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2020 (3) TMI 106 - AT - Income TaxAssessment u/s 153C r.w.s. 153A - addition by estimating profit @ 10% in the alleged undisclosed receipt - HELD THAT - A perusal of Section 153C would indicate that satisfaction of the Assessing Officer of the searched person is must exhibiting the fact that documents/evidences shown escapement of undisclosed income of a person other than the searched person is available which required to be assessed; thereafter, he would transmit his satisfaction note along with that evidences to the Assessing Officer of such other person having territorial jurisdiction. In case satisfaction by the Assessing Officer of the searched person is being not recorded, then no assessment under Section 153C is sustainable. These appeals are lying in the Tribunal since 2012 and the Department has filed paper-book, but failed to place on record the copy of the satisfaction note. Putting reliance on the submissions of the assessee and, in the absence of any details, we are satisfied that the assessment order is not sustainable. See M/S. Calcutta Knitwears 2014 (4) TMI 33 - SUPREME COURT - Decided in favour of assessee.
Issues:
1. Jurisdiction of the Assessing Officer under Section 153C r.w.s. 153A of the Income-tax Act. 2. Addition of undisclosed income based on seized documents. Analysis: Issue 1: Jurisdiction of the Assessing Officer under Section 153C r.w.s. 153A of the Income-tax Act: The case involved cross-appeals by the Revenue and the assessee against the order of the CIT(A) for the assessment year 2009-10. The Revenue contended that the CIT(A) erred in deleting an addition of ?2,39,55,483 out of a total addition of ?2,62,08,519. On the other hand, the assessee raised two main grievances: firstly, challenging the jurisdiction of the Assessing Officer to pass the assessment order under Section 153C r.w.s. 153A, and secondly, disputing the addition of ?22,53,036 by estimating profit at 10% in the alleged undisclosed receipt of ?2,25,30,368. The case revolved around the search operation conducted under Section 132 of the Act and the subsequent assessment based on seized documents. Issue 2: Addition of undisclosed income based on seized documents: The Assessing Officer issued a notice under Section 153C of the Act based on loose papers found during the search operation. These papers indicated transactions related to the assessee's concerns. The Assessing Officer made additions to the income by treating these transactions as undisclosed income. On appeal, the CIT(A) estimated the profit element in the alleged receipt and confirmed an addition of ?22,53,036. The assessee argued that for cognizance under Section 153C, the Assessing Officer of the searched person must record satisfaction that documents belonging to the assessee were found at the searched person's premises, disclosing undisclosed income. The absence of a satisfaction note rendered the assessment unsustainable. The Tribunal concurred, emphasizing the necessity of the Assessing Officer's satisfaction in such cases. The assessment order was quashed due to the lack of a satisfaction note, providing the Revenue with the option to file a Miscellaneous Application if the satisfaction note was available for re-verification. In conclusion, the Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal, emphasizing the importance of the Assessing Officer's satisfaction under Section 153C for initiating assessment proceedings. The judgment highlighted the need for proper documentation and adherence to procedural requirements in such cases to maintain the validity of the assessment order.
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