2021 (10) TMI 1242 - AT - Income Tax

Assessment u/s 153A - Absence of satisfaction as needed foregoing alleged section 153C - HELD THAT - As in the 2nd proviso to sub-section (1) of section 153A that all assessments pending on the date of initiation of search shall abate. We hold in view of the foregoing statutory provisions that the AO's foregoing alleged section 153C satisfaction only incorporated the expression; whilst dealing with the alleged seized material, it only relates to than belongs to as on the date of search and therefore also, section 153C satisfaction are found not same is not sustainable qua the instant latter aspect as well. We wish to make it clear that we are dealing with a search wherein the corresponding statutory provisions have to be given stricter interpretation only in light only in light of Commissioner of Customs Vs. Dilip Kumar Co. 2018 (7) TMI 1826 - SUPREME COURT - We accordingly affirm the CIT(A)'s action under challenge holding the impugned 143(3) r.w.s. 153C assessment as lacking proper satisfaction. - Decided in favour of assessee.

Summary

Issues Involved:
1. Delay in filing appeals due to the pandemic.
2. Validity of the Assessing Officer's satisfaction note under Section 153C.
3. Interpretation of statutory provisions regarding seized material "belongs to" or "pertains to" a person other than the searched assessee.

Analysis:

Issue 1: Delay in filing appeals due to the pandemic
The Revenue's appeals faced a 9-day delay in filing, attributed to challenges arising from the COVID-19 pandemic. Citing relevant case law, the Tribunal acknowledged the circumstances beyond control that led to the delay. Following the principle of substantial justice, the Tribunal condoned the delay and proceeded to adjudicate the cases on their merits.

Issue 2: Validity of the Assessing Officer's satisfaction note under Section 153C
During the proceedings, it was revealed that the CIT(A) had set aside the Assessing Officer's assessment under Section 143(3) r.w.s. 153C due to the absence of a valid satisfaction note following a search conducted on a specific date. The CIT-DR contended that the CIT(A) erred in deeming the assessment invalid, referencing a recent apex court decision. The Tribunal examined the Assessing Officer's order sheet entry initiating 153C proceedings and noted that previous judgments had found deficiencies in the satisfaction recorded. Consequently, the Tribunal upheld the CIT(A)'s decision, emphasizing the importance of proper satisfaction for such assessments.

Issue 3: Interpretation of statutory provisions regarding seized material
The Tribunal delved into the statutory provisions related to seized material "belongs to" or "pertains to" a person other than the searched assessee. Analyzing the amendments introduced by the Finance Act, 2015, the Tribunal highlighted the significance of the expressions used in the law. Referring to a specific case law, the Tribunal emphasized the need for a stringent interpretation of statutory provisions in cases involving searches. Considering the statutory framework and the specifics of the case, the Tribunal affirmed the CIT(A)'s ruling that the 143(3) r.w.s. 153C assessment lacked proper satisfaction, leading to the dismissal of the Revenue's appeals.

In conclusion, the Tribunal dismissed the Revenue's appeals, emphasizing the importance of valid satisfaction notes in Section 153C assessments and the strict interpretation of statutory provisions related to seized material in search cases.