Law & Society

Documents seized during search of a person other than the person against whom assessment proceedings are initiated under section 153A: Basis for passing order under section 153C

Case: Iq City Foundation vs Addl. CIT, Kolkata ITAT

Outcome: Partial

Facts

  • During the search conducted at the premises of Mani Group, certain documents pertaining to Assessee were found and accordingly, a case under section 153C of the Income Tax Act was opened against the Assessee.

Key Points

  • Since there was no incriminating material qua the Assessee foundation qua the A.Y. 2016-17 when department searched Mani Group and since from the date of satisfaction note dated 03.09.2018 the assessment for A.Y. 2016-17 was a completed assessment and not pending before the Assessing Officer, so, as per the second proviso to section 153C of the Act the assessment in respect of A.Y. 2016-17 17 was a completed assessment and therefore, without the aid of any incriminating material against the Assessee qua A.Y. 2016-17 which were unearthed from the search conducted on the searched person, the Assessing Officer could not have usurped jurisdiction without spelling out the same in his ‘satisfaction note’ as to whether the material found pertained/related to/belonged to the Assessee and has a bearing on the determination of the total income of the Assessee foundation qua the A.Y. 2016-17.
  • From a perusal of the satisfaction note dated 03.09.2018, it was noticed that the Assessing Officer had failed to record the requisite satisfaction in terms of section 153C of the Act and since the fundamental requirement of assuming jurisdiction had not been satisfied, it was inferred that the assumption of jurisdiction itself is bad in law and, therefore, the impugