2014 (8) TMI 425 - HC - Income Tax

Validity of Notice u/s 153C - issuance of a notice by an AO of a person who has not been searched, on the basis of a satisfaction note prepared by the AO of a searched person - Basic ingredient - satisfaction – Held that:- Assessee rightly contended that whenever a document is found from a person who is being searched the normal presumption is that the document belongs to that person - It is for the AO to rebut that presumption and come to a conclusion or “satisfaction” that the document in fact belongs to somebody else - There must be some cogent material available with the AO before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else - apart from saying that the documents belonged to the assessee and that the AO is satisfied that it is a fit case for issuance of a notice u/s 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised have been rebutted by the AO - Mere use or mention of the word “satisfaction” or the words “I am satisfied” in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the Act - The satisfaction note itself must display the reasons or basis for the conclusion that the AO of the searched person is satisfied that the seized documents belong to a person other than the searched person – thus, the very first step prior to the issuance of a notice u/s 153C has not been fulfilled – the condition precedent has not been met, the notices u/s 153C are liable to be quashed – Decided in favour of Assessee.