9911796707
TMI Blog2025 (1) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... development and real estate broking. He filed his return of income on 28.07.2017 declaring total income of Rs. 8,08,880/-. A search action u/s. 132 of the Act was conducted in Yuvraj Dhamale Group of cases on 26.09.2017. During the search in the above mentioned group, residential premises of Shri Umakant S Kuwar [Accountant of Yuvraj Dhamale Group] at Flat No.201, Alka Uttam Enclave, Mundhawa, Pune as well as office premise of Dhamale Group at 158, Wellesley Road, Besides Lal Deval, Camp, Pune were covered from where certain documents pertaining to Shri Rajendra Ramesh Gugale were found and seized. Therefore, the Assessing Officer of the searched-party having possession of the seized material recorded the satisfaction that the information contained on Page No.57 of Bundle No.4 seized from residential premises of Shri Umakant Kuwar and Page No.5 of Bundle No.4 seized from the office premises of Dhamale Group at Camp, Pune relates to Shri Rajendra Ramesh Gugale. The case was centralized u/sec.127 of the I.T. Act, 1961. Thereafter, by recording a satisfaction dated 01.03.2021 as per the provisions of Section 153C of the Act in the case of the present assessee, notice u/s. 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by accepting the returned income. 03. On perusal of the assessment records and information available with this office, it is seen the assessee is engaged in the business of land development and real estate broking and the main source of the income of the assessee is commission receipt. Further, it is observed that the assessee had shown closing balance of unsecured loans taken from others of Rs. 62,17,000/- for the captioned year whereas proceedings revealed that the assessee had taken unsecured loan in cash through Shri Sachin Nahar of Rs. 1,56,00,000/- against which he had paid interest of Rs. 18,64,800/- in cash during the F.Y. 2016-17 relevant to A.Y. 2017-18. The AO failed to ascertain whether the assessee had has correctly disclosed all the particulars of his income for the year under consideration. 0.4. In view of the above, it is found that the no verification on the aforesaid issue has been done in the assessment proceedings by the AO. As per explanation (2) to section 263(1) of the Act an order without making inquiries or verification which should have been made is deemed to be erroneous in so far as it is prejudicial to the interest of revenue. 05. Considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the issues raised in the show cause notice issued u/s. 263 of the Act and on perusal of the records and facts of the case, it is clear that the assessee had taken unsecured loan in cash through Shri Sachin Nahar of Rs. 1,58,00,000/-against which he had paid interest of Rs. 18.64,800/- in cash during the F.Y. 2016-17 relevant to A.Y. 2017-18. The Assessing Officer had failed to ascertain whether the assessee had correctly disclosed all the particulars of his income for the year under consideration. No verification on the aforesaid issue had been done in the assessment proceedings by the Assessing Officer and therefore income has been under assessed. Therefore, it is clear that the Assessing Officer had not examined and verified the above issue having tax implications during the course of assessment proceedings. Thus, issues discussed in the show-cause notice were not at all examined by the Assessing Officer in the course of assessment proceedings. 6. In view of the above facts, it is clear the issues as discussed in para 2 above have not been property examined, verified and enquired by the Assessing Officer in the course of assessment proceedings. It has been held by various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uate enquiry and verification. In this matter, SLP of the assessee has also been dismissed by Hon'ble Apex Court. * The Hon'ble ITAT Delhi in the case of Ankush Garg v CIT, Rohtak in ITA No 2287 & 2288/Del/2015 dated 21.05.2019, upheld the Pr.CITs action u/s 263 by holding that the order of the AO was cryptic, and was not passed after due examination and verification of certain issues and therefore, there was an error on the part of AO which led to a correct conclusion of the CIT that the order of the AO was not only erroneous but also prejudicial to the interest of Revenue. * In the case of Pooja Gupta in ITA No 4057/Del/ 2018 dated 31.01.2019, the ITAT Delhi has discussed the validity of action under section 263 in respect of penny stock matters. The Tribunal has referred to the detailed SOP issued by the CBDT, CBDT Instruction dt 16.03.2016 on penny stock/ LTCG, and other specified parameters in this order, and held that the order u/s 263 was justified since there was complete lack of inquiry with regard to the perspective for which the case was selected for scrutiny, and that the AO had merely relied on the assessee's submissions. * The decision of the ITAT De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is passed without making inquiries or verification which should have been made; b. the order is passed allowing any relief without inquiring into the claim; c. the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or d. the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. In view of the above facts and circumstances, I find that the Assessing Officer has failed to make necessary examination and verification of the issues stated above while completing the assessment. I, therefore hold that assessment order for A.Y. 2017- 18 dated 26.12.2021 passed by the Assessing Officer u/s 153C r.w.s 143(3) of the Act to be erroneous in so far as it is prejudicial to the interest of revenue. Accordingly, the said assessment order dated 26.12.2021 is hereby set aside to the file of Assessing Officer for examining the above issues in detail while framing the fresh assessment order. The Assessing Officer shall make necessary