2024 (4) TMI 1183 - AT - Income Tax

Assumption of jurisdiction u/s 153C - as argued satisfaction note for initiation of proceedings u/s 153C in itself is against the facts and bad in law - HELD THAT - Facts of the case, which have not been properly appreciated by the AO before assuming jurisdiction are that the said MOU, which is alleged to be incriminating document is dated 30.11.2012 and has been prepared by the Director without having complete sign of the persons mentioned therein cannot be considered as a legally enforceable document. Interestingly, the document was found from the premises of Shri Mukesh Khurana and Shri Mukesh Khurana himself has not signed that document. There is mere mention of Rs. 20 crores in cash and PDC but neither date is mentioned nor any dates of post dated cheques have been mentioned. Such error goes on to show that the Assessing Officer has recorded the satisfaction in haste and without application of mind for the year under consideration. In our considered opinion, mere seizure of illegal unauthorized MOU found from the premises of third party whose statement was never recorded by the INV Wing nor by the AO and reference to the entries in the MOU does not reflect the date of payment and bifurcation of the amount in cash and post dated cheques could not be basis to initiate proceedings u/s 153C of the Act. We are of the opinion that the assumption of jurisdiction by recording the aforementioned satisfaction note is bad in law. Since the proceedings have been initiated on wrong assumption, the entire assessment proceedings get vitiated and deserve to be quashed. Assessee appeal allowed.

Summary

Issues:
Challenging jurisdiction under section 153C of the Income Tax Act, 1961.

Detailed Analysis:
The appeal was against the order of the ld. CIT(A) regarding the assessment year 2013-14. The assessee raised several grievances, including the jurisdiction assumed under section 153C of the Act. The satisfaction note for initiating proceedings under section 153C was dated 16.02.2016, while the record of the assessee was transferred on 19.02.2016, indicating a lack of access to the assessee's records by the Assessing Officer. The search operation revealed alleged incriminating documents related to a land sale transaction, prompting the initiation of proceedings under section 153C. However, critical aspects were overlooked, such as the absence of examination of the individuals from whose premises the documents were seized and the lack of verification from Noida authorities regarding the land sale. The Assessing Officer assumed that the assessee made a cash payment of Rs. 20 crores without concrete evidence or investigation.

The Tribunal highlighted that the satisfaction note was drawn without proper application of mind and failed to establish a nexus between the seized documents and the undisclosed income of the assessee. Citing relevant case law, the Tribunal emphasized the necessity for the assessing officer to transfer assets or documents believed to belong to the assessee for initiating proceedings under section 153C. The Tribunal concluded that the assumption of jurisdiction based on the satisfaction note was flawed and lacked legal basis. As a result, the entire assessment proceedings were deemed invalid and were quashed, leading to a partial allowance of the assessee's appeal in ITA No. 684/DEL/2020.

The Tribunal's decision was based on the inadequacy of evidence, lack of proper investigation, and failure to establish a connection between the seized documents and the assessee's undisclosed income. By quashing the assessment order, the Tribunal emphasized the importance of a valid jurisdictional basis for initiating proceedings under section 153C of the Act. The judgment underscored the necessity for assessing officers to conduct thorough examinations and verifications before assuming jurisdiction and taking further actions under the Income Tax Act.

The Tribunal's ruling serves as a reminder of the legal requirements and procedural obligations that must be met before initiating proceedings under section 153C. It highlights the significance of concrete evidence, proper investigation, and a clear nexus between seized documents and undisclosed income to establish a valid jurisdictional basis for assessment proceedings under the Income Tax Act.