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2021 (3) TMI 1066 - AT - Income TaxAssessment u/s 153C - Addition u/s 68 - bogus bogus share capital introduced - HELD THAT - No grounds have been raised by the Revenue to challenge the Order of the Ld. CIT(A) in allowing the appeal of assessee because no satisfaction note have been recorded in the case of the person-searched for invoking jurisdiction under section 153C. Sufficient time was already granted to the Department to revise its grounds of appeal. No steps have been taken by the Department. It is, therefore, clear that the findings of the Ld. CIT(A) as produced above, have not been challenged by the Revenue on any of the grounds of appeals. Therefore, the grounds of appeal raised by the Revenue on merit would not arise from the findings of the Ld. CIT(A). Thus, the appeal of the Revenue would not be maintainable in the absence of any challenge to the findings of the Ld. CIT(A) with regard to quashing of proceedings under section 153C in the absence of any satisfaction note recorded by the A.O. of the person searched. In view of the above, Departmental appeal is dismissed.
Issues:
1. Challenge to the jurisdiction of the Assessing Officer under section 153C of the Income Tax Act, 1961. 2. Deletion of addition of ?3,00,00,000 made on account of bogus share capital under section 68 of the Income Tax Act, 1961. Analysis: Issue 1: Challenge to Jurisdiction under Section 153C: The case involved a challenge to the jurisdiction of the Assessing Officer (A.O.) under section 153C of the Income Tax Act, 1961. The search and seizure operations were conducted on the residential and office premises of the assessee by the Director of Income Tax (Inv.), Chandigarh. The A.O. issued a notice under section 153A r.w.s. 153C of the Act, and subsequently made an addition of ?3 crores under section 68 of the Act. The assessee contended that the A.O. did not have the jurisdiction to invoke section 153C as there was no satisfaction note recorded by the A.O. of the searched person. The Ld. CIT(A) agreed with the assessee's contention, citing the absence of a satisfaction note as per the provisions of the Act and relevant judicial precedents. The Ld. CIT(A) held that proceedings under section 153C were ab initio void due to the lack of a recorded satisfaction note, thereby leading to the deletion of the addition of ?3,00,00,000. Issue 2: Deletion of Addition of Bogus Share Capital: The second issue pertained to the deletion of the addition of ?3,00,00,000 made on account of bogus share capital under section 68 of the Income Tax Act, 1961. The A.O. had passed the assessment order making this addition, which was subsequently challenged by the assessee before the Ld. CIT(A). The Ld. CIT(A) allowed the appeal of the assessee, quashing the assessment order. The Ld. CIT(A) based the decision on the lack of a satisfaction note by the A.O. of the searched person, as required under section 153C of the Act. The Ld. CIT(A) referred to relevant legal provisions and a judgment of the Hon'ble Delhi High Court, along with a Board Circular, to support the decision. Consequently, the Ld. CIT(A) held that the addition of ?3,00,00,000 on account of bogus share capital under section 68 was not sustained and was deleted. In conclusion, the appellate tribunal dismissed the appeal of the Revenue, emphasizing that the findings of the Ld. CIT(A) regarding the absence of a satisfaction note and the consequent quashing of proceedings under section 153C were not challenged by the Revenue. As a result, the appeal of the Revenue was deemed not maintainable, and the deletion of the addition of ?3,00,00,000 on account of bogus share capital was upheld.
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