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2015 (3) TMI 542 - ALLAHABAD HIGH COURT

2015 (3) TMI 542 - ALLAHABAD HIGH COURT - [2016] 380 ITR 566 - Initiation of the proceeding under Section 153C - absence of satisfaction note - Held that:- When no satisfaction was recorded then the requirement of Section 153C was not satisfied. Therefore, we have no reason to interfere with the impugned order passed by the Tribunal, who has not sustained the proceedings under Section 153C of the Act, for the reason that there was no satisfaction at any stage.

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. For the Appellant : Shambhu Chopra, Sr. Sc For the Respondent : Rahul Agarwal ORDER All the three appeals have been filed by the Department against consolidated order dated 29.11.2013 passed by the Income Tax Appellate Tribunal, Agra in ITA Nos. 200, 305 and 306/Agra/2013 for the assessment year 2002-03 and 2006-07. The brief facts of the case are that all the assessees belong to M/s. Shanker Gutka Group, where a search and seizure operation was carried out on 30/31 January 2008. During the co .....

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has filed the present appeals. With this background, Shri Shambhu Chopra, the learned counsel for the Department submits that the core issue is that the Tribunal himself has interpreted the provision of Section 153C of the Income Tax Act but the same only provides the procedure to be followed. For the purpose, the learned counsel submits that in the case of CIT vs. Classic Enterprises [2013] 358 ITR 465 (Alld.), it was observed that: "...Section 153C of the Income Tax Act, 1961, prescribed .....

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3C. Mere use or mention of the word "satisfaction" in the order or note will not meet the requirement of the concept of satisfaction as used in section 158BD. The satisfaction has to be in writing and can be gathered from the assessment order, if it is so mentioned or recorded, or from any other order, note or record maintained by the Assessing Officer of the person searched. The Assessing Officer is satisfied when he makes up his mind or reached a clear conclusion when he take a prima .....

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nquiry by the Bench, the learned counsel for the Department accepted that in the instant cases, no satisfaction was recorded. He read out para 7 of the Tribunal's order, where it was mentioned that the A.O. did not make any addition against the assessee on the basis of any adverse material. No material is produced to prove that the A.O. was satisfied that any money, bullion, jewellery or other valuable articles or things or books of accounts, or documents seized or requisitioned belong to or .....

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al. Learned counsel further submits that satisfaction is the mandatory requirement. For the purpose he relied on the ratio laid down in the following cases : (a) Commissioner of Income Tax vs. Gopi Apoartment [2014] 365 ITR 411 (Alld); and (b) CIT vs. M/s. Shettys Pharmaceuticals & Biologicals Limited ITA Nos 662 and 668 of 2014 (AP) It is also the submission of learned counsel for the assessee that the Income Tax Act however provides for taking recourse to a assessment of income of any othe .....

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ized or requisitioned shall be handed over to the AO having jurisdiction over such other persons. (d) The AO has proceeded under Section 153C against such other person. The section mandates about recording of the satisfaction by the Assessing Officer(s) and it is a pre-condition for invoking jurisdiction and it is not a mere formality because recording of satisfaction postulates application of mind consciously as the documents seized must be belonging to any other person other than the person re .....

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or record maintained by the Assessing Officer of the person searched. The satisfaction always reflects in writing/averments where it is recorded. The satisfaction may be recorded at any stage. In the instant case, the order passed by the Tribunal, a final fact finding authority, clearly states that no "satisfaction note" has been recorded before initiating the proceedings under Section 153C of the Income Tax Act. In the case of Vijaybhai N. Chandrani vs. ACIT, 333 ITR 436 (Guj.), it wa .....

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each such other person and issue such other person notice and assess or reassess income of such other person. However, there is a distinction between the two provisions inasmuch as under section 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the Assessing Officer was satisfied that any undisclosed income belongs to any person, .....

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