The assessment u/s 153C mandates the recording of satisfaction ...

AO's Failure to Record Satisfaction u/s 153C Invalidates Jurisdiction Over Seized Documents Impacting Income.

September 23, 2024

Case Laws     Income Tax     AT

The assessment u/s 153C mandates the recording of satisfaction by the Assessing Officer (AO) upon discovery of material likely to "have a bearing on the determination of the total income." Proceedings u/s 153C can be initiated only upon the AO's satisfaction of the other person on receipt of the seized material from the AO of the searched person. The AO shall then proceed against such other person, issue notice, and assess or reassess the income in accordance with Section 153A, if satisfied that the seized books of account, documents, or assets have a bearing on the determination of the total income for six assessment years immediately preceding the search/requisition year. However, the AO failed to record how the seized documents have a bearing on the determination of the total income for the six preceding assessment years, indicating non-compliance with Section 153C. Relying on the Saksham Commodities Ltd case, the AO failed to record satisfaction as per the Act and assess the potential impact on undeclared income and its effect on the total income for the six preceding assessment years. Consequently, the non-recording of proper satisfaction to initiate proceedings u/s 153C renders the proceedings without proper jurisdiction, allowing the assessee's ground.

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