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2018 (5) TMI 1006 - AT - Income TaxValidity of assessments made u/s 153C - Held that - Since the assessment records do not contain any satisfaction note by the AO and also the whole addition was made based on the diary belonging to M/s B. Ramdas Goud, there is no evidence which directly relates to the assessee was found during the search proceedings. Therefore, we set aside the orders of CIT(A) in all the AYs under consideration and hold that the assessments framed u/s 153C of the Act rws 143(3) of the Act are void ab-initio in all the AYs under consideration. Hence, the additions made in such assessments cannot stand in the eye of law. - Decided in favour of assessee.
Issues Involved:
1. Validity of assessments made under Section 153C of the Income Tax Act, 1961. 2. Justification of additions made under Section 68 of the Income Tax Act, 1961. Detailed Analysis: 1. Validity of Assessments under Section 153C: The primary issue contested by the assessee was the validity of assessments made under Section 153C of the Income Tax Act, 1961. The assessee argued that the due process of law was not followed, specifically the lack of recorded satisfaction before initiating proceedings under Section 153C. The assessments were based on a diary found during a search operation on M/s B. Ramdas Goud and Desagoni Raghupathi Goud Group, with no direct evidence linking the assessee to the seized materials. The Tribunal considered several precedents, including: - Pr. CIT Vs. Vinita Chaurasia: Emphasized that seized documents must belong to the other person, not merely pertain to them. - CIT Vs. Sinhgad Technical Education Society: Stressed that documents seized should belong to a person other than the one referred to in Section 153A. - Canyon Financial Services Ltd. Vs. ITO: Held that at the initiation stage, it is sufficient if the seized document pertains to the other person. - Shri Ch. Damodar Rao: Highlighted the necessity of recording satisfaction by the AO before issuing a notice under Section 153C. The Tribunal found that in the present case, there was no satisfaction recorded by the AO of the person searched or the AO of the assessee before issuing the notice under Section 153C. This lack of recorded satisfaction rendered the initiation of proceedings under Section 153C invalid. 2. Justification of Additions under Section 68: The second issue was the justification of additions made under Section 68, amounting to ?33,00,000, representing alleged investment. Given that the Tribunal held the assessments under Section 153C to be void ab initio, the additions made under these assessments could not stand legally. Consequently, the Tribunal did not delve into the merits of the additions under Section 68, as the primary issue of the validity of the assessments had already been resolved in favor of the assessee. Conclusion: The Tribunal concluded that the assessments framed under Section 153C read with Section 143(3) were void ab initio due to the absence of recorded satisfaction by the AO. Consequently, the additions made in such assessments could not be sustained. All appeals by the assessee were allowed, and the orders of the CIT(A) were set aside. Result: All the appeals under consideration were allowed, and the assessments made under Section 153C read with Section 143(3) were declared void ab initio.
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