Monday, 3 December 2012

S. 153C search assessment is void if AO’s satisfaction not recorded

ACIT vs. M/s. Global Estate (ITAT Agra)

Search & seizure operations u/s 132 were conducted at the premises of P.C. Wadhwa. Pursuant thereto, a notice u/s 153C was issued on the assessee requiring it to file its return. The assessee asked the AO for a copy of the reasons which resulted in satisfaction for issue of the s. 153C notice. The said reasons were not furnished by the AO on the ground that there was no requirement in the Act which required such reasons to be furnished. The CIT(A) struck down the s. 153C assessment on the ground that the AO had not recorded any satisfaction before issue of the notice. On appeal by the department to the Tribunal, HELD dismissing the appeal:

S. 153C is analogous to s. 158BD. In the context of s. 158BD, the Supreme Court held in Manish Maheshwari 289 ITR 341 that the recording of satisfaction by the AO that undisclosed income belongs to any person, other than the person who was searched, is a condition precedent. This principle applies to s. 153C as well. The burden is on the Revenue to show that the necessary ingredients of s. 153C have been complied with. On facts, there is material to show the AO in the case of the person searched was satisfied that any money, bullion, jewellery or other valuable articles or things or books accounts or documents seized or requisitioned belongs to someone else. There is nothing to show that such satisfaction was recorded by the AO. Even in the assessment order, no seized document or material has been referred to by the AO. Consequently, the conditions of s. 153C are not satisfied and the assessment order had to be quashed (Vijaybhai N. Chandrani 333 ITR 436 (Guj) and other judgements followed).

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