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TMI Blog2025 (1) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is both barred by limitation and nonest satisfaction and consequently, the entire proceedings under s. 153C of the Act is a complete non-starter and vitiated in law. Appeal of assessee allowed. Conferment of jurisdiction u/s 153C based on a satisfaction note - AYs 2012-13 to 2015-16 - The satisfaction note must suggest some degree of objectivity and lack of relevant particulars giving rise to purported satisfaction renders such satisfaction to be a nullity. In consonance with the view expressed in DCIT vs M/s. Manglam Multiplex Private Limited [ 2024 (10) TMI 253 - ITAT DELHI] and Renu Singh [ 2024 (12) TMI 184 - ITAT DELHI ] we find potency in the plea of the assessee towards incorrigible legal infirmities rendering the assumption of jurisdiction based on satisfaction note bereft of objectivity, to be vitiated in law. Thus, the assessment proceedings based on nonest jurisdiction is a complete non-starter. The resultant assessment orders passed u/s 153C of the Act for different AYs in question are bad in law and thus stand quashed. - Shri Pradip Kumar Kedia, Accountant Member And Shri Sudhir Kumar, Judicial Member For the Appellant : Shri S.S.Nagar, CA And Shri Gaurav Sachde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is invalid and deserves to be quashed as such. 4. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in law in upholding an addition of Rs. 2,05,24,705/- by applying rate of 1% is figure of Rs. 20,52,47,052/- representing alleged income from commission on total credits and debits reflected in the bank statement of the appellant company. 4.1. That the learned Commissioner of Income Tax (Appeals) has proceeded on arbitrary assumptions and, presumptions and overlooked the evidence and. explanation tendered by the appellant company, the addition thus sustained is based on surmises, conjectures and suspicion and therefore untenable. 4.2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in recording various adverse inferences which are contrary to the facts on record, material placed on record and, are otherwise unsustainable in law and therefore, addition so sustained is absolutely unwarranted. 4.3. That in any case and without prejudice that addition made is highly arbitrary and excessive and therefore unsustainable. 3. When the matter was called for hearing, the Ld. Counsel for the assessee submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded under s. 153C being germane to the subject matter of the controversy is reproduced hereunder:- Reasons/Satisfaction note for taking up the case of M/s Aashrya Developers Pvt. Ltd., under section 153C of the Income Tax Act, 1961 Name and address of the assessee M/s Aashrya Developers Pvt. Ltd. Asst. Year 2011-12 to 2017-18 PAN AAICA6465G Status Company By virtue of the authorization of the Director of Income Tax (Investigation), Chandigarh, a Search Seizure operation u/s 132 of the Income Tax Act, 1961 (hereinafter called 'the Act') was carried out on 21.07.2016 at the residential/business premises of the persons associated with the M/s M3M Group. 2. During search seizure operation u/s 132 of the Income Tax Act carried out at Chamber No. Paras Twin Towers, Tower-B, 6th Floor, Golf Course Road, Sector-54, Gurgaon-122002 belonging to M3M Group seized material i.e. Annexure A-3 was seized from the aforementioned premises. 3. In view of the above and as per the provisions of sub section (1) of the section 153C of the Act, I am satisfied that the document seized as mentioned above contains information relating to the assessee M/s Aashrya Developers Pvt. Ltd. and will have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to the assessee M/s Manglam Multiplex Pvt. Ltd. and will have bearing on the determination of total income for the A.Y. 2011- 12 to 2017-18 of M/s Manglam Multiplex Pvt. Ltd. Accordingly, after consideration, it is decided to issue such other person (M/s Manglam Multiplex Pvt. Ltd.) notice as per provisions of section 1530 read with section 153A of the Act. Date: 25.09.2018 Sd/- Asstt. Commissioner of Income Tax Central Circle-II, Faridabad Notice u/s 153C read with section 153A of the Act issued. 10. We shall first address the Cross Objection raised by the assessee seeking to challenge the propriety and legality of assessment for the A.Y. 2011-12 in question having regard to the embargo of limitation placed under Section 153C of the Act. It is the case of the assessee that the limitation period of 6 years has to be counted with reference to the date of requisition of books and other documents etc. seized from the custody of searched person. The date of search is not relevant for the purposes of limitation in Section 153C. What is relevant is the date of receipt of seized assets, documents by the AO of the non-searched person i.e. assessee in the instant case. When the lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t identifiable with any assessment year. In the absence of any particular of incriminating material available, such obscure and vague satisfaction note does not entitle the AO to assume jurisdiction under Section 153C of the Act. Neither the income assessed under Section 153C of the Act appears to relate to any incriminating material nor the so called incriminating material has been shown to be attributable to A.Y. 2011-12. 14 Hence, looking from any angle, the action of the Revenue is unfounded in law. Appeal of the Revenue is thus dismissed. 15. In the result, appeal of the Revenue is dismissed whereas Cross Objection of the assessee is allowed. 8. In consonance with view towards lack of jurisdiction under s. 153C of the Act, both on the ground of bar of limitation as well as legal infirmities in the satisfaction note in the identical set of facts, we hold that the assessment framed under s. 153C for the AY 2011-12 in question is both barred by limitation and nonest satisfaction and consequently, the entire proceedings under s. 153C of the Act is a complete non-starter and vitiated in law. 9. In the result, the appeal of the assessee is allowed. ITA Nos.3462 to 3464/Del/2023 [Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the satisfaction note recorded the purposes of jurisdiction of assumption under s. 153C of the Act is vague and non-descript. It is not known from the satisfaction note as to what is the quantum of undisclosed income qua different AYs recorded in a consolidated note. No seized material have been identified qua each AY. Thus satisfaction note drawn by the AO without reference to seized material pertaining to different AYs in an objective manner is an illusory exercise and unsustainable in law. Based on such observations, the jurisdiction assumed under s. 153C of the Act with reference to AYs 2012-13 to 2015-16 is also unfounded in law. 14. In similar facts situation, the Co-ordinate Bench of the Tribunal in the case of Renu Singh vs ACIT (supra) observed that conferment of jurisdiction under s. 153C of the Act based on a satisfaction note which has been recorded by the AO collectively for the multiple numbers of years without identifying the incriminating material in respect of particular AY and throwing open the all six years without giving reference to any concrete incriminating material qua each AY in an objective manner is outside the sanction of law. The relevant operative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is a huge difference in the consideration price as per agreement and sale deed. Further, cash exchange is also involved in this transaction. As per incriminating documents there is a difference of Rs. 300 Lacs and cash exchange of Rs. 90 Lacs. Panchnama was signed on 18/08/2020. The above documents have been examined and I am, being the assessing officer of the searched person. satisfied that the information contained in documents seized during the course of search u/s 132 of the 1.T. Act, 1961 at the premises of Shri Pranjil Batra, pertains to the assessee, who is a case of a person other than the person referred to in Section 153A ie. Shri Pranjil Batra. Hence, the information is being sent to the assessing officer of the such other person. Further, I am satisfied within the meaning of Section 153C r.w.s. 153A of the Act, that the documents have bearing on the determination of the total income of Renu Singh for the A.Y. 2015-16 to 2021-22. 18. The AO being common to the searched person as well as the assessee. The satisfaction note prepared in the capacity of the AO of the searched person is identical and therefore, not reproduced. 19. Section 153C of the Act pertains to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to any concrete incriminating material of a particular assessment Year; [iii] the act of the AO making sweeping averment in the satisfaction note that documents have bearing on determination of total income of Smt.Renu Singh for AY 2015-16 to 2020-21, is without legal foundation as the AO has even failed to name the alleged documents and further failed to mention as to how it is related /pertained to which Assessment Year; [iv] the AO on receipt of material/documents from the AO of the searched person must necessarily apply his mind on the material received and ascertain precisely the specific year to which incriminating material relates. It is only when this determination/ascertainment is complete that the flood gates of an assessment would open qua those particular years. The issuance of notice cannot be an automated function unconnected to this exercise of analysis and ascertainment by the AO in the light of judgement rendered in the case of Agni Vishnu Feature Pvt.Ltd. vs DCIT [2023] 157 taxmann.com 242 (Madras); [v] the satisfaction note do not provide any particulars of documents seized from the premises of Shri Pranjil Batra. Nothing is mentioned with regard to Annex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm part of block of relevant AYs. For holding so, the Hon ble Delhi High Court relied upon the judgement delivered by the Hon ble Supreme Court in the case of Sinhgad Technical Education Society wherein the Hon ble Supreme Court held that the assessment under section 153C could be made only for the year to which material relates to and exercise of power under section 153C of the Act in respect of other AYs would not sustain . The Hon ble Delhi High Court also noted that the AO is bound to ascertain and identify the AY to which the material recovered relates and AYs which can then be subject to action under section 153C of the Act will have to be necessarily those in respect of which the assessment is likely to be influenced or impacted by the material discovered. The Hon ble Delhi High Court went one step further to hold that where material discovered in the course of search has the potential of constituting incriminating material for more than one AYs, even in such a situation, it will be incumbent upon the AO to duly record reasons that material is likely to be incriminating for more than one AY and thus, warranting the action under section 153C of the Act for years in addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d initiation of action under section 153C of the Act qua such assessment years. The AO has failed to do so. As a corollary, the notice issued under section 153C of the Act and consequent assessment order passed under section 153C of the Act is vitiated in law and requires to be quashed. 23. We however, also advert to the objections raised on merits of the additions made in the assessment order. On facts, the AO has relied on some photographs of the Agreement to Sale dated 06.08.2018 and alleged that the total sale consideration of the property situated at Laxmi Nagar, Delhi stands at INR 4,49,50,000/- instead of amount of INR 1,49,15,000/- and that the assessee holds 25% share in such property. The assessee on the other hand, claims that as per the Sale Agreement, the property sold as per Sale Deed stands at actual sale consideration at INR 1,49,15,000/- in which she holds 25% shares and accordingly, declared the capital gains based on actual such sale consideration. The AO on the other hand, alleged that the difference between the sale consideration mentioned in Agreement to Sale and Sale Deed is undisclosed part of the transaction. The basis of making additions is the photocopy o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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