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2015 (10) TMI 2015 - AT - Income TaxValidity of the assessment order passed u/s 153C read with Section 153A and 143(3) - Held that - As per Section 292B, any notice, summons or other proceeding would not be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding provided such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. However, before issuing of notice u/s 153C, the satisfaction of the Assessing Officer of the person searched is essential for assuming the jurisdiction u/s 153C by the Assessing Officer of such other person. Therefore, in the absence of satisfaction by the Assessing Officer of the person searched, the Assessing Officer of the present assessee does not get any jurisdiction to issue such notice. Accordingly, notice u/s 153C issued by the Assessing Officer of the person searched lacks jurisdiction which is not curable by virtue of provision of Section 292B. In view of above, we respectfully following the decision of Hon ble Apex Court in the case of Manish Maheshwari (2007 (2) TMI 148 - SUPREME COURT OF INDIA) and decision of Lalitkumar M. Patel (2013 (7) TMI 778 - GUJARAT HIGH COURT), hold that the notices issued u/s 153C were invalid; accordingly the same are quashed. Consequently, the assessment orders framed u/s 153C r.w.s. 153A are also quashed. Since the assessment order itself has been quashed, the other grounds of the assessee s appeal which is with regard to determination of the income of the assessee needs no adjudication. - Decided in favour of assessee.
Issues Involved:
1. Validity of assessment orders passed under Section 153C read with Section 153A and 143(3) of the Income-tax Act, 1961. 2. Requirement of satisfaction recording by the Assessing Officer of the person searched. 3. Applicability of Section 292B to cure procedural irregularities in the issuance of notice under Section 153C. Detailed Analysis: 1. Validity of Assessment Orders under Section 153C: The primary issue in these appeals is the validity of the assessment orders issued under Section 153C read with Section 153A and 143(3) of the Income-tax Act, 1961. The appellants argued that the learned Commissioner of Income-tax (Appeals) erred in rejecting their grounds challenging the validity of the assessment orders. The basis for this challenge was the improper issuance of notices under Section 153C, which lacked the necessary satisfaction by the Assessing Officer of the person searched. 2. Requirement of Satisfaction Recording by the Assessing Officer: The appellants contended that no satisfaction was recorded by the Assessing Officer of the person searched (Shri Rameshbhai B. Shah) before issuing the notices under Section 153C. The legal requirement, as per Section 153C, is that the Assessing Officer must be satisfied that any money, bullion, jewellery, or documents seized belong to a person other than the one searched. This satisfaction must be recorded and the seized items handed over to the Assessing Officer of the other person. The appellants cited various judicial precedents, including the Supreme Court's decision in Manish Maheshwari vs. ACIT, which mandates the recording of such satisfaction as a condition precedent. 3. Applicability of Section 292B: The Revenue argued that any procedural irregularities in the issuance of notices under Section 153C could be cured under Section 292B of the Income-tax Act. However, the Tribunal rejected this contention, stating that Section 292B cannot cure the lack of jurisdiction caused by the failure to record the necessary satisfaction. Section 292B applies to minor mistakes or defects, provided the notice is in substance and effect in conformity with the intent and purpose of the Act. The Tribunal held that the absence of recorded satisfaction is a jurisdictional defect that cannot be remedied by Section 292B. Conclusion: The Tribunal concluded that the basic condition for the issuance of notices under Section 153C was not satisfied as no satisfaction was recorded by the Assessing Officer of the person searched. Consequently, the notices issued under Section 153C were invalid, and the subsequent assessment orders were quashed. This decision was based on the principles laid down by the Supreme Court and the jurisdictional High Court, emphasizing the mandatory requirement of recording satisfaction before initiating proceedings under Section 153C. Other Appeals: The Tribunal noted that the facts in the cases of other assessees were identical to those in the case of M/s. Parshwa Corporation. Therefore, the notices issued under Section 153C in these cases were also quashed, and the assessment orders were invalidated. Consequently, the Tribunal did not need to adjudicate the other grounds related to the determination of income. Final Order: All the appeals by the assessees were allowed, and the assessment orders issued under Section 153C read with Section 153A were quashed. The Tribunal pronounced this consolidated order on 11th September 2015 at Ahmedabad.
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