examination, verification and enquiries in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged the order of the PCIT in invoking provisions of sec.263 of the Act. He submitted that the Assessing Officer in the instant case on the basis of search in the premises of Yuvraj Dhamale Group of cases from where certain incriminating material pertaining to the assessee were found, issued notice u/sec.153C of the Act to the assessee and thereafter, completed the assessment u/sec.153C r.w.s.143(3) of the Act on 26.12.2021 accepting the returned income of Rs. 8,08,880/-. He submitted that the learned PCIT in the order passed u/sec.263 has set-aside the order of the Assessing Officer on the ground that assessee had taken unsecured loan in cash through Shri Sachin Nahar of Rs. 1,56,00,000/- which was found from the premises of Shri Sachin Nahar during the course of search at his place on 04.08.2017. Learned Counsel for the Assessee submitted that this is a case of unabated assessment and addition, if any, can be made only on the basis of incriminating material found during the course of search. Referring to Pages-11 to 20 of the paper book, the Learned Counsel for the Assessee drew the attention of the Bench to the satisfaction recorded u/sec.153C of the Act in the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society reported in [2017] 397 ITR 344 (SC). He submitted that since there are two searches i.e., in the case of Yuvraj Dhamale Group of cases and another in the case of Shri Sachin Nahale and there is only one satisfaction note recorded on the basis of search at Dhamale Group of cases that too a combined satisfaction note for all the years which itself is invalid. Therefore, in absence of separate satisfaction note in the case of Shri Sachin Nahar, the Assessing Officer could not have made any addition in the case of the assessee without resorting to either a separate 153C notice or through sec.148. He accordingly submitted that the order of the learned PCIT is not in accordance with law and has to be set aside and the grounds raised by the assessee should be allowed. 7. The Learned DR on the other hand, strongly supported the order of the PCIT and submitted that when the Assessing Officer has received an email dated 19.03.2021 that assessee had taken unsecured loan in cash through Shri Sachin Nahar of Rs. 1,56,00,000/-, against which, he paid interest of Rs. 18,64,800/-, the Assessing Officer should have made d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup of cases, a combined satisfaction note u/sec.153C of the Act has been prepared for assessment years 2012-2013 to 2018-2019 which itself is not in accordance with law in view of the decision of Hon'ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma reported in [2024] 159 taxmann.com 179 (Karnataka), according to which, satisfaction note is required to be recorded u/sec.153C for each assessment year separately and a consolidated satisfaction note recorded for different assessment years would vitiate the entire assessment proceedings. It is also his submission that on the basis of search at the premises of Shri Sachin Nahar no satisfaction note has been recorded. According to him, the provisions of sec.153C have to be resorted to where any books of account or documents seized or requisitioned pertains or pertain to or any information contained therein relates to the assessee. Therefore, no addition could have been made merely on the basis of an email dated 19.03.2021 without resorting to the provisions of sec.153C or sec.148. 8.2. We find some force in the arguments of Learned Counsel for the Assessee. On a pointed query by the Bench to find-out as to whether any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order u/s. 153C of the Act passed on 26/12/2021 as erroneous and prejudicial to the interest of the revenue and directed the AO to examine the issue of cash loan of Rs. 1,56,00,000/- received by the assessee and interest payment of Rs. 18,64,800/- made by the assessee based on the incriminating documents seized in the case of Sachin Nahar. The set-aside proceedings are in progress as on date. 05. Further, it is pertinent to mention here that on analysis of the incriminating materials seized during another search action u/s. 132 of the Act conducted on 04/08/2017 in the case of Sachin Nahar, it is very clear that the assessee has received cash loan of Rs. 1,56,00,000/- and made interest payment of Rs. 18,64,800/- for the period under consideration as per the evidences seized during the search proceedings in the case of Sachin Nahar, forwarded to this office by the DCIT, Central Circle-1(1), Pune vide mail dated 19/03/2021. Hence, the necessary proposal for initiating penalty proceedings u/s. 271D of the Act for contravention of provisions of section 269SS of the Act will be submitted by this office after completion of this set-aside proceedings currently in progress. Yours fait ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble High Court reads as under : "53. Further, satisfaction note is required to be recorded under section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant/ Revenue." 8.6. We find when the Revenue challenged the above order of the Hon'ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma (supra), the Hon'ble Supreme Court in SLP (Civil) Diary No.21526 of 2024 vide order dated 20th August, 2024 dismissed the SLP filed by the Revenue. 8.7. Since in the instant case a consolidated satisfaction note has been prepared for assessment years 2012-2013 to 2018-2019, therefore, the consolidation satisfaction note being not in accordance with law, therefore, the entire assessment proceedings is liable to be quashed. We hold accordingly and quash the assessment. 8.8. Further, there is also no dispute to the fact that two searches have taken place i.e., one in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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