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2023 (1) TMI 216 - AT - Income TaxValidity of assessment u/s 153C - no incriminating material for issuance of notice - HELD THAT - Satisfaction which has been recorded is not based on incriminating assets/documents found as a result of search and that there does not exist any incriminating document which belongs to or pertains to or relates to the assessee. On identical facts in the case of one of the group concern of the assessee, on issuance of notice u/s. 153C arising out of the same search was held to be not legally sustainable and therefore assessment was annulled. Before us, Revenue has not pointed to any distinguishing feature in the facts of the present case and in the case of group concern nor has pointed to any fallacy in the findings of Ld. CIT(A). Further the decisions relied upon the Revenue are distinguishable on facts and are therefore not applicable to the facts of the present case. Considering the totality of the aforesaid facts we find no reason to interfere with the order of Ld. CIT(A) on this issue and thus the grounds of Revenue are dismissed.
Issues involved:
Appeals filed by Revenue and Cross Objection by Assessee against Order of Ld. CIT(A) for different assessment years - Whether incriminating material existed for notice u/s 153C - Legality of assessment order u/s 153C - Validity of notice u/s 153C based on seized documents - Interpretation of incriminating material - Application of decisions in similar cases - Quashing of assessment order u/s 153C. Analysis: The appeals and cross objections were filed by the Revenue and the Assessee against the Order of the Ld. CIT(A) for different assessment years, all related to the same party. The key issue revolved around whether there was incriminating material to justify the issuance of notice u/s 153C. The Revenue contended that the material found during the search operation, specifically a laptop showing transactions with doubtful entities, constituted incriminating evidence. However, the Ld. CIT(A) held that the seized documents, including the balance sheet, did not qualify as incriminating material as they were part of regular books of accounts and were disclosed in the return of income. The Ld. CIT(A) further emphasized that the A.O. did not make any additions based on incriminating material, leading to the quashing of the assessment order u/s 153C. The Revenue argued that the assessment order u/s 153C was legally sustainable and should not have been quashed. They cited various decisions to support their stance. However, the Assessee maintained that there was no incriminating material found during the search regarding the transactions with Golf Link Hospitality Pvt. Ltd. They highlighted that the investments were disclosed in the books of accounts and no adverse inference was drawn by the A.O. The Assessee also referred to the decision of the Hon'ble Apex Court to support their position. The Tribunal, after considering the submissions and facts, upheld the decision of the Ld. CIT(A) to quash the assessment order u/s 153C. They noted that the satisfaction note did not establish incriminating material for the years in question and that the investments were part of regular accounts. The Tribunal found no reason to interfere with the Ld. CIT(A)'s order, as the Revenue failed to provide any distinguishing features or challenge the findings effectively. Consequently, the appeal of the Revenue was dismissed, and the cross objections of the Assessee were also dismissed. In conclusion, all the appeals of the Revenue and cross objections of the Assessee were dismissed, affirming the decision to quash the assessment order u/s 153C based on the absence of incriminating material and the regular nature of the transactions in question.
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