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2020 (11) TMI 168 - AT - Income TaxAssessment u/s 153A - Need for spelling out ‘Satisfaction note’ - requisite satisfaction in terms of section 153C - incriminating materials found in search or not? - HELD THAT:- Since the original scrutiny assessment u/s 143(3) of the Act for AY 2014-15 in the case of assessee foundation was framed on 31.12.2016, therefore, the assessment was not pending before AO on the date when ‘Satisfaction Note’ was prepared, so as per the settled position of law, the AO ought to have discussed in the ‘Satisfaction note’ the jurisdictional facts i.e. incriminating materials qua the assessee qua AY 2014-15, for invoking section 153C jurisdiction. As noted earlier there is no whisper about M/s PHPL opting for IDS Scheme, 2016 and according to us, the ld. CIT(A) while adjudicating the legal issue of the validity of the satisfaction note prepared by the AO to invoke 153C against the assessee foundation, cannot resort to post mortem and resurrect a bad satisfaction note because AO could not have usurped the jurisdiction u/s 153C without preparing a valid Satisfaction Note and therefore AO’s action to invoke the jurisdiction u/s 153C in respect of AY 2014-15 was ab-initio void and therefore the CIT(A) cannot correct a jurisdictional issue and therefore this action of ld. CIT(A) was itself untenable in the eyes of law. Even if for argument’s sake, the ld. CITDR’s contention regarding M/s PHPL opting for IDS Scheme, 2016 is considered we find force in the argument of ld. A.R that Shri Ladia’s statement during the survey on 23.09.2016 that M/s PHPL has received back the donated amount of ₹ 50 lacs from the assessee foundation does not corroborate with their subsequent action of only disclosing an amount of ₹ 25 lacs for AY 2014-15 during the IDS Scheme, 2016. We note that for AY 2013-14 to 2016-17 M/s PHPL has disclosed in IDS Scheme, 2016, a total of ₹ 71.25 lacs which fact goes on to show that M/s PHPL had enough money in its kitty to give donation to assessee foundation. Therefore, the action of M/s PHPL declaring ₹ 25 lacs as undisclosed income for AY 2014-15 cannot be considered to justify the action of ld. CIT(A) in confirming the addition of ₹ 50 lacs as against the assessee foundation. The contentions raised by the Ld. CIT DR are devoid of merits and so it is rejected and therefore on merits also the assessee succeeds. However, since we allow the legal issue raised by the assessee, we hold that the action of AO to invoke section 153C of the Act was without jurisdiction and, therefore, the impugned action of AO to issue notice u/s. 153C of the Act is null in the eyes of law and therefore ab-initio void and so it is quashed. - Decided in favour of assessee.
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