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2020 (3) TMI 218 - AT - Income TaxAssumption of jurisdiction u/s 153C - no satisfaction note recorded in the case of the searched person - HELD THAT - CIT(A) while adjudicating the issue has gone through the documents which are mentioned in the satisfaction note and found that the documents so found or seized are photocopy of the sale deed agreement of sale along with indemnity bond possession letter etc in respect of Sunder Nagar Property purchased by the assessee from M/s Atma Ram Properties Ltd. These documents do not give any indication that the assessee had paid 3.5 Crores in cash over and above of 33 Crores as recorded in the sale deed. We find the Ld. CIT(A) while adjudicating the issue has followed the decision of the Hon ble Delhi High Court in the case of PEPSI FOODS PVT. LTD. 2014 (8) TMI 425 - DELHI HIGH COURT and PEPSICO INDIA HOLDINGS PRIVATE LIMITED 2014 (8) TMI 898 - DELHI HIGH COURT DR could not controvert the factual findings given by the Ld. CIT(A) in his order on this issue. We further find that there is no satisfaction note recorded in the case of the searched person which is a condition precedent for issue of notice u/s 153C although the Assessing Officer of the searched person and the other person is the same. In view of the above discussion and detailed reasoning given by the Ld. CIT(A) on this issue we find no infirmity in his order in quashing the proceedings initiated under section 153C of the Act by the Assessing Officer. The grounds raised by the Revenue are accordingly dismissed.
Issues Involved:
1. Correctness of the CIT(A) order in law and facts. 2. Validity of the assessment order under section 153C. 3. Decision on the merits of the case by the CIT(A). Issue-wise Detailed Analysis: 1. Correctness of the CIT(A) Order in Law and Facts: The Revenue challenged the correctness of the CIT(A)'s order, arguing that the order was not in accordance with law and facts. The CIT(A) quashed the proceedings initiated under section 153C by observing that the Assessing Officer (AO) did not properly assume jurisdiction. The CIT(A) noted that the satisfaction note, a prerequisite for invoking section 153C, was defective as it failed to substantiate how the seized documents belonged to the assessee and not the searched person. The CIT(A) relied on the Delhi High Court's rulings in the cases of Pepsi Foods Pvt. Ltd. and Pepsico India Holdings Pvt. Ltd., which emphasized that mere mention of "satisfaction" is insufficient without proper justification. 2. Validity of the Assessment Order Under Section 153C: The AO issued a notice under section 153C based on documents seized during a search operation. However, the documents were photocopies of sale deeds and agreements related to a property transaction, and the originals were still with the assessee. The CIT(A) found that the AO's satisfaction note did not explain why these documents, seized from the searched person's premises, were considered to belong to the assessee. The CIT(A) highlighted that the AO failed to rebut the statutory presumption that documents found during a search belong to the person from whom they were seized. The Tribunal upheld the CIT(A)’s decision, noting that the AO did not record a satisfaction note in the case of the searched person, a condition precedent for issuing a notice under section 153C. 3. Decision on the Merits of the Case by the CIT(A): The CIT(A) did not decide on the merits of the case due to the quashing of the proceedings under section 153C. The Tribunal agreed with this approach, stating that since the assumption of jurisdiction was invalid, other grounds raised in the appeal did not survive. The Tribunal dismissed the Revenue's appeal, finding no infirmity in the CIT(A)'s order. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to quash the proceedings initiated under section 153C due to defective satisfaction notes and improper assumption of jurisdiction. The Tribunal upheld that the documents seized were photocopies, and the AO failed to record necessary satisfaction in the case of the searched person. Consequently, the CIT(A)'s order was deemed correct in law and facts, and no decision on the merits was required.
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