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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 ..... 1.1 That both the notice issued u/s 153C of the Act and assessment framed u/s 153C of the Act were without satisfying the statutory preconditions contained in the Act and therefore without jurisdiction and therefore deserves to be quashed as such. 1.2 That while upholding the assumption of jurisdiction the learned Commissioner of Income Tax (Appeals) has failed to appreciate that since neither money, bullion, jewellery or other valuable article or thing belonging to the appellant and nor any books of accounts or documents pertaining to the appellant or any information contained therein relating to the appellant were seized as a result of search the assumption of jurisdiction u/s 153C of the Act was illegal, invalid and unsustainable. 1.3 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the assumption of jurisdiction despite the fact that in absence of any valid satisfaction having been recorded both in the case of searched person and, the appellant action u/s 153C of the Act was in excess of jurisdiction. 2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that addition made and upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing on the determination of total income of the assessee. The case was centralized in Central Circle 2, Faridabad vide File No.CIT-7/Cent/156/2017-18/793 dated 30.08.2018 in pursuance to search and seizure action u/s 132 of the Act. Seized documents/materials in the group were received by the AO on 29.01.2018 from the DDIT (Inv.)-I, Gurugram. Accordingly, notice u/s 153C of the Act was issued to the assessee on 26.09.2018 requiring the assessee to file its return of income in respect of six assessment years including search assessment in which search was conducted in the group. In response, assessee filed its return of income u/s 153C of the Act on 26.10.2018 for the AY 2011-12. In the return of income, assessee has declared its income at Rs. Nil. Accordingly, notices u/s 143(2) and 142(1) were issued along with questionnaire to the assessee on 12.11.2018. 6. At the time of hearing, ld. AR brought to our notice satisfaction note recorded by the AO of the assessee u/s 153C of the Act, which is placed on record at page 65 of the paper book, as per which the AO of the assessee has recorded the above satisfaction only on 25.09.2018. Accordingly, ld. AR of the assessee submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the result, the appeals for AYs 2011-12 & 2012-13 are partly allowed. 12. Coming to the other appeals filed by the assessee relating for AYs 2013-14 and 2015-16 to 2017-18, in this regard, ld. AR of the assessee submitted that no doubt the AO of the assessee has recorded satisfaction note u/s 153C of the Act based on the seized material found during search and seizure operation u/s 132 of the Act carried out at Chamber No.Paras Twin Towers, Tower B,6th Floor, Golf Course Road, Sector 54, Gurgaon-122 002 belonging to M3M group identified as Annexure A-3. He submitted that the satisfaction note so prepared by the AO for the complete block period on 25.09.2018 for the AYs 2011-12 to 2017-18 u/s 153C r.w.s. 153A and submitted that this satisfaction note is illegal, void ab initio, barred by limitation and, therefore, liable to be quashed. In this regard, ld. AR of the assessee heavily relied on the decision of Renu Singh vs. ACIT in ITA No.2806 & 2810/Del/2024 dated25.11.2024 He placed a copy of the abovesaid order and further relied on the decision of Marconi Infratech vs. ACIT dated 21.06.2024. 13. On the other hand, ld. DR of the Revenue submitted that satisfaction note prepare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 I.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 i.e. 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 doucemtns 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minating 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 Assessing Officer in the light of judgement rendered in the case of 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 Annexure No., page no. of the panchnama thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 A Y and thus, warranting the action under section 153C of the Act for years in addition to those to which material may be directly rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication of mind and 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." 15. Further we observed that in the exactly similar facts on record, in the group concerns of the search proceedings, coordinate Bench has considered the similar facts in the case of Marconi Infratech (supra) and held as under :- "16. Apart from the above fact, the Learned Counsel appearing for the assessee submitted before us that the Learned CIT(A) erred in law and also in fact in upholding the assumption of jurisdiction in the absence of a valid satisfaction note recorded in the case of searched person and the appellant under Section 153C of the Act. Rather the same is issued in access of jurisdiction. In this regard, he has taken us to the satisfaction note recorded by the ACIT, Central Circle - II, Faridabad dated 30.10.2018 in respect of the entire block period commencing from A.Ys. 2011-12 to 2017-18 appearing at page 88 of the paper book filed by the assessee before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The reason assigned to the satisfaction note is, thus, not found to be logical, rather vague. 18. A decision of the Hon'ble Supreme Court in the case of CIT vs. Singhad Technical Education Society [2017] taxmann.com 146 (Delhi) as relied upon by the Learned AO already settled the issue and held this to be an essential requirements as submitted by Learned AR. The relevant para of the same are reproduced as under: "(18) The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re A-3 as relied upon by the Learned AO being the seized document neither even speaks about the issue in respect of the respective Assessment Year sought to be reopened which could ultimately be said to be unexplained and addition thereon could be made. It is an undisputed fact that these documents did not establish co relation, document wise with these six Assessment Years. The very essential element for invoking the provision of Section 153C is therefore, found to be missing. In that view of the matter, the reason assigned by the Learned AO while recording satisfaction is not found to be logical one rather vague; the material seized does not properly disclosed how the same belongs to be appellant; neither has it established any co relation document wise with these Assessment Years sought to be reopened and finalized upon making addition thereon. We, thus, respectfully relying upon the judgment passed by the Hon'ble Supreme Court in the case of CIT vs. Sinhgad Technical Education Society (supra) do not find any force in such satisfaction note recorded by the Learned AO as the said is recorded not in terms of the provision of Section 153C of the Act and thus, found to be invalid. T ..... 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