TMI Blog2021 (12) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the Revenue against the impugned order dated 27.07.2018, passed by Commissioner of Income Tax - IV, Kanpur for the quantum of assessment passed u/s 153C r.w.s 143(3) of the Act for the Assessment Year 2012-13. 2. None appeared on behalf of the assessee despite service of notice. Accordingly, we have heard the Learned DR on the issues raised in the Grounds of appeals, which reads as under: 1. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in law while holding that there was no incriminating material for the issuance of notice u/s 153C, without appreciating that in the satisfaction note the AO had clearly brought out all the facts and circumstances, which indicated that the names of the entities including the assessee, appearing on seized documents were in the nature of accommodation entries only for routing the undisclosed income of M/s Golf Link Hospitality Pvt. Ltd. and hence such documents constituted incriminating material for the purpose of the issue of notice u/s 153C in the context of assessee. 2. Whether on facts and circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts of the case and is liable to be set aside and the order of the AO be restored. 3. The facts, in brief, qua the issue involved, are that a search and seizure operation u/s 132 of the Act was conducted on 27.11.2014 in the case of Maconns, Meenu and Yadav Singh Group where certain incriminating documents were found seized. Thereafter, notice u/s 153C of the Act was issued on 29.02.2016 for A.Y. 2010-11 to A.Y. 2013-14. In response, assessee filed its return showing income of Rs. Nil, ₹ 95,48,405/- (loss), Rs. Nil and ₹ 57,76,599/- (loss) for A.Y. 2010-11 to A.Y. 2013-14 respectively. Thereafter, the assessment has been completed after making addition of ₹ 12,71,00,000/- on account of unsecured loan and on account of unexplained investment in construction of hotel. 4. Before the Learned CIT(A), assessee took a specific plea that additions made in the assessment framed u/s 153C of the Act to be bad in law, because none of the additions were based on any incriminating document found or seized during the course of search as per the very specific notice u/s 153C of the Act. Learned CIT(A) had called for the remand report from the AO with specific reques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153C of the Act. Further, it is settled preposition of law that notice u/s 153C of the Act is bad in law in absence of any undisclosed assets or incriminating documents found as a result of search. Findings of Hon'ble Supreme Court given in the case of PCIT-3, Pune Vs. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) is squarely applicable in present cases. The AO has not made any addition on the basis of any incriminating document found and also, additions made by AO does not co-relate with satisfaction noted by him. In absence of incriminating seized material relating to assessment year under consideration, action u/s 153C of the Act cannot be treated as valid in the eye of law. 5.6 The proceedings u/s 153C of the Act are very specific and clearly explained in the Act. For the sake of clarity, relevant provisions of Act is as under; 153C. [(1)] [Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bullion, jewellery or other valuable article or thing or any books of account or' document must be seized or requisitioned for the relevant assessment year for issue of notice u/s 153C of the Act. The observation of the Supreme Court in para 18 of the order mentioned here in above is reproduced below: The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document- wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot recorded the satisfaction for these relevant assessment years, as envisaged u/s 153C of the Act. 5.9 In view of the detailed discussion mentioned here in above and respectfully following the judgement of the Supreme Court in the case of Sinhgad Technical Educational Society notice it is concluded that notice u/s 153C issued by the AO need to be treated as ab-initio invalid and legally not sustainable and quashed, therefore, assessment framed on the basis of legally unsustainable notice is hereby annulled. Therefore, ground of appeal of the appellant is decided in favour of the appellant. Though, addition made by AO was not justified in terms of provisions u/s 153C of the Act. However, it is open for AO to take remedial action in accordance with the: provisions of income tax Act, to assess/reassess the income escaping assessment, if any. Therefore- assessment framed u/s 153C of the Act on the basis of legally unsustainable notice is hereby quashed and annulled. Thus, these legal grounds of appeals i.e. for A.Y. 2010-11 to A.Y. 2013-14 are decided in favour of the appellant. 6. Since order u/s 153C of the Act is treated as annulled for all assessment years, remaining gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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