2015 (3) TMI 542 - HC - Income Tax

Initiation of the proceeding under Section 153C - absence of satisfaction note - Held that - When no satisfaction was recorded then the requirement of Section 153C was not satisfied. Therefore, we have no reason to interfere with the impugned order passed by the Tribunal, who has not sustained the proceedings under Section 153C of the Act, for the reason that there was no satisfaction at any stage. Needless to mention that in the case of Manish Maheshwari vs. Asst. CIT and Another 2007 (2) TMI 148 - SUPREME COURT OF INDIA , similar views were expressed. In the case of CIT vs. Anil Kumar Chadha, Income Tax 2015 (2) TMI 723 - ALLAHABAD HIGH COURT the same was followed too. - Decided against revenue.

Summary

Issues:
Appeals filed by the Department against ITAT order for assessment years 2002-03 and 2006-07.

Analysis:
The case involves appeals by the Department against the ITAT order for assessment years 2002-03 and 2006-07 concerning assessees from M/s. Shanker Gutka Group. The search and seizure operation led to the initiation of proceedings under Section 153C without a search warrant in the assessees' names. The AO passed assessment orders under Section 153C read with Section 153A/143(3) of the Income Tax Act, with the CIT(A) confirming additions later deleted by the Tribunal, prompting the Department's appeals.

The core issue raised by the Department's counsel is the Tribunal's interpretation of Section 153C, emphasizing the necessity of the AO's satisfaction before initiating proceedings. The absence of recorded satisfaction was acknowledged by the Department, as highlighted in the Tribunal's order. The counsel for the assessee stressed the mandatory requirement of satisfaction, citing relevant case laws to support their argument.

The Court emphasized the importance of recorded satisfaction as a pre-condition for invoking jurisdiction under Section 153C. Referring to precedents, the Court reiterated that satisfaction must be in writing and can be inferred from various sources, including assessment orders or other records. The absence of a satisfaction note in the present case led the Court to uphold the Tribunal's decision, citing previous judgments to support their stance.

Ultimately, after considering the arguments and reviewing the facts, the Court found no substantial legal question arising from the Tribunal's order. Consequently, the Department's appeals were dismissed at the admission stage, affirming the Tribunal's decision based on the absence of recorded satisfaction as required under Section 153C.