TMI Blog2022 (2) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... ri, CA ORDER PER N.K. CHOUDHRY, J. M.: 1. This appeal has been preferred by the Revenue against the order dated 27.07.2018 impugned herein passed by the ld. Commissioner of Income Tax (Appeals) IV, Kanpur (hereinafter referred to as ld. Commissioner ) under Section 250(6) of the Income Tax Act, 1961 (in short the Act ) for assessment year 2011-12. 2. In this case 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 which resulted into recovery and seizing of certain incriminating documents and consequently, notices u/s 153C have been issued for Assessment Year 2010-11 to 2013-14. In response to which the assessee filed its return of income by declaring total income of (-) ₹ 95,48,405/- (loss) for the Assessment Year under consideration i.e. 2011-12. 2.1 The AO completed the assessment and made the addition of ₹ 50 lakhs on account of unsecured loan and ₹ 1,08,65,000/- on account of share application. 2.2 Against the said additions, the Assessee preferred first appeal before ld. Commissioner who vide impugned order annulled the assessment order itself, against wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for issue of 153C the test for 'incriminating material has to be only in nature of prima facie belief based on some material having live nexus and not in the nature of absolute evidence established after detailed investigation of facts or law. 5. Whether on facts and circumstances of the case and in law, the Ld. C1T (A) erred in applying the decision of the Hon ble Supreme Court in the case of M/s Sinhgad Technical Education Society, which was distinguishable on the facts of the present case as the same pertained to period prior to 01.04.2005 whereas the provisions of 153G have undergone material change w.e.f. 01.04.2005 whereby 153C notice can be issued when A.O. is satisfied that seized material has a bearing on the assessment of income of other person. 6. The order of the CIT (A) is erroneous in law and on facts of the case and is liable to be set aside and the order of the AO be restored. 3. The ld. DR relied upon the assessment order passed by the AO, whereas the ld. AR supported the impugned order. 4. Heard the parties and perused the material available on record. Issue involved in the appeal under consideration relates to the issuance of notice u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any seized material belonging to the assessee-company, in fact, there is no incriminating document. Apart from that, he also noted that in the satisfaction note there is no assessment year which has been mentioned and accordingly concluded that notice issued u/s 153C of the Act is legally invalid as it does not contain any incriminating, seized document belonging to the assessee company for relevant assessment years. For the sake of ready reference the relevant observation of Learned CIT(A), reads as under: Thus, satisfaction note recorded by A.O. has not brought out any seized material belonging to the appellant company, what to talk of the incriminating document. Also, it is not clear, which assessment year this satisfaction note belong to. Thus, it is concluded that, notice issued by the A.O. u/s 153C of the Act is legally invalid as it does not contain any incriminating seized document belonging to the appellant company for these relevant assessment years. In fact, there does not exist any incriminating document as a result of search which belong to or pertaining to or relate to the appellant. The investments reflected in the balance sheet of M/s. Golflink Hospit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount or documents or assets seized or Arequisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A]:] A plain reading of provision u/s 153C makes it abundantly clear that the some imperative condition need to be satisfied by the AO, prior to the issue notice u/s 153C of the Act. This pre-condition includes: (i) Existence of undisclosed/unexplained asset or incriminating seized documents against the appellant, as a result of search. (ii) This undisclosed assets or incriminating document found as a result of search should belongs to or pertain to or relate to the appellant, for relevant assessment year. (iii) Proper satisfaction is to be recorded by the AO for the relevant assessment year for issuance of notice u/s 153C. All the above three conditions are to be satisfied cumulatively and simultaneously as per provisions of section 153C of the Act. Non satisfaction of any of the pre-conditions mentioned here in above, would result in notice u/s 153C legally unsustainable or invalid. In the present facts of the case no incriminating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the instant case are squarely covered by the ratio of the judgment mentioned here-in-above. 5.8 Hon ble Delhi High Court in para 31 has held in the case of Index Security Pvt. Ltd [86 taxmann.com 84 (Del)] as follows: As regards the section jurisdictional requirement viz., that the seized documents must be incriminating and must relate to the A.Ys. whose assessments are sought to be reopened, the decision of the Supreme Court in Commissioner of Income Tax-III, Pune Vs. Sinhgad Technical Education Society (Supra) settles the issue and holds this to be an essential requirement. The decision of this Court in CIT-7 Vs RRJ Securities (2016) 380 ITR 612 (Del) and ARN Infrastructure India Ltd. Vs ACIT [2017] 394 ITR 569 (Del) also held that in order to justify the assumption of jurisdiction under section 153C of the Act the documents seized must be incriminating and must relate to each of the AYs whose assessments are sought to be reopened. Thus, by now, it is a settled law that notice u/s 153C of the Act is ab-initio-invalid in absence of incriminating seized material. Thus, from the plain reading of language of section 153C of the Act and various judicial prono ..... X X X X Extracts X X X X X X X X Extracts X X X X
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