2023 (6) TMI 765 - AT - Income Tax

Validity of the assessment framed u/s 153C - mandation of satisfaction note recorded by the AO - searched person having recorded satisfaction of documents found during search belonging to the assessee - HELD THAT - The arguments now being raised before us have already been dealt with by the ITAT in the first round and no grievance against the findings of the ITAT on the issue was raised by the assessee its MA this issue stand adjudicated by the ITAT for all purposes and the assessee is not entitled to therefore rake up this issue again during the hearing in recall which as we have noted above is limited in scope to adjudicate only the mistake in the order of the ITAT in the first round. We hold that the argument of the assessee that for a valid assumption of jurisdiction under section 153C of the Act the AO of the searched person has to mandatorily record satisfaction of material or documents found during the course of search belonging to the assessee is misplaced and against principles of law admittedly laid down in the case of Super Mall P. Ltd. ( 2020 (3) TMI 361 - SUPREME COURT and is rejected

Summary

Issues Involved:
1. Validity of assessment framed under section 153C of the Income Tax Act.
2. Requirement of satisfaction note by the AO of the searched person.
3. Incriminating material found during the search.

Summary:

Validity of Assessment under Section 153C:
The ITAT Ahmedabad recalled its earlier order to adjudicate the issue of the validity of the assessment framed under section 153C of the Income Tax Act, 1961. The Tribunal noted that the earlier order had not considered the requirement of a satisfaction note by the AO of the searched person, as mandated by various judicial pronouncements.

Requirement of Satisfaction Note:
The Tribunal found merit in the assessee's contention that for a valid jurisdiction under section 153C, it was mandatory for the AO of the searched person to record satisfaction that documents found during the search belonged to the assessee. This requirement was not met in the present case, as admitted by the AO, and thus constituted an apparent error. The Tribunal emphasized the necessity of this satisfaction note, referencing the Hon'ble Supreme Court's decision in CIT Vs. Calcutta Knitwears, which mandates the recording of such satisfaction before transmitting records to the AO of the other person.

Incriminating Material:
The assessee argued that no incriminating material was found during the search, and a single satisfaction note was recorded for all years involved, which was insufficient. However, the Tribunal noted that these arguments were beyond the scope of the recall, which was limited to the issue of the satisfaction note. The Tribunal also observed that the ITAT had already dealt with the issue of incriminating material in its first round, rejecting the assessee's contention that no such material was found.

Conclusion:
The Tribunal held that the argument regarding the mandatory recording of satisfaction by the AO of the searched person was misplaced, as per the Hon'ble Supreme Court's decision in Super Mall P. Ltd. The Tribunal thus rejected the assessee's plea and upheld the validity of the assessment framed under section 153C. The order forms part of the original order dated 12.4.2013. Order pronounced on 14th June 2023 at Ahmedabad.