2017 (5) TMI 842 - HC - Income Tax

Assessment u/s 153C - no proper recording of satisfaction by the Assessing Officer to issue notice under section 153A - Held that - During the course of the hearing it was suggested to the respondent/assessee through its counsel that having regard to the categorical statement in the note that During the course of search and seizure documents/papers pages 1 to 31 of annexure A-28 seized by Party R-2 annexures A-56 A-57 and A-58 seized by party 04 are found to belong to M/s Satkar Fincap Ltd. C-I05 Ramdutt Enclave Uttam Nagar New Delhi. I have examined the above mentioned documents/papers and provision of section 153C is invocable in this case the Income-tax Appellate Tribunal s findings and conclusion cannot be sustained. Referring to assessee s submission that having regard to these facts the Income-tax Appellate Tribunal s findings with respect to no proper recording of satisfaction under section 153C of the Act may be set aside and the matter be remitted for consideration on the merits of the assessee s appeal we accordingly set aside the Income-tax Appellate Tribunal s findings with regard to absence of any satisfaction under section 153C and as a consequence remit the appeals for consideration by the Income-tax Appellate Tribunal on the merits.

Summary

Issues:
1. Interpretation of section 153C of the Income-tax Act, 1961 regarding the satisfaction recorded by the Assessing Officer.

Analysis:

The judgment in question pertains to the interpretation of section 153C of the Income-tax Act, 1961, specifically focusing on the satisfaction recorded by the Assessing Officer. The case involved search and seizure proceedings at the premises of certain entities, including M/s. Madhusudan Buildcon P. Ltd. During the search, relevant materials were seized. The Assessing Officer of the searched parties also happened to be the Assessing Officer of the present assessee. The Assessing Officer recorded a satisfaction note on September 8, 2010, regarding the applicability of section 153C to the case of M/s. Satkar Fincap Ltd.

Subsequently, a section 153C notice was issued to the assessee on the same day, leading to the conclusion of assessment on December 31, 2010. The assessee's appeal was initially rejected, but the Income-tax Appellate Tribunal (ITAT) later overturned the decision, citing improper recording of satisfaction by the Assessing Officer as the grounds for quashing the assessment order.

Upon review, the High Court found that the ITAT's conclusion was not sustainable, emphasizing the clear statement in the note provided by the Assessing Officer during the search and seizure process. The court noted that the documents seized during the search were linked to M/s. Satkar Fincap Ltd., justifying the invocation of section 153C. Consequently, the court set aside the ITAT's findings on the lack of satisfaction under section 153C and remitted the appeals for reconsideration on the merits by the ITAT. The court ensured that all rights and contentions of the parties remained open, clarifying that the judgment did not serve as a binding expression on the case's merits.

In conclusion, the appeals were allowed, and the matter was remitted to the ITAT for a fresh consideration based on the clarified interpretation of the satisfaction recorded under section 153C of the Income-tax Act, 1961.