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2022 (10) TMI 559 - AT - Income TaxValidity of assessment/re-assessment u/s 153C - Necessity of Satisfaction Note regarding initiation of proceedings - HELD THAT:- In the case in hand, pre-amended law u/s 153C of the Act needs to be applied [since the date of search was on 27.10.2014, that has to be considered to be relevant date for the purpose of applying the provision of section 153C(1) of the Act, even though the satisfaction note was handed over to AO of assessee on 15.03.2017]. The essential jurisdictional fact for initiation of assessment u/s 153C of the Act as per the pre-amended section 153C of the Act is that AO of the searched person should be able to return a finding of fact that the seized material belongs to assessee and thereby rebutting the presumption that documents seized belongs to searched party. Whether the satisfaction note recorded by the AO of the searched person (M/s. Navjeevan Trust) i.e. DCIT-CC-2(1), Mumbai satisfies the requirement of law as prescribed under the pre-amended section 153C ? - Jurisdictional fact [seized material from M/s Navjeevan belongs to third party the assessee] does not exist, and the DCIT/AO of searched person wrongly assumed that the documents seized during searched on 27.10.2014 at the premises of M/s. Navjeevan Trust belongs to the assessee which was on wrong assumption of facts and therefore the foundational fact recorded by DCIT in his satisfaction note itself is bad in law. Therefore, we are of the considered opinion that the satisfaction note prepared at the first stage by AO of the searched persons [DCIT-CC-2(1)] in respect of third party assessee for initiation of proceedings u/s 153C of the Act does not satisfy the requirement of the law and consequently all actions taken pursuant thereto by the AO of the assessee i.e. ITO, Ward (4)(3) also is void-ab-initio and we hold accordingly. Penalty levied u/s 271(1)(c) - In the light of us quashing the assessments framed u/s 153C of the Act for AY 2010-11, 2011-12, 2012-13, the penalty levied also based on those assessments, has to fall because the case of assessee is squarely covered by the legal Maxim “Sublato Fundamento credit opus” meaning in case foundation is removed, the super-structure falls. In the case of Badarinath Vs. Tamilnadu [2000 (9) TMI 1044 - SUPREME COURT] held that once the basis of proceedings is gone, all consequential order/action would fall on the ground automatically which is applicable to judicial and quasi-judicial proceedings also. Thereafter, the impugned penalty for all the captioned appeals needs to be cancelled and we do so. All the appeals of the assessee are allowed.
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