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2021 (7) TMI 623 - AT - Income TaxAssessment u/s 153C - whether there was a material belonging to the assessee that authorise the AO to record a satisfaction note for taking cognizance of section 153C? - HELD THAT:- AO has made reference to the statement of Shri Sargam Gupta under section 131(1A) of the Act. His statement was recorded twice. First statement was recorded on 24.3.2014. It could be termed pre-search statement, and second statement was recorded on 13.5.2014. Copies of both these statements are available on page no.23 to 26 and 41 to 46 - CIT(A) while evaluating the evidence for the purpose of arriving at a conclusion, whether a judicial mind can reach on a satisfaction on the basis of the above material for taking action against the assessee under section 153C and make reference to the statement of Shri Sargam Gupta recorded under section 131(1A) on 13.5.2014. It is pertinent to note that this statement cannot be referred for taking cognizance against the assessee. Section 153C contemplates documents seized or requisitioned during the search. It does not talk of information. Otherwise also a statement under section 131 dated 13.5.2014 was not recorded during the course of search; it is after the conclusion of the search. Statement recorded on 24.3.2014 is concerned, it is a presearch statement i.e. before the commencement of search, and in this statement the investigating officer has no where asked any such question, because upto that stage, documents were not discovered i.e. Annexure A/1 and Annexure-A/2. Therefore, Shri Sargam Gupta could not be asked to explain this. These documents were put to him in the statement under section 132(4). We have taken cognizance of that part of the statement. As observed that statement recorded under section 131(1A) of the Act after conclusion of the search i.e. on 13.5.2014 is concerned, this can be an information for evaluating whether any income has escaped assessment or under section 147 for reopening of the assessment; but for taking action under section 153C this statement cannot be used. A perusal of the satisfaction note extracted(supra) would indicate that the AO has vaguly made reference of statement under section 131(1A) of the Act, but he has not referred which statement i.e. pre-search statement or consequent to the conclusion of the search. There are three paragraphs in this note; in the first para, he made reference of the facts, and in the second para he wrote that books of the accounts belonging to the assessee of the alleged seizure referred by the AO be construed as books of accounts belonging to the assessee. These documents do not contain names; even page no.3 of Annexure A/2 did not reflect to whom cash was given. There is no reference to this page. Therefore, on the basis of these documents, adjudicating authority could not goad to reach any firm conclusion that these documents belonging to the assessee - on a detailed analysis of the evidence available on record, we are satisfied that there is no material with the Revenue to form a belief that action under section 153C is required to be taken against the assessee in these two assessment years. Thus, preliminary issue is decided in favour of the assessee in both these assessment years, and it is held that the AO has erred in assuming jurisdiction under section 153C against the assessee in the Asstt.Year 2012-13 and 2013-14. The assessment orders on preliminary issue are quashed in these years. Best judgment assessment - A.Y.2014-15 - AO did not issue any notice under section 143(2), and passed ex parte assessment order under section 144 - HELD THAT:- Best judgment could be passed in case if any person fails to make a return required under sub-section (1) of section 139 of the Act, and has not made a return or revised return under sub-section (4) or 5 of section 139. Similarly, he fails to comply with all the terms of the notice issued under section 142(1) of the Act. In the present case, the Act talk of return filed under section 139(1) and 139(4) or revised return under subsection (5). Similarly, it talks of conditions contemplated in sub-section (1) of section 142 of the Act. In the present case, the AO failed to issue notice under section 143(2) of the Income Tax Act in the Asstt.Year 2014-15, and therefore, respectfully following the decision of the Hon’ble Supreme Court in the case of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] and case of CIT Vs. Sukhini P. Modi [2014 (11) TMI 50 - GUJARAT HIGH COURT] we are of the view that the assessment order is not sustainable, accordingly it is quashed.
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