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Smt. Madhu Mangal Versus The D.C.I.T., Central Circle-II, Chandigarh, And Vice-Versa

2016 (5) TMI 1372 - ITAT CHANDIGARH

Legality of notice under section 153C - whether the satisfaction note as prepared by the Assessing Officer of the searched person in the present case is as per law or not? - Held that:- There is nothing coming out of the satisfaction note that the seized documents belong to the assessee. Further, there is nothing which would indicate as to how the presumption which was to be raised against the person searched have been rebutted by the Assessing Officer. The satisfaction note does not at all disp .....

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A.M. : Both the cross appeals are directed against the order of learned Principal Commissioner of Income Tax (OSD), Gurgaon dated 12.3.2015 for assessment year 2008-09. 2. We will first take up the appeal of the assessee in ITA No.489/Chd2015 ITA No.489/Chd/2015 (Assessee s Appeal) : 3. Briefly, the facts of the case are that the assessee filed her return of income as on 28.7.2008 at total income of ₹ 19,53,440/-. Search and seizure operation was conducted on Dr.Naresh Mittal Group of case .....

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income of ₹ 91,94,940/- was completed making an addition of an amount of ₹ 72,41,500/-. 4. Aggrieved by this, the assessee went in appeal before the learned Principal Commissioner of Income Tax (OSD). Elaborate submissions with regard to the merits of the case as well as on legal issue were made before the learned Principal Commissioner of Income Tax (OSD). The main argument advanced by the assessee before the learned Principal Commissioner of Income Tax (OSD) was that notice issued .....

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her words, it was not conclusively proved that the loose documents belong to the assessee. Reliance was placed on a number of judgments including that of Gujarat High Court in the case of Vijaybhai N. Chandrani Vs. ACIT (2011) 333 ITR 436 (Guj) and Delhi Tribunal in the case of National Industrial Corporation Ltd. Vs. DCIT in ITA No.2539/Del/2011, Bangalore Tribunal in the case of P.Srinivas Naik Vs. ACIT (2008) 306 ITR (AT) 411 and also Delhi High Court in the case of Pepsico India Holdings Pvt .....

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e us. Since the assessee has raised the legal issue regarding the legality of notice under section 153C of the Act, we heard this ground first and intend to dispose of the same first. 6. The learned counsel for the assessee basically reiterated the submissions which were made by him before the learned Principal Commissioner of Income Tax (OSD). Our attention was invited to the satisfaction recorded by the Assessing Officer of the searched person placed at Paper Book page No1, whereby it has been .....

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t was more than a mere reference of the assessee revealing element of income thereby suggesting undisclosed income of other person. Besides relying on the judgments which were relied on before the learned Principal Commissioner of Income Tax (OSD), heavy reliance was placed on the judgment of Delhi High Court in the case of Pepsi Foods Pvt. Ltd. Vs. ACIT, WP(C) No.415, 568, 570, 571, 575, 576 of 2014 and Pepsico India Holdings Pvt. Ltd. (supra). In conclusion, it was stated that in the facts and .....

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amental Jurisdictional facts for invoking section 153C of the Act are thus missing in the present case. 7. The learned D.R. relied on the orders of the lower authorities and further stated that on perusal of the seized document found during the course of search, it can be seen that there are transactions entered into by the assessee which may also have an element of undisclosed income on the part of the assessee. The nature of the document being that of self-explanatory document, there is no nee .....

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irst we would like to quote the satisfaction note, copy of which was placed at Paper Book page 2, which reads as under : 1. A search was conducted on 17.11.2010 at the residential premises of Dr. Naresh Mittal at H. No. 212, Sector-6, Panchkula. During the course of search, documents marked as AT, A2 and A3 were found and seized. 2. Pages 21-25 of document A1, pages 11-14,65-69, 95-96, 150, 178-251,253 of document A2 and pages 31-32 of document A3 contain the details of transactions in immovable .....

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by the Assessing Officer of the searched person in the satisfaction note is that the documents contain the details of transactions made by the assessee. Another important factor which we observe from the reading of the satisfaction note is that the Assessing Officer opines that this transaction needs to be verified. We have also seen the copies of documents found during the course of search, which were made the basis for preparing such satisfaction note. In these documents basically certain fina .....

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sessment year, which read as under : 153C "Notwithstanding anything contained in section 139, section 147, section 149, section 151 and section 153, where the Assessing Off icer is satisf ied that any, bullion, je wellery or other valuable article or thing or books 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 .....

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ver such other person. 11. Since a very heavy reliance was placed on the judgment of the Delhi High Court in the case of Pepsi Foods Pvt. Ltd. (supra), we intend to analyze the said judgment in the background of the facts of the present case. On the reading of the judgment of the Delhi High Court, we observe that in para 6 of the order, the Hon'ble Court has summarized the steps to be taken before issue of notice under section 153C of the Act. The first step is that the Assessing Officer of .....

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tion provided in these sections and come to a conclusion or satisfaction that the documents in fact belong to somebody else. There must be some cogent material available with the Assessing Officer before he arrives at satisfaction that the seized document does not belong to the searched person but to somebody else. The Hon'ble Court also emphasized that surmise and conjecture cannot take the place of satisfaction. A very important finding in this regard has been given by the Court at the end .....

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1, which reads as under : 11. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word "satisfaction" or the words "I am .....

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kind required under Section 153C of the said Act. 13. On perusal of the above and applying the proposition as laid down by the Hon'ble Delhi High Court in the facts of the present case, we see that there is nothing coming out of the satisfaction note that the seized documents belong to the assessee. Further, there is nothing which would indicate as to how the presumption which was to be raised against the person searched have been rebutted by the Assessing Officer. The satisfaction note does .....

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