI 
2025 (8) TMI 684
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....00/- is liable to be deleted. 2. The learned CIT(A) ought to have observed that the Assessing Officer has relied completely upon the dumb documents found during the course of search of other party with whom the appellant does not have any business transactions, ignoring this fact, the learned CIT(A) could not have confirm the addition made by the AD. 3. The learned CIT(A) ought to have considered the settled judicial precedent that no addition could be made on the basis of notings' in the loose sheets without any corroborating evidence 4. The learned CIT(A) ought to have observed that the Assessing Officer without considering and rebutting the evidences submitted by the appellant, finalized the assessment proceedings a/s. 153C res 147 of the IT Act by making some general observations and made the addition on of Rs. 40,00,000/-by treating the same as an unexplained expenditure u/s: 69C of the IT Act and hence the same may not be sustained. 5. The learned CIT(A) ought to have observed that the Assessing Officer has no jurisdiction to issue notice u/s 153C of the IT Act accordingly the proceedings are also null & void. 6. There is no sa....
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....to the cash transaction have been declared by the assessee. Therefore, the Assessing Officer observed that, income chargeable to tax for the assessment years 2014-2015 to 2017-2018 has escaped assessment in the hands of the assessee and that "I am satisfied the assessment to be re-assessed under section 153C of the Income Tax Act, 1961 for the assessment years 2014-2015 to 2017-2018". Accordingly, the Assessing Officer has issued notice under section 153C of the Act on 25.03.2019 and served on the assessee. However, there is no response from the assessee for the notice issued under section 153C of the Act. Therefore, a show cause letter dated 14.11.2019 was issued to the assessee proposing to complete the assessment based on the merits of the case and as per the information available on record. In response to the show cause notice, the assessee has filed an application denying the transaction of expenditure in toto. Since, the assessee did not furnish any proof as called-for in the show cause letter such as, municipal plan approval, year-wise construction details, valuation report by approved valuer, bank account copies etc., the Assessing Officer has made addition towards unexplai....
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....r should be deleted. 5. During the course of appellate proceedings, the learned CIT(A) forwarded the additional evidences filed by the assessee to the Assessing Officer for his comments in terms of Rule 46A of I.T. Rules, 1962. The Assessing Officer after considering the relevant additional evidences filed by the assessee, submitted his remand report dated 04.07.2024 and stated that, the assessee could not furnish the requisite documents and information called-for by the Department to establish the year of construction of the property in the financial year 2009-2010. The learned IT(A) after considering the relevant submissions of the assessee and also taking note of the loose sheets found during the course of search in the case of Sri Manohar Rao Warlawar held that, the documents found during the course of search shows certain expenditure incurred by the assessee towards construction of house property or building. This fact has been admitted by Sri Manohar Rao Warlawar in his statement recorded under section 132(4) of the Act. The assessee could not establish the payments referred to in the incriminating document with any evidence including source for the said payment. Although,....
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....5 to 2017-2018. If we go through the relevant loose sheets, including page-19, it is a plain sheet under the Head "Dr.DM Rao Garu" with date and certain amount without any reference to the name of the assessee and the person to whom the said payment was made and also the nature and purpose of the payment. Therefore, the satisfaction arrived by the Assessing Officer on the basis of loose sheet no.19 that, the said document is having a bearing on the total income of the assessee for the above assessment year is illegal and notice issued by the Assessing Officer on the basis of the said illegal satisfaction note renders the entire assessment proceeding void abinitio and liable to be quashed. 7.1. Learned Counsel for the Assessee further, referring to the document found during the course of search and various other documents submitted that, the loose sheet page no.19 refers to date and amount without any party to the transaction. However, the Assessing Officer on the basis of the statement of Sri Manohar Rao Warlawar come to the conclusion that, the said document belongs to the assessee and is having a bearing on the determination of the total income, even though, the Assessing Offi....
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....ar 2009-2010, the document and it's contents not related to the assessee for the year under consideration, the Assessing Officer without verifying the relevant facts, has simply made the addition. The learned CIT(A) without verifying the relevant facts, has simply sustained the addition made by the Assessing Officer. Therefore, he submitted that, the addition made by the Assessing Officer should be deleted. 8. Sri Gurpreet Singh, learned Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, the loose sheets found during the course of search contains dates and payments. Dr. VM Rao in the statement recorded, stated that, the said payments relates to construction of expenditure incurred by his son-in-law-the-assessee. The Assessing Officer on the basis of documents found during the course of search coupled with the statement recorded from Dr. VM Rao, has recorded satisfaction in terms of section 153C and satisfied that, the said document is having a bearing on the determination of the total income of the assessee for the above assessment year. Therefore, the argument of the assessee that, the document considered by the Assessing Offic....
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....g Officer of the searched person and satisfied that, loose sheets nos.18 to 28 and more particularly, page-19 of the above loose sheet contains details of cash payments to the tune of Rs. 1,15,15,000/- for the period between 20.02.2014 to 25.09.2016 and further, it has a bearing on the determination of the total income of the assessee for the assessment years 2014-2015 to 2017-2018. Therefore, the Assessing Officer issued notice under section 153C of the Act and completed the assessment by making addition towards unexplained expenditure under section 69C of the Income Tax Act, 1961 for all four assessment years. 10. We have given our thoughtful consideration to the satisfaction note recorded by the Assessing Officer of the searched person for the assessment year 2014-2015 and satisfaction note recorded by the Assessing Officer of the assessee for the assessment years 2014-2015 to 2017-2018, in light of relevant loose sheet nos.18 to 28 and more particularly, page-19 in light of arguments of the Counsel for the Assessee and upon consideration of the relevant documents, we ourselves do not subscribe to the reasons given by the learned CIT(A) to uphold the initiation of proceedings....
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....e transaction and purpose of payment, in our considered view, on the basis of said document, the satisfaction note recorded by the Assessing Officer for issuance of notice is illegal and thus, the assessment order passed by the Assessing Officer on the basis of illegal or incorrect satisfaction note becomes void abinitio and liable to be quashed. This legal principle is supported by the decision of Hon'ble Supreme Court in the case of DCIT vs., M/s. U.K. Paints (Overseas Ltd.) in Civil Appeal No.6634 of 2021, wherein it was held that, "as no incriminating material found in the case of any of the assessee either from the assessee or from the third party and the assessments were made under section 153 of the Act, the High Court has rightly set-aside the assessment orders. Therefore, the impugned Judgment and the Orders passed by the High Court do not require any interference from this Court." 11. In this view of the matter and considering the facts and circumstances of the case, we are of the considered view that, initiation of proceedings under section 153C of the Income Tax Act, 1961 by the Assessing Officer on the basis of satisfaction note recorded for initiation of proceeding....