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2016 (9) TMI 851 - ITAT DELHI

2016 (9) TMI 851 - ITAT DELHI - TMI - Validity of proceedings u/s 153C/143(3) - absence of satisfaction note - Held that:- As it is undisputed that no satisfaction was recorded by the AO of the searched persons in this case. A communication from the ACIT to the ld. CIT-DR IV, ITAT Delhi also confirms the contention of the assessee. It is also undoubted that the Circulars issued by the CBDT have a binding force at least as far as the assessee’s interest are to be safe guarded. Para 4 of the circu .....

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d with. Hence, the assessments for both the years are quashed - Decided against revenue - ITA Nos. 1144 & 1145/Del/2009, ITA No. 2322/Del/2009 - Dated:- 11-8-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Assessee : Dr. Rakesh Gupta, adv., Sh. Somil Agarwal, Adv. and Sh. Abhishek Anand, Adv. For The Revenue : Sh. Ravi Jain, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: ITA No. 1144/Del/2009 has been preferred by the assessee against the .....

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brief facts of the case are that search u/s 132 of the Income Tax Act, 1961 (in short The Act ) was conducted at the business/residential premises of the Directors of the asseessee company on 10/11/2005. The assessments for both the years were completed u/s 153C/143(3) of the Act in which substantial additions were made. For both the years the assessee raised a primary objection before the ld. CIT (A s) that the AO was lacking in the basic jurisdiction to invoke section 153C of the Act without f .....

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led. However, the ld. CIT(A s) noted that it was undisputed that the papers found in the residential premises of the two directors namely Shri Babu Ram Singla and Shri Harish Singla were belonging to the assessee company only. The ld. CIT(A s) also referred to some loose papers found during the course of search and noted that the transactions as appearing in these loose papers were also duly accepted by the assessee as relating to its business deals and recorded in the books. The ld. CIT (A s) a .....

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rty were one in the same person and hence the requirement of a separate satisfaction was not mandatory. Accordingly, the ld. CIT (A) held that the proceedings u/s 153C/143(3) were valid and that the assessee s legal objection was unsustainable. On merits the ld. CIT (A s) gave some relief to the assessee. 3. Now the assessee has preferred an appeal before the ITAT and although numerous grounds have been raised for both the assessment years, the ld. AR chose to address the Bench on ground no. 1 o .....

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ears 2000- 01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 & 2008-09. He referred to a communication bearing F.No. ACIT/CIRCLE 36(1)/2010-11/382 dated 31/03/2011 addressed to the ld. CIT DR-IV, ITAT, New Delhi and originating from the ACIT, Circle 36(1), New Delhi in which the ACIT has accepted that on going through the records in the cases of Shri Babu Ram Singla, Smt. Laxmi Singla & Shri Harish Singla no satisfaction note as per section 153C recorded by the AO was on .....

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binding in nature. 6. We have heard the rival submissions and also have perused the relevant records. At this juncture it will be a relevant to reproduce Circular No. 24/2015 issued by the CBDT which reads as under: CIRCULAR NO. 24/2015 F.No.279/Misc./140 /2015/ITJ Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 31 st December, 2015 Subject: Recording of satisfaction note under section 158BD/153C of the Act - reg.- The issue of recording of .....

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isdiction over such other person u/s 158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act; or (b) in the course of the assessment proceedings under section 158BC of the Act; or (c) immediately after the assessment proceedings' arc completed under section 158BC of the Act of the searched person." 3. Sever .....

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te, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the "other person" is one and the same, then also he is required to record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgement. Accordingly, the Board hereby directs that pending litigation with regard to recor .....

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