2021 (12) TMI 1529 - AT - Income Tax

Validity of proceedings u/s. 143(3) r.w.s.153C - absence of a valid satisfaction note - HELD THAT - A perusal of CIT(A) s order s in AY 2005-06 indicates that the AO thereafter recorded his corresponding satisfaction that the alleged incriminating material only relates to the assessee whereas the said statutory expression to this effect stood inserted vide Finance Act 2015 w.e.f. 1.6.2015 without carrying having retrospective effect. Faced with this situation we adopt stricter rule of interpretation in light of Commissioner of Customs Vs. Dilip Kumar Co. 2018 (7) TMI 1826 - SUPREME COURT (LB) that the CIT (A) has rightly quashed the impugned assessment in absence of a valid satisfaction note. This tribunal s common order in Syed Rafiuddin Others 2021 (10) TMI 1242 - ITAT HYDERABAD involving the very search and various third parties has already adopted identical reasons while upholding the CIT(A) s similar lower appellate findings. We thus adopt judicial consistency in above terms. Revenue s four appeals are dismissed.

Summary

The Appellate Tribunal (ITAT Hyderabad) dismissed the Revenue's appeals for Assessment Years 2005-06 to 2007-08 and 2009-10 arising from proceedings under section 143(3) read with section 153C of the Income Tax Act, 1961. The Revenue contended that the CIT(A) erred by not following the Supreme Court's ruling in M/s. Super Malls Pvt. Ltd. (Civil Appeal Nos. 2006-07 of 2020), which held that when the Assessing Officer (AO) for both the searched person and the other person is the same, it suffices for the AO to note in the satisfaction note that seized documents belong to the other person.The Tribunal noted that the AO recorded satisfaction that the incriminating material "relates to" the assessee, a phrase inserted only from 1.6.2015 onward and hence not applicable retrospectively. Applying the stricter interpretation rule from Commissioner of Customs v. Dilip Kumar & Co. (2018) 9 SCC 1, the Tribunal upheld the CIT(A)'s quashing of the assessment due to the absence of a valid satisfaction note under section 153C. The Tribunal also relied on its prior common order in ACIT v. Syed Rafiuddin & Others (ITA Nos. 491 to 494/Hyd/2020), which adopted similar reasoning.In sum, the Tribunal affirmed that "nothing incriminating has been recorded in the satisfaction note" as required under the law applicable at the relevant time, and dismissed the Revenue's appeals for lack of valid satisfaction under section 153C.