TaxTMI 
TaxTMI 
2026 (6) TMI 930
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....ere heard together and are being disposed of by this common order. ITA No.1772/JPR/2025 in the case of Manish Dhariwal is taken as the lead case. ITA No.1772/JPR/2025 2. The assessee in this appeal has taken the following ground of appeal: "1. The Ld. CIT(A) has erred on facts and in law in upholding the validity of notice issued u/s 153C of IT Act, 1961 and the consequent order passed by the AO. 2. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 37,20,000/- u/s 69 of IT Act, 1961 on account of alleged cash paid for purchase of flat in the project Royal Palm even when no evidence of any receipt indicating payment of such amount was found in search of Friends SPS Group, Kota and neither the copy of the statement of the concerned person of the group OR the opportunity to cross examine such person was provided. 3. The Ld. CIT(A) has erred on facts and in law in confirming the addition relying on the excel sheet containing details of 55 flats which was not found in search but subsequently got prepared 3 from the searched person on 03.08.2019 and therefore making the addition relying on such excel sheet is unjustified and u....
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....rder u/s 127 of the Act dt. 23.06.2023. 3.3 During the assessment proceedings, the AO show caused the assessee to the effect that a flat no. A-701 was purchased by the assessee and flat no. A-702 was purchased by Smt. Neetu Dhariwal. As per the incriminating documents found in the case of searched persons, total sale consideration paid for the said flats was of Rs. 1,86,00,000/- out of which Rs. 65,00,000/- was paid in cash along with Smt. Neetu Dhariwal. However, in the sale deed, the sale consideration was mentioned as Rs. 55,80,000/-, but the actual sale consideration was Rs. 93,00,000/- (one- half of Rs. 1,86,00,000/-). Thus, assessee made payment of on money in cash amounting to Rs. 37,20,000/- (93,00,000-55,80,000) during FY 2019-20 and therefore it was proposed to make addition of Rs. 37,20,000/- u/s 69 of the Act in the hands of the assessee. The assessee denied of having made any payment in cash. The assessee also filed objections relating to the validity of the satisfaction recorded by the AO of the assessee for proceeding u/s 153C of the Act. The assessee also sought cross-examination of the concerned searched persons whose statements were recorded and made basis for ....
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....Central Circle, Kota (AO of the searched person). The learned counsel in this respect has submitted that in the satisfaction note it is nowhere mentioned that the seized document had a bearing on the determination of the total income of the assessee rather it is stated that assessee concealed income to the extent Rs. 48,75,000/-. The learned counsel therefore has contended that the satisfaction note recorded by the AO of the assessee is not valid in the eyes of law. The learned counsel has further submitted that the satisfaction note of the AO of the assessee is verbatim reproduction of letter dated 17.01.2023 (supra). The learned counsel has further submitted that there is no independent recording of the satisfaction note by the AO of the assessee u/s 153C of the Act. He therefore has submitted that there was no independent application of mind by the AO of the assessee, hence the notice issued u/s was illegal and bad in law. 7. The learned DR on the other hand has relied upon the findings of the ld. CIT(A) wherein he has observed that the language of the satisfaction note did not show that there was no application of mind by the AO as the copy of search material was handed over....
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....The AO of the searched person has no obligation to record satisfaction that such seized material has any bearing on the income of the such person other than the searched person. Such an obligation to record satisfaction has been cast upon the AO of that other person. After receipt of the seized material, the AO of the other person shall proceed under section 153C, only if, he is satisfied that the seized books of account or documents or information contained therein have a bearing on the determination of the total income of such other person. The satisfaction contemplated by the statute is thus not a mere reason to verify, investigate, or scrutinize, but a jurisdictional satisfaction that the seized material bears upon the determination of total income. At the same time, one has also to see the satisfaction note as a whole and not by reading one line in isolation. If on cumulative reading of the entire note, the AO has clearly identified the seized material, linked the same to the assessee, and recorded in substance that the material pertains to the assessee and has nexus with determination of its undisclosed income, then a mere variation in phraseology may not by itself invalidate....
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....reproduced by the AO in the satisfaction note, "Details of seized material : As per the list of 55 flats provided during the search proceedings which is enclosed with the DCIT Central Circle, Kota's above letter". A perusal of the entire satisfaction note of the AO would reveal that there is no mention of any seized incriminating material on the basis of which the AO of the assessee had drawn satisfaction that the said incriminating materials have any bearing on the income of the assessee. The learned AO of the assessee has just reproduced the contents of the letter dated 17.01.2023 of the DCIT Central Circle, Kota and has extracted the relevant portion of the list/table given in the said letter and concluded that as per the given summary in the table, it was clear that the assessee had made payment of on-money of Rs. 48,75,000/-, in cash for purchase of flat during financial year 2019-20. He has further mentioned that hence, the assessee cancelled the income of Rs. 48,75,000/-. He thereafter concluded that he was satisfied that it was a fit case for issuing of notice u/s 153C of the Act. The AO of the assessee has only referred to the table containing the list of 55 flats and 50 p....
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.... 153C(1) of the Act reads as under: "...Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person." 13. Section 153C (3) of the Act explicitly introduces a strict sunset clause, which reads as under: "(3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April, 2021." 14. We find immense force in this contention of the Ld. AR. As per the first proviso to Section 153C(1) of the Act, the reference to the date of initiation of the search under section 132 in case of the person other than the searched person shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer of th....