2019 (9) TMI 405 - AT - Income Tax

Validity of proceedings u/s 153C - CIT(A) quashed the proceedings u/s 153C on the ground that the satisfaction note in respect of 153C proceedings was not recorded by the Assessing Officer of the searched person - HELD THAT - As relying on SHEETAL INTERNATIONAL PVT. LTD. 2017 (7) TMI 738 - DELHI HIGH COURT since the Assessing Officer of the searched person and the other person is same, therefore, respectfully following the decision cited (supra), we hold that the ld.CIT(A) was not justified in quashing the 153C proceedings merely on the ground that the satisfaction note in respect of 153C proceedings was not recorded by the Assessing Officer of the searched person. Since the ld.CIT(A) has not decided the issue on merit, therefore, we deem it proper to restore the issue to the file of the CIT(A) with a direction to decide the issue on merit - Grounds raised by the Revenue are accordingly allowed for statistical purposes.

Summary

Issues:
Validity of proceedings under section 153C of the Income Tax Act

Analysis:

Issue 1: Validity of proceedings under section 153C

The case involved a private limited company subjected to a search and seizure operation under section 132 of the Income Tax Act. The Assessing Officer issued a notice under section 153C, which the assessee challenged as illegal. The CIT(A) quashed the proceedings under section 153C, citing the absence of a satisfaction note by the Assessing Officer of the searched person. The Revenue appealed, arguing that the proceedings were validly initiated as the Assessing Officer of the searched person and the assessee were the same. The Revenue referred to various decisions, including the Hon'ble Delhi High Court's rulings in similar cases. The Tribunal found merit in the Revenue's argument, citing the High Court's decision in PCIT vs. Sheetal International Pvt. Ltd., which held that a single satisfaction note by the Assessing Officer sufficed when dealing with the same person. The Tribunal disagreed with the CIT(A)'s decision and directed a review on merit, restoring the issue to the CIT(A) for further examination.

In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, emphasizing the need for a merit-based assessment following the legal requirements under section 153C of the Income Tax Act. The decision aimed to ensure procedural correctness and a fair evaluation of the case based on facts and law.

This comprehensive analysis highlights the legal intricacies surrounding the validity of proceedings under section 153C and the importance of adhering to established legal principles in tax assessments.