2021 (5) TMI 101 - AT - Income Tax

Proceedings u/s. 153C r.w.s. 153A - Recording of satisfaction - HELD THAT - In the present case, the assessee repeatedly asked for the order sheet entry relating to recording of satisfaction, however the Assessing Officer given a reply that it is a confidential document and it cannot be furnished to the assesses. Even before the CIT (Appeals), the assesses have raised the issue of providing order sheet entry and recording of satisfaction. CIT (Appeals) has not provided the same and dismissed the appeals in a summary manner observing that document found in the course of search constitute as an incriminating material that points to the undisclosed income of a person other than a searched person, then the proceedings u/s. 153C r.w.s. 153A of the Act has been rightly initiated. CIT (Appeals) not given finding that what basis he came to such conclusion that there was a recording of satisfaction by the Assessing Officer of searched person. We are of the opinion that recording of satisfaction is legal issue which shall be examined by the learned CIT (Appeals) after calling the relevant record from the AO of searched person and decide the issue afresh. With this observation, we remit this issue to the file of CIT (Appeals) for fresh adjudication. Regarding the objection by the ld. DR that the assessee has co-operated with the AO and precluded from raising this issue before this Tribunal have no merit since the assessee from the beginning sought the copies of recording of satisfaction by the Assessing Officer of searched person. Further at this stage, we are refrained going into other grounds of appeals raised by the assesses. Appeals of the assesses are allowed for statistical purposes.

Summary

Issues:
Appeal against assessment order under section 143(3) read with 153C of the Income Tax Act, 1961 for non-recording of satisfaction by the Assessing Officer of searched persons.

Analysis:
The appeals were filed against different orders of the Commissioner of Income Tax (Appeals), Bangalore, regarding assessment orders framed under section 143(3) read with 153C of the Income Tax Act, 1961. The main legal ground raised by the assesses was the non-recording of satisfaction by the Assessing Officer of searched persons. The Authorised Representative argued that the assesses requested copies of the order sheet entry to understand the satisfaction recorded by the Assessing Officer but were denied access, citing confidentiality. The CIT (Appeals) did not address this issue adequately, leading to the conclusion that the recording of satisfaction is a crucial legal matter that needs proper examination by the CIT (Appeals) with relevant records from the Assessing Officer of the searched person.

The Departmental Representative contended that the Assessing Officer had reviewed the seized material during the search action and, based on that, transferred relevant records to the Assessing Officer of the assesses, who then issued notices under section 153C of the Act. It was argued that since the assesses did not raise the satisfaction recording issue during the assessment, they cannot bring it up before the CIT (Appeals) or the Tribunal. However, the Tribunal found that the recording of satisfaction is a significant legal matter that requires proper scrutiny.

The Tribunal, after hearing both parties and examining the records, emphasized the importance of the Assessing Officer of the searched person being satisfied about undisclosed income belonging to another person before initiating proceedings under section 153C of the Act. The Tribunal noted that the assesses repeatedly requested the order sheet entry related to satisfaction recording, which was denied on grounds of confidentiality. The CIT (Appeals) did not adequately address this issue and dismissed the appeals summarily. The Tribunal concluded that the recording of satisfaction is a crucial legal issue that the CIT (Appeals) must re-examine with relevant records from the Assessing Officer of the searched person. The Tribunal allowed the appeals for statistical purposes, remitting the legal issue to the CIT (Appeals) for fresh consideration while keeping other grounds raised by the assesses open for future review in accordance with the law.