The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) quashed the assessment order without recording valid satisfaction before issuing notice under Section 153C of the Income Tax Act, 1961.
The Assessee Dilip B Patel was not searched by the department when a search action carried out by the department .However a search was carried out in the premises of Shri Vinod Faria & Shri Milan Dalal on 30.05.2008; and based on allegation of finding certain incriminating materials against the assessee from the premise of the searched persons. Accordingly proceedings under section 153C of the Act initiated against the assessee .
AO completed the assessment proceedings without first forming requisite satisfaction as required under Section 153C of the Income tax Act
Aggrieved by the order assesee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal filed by the assessee . Thereafter the assessee filed an appeal before the tribunal.
During the adjudication Pavan Ved , the counsel for assessee argued that without forming satisfaction as required under Section 153C of the Income Tax Act AO issued the notice .Hence there was no “valid satisfaction” formed by the AO before issuing notice under Section 153C of the Income Tax Act and therefore the issuance of notice under Section 153C of the Income Tax Act and subsequent framing of assessment under Section 153(A)/143(3) of the Income Tax Act were invalid.
Ankush kappor, Department representatives supported the order of lower authorities.
The tribunal observed that the AO before issuing notice under Section 153C of the Income Tax Act had not successfully usurped the jurisdiction vested under Section 153C of the Income Tax Act by not recording his “satisfaction” as required under Section 153C of the Income Tax Act.Although in this case assessee has not been searched under Section 132 Income Tax Act or requisitioned under Section 132A of the Income Tax Act.
Hence the AO without fulfilled valid satisfaction initiated the proceedings .He has not referred to any incriminating material belonging/pertaining/relating to the assessee which was seized/ unearthed from the premises of the searched person.
After analyzing the submission of both parties, the bench comprising Aby T. Varkey, (Judicial Member) & S Rifuar Rahman, (Accountant Member) observed that AO did not record valid satisfaction before issuing notice to assessee under Section 153C of the Income Tax Act.
Therefore, it was held that the AO did not had requisite jurisdiction to issue notice to assessee under Section 153C of the Income Tax Act.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
