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TMI Blog2025 (2) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... ition thereon could be made. We also hold that it is undisputed fact that these documents did not establish correlation document-wise with these assessment years under consideration. The very essential element for invoking the provisions of section 153C is, therefore, found to be not present in the impugned satisfaction note prepared by the AO. Accordingly, ground raised by the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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. Prayer It is therefore, prayed that, it be held that assessment made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) be quashed. It be further held that addition sustained by the learned Commissioner of Income Tax (Appeals) is not tenable and therefore be deleted and appeal of the appellant company may kindly be allowed." 4. At the time of hearing, ld. AR of the assessee made submissions on jurisdictional issues raised by the assessee in Ground No.1 and sub-grounds. 5. The relevant facts relating to ground no.1 are, a search and seizure operation under section 132 of the Income-tax Act, 1961 (for short 'the Act') was conducted on 21.07.2016 at the residential as well as office premises of M3M group of cases by virtue of the authorization of the Pr. Director of Income Tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee submitted that the AYs 2011-12 & 2012-13 are outside the assessment years which covers under section 153A of the Act and prayed that the assessment passed u/s 153C of the Act in the above two years is outside the jurisdiction and accordingly should be quashed. 8. On the other hand, ld. DR of the Revenue fairly accepted the said position of law that these two assessment years are outside the jurisdiction u/s 153A read with section 153C of the Act. 9. Considered the rival submissions and material placed on record. We observed that the AO of the assessee has recorded the satisfaction note on 25.09.2018. As per the provisions of section 153C r.w.s. 153A, relevant search assessment year for the other person is the assessment year in which this satisfaction note is recorded. Accordingly, the relevant search assessment year for the assessee is AY 2019-20. Accordingly, the assessment years under consideration i.e. AYs 2011-12 & 2012-13 are outside the jurisdiction of revision proceedings u/s 153A r.w.s. 153C of the Act. Accordingly, assessment orders based u/s 153A(1)(b) of the Act is accordingly quashed. Resultantly, ground no.1 raised by the assessee in AYs 2011-12 and 2012- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record, we observed that the coordinate Bench in the case of Renu Singh vs. ACIT (supra) has considered similar aspect and quashed the proceedings u/s 153C by observing as under :- "17. The 'satisfaction note searched person) being assumption of jurisdiction. It would be apt recorded hereunder:- "A search was conducted in the case of Shri Pranjil Batra on 17/08/2020. During the proceedings Pranjil Batra, incriminating documents were found and seized. There are various documents/ inform acquired huge wealth and has invested bank accounts in the names of various persons and entities. Most of these persons are related to Sh. Pranjil Batra or his employees. Most of the entities are paper entities and are controlled and managed by Sh. Pranjil Batra. However, in sake of name Sh. Pranjil Batra has relatives/employees as directors/share holders in these entities. On perusal of such documents/information it has been observed that many of such information/ documents belongs to or pertains to the assessee as per brief description given under :- S.No. Premise/Party/Annexure/Page No. 1. Description of document sealed 1 Premise of Shri Pranjil Baua. F 193 Laxmi Nagar, New Delhi Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered invalid. The 'satisfaction note' being so critical and powers under section 153C of the Act being contingent upon such Note, the information contained therein need to be actionable. This being so, the 'satisfaction note' is expected to identify the relevant material found in search and that it pertains to or relates to third person. Such material found should reliably indicate or suggest the bearing of such documents/assets etc. to the income in the hands of third person. The 'satisfaction note' should record such material to provide accountability of the AO and to justify the initiation of proceedings against other person. In summary, such Note should set the narrative in an objective manner, as far as possible, to enable judicial scrutiny of such document, if so called for. 20. The assessee contends that 'satisfaction note' which is the first step for assumption of jurisdiction under section 153C of the Act and provides foundation for conferment of jurisdiction is plagued with infirmities. Viz: [i] the 'satisfaction note' has been recorded by the Assessing Officer of searched person and that of assessee collectively for the period AY 2015 to AY 2021-22 without id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- but the assessment order refers to an altogether different figure of INR 3,00,35,000/-; and [viii] the 'satisfaction note' is clearly very generic and devoid of any basic detail of the transaction in question. 21. We find potency in, the plea of assessee towards allegation of infirmities in the 'satisfaction note'. The Hon'ble Delhi High Court in the case of Sakham Commodities Ltd. Vs ITO 161 taxmann.com 485 (Delhi) deftly expounded the imperatives of a 'satisfaction note', incriminating material in respect of particular AY will not automatically confer jurisdiction to invoke section mentioned therein. The Hon'ble Delhi High Court further observed that discovery of material for a particular AY is not intended to trigger a chain reaction or have a water fall effect on all the AYs which can form part of the 'relevant AYs' under section 153C Of the Act. The Hon'ble Delhi High Court underscored well settled distinction which the law recognizes between the existence of power and the exercise thereof and thus, held that unless the AO is satisfied that the material gathered can potentially impact the determination of total income, it will be abrupt exercise of pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of the parameters expected of him while drawing satisfaction. While exercising the power under section 153C of the Act, neither has the AO related the material found in the course of search with a particular AY while making a consolidated 'satisfaction note' nor provided any requisite details of transaction to enable an independent person to ascertain and form any independent' opinion on facts stated in Note that invocation of section 153C of the Act is indeed warranted in the facts of the case. Mere drawing of a perfunctory satisfaction without meeting basic ingredients of providing some tangible & descript information and application of mind thereon has no standing in law and would not confer drastic jurisdiction of assessment u/s 153C of the Act on a person other than searched person. The jurisdiction assumed based on such lackadaisical 'satisfaction note' beset with vital infirmities cannot be countenanced in law. The objection raised on behalf of the assessee towards lack of jurisdiction based on cryptic and non-descript satisfaction thus deserves to be sustained. While recording a consolidated 'satisfaction note' is not a bar in law per se as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion relating to the assessee M/s. Marconi Infratech Pvt. Ltd. and will have bearing on the Marconi Infratech Pvt. Ltd. Accordingly, after consideration, it is decided to issue such other person (M/s. Marconi Infratech Pvt. Ltd.) notice as per provisions of Section 153C r.w.s 153A of the Act. Date : 31.10.2018 Sd/- [SUDEEP DABAS] Asstt. Commissioner of Income Tax, Central Circle - II, Faridabad" 17. It appears from the above satisfaction note that the material being Annexure A-3 belonging to M3M Group was seized during the search and seizure operation under Section 132 of the Act carried out at Chamber No. Paras Twin Towers, Tower-B, 6th Floor, Golf Course Road, Sector - 54, Gurgaon - 122002. It was further noted by the Learned AO that he is satisfied by the said documents seized containing information relating to the Marconi Infratech Pvt. Ltd. and the same have bearing on the determination of the total income for the A.Ys. 2011-12 to 2017-18 of M/s. Marconi Infratech Pvt. Ltd. and therefore, decided to issue notice to that other person being the assessee before us under Section 153C r.w.s 153A of the Act. The satisfaction note is, thus admittedly fails to demonstrate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2001-02 and 2003-04. The Tribunal allowed the assessee to raise issues against such Assessment Years and decided the issue in favour of the assessee by quashing the notice issued in respect of the said Assessment Years. It was held that the documents as claimed to be incriminating material, should establish co-relation with the Assessment Years in questions, in default the notice issued under Section 153C of the Act is not maintainable. With the above observation, the order passed by Tribunal quashing the notice under Section 153C of the Act was upheld. 20. In the case in hand the satisfaction note simply referred the seized material i.e. Annexure A-3 seized during the search and seizure operation carried out on 21.07.2016 at Chamber No. Paras Twin Towers, Tower-B, 6th Floor, Golf Course Road, Sector - 54, Gurgaon - 122002. Whereas from the plain reading of the language of Section 153C of the Act and judicial pronouncement cited hereinabove it is abundantly clear that in order to reopen assessment of the other person under Section 153C of the Act for the Assessment Year earlier to the year of search, direct co relation must exist between existence of incriminating material and r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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