2022 (11) TMI 1060 - AT - Income Tax
Revision u/s 263 by PCIT - second round the assessee during the course of appellate proceedings before the ld. CIT(A)- Additional ground admitted by the ld. CIT(A) - assessment framed u/s. 153C/263/143(3) - CIT(A) raised the additional ground challenging the exercising of the jurisdiction by the ld. AO u/s. 153C of the Act for initiating the proceedings without prior recording a ‘satisfaction note’, which was a pre-condition to invoke the jurisdiction u/s. 153C - HELD THAT:- We find that in the case of Peerless General Finance & Investment Co. Ltd. [2007 (12) TMI 309 - ITAT KOLKATA] this Tribunal has held that jurisdictional issue, which is relating to validity of assessment order can be raised in the second round of litigation even if the same was not raised in the first round of proceeding - Also see case of Inventors Industrial Corporation Ltd [1991 (4) TMI 70 - BOMBAY HIGH COURT]
We find force in the submissions of the ld. Counsel for the assessee and fail to find any merit in the grounds raised by the revenue that the ld. CIT(A) erred in admitting and adjudicating the legal ground challenging the validity of proceeding carried out u/s. 153C of the Act.
CIT(A) has quashed the assessment order u/s. 153C of the Act on the ground that the ld. AO failed to record the satisfaction note - The pre-condition for carrying out proceedings u/s. 153C is that if the ld. AO of the ‘searched person’ and the ld.AO of the ‘other person’ in whose name incriminating material is found are different, then firstly ‘satisfaction note’ is prepared by the ld. AO of the ‘searched person’ mentioning the details of search material not belonging to the ‘searched person’ but belonging to the ‘other person’. Such satisfaction note along with seized material is passed over to the ld. AO of ‘other person’. Thereafter, the ld.AO of the ‘other person’ is again required to prepare the ‘satisfaction note’ stating that such seized material belongs to ‘other person’, who is under his jurisdiction. In the instant case before initiation of proceeding u/s. 153C of the Act the ld. AO has not prepared the satisfaction note. This fact has been admitted by the revenue authorities before us also.
Circular No. 24/2015 dt. 31-12-2015 issued by the Central Board of Direct Taxes (CBDT) which has been issued after following the judgment of the Hon’ble Supreme Court in the case of M/s. Calcutta Knitwears (supra) [2014 (4) TMI 33 - SUPREME COURT] and also considering the consistent view taken by various Hon’ble Courts, we find that the ld. CIT(A) has rightly applied the ratio laid down by the Hon’ble Apex Court as well as CBDT Circular No. 24 of 2015 dated 31-12-2015 to hold that proceeding u/s. 153C r.w.s 143(3) are void and ab initio. Since the same was carried out without recording satisfaction by the ld. AO, no interference is called for in the findings of the ld. CIT(A). Thus, all the grounds raised by the revenue in both the appeals are dismissed.