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Narsi Creations Versus DCIT Central Circle-12, New Delhi

2016 (6) TMI 83 - ITAT DELHI

Validity of assessment u/s 153C - Satisfaction note for proceedings u/s. 153C - Held that:- Exercise of recording the satisfaction during the assessment proceedings of the person searched has not been carried out. On the other hand, the Assessing Officer recorded the satisfaction in the case of such other person which does not satisfy the condition of assuming jurisdiction under Section 153C. Therefore, the above satisfaction note cannot be said to be a valid satisfaction note within the meaning .....

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he date of search. In the remand report dated 23.07.2010, the Assessing Officer has also not disputed the above fact but he tried to justify action under Section 153C on the ground that for issue of notice under Section 153C, it is not necessary that the document found and seized should be of incriminating nature. Therefore, we hold that the underlying condition for invoking the jurisdiction under Section 153C is not satisfied in the case of the assessee. - Decided in favour of assessee - I.T.A. .....

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sdiction. First we will take up this ground. 3. In this case, search and seizure action was conducted at assessee s premises on 30/7/2008 as part of Rajdarbar Group. Notice u/s 153C of Income Tax Act 1961 dated 23/07/2010 was issued to the assessee firm requiring it to file the return for the various assessment years. The satisfaction was recorded by the same Assessing Officer on 23/7/2010. The satisfaction recorded in A.Y. 2005-06 is as under:- 23.07.2010 Satisfaction note for proceedings u/s. .....

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initiated in the above case. Deputy Commissioner of Income Tax, Central Circle-12. New Delhi. 4. The Ld. AR submitted that the satisfaction note recorded is similar in all the assessment year as relates to the premises and the search party. The Ld. AR further pointed out though there was search, however, the same took place at premises which was not belonging to assessee company. The assessee was asked to file its return and accordingly assessee filed its return declaring income stated therein. .....

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M/s. Nageshwar Investment Ltd. (ITA No. 5393/DEL/2012) passed by ITAT New Delhi confirmed by the Hon ble Delhi High Court in ITA No. 406/2015. 6. The Ld. AR submitted that in case of M/s Nageshwar Investment Ltd. the Hon ble ITAT has allowed the appeal on the ground that the Assessing Officer was not having jurisdiction to initiate Section 153C proceedings against the assessee and, therefore, the issuance of notice itself is null and void and, therefore, the same may be quashed. The Ld. AR subm .....

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oduced hereinabove. The Ld. AR also submitted that the ITAT, New Delhi Bench judgment has been confirmed by the jurisdictional High Court. 7. The Ld. DR tried to distinguish the judgments but was not able to answer whether the Assessing Officer for the search party has recorded his satisfaction or not. Merely recording satisfaction by the Assessing Officer of the assessee in question will not amount it as a satisfaction. The Ld. DR submitted that since the Assessing Officer of both the persons w .....

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of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A: .....

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or books of account or documents. Thereafter, the Assessing Officer of such other person shall proceed against the said person to assess or reassess his income in accordance with the provisions of Section 153A. Therefore, recording of satisfaction by the Assessing Officer of the person searched that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized belong to the person other than the person searched is a sine qua non for initiating action u .....

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to the Assessing Officer having jurisdiction over such other person and thereafter, the Assessing Officer of such other person has to proceed to assess such other person. Thus, the basic condition of recording the satisfaction by the Assessing Officer of the person searched as well as handing over of books of account, other documents or assets seized to the Assessing Officer of such other person has to be present. But in the present case the same is missing. 11. From a perusal of the said satisf .....

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ding of the above sentence indicates that it is recorded by the Assessing Officer who is taking action under Section 153C. Thus, it seems that the satisfaction note is recorded by the Assessing Officer of the assessee. If the Assessing Officer is assessing the person searched as well as other person whose assets, books of account or documents were found at the time of search, then also, first while making the assessment in the case of the person searched, he has to record the satisfaction that t .....

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53C. The Assessing Officer of the person searched and such other person may be the same but these are two different assessees and, therefore, the Assessing Officer has to carry out the dual exercise, first as the Assessing Officer of the person searched in which he has to record the satisfaction, during the course of assessment proceedings of the person searched. After recording such satisfaction note in the file of the person searched, the same is to be placed in the file of such other person. .....

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