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2022 (2) TMI 169 - AT - Income TaxAssessment u/s 153A - Addition on account of unsecured loan and on account of share application - proof of incriminating material for the relevant assessment year found or not? - HELD THAT - As decided in own case 2021 (12) TMI 550 - ITAT DELHI satisfaction note recorded by the AO does not mention or is based on any seized material belonging to the assessee company and consequently, the additions made by the AO has no co-relation with any seized material. The aforesaid finding of the Learned CIT(A) has not been rebutted by any material placed on record. Therefore, the aforesaid findings of Learned CIT(A) is based on legal principles upheld by the Hon ble Jurisdictional High Court as well as Supreme Court in the case of PCIT vs. Sinhgad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT - Thus the ground of Revenue is dismissed.
Issues Involved:
1. Issuance of notice under Section 153C without any incriminating material. 2. Validity of the assessment order annulled by the Commissioner of Income Tax (Appeals). 3. Applicability of the Supreme Court's decision in the case of Sinhgad Technical Education Society. 4. Satisfaction note recorded by the Assessing Officer (AO). Issue-wise Detailed Analysis: 1. Issuance of Notice under Section 153C Without Any Incriminating Material: The core issue in this appeal revolves around the issuance of notice under Section 153C of the Income Tax Act, 1961. The Revenue argued that the seized documents constituted "incriminating material" for the purpose of issuing the notice. However, the Commissioner of Income Tax (Appeals) annulled the assessment order, stating that there was no incriminating material justifying the issuance of the notice under Section 153C. The Tribunal upheld this position, noting that the satisfaction note recorded by the AO did not bring out any seized material belonging to the assessee company, nor did it contain any incriminating document. 2. Validity of the Assessment Order Annulled by the Commissioner of Income Tax (Appeals): The assessment order was annulled by the Commissioner on the grounds that the notice under Section 153C was issued without any incriminating material. The Tribunal supported this annulment, citing that the additions made by the AO were not based on any incriminating document found during the search. The Tribunal emphasized that the seized balance sheet of M/s. Golf Link Hospitality Pvt. Ltd. did not constitute incriminating material as it was part of the regular books of account. 3. Applicability of the Supreme Court's Decision in the Case of Sinhgad Technical Education Society: The Tribunal referred to the Supreme Court's decision in the case of PCIT-3, Pune Vs. Sinhgad Technical Education Society, which held that the nexus between the issue of notice under Section 153C and the incriminating material found as a result of the search must exist. The Tribunal noted that the facts of the present case were squarely covered by this judgment, reinforcing the requirement that incriminating material must pertain to the relevant assessment years for which the notice is issued. 4. Satisfaction Note Recorded by the Assessing Officer (AO): The Tribunal scrutinized the satisfaction note recorded by the AO and found it lacking in specifics. The note did not mention any seized material belonging to the assessee company, nor did it specify the assessment year it pertained to. The Tribunal concluded that the notice issued under Section 153C was legally invalid due to the absence of incriminating seized material for the relevant assessment years. This conclusion was supported by various judicial pronouncements, including those from the Supreme Court and High Courts, which mandate that the seized documents must be incriminating and relate to the assessment years in question. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the annulment of the assessment order by the Commissioner of Income Tax (Appeals). The Tribunal reiterated that the issuance of notice under Section 153C without any incriminating material is legally unsustainable. The decision was based on established legal principles and judicial precedents, ensuring that the assessment framed on the basis of an invalid notice was annulled. Order Pronouncement: The appeal filed by the Revenue was dismissed, and the order was pronounced in the open court on 31/01/2022.
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