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2016 (5) TMI 791 - KARNATAKA HIGH COURT

2016 (5) TMI 791 - KARNATAKA HIGH COURT - [2016] 388 ITR 450 - Validity of assessment u/s 153A - Held that:- Tribunal has neither examined the records of all the cases before the AO nor any finding is recorded on the aspects of the satisfaction note and, as the Tribunal is the final fact finding authority, we fi nd that the matter should be relegated to the Tribunal for examining the said aspect, namely whether there was compliance of the requirement of satisfaction recording before final conclu .....

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h the provisions of the Act under Section 143(3) read with Section 153C, has examined the other aspects namely of the estimated gross profit at the rate of 7% or 6% and further addition of the amount of liability to pay interest to appellant-assessee. - Considering the above it appears to us when we are inclined to relegate the matter to the Tribunal on the issue which goes to the root of the matter, it would be premature on our part to address ourselves on the aspects of the assessment alr .....

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010 & ITA Nos.450/2010, 455-56/2010 - Dated:- 11-3-2016 - MR. JAYANT PATEL AND MRS. B.V.NAGARATHNA JJ. For the Appellant: Sri. A. Shankar & M. Lava, Advocates For the Respondent: Sri. K.V. Aravind, Advocate JUDGMENT As in all the appeals common questions are to be considered, they are considered simultaneously. 2. All the appeals, preferred by the assessee are directed against the common order passed by the Tribunal in Appeal Nos.174-18 .....

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or the purpose of re- assessment of the income under Section 153A of the Act. The appellant had filed return of income in response to the notice under Section 153A of the Act and declared the income for the respective assessment year. The Assessing Officer issued notices under Section 153C of the Act for the respective assessment years. In response to the notices received under Section 153C of the Act the appellant filed a letter to be treated as the return filed in response to the n .....

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e raised, including that the order passed under Section 143(3) read with Section 153-C of the Act by the Assessing Officer was not in accordance with the provisions of law laid down. The additional contentions were also raised for erroneous consideration of profit ratio of 7% against 6% and further addition made by the Assessing Officer, the liability to pay interest under Sections 234-C and 234-D of the Act was also denied and the same was also challenged. CIT(Appeal ) vide order dated 15.1.201 .....

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ies below justified in law in holding that the assessment made under section 143(3) read with section 153C of the Act is valid i n law and further whether the notice issued under Section 153C of the Act is valid in law without recording satisfaction on the facts and circumstances of the case? 2. Whether the authorities below are justified in law in holding that there was valid assessment when notice under Section 143(2) was not issued within twelve months from the end of the month in .....

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ddition of ₹ 17,171/- being net profit at 7% determined by the Assessing Officer against 6% offered by the appellant on the facts and circumstance of t he case and consequently gave a perverse finding? 5. We have heard Mr.Shankar, learned counsel for the appellant in all the appeals and Mr. K.V. Arvind, learned counsel appearing for respondent-revenue in all the appeals . 6. During the course of hearing, it has been brought to our notice by the learned counsel appea .....

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of litigation. 2. The Hon ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No.3958 of 2014 dated 12.3.2014(available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of Section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person u/s 158BD. The Hon ble Court held t .....

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ons of section 153C of the Act are substantially similar/pari- materia to the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon ble SC, apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT. 4. The guidelines of the Hon ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of .....

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on 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court. 7. As per the aforesaid circular, at the time of o r along with the initiation proceedings against the search under Section 158C or in the course of assessment proceedings under Section 158BC of the Act or immediately after the assessment proceedings are completed under Section 158BD of the Act recording of satisfaction is required. Further, even in respect of all .....

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pplicability of the circular even in the present cases. The resultant effect would be that, the requirements of recording of satisfaction note for exercise of power under Section 153-C is a mandatory requirement and cannot be given a go-bye, either at the stage of initiation or during the course of assessment or at the conclusion of the assessment. If the order of the Tribunal is examined in light of above, more particularly in the context of question no.1 referred to hereinabove, the discussion .....

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.143(3) rws 153C of the Act which were not in accordance with the provisions of the act and bad in law and, thus, liable to be quashed etc., 5.1.1. However, the assessee had not come up with a ny credible documentary evidence to substantiate its claim that the assessment orders under dispute have not been passed in accordance with the provisions of the Act . On the other hand, the stand of the authorities below on this score was conformity with the provisions of the Act a .....

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er some noting available in the file, it is possible to discern that the satisfaction note is recorded. In furtherence to his submission, he did rely upon the notings in the file. In order to make it as a part of the record in the present appeal, we have directed learned counsel appearing for respondent-revenue to put the so-called note on record, for which, learned counsel appearing for the revenue has undertaken to do so. However, learned counsel appearing for appellant-assessee contended that .....

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e relegated to the Tribunal for examining the said aspect, namely whether there was compliance of the requirement of satisfaction recording before final conclusion was drawn and as to whether the assessment made under Section 153C is in accordance with the provisions of the Act or bad in law or li able to be quashed or not. As observed earlier, since there is no consideration by the Tribunal on the said aspects, it would be just and proper to relegate the matter to the Tribunal for reconsidering .....

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ssee has preferred the present appeals and has also raised the questions for which, appeals were admitted. But, considering the facts and circumstances, it appears to us that, the requirements of satisfaction note at the time of initiation of assessment or during the assessment or at the time of conclusion of the assessment would go to the root of the matter and if ultimately found by the Tribunal that aforesaid requirement was not complied, everything would fall to the ground and the assessment .....

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