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2016 (2) TMI 1208 - AT - Income TaxAssessment u/s 153C - non recording of reasons - Held that - Proceedings initiated under S.153C of the Act for the two years deserve to be quashed in as much as the concerned Assessing Officer has admittedly not recorded any satisfaction before forwarding the files to the Assessing Officer in whose charge, the assessee herein is assessed. The assessments made under S.153C of the Act are hereby quashed. In this view of the matter, the other grounds urged by the Revenue as well as the assessee have no legs stand, since the assessments for both the years are quashed. - decided in favour of assessee.
Issues:
Cross-appeals related to assessment years 2006-07 and 2007-08 arising from orders under S.143(3) read with S.153C of the Income Tax Act, 1961. Analysis: 1. Additional Grounds Raised by Assessee: The assessee raised additional grounds challenging the jurisdiction of the Assessing Officer under S.153C of the Act for the assessment years 2006-07 and 2007-08. The contention was that the Assessing Officer did not record satisfaction regarding undisclosed income of the appellant found during proceedings under S.132 of the Act in the case of another entity, AMR Construction Ltd. The assessee argued that this lack of satisfaction rendered the order under S.153C invalid. The Tribunal admitted the additional grounds based on legal questions and relevant precedents. 2. Background and Proceedings: Search and seizure operations in the case of AMR Construction Ltd. group led to findings of incriminating material related to the assessee. Subsequently, the Assessing Officer initiated proceedings under S.153C of the Act for the assessment years 2006-07 and 2007-08. The CIT(A) partially accepted the assessee's contentions, leading to appeals from both the Revenue and the assessee before the Tribunal. 3. Jurisdictional Requirement under S.153C: The assessee argued that the Assessing Officer must record satisfaction in the assessment file of the entity subject to search proceedings before initiating action under S.153C in the assessee's case. The assessee cited a CBDT circular and a High Court judgment emphasizing the necessity of recording satisfaction as a precondition for invoking jurisdiction under S.153C. The Tribunal noted the importance of this requirement and held that the absence of recorded satisfaction invalidated the proceedings under S.153C for the assessment years in question. 4. Decision and Rationale: The Tribunal, considering the CBDT circular, the High Court judgment, and legal principles, concluded that the Assessing Officer's failure to record satisfaction before initiating proceedings under S.153C rendered the assessments invalid. Despite the Revenue's argument that non-recording of satisfaction was a procedural irregularity, the Tribunal emphasized the mandatory nature of this requirement. Consequently, the Tribunal quashed the assessments made under S.153C for both years, leading to the dismissal of other grounds raised by both the Revenue and the assessee. 5. Final Outcome: The Tribunal allowed the appeals filed by the assessee and dismissed the appeals filed by the Revenue, thereby annulling the assessments made under S.153C for the assessment years 2006-07 and 2007-08. The decision was based on the lack of recorded satisfaction by the Assessing Officer, in line with legal precedents and the CBDT circular, emphasizing the mandatory nature of this requirement for invoking jurisdiction under S.153C of the Income Tax Act, 1961.
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