2018 (4) TMI 176 - AT - Income Tax

Validity of assessment u/s 153C - as per assessee satisfaction has not been recorded in the case of the person who was searched u/s.132(1), that is, in whose case assessment was to be framed u/s.153A - Held that - There is no dispute with regard to the fact that the satisfaction in terms of Section 153C has not been recorded in the case of the person searched in whose case assessment has been framed u/s.153A, albeit the satisfaction has been recorded by the Assessing Officer in the case of the assessee. This is also apparent from the clear cut finding of the ld. CIT (A) that the satisfaction note has been recorded in the assessee s file and not in the file of the person searched. See SSP Aviation Ltd. vs. DCIT 2012 (4) TMI 335 - DELHI HIGH COURT and CIT vs. Meghna Organics (2011 (4) TMI 1329 - GUJARAT HIGH COURT) - Decided against revenue

Summary

Issues:
Jurisdictional issue regarding the recording of satisfaction note under Section 153C in the case of the person searched, Assessment order quashed by CIT (A) on jurisdictional grounds.

Analysis:
1. The Revenue filed appeals against the CIT (A)'s orders quashing the assessment orders for Assessment Years 2005-06 and 2006-07. The grounds raised by the Revenue included errors in quashing the assessment order, misinterpretation of Section 153A, and failure to confine to incriminating material found during search.

2. Despite no appearance by the assessee, the appeals were heard. The jurisdictional issue was central to the case, arising from a search and seizure operation in the Amtek Group cases, leading to the discovery of documents belonging to the assessee. The jurisdiction for assessment was to be acquired under Section 153C by the Assessing Officer.

3. The CIT (A) noted that the satisfaction note under Section 153C was crucial. The assessee contended that the satisfaction was not recorded in the case of the person searched, rendering the proceedings invalid. Legal precedents were cited to support this argument.

4. The CIT (A) ruled in favor of the assessee, emphasizing the importance of recording satisfaction in the file of the person searched, as per legal guidelines. The failure to do so invalidated the jurisdiction assumed under Section 153C.

5. The appellate order affirmed the CIT (A)'s decision, highlighting the absence of satisfaction recorded in the file of the person searched. Citing relevant case laws, the order upheld the quashing of the assessment orders on jurisdictional grounds.

6. The appeals filed by the Revenue were dismissed, confirming the CIT (A)'s decision to quash the assessment orders based on the jurisdictional issue regarding the recording of satisfaction note under Section 153C.

7. The judgment was pronounced on 31st January 2018 by the Appellate Tribunal ITAT Delhi, with detailed analysis and legal reasoning provided for the dismissal of the Revenue's appeals.