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2024 (2) TMI 551 - HC - Income TaxValidity of Initiation of proceedings u/s 153C - as argued satisfaction note of the searched person and satisfaction note of the petitioner (other than the searched person) are verbatim, proceedings are invalid as the satisfaction note does not contain DIN (Document Identification Number), mandatorily to be generated as per the CBDT Circular No. 19/2019 dated 14.08.2019, no incriminating material was found against the petitioners during the search carried out on 15.10.2019 and there is undue delay in recording the satisfaction note in the case of the petitioners, Baseless allegations have been made against the petitioners without there being any material before the AO to even record a prima facie proof that the seized material has a bearing on the petitioners case. HELD THAT - As in view of the change in the legal regime with effect from 01.06.2015, the requirement is that even an information contained in the documents seized, if pertains to or relates to a person other than the searched person, the requirement of Section 153C(1) can be held to be fulfilled. In view of the categorical statement in the satisfaction note of the searched person forwarded by the AO of the searched person to the Assessing Officer of the petitioner assessee, it cannot be assumed that no prima facie satisfaction of the seized material being pertain to the petitioner assessee could be recorded. Having gone through the decision of the Apex Court in the case of Super Malls (P) Limited 2020 (3) TMI 361 - SUPREME COURT we find that the observations made therein with regard to the mandatory requirement of Section 153C to record a satisfaction note by the AO of the petitioner assessee herein, before issuing notice u/s 153C of the Act has been fulfilled in the facts of the instant case. Having noted the fact that the satisfaction note of the AO of the petitioner assessee has not been brought on record and moreover, the assessment note of the AO of the searched person indicates a prima facie case of inquiry against the petitioner, we do not find any substance in the argument of the learned Senior Counsel that the satisfaction note of the AO of the petitioner is to be discarded being a copy in verbatim of the satisfaction note of the AO of the searched person. It is not a case where it can be argued that the satisfaction recorded by the AO of the petitioner in his satisfaction note supplied to the petitioner is without any basis. The first ground of challenge is, therefore, liable to be turned down. Mandation of quoting DIN - The said ground is misconceived, inasmuch as, the copy of the letter of communication to the petitioner of satisfaction note to initiate assessment proceedings u/s 153C has not been brought on record. Revenue has brought the attention of the Court to the communication addressed to the petitioner, which contains the DIN number, to assert that the requirement of CBDT Circular No. 19 of 2019 dated 14.08.2018 has been fulfilled. We may also note from the order of disposal of the objection of the petitioner wherein it is noted that the DIN number is mandatory for communication by the Income Tax authority/officer to the assessee or another person and it is not to be generated for the covering letter forwarded by the AO of the searched person to the AO of the assessee, i.e. the petitioner herein. Having gone through the language of CBDT No. 19 of 2019 dated 14.08.2019, we do not find any error in the conclusion drawn by the respondent No. 2 in rejection of the objection of the petitioner in this regard. For the remaining grounds that the allegations against the petitioner are baseless or there was no incriminating material against the petitioner, we may note the decision of the Apex Court relied on by Revenue in the case of Commissioner of Income- Tax, Gujarat vs. Vijaybhai N. Chandrani 2013 (7) TMI 740 - SUPREME COURT wherein as held that at the stage of issuance of notice under Section 153C, the High Court ought not to have entertained the writ petition and relegated the assessee to file reply to the said notices and upon receipt of a decision from the Assessing Officer, if for any reason, it was aggrieved by the said decision, to question the same before the forum provided under the Act. Delay agitated in the writ petition, no submission has been made by the learned Senior Counsel and as such the same is not being dealt with. Thus no jurisdictional error could be found in the decision of the Assessing Officer in the proceedings under Section 153C. WP dismissed.
Issues Involved:
1. Validity of the satisfaction note under Section 153C of the Income Tax Act, 1961. 2. Compliance with the CBDT Circular No. 19/2019 regarding Document Identification Number (DIN). 3. Presence of incriminating material against the petitioner. 4. Allegations of undue delay in recording the satisfaction note. 5. Jurisdictional challenge to the proceedings under Section 153C. Summary: 1. Validity of the Satisfaction Note: The petitioner challenged the notice dated 06.05.2022 under Section 153C of the Income Tax Act, 1961, arguing that the satisfaction note of the searched person and the petitioner were verbatim, indicating a lack of independent application of mind by the Assessing Officer. The court noted that the legal requirement under Section 153C(1) was fulfilled as the satisfaction note of the Assessing Officer of the petitioner, although similar, was based on prima facie evidence of "on money" transactions found during the search. The court distinguished the case from Canyon Financial Services Limited and Super Malls (P) Ltd., noting the amendments to Section 153C post-2015, which allow for proceedings based on information that "pertains to" the petitioner. 2. Compliance with CBDT Circular No. 19/2019: The petitioner argued that the satisfaction note lacked a DIN, as mandated by CBDT Circular No. 19/2019. The court found this ground to be misconceived, noting that the communication to the petitioner contained the necessary DIN, and the requirement does not apply to internal communications between tax officers. The court upheld the conclusion of the respondent that the CBDT Circular requirements were met. 3. Presence of Incriminating Material: The petitioner claimed no incriminating material was found during the search. The court referred to the Apex Court's decision in Commissioner of Income-Tax, Gujarat vs. Vijaybhai N. Chandrani, emphasizing that at the notice stage under Section 153C, the High Court should not interfere and the petitioner should address these issues during the assessment proceedings. 4. Allegations of Undue Delay: The petitioner alleged undue delay in recording the satisfaction note. However, no specific arguments were presented by the petitioner's counsel on this point, and thus, the court did not address this issue in detail. 5. Jurisdictional Challenge: The court found no jurisdictional error in the Assessing Officer's decision to proceed under Section 153C. The court emphasized that within the scope of judicial review under Article 226 of the Constitution of India, no jurisdictional error was found in the proceedings against the petitioner. Conclusion: The court dismissed the writ petitions, stating that the Assessing Officer should not be influenced by the court's observations while framing the assessment order. The court clarified that it did not express any opinion on the merits of the proceedings initiated against the petitioner. The request for a stay of the order to approach the Apex Court was also rejected.
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