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2017 (5) TMI 1426 - HC - Income TaxValidity of assessment u/s 153C - Whether the ITAT was correct in holding that in the absence of any satisfaction of AO of the searched person, the assessment framed by invoking the provisions of Section 153C cannot be sustained? - Held that - The Court finds that there is no discussion in the impugned order of the ITAT on whether the documents referred to in the Satisfaction Note were, in fact, incriminating. The ITAT invalidated the proceedings under Section 153 C of the Act only on the ground of there being no Satisfaction Note by the AO of the searched person. As discussed earlier, this was factually erroneous. There was no occasion for the ITAT to examine the other grounds of challenge to the assumption of jurisdiction under Section 153 C of the Act. Consequently, the impugned order dated 13th March 2015 of the ITAT is hereby set side. The Court restores to the file of the ITAT for a further hearing all the appeals in which the impugned order was passed for consideration of the further grounds including the question whether the assumption of jurisdiction by the AO under Section 153C qua the Assessee was justified on the ground that the documents seized and stated to belong to the Assessee were not incriminating.
Issues:
1. Delay in filing and re-filing of appeals condonation. 2. Appeals by Revenue against ITAT's order. 3. Validity of assessment under Section 153C of the Act. 4. Jurisdictional aspect of the AO in satisfaction note. 5. Incriminating nature of seized documents not discussed by ITAT. Issue 1: The High Court condoned the delay in filing and re-filing of appeals due to reasons explained in the applications, disposing of the applications related to ITA Nos. 613/2016, 614/2016, 615/2016, 801/2016, 805/2016, 809/2016, 814/2016, 840/2016, 848/2016, and 849/2016. Issue 2: The Court addressed ten appeals by the Revenue against the common order passed by the Income Tax Appellate Tribunal (ITAT) for various Assessment Years. The ITAT partly allowed all appeals filed by the Assessee and dismissed the cross appeals of the Revenue for the Assessment Years 2003-04 to 2008-09. Issue 3: The key question of law framed for consideration was whether the ITAT was correct in holding that the assessment under Section 153C of the Act cannot be sustained without satisfaction of the Assessing Officer (AO) of the searched person. The search took place in cases related to certain individuals and companies, and the AO later recorded satisfaction that certain documents belonged to the Assessee, leading to the initiation of proceedings under Section 153C. Issue 4: The Court analyzed the jurisdictional aspect of the AO in the satisfaction note. It was argued that the AO of the searched person, who was also the AO for the Assessee, had correctly recorded the satisfaction note as required by law. The Court referred to previous judgments and held that the Satisfaction Note met the legal requirement, ruling in favor of the Revenue and against the Assessee. Issue 5: The Court noted that the ITAT had not discussed whether the seized documents referred to in the Satisfaction Note were incriminating. As the ITAT invalidated the proceedings solely based on the lack of a Satisfaction Note by the AO of the searched person, which was found to be factually erroneous, the Court set aside the ITAT's order and directed a further hearing to consider all grounds, including the incriminating nature of the seized documents. The appeals were listed for further directions before the ITAT. Overall, the High Court's judgment addressed various legal aspects related to the assessment under Section 153C of the Act, emphasizing the importance of the AO's jurisdictional aspect in recording the satisfaction note and the need to consider all grounds, including the incriminating nature of seized documents, in such proceedings.
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