Importance of satisfaction Note in search cases

AVALANCHE REALITY PVT. LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX

INDORE TRIBUNAL

Search & seizure—Assessment in case of person other than person searched—Satisfaction note by AO of searched person—Search and seizure operation u/s 132 was conducted in case of M/s. PDPL wherein, various documents were seized belonging to assessee—Copies of documents related to assessee and based on which satisfaction was recorded for issuing notice u/s 153C were supplied—AO made additions on two counts—CIT(A) granted partial relief to assessee—Held, no specific ground was raised before CIT(A) challenging assessment on ground that no satisfaction was recorded by AO of searched person and thus, assessment was vitiated—Satisfaction of AO of searched person was a sine-qua-non to effect that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned belonged to; or any books of accounts or documents, seized or requisitioned pertains or pertain to, for any information contained thereto, related to a person other than person referred to in sub-section (1) of s. 153A—No satisfaction note by AO of searched person was furnished by Revenue, despite categorical directions given by Tribunal—However, a satisfaction note in case of assessee was furnished by Revenue—DR fairly conceded that despite various reminders, satisfaction note by AO of searched person i.e. M/s. PDPL was not made available—For purpose of s. 153C, AO before handing over items to AO having jurisdiction must be “satisfied” that items belonged to person other than person referred to in s. 153A—View formed by AO after his own enquiry does not entail in seating in appeal over satisfaction of first AO, who had handed over items to him—Accordingly, proceedings u/s 153C was not validly initiated and was contrary to settled position of law and same was therefore quashed—Assessee’s appeal allowed.

ReplyForward