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2022 (11) TMI 1171 - AT - Income TaxValidity of assessment u/s 153C - HELD THAT - We find that the A.O. in the instant case has failed to demonstrate that seized document belongs to the assessee company and no seized documents were found as a result of search and have bearing on the determination of total income of the assessee company. Therefore, we find that the above imperative three jurisdictional conditions for issuance of notice under section 153C of the Act are not satisfied. We rely on the Judgment in the case of Sinhgad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT wherein as held that the nexus between issue of notice under section 153C and the incriminating material found as a result of search must exist. Since in the instant case no incriminating material was found and seized during the course of search which belonging to the assessee company, the Judgment of Sinhgad Technical Education Society (supra), is squarely applicable to the facts of the present case. Further, the Hon ble Jurisdictional Delhi High Court also in the case of CIT vs., Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT . - Decided against revenue.
Issues:
Validity of notice under section 153C of the Income Tax Act, 1961 and the consequential additions made by the Assessing Officer. Analysis: In the case under consideration, a search and seizure operation was conducted in a group of companies, resulting in the discovery of incriminating documents belonging to the assessee. The Assessing Officer (AO) issued notices under section 153C for the assessment years 2009-10 to 2014-15. The AO made additions to the income of the assessee based on unverified share capital. The assessee contended that the notice under section 153C was without jurisdiction and the additions were unsustainable as no incriminating material was found during the search. The Commissioner of Income Tax (Appeals) quashed the assessment, citing the Supreme Court judgment in PCIT-3, Pune vs. Sinhgad Technical Education Society. The Revenue appealed the CIT(A)'s decision, arguing that the notice under section 153C was valid and that the CIT(A) erred in relying on the appellant's submissions. The Revenue contended that the CIT(A) misapplied the Supreme Court judgment in Sinhgad Technical Education Society, which was not applicable to the present case. The Revenue also claimed that the CIT(A) did not consider the facts and material on record, and the assessment order should be restored. However, the CIT(A)'s order was upheld by the ITAT Delhi. The ITAT Delhi emphasized that for a notice under section 153C to be valid, three conditions must be satisfied: the existence of undisclosed assets or incriminating documents, the assets or documents must belong to the assessee, and proper satisfaction must be recorded by the AO. As the AO failed to demonstrate that the seized documents belonged to the assessee and no incriminating material was found during the search, the notice under section 153C was deemed legally unsustainable. The ITAT Delhi affirmed the CIT(A)'s decision, citing the Supreme Court and Delhi High Court judgments. The ITAT Delhi dismissed the Revenue's appeals for the assessment years 2009-10 to 2014-15, as the issues were identical to the case of the assessment year 2009-10. Consequently, the cross-objections filed by the assessee were allowed. In conclusion, the appeals of the Revenue were dismissed, and the cross-objections of the Assessee were allowed.
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