Entire law of Section 153A & 153C on recording of ‘satisfaction’ by the AO and limitation period elaborated by Delhi ITAT
ACIT vs. Inlay Marketing Pvt. Ltd (ITAT Delhi)
The relevant para of the judgement is as under:
(i) It must not be lost sight of that s. 153C of the Act and 158BD of the Act are draconian in nature when accounts of the person or entity other than the person searched are reopened automatically and revenue gets authority to assessee or reassess assessment of six assessment years preceding previous year in which seized material or evidence belonged to the person other than the person searched is handed over to the AO of that other person. Therefore, it is always advisable to the revenue authorities that the proceedings u/s 153C of the Act should not be initiated and conducted in a casual manner and the motive of statutory provision clearly stipulates that the AO should make himself satisfied prior to initiation of proceedings u/s 153C of the Act.
(ii) As per RTI reply, it has been stated and answered to the present assessee i.e. person other than person searched, the AO of the person searched has admitted that no satisfaction note is available in their record/files concerning person other than the present case. The satisfaction note clearly reveals ex facie that the same has been recorded by the AO in the capacity of AO of the person other than person searched meaning thereby assessee of the instant appeals. In these circumstances, it can safely be held that no valid satisfaction was recorded by the AO of person searched so as to fulfill requirement of valid assumption of jurisdiction u/s 153C of the Act which is sine qua non for validly assumed jurisdiction u/s 153A of the Act.
(iii) The AO recorded satisfaction and issued notice u/s 153C of the Act from AY 2003-04 to 2008-09 but on the date of recording of satisfaction i.e. 5.7.2010 the relevant previous year is 2010-11. The assessment for AY 2003-04 and AY 2004-05 is time barred as per provisions of section 153(1) of the Act which stipulated that the AO can issue the notice u/s 153A of the Act for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted and for the purpose of section 153C of the Act for the six assessment years immediately preceding the assessment year relevant to the previous year in which the document or material is handed over (DSL Properties Ltd & V.K. Fiscal Services Pvt. Ltd followed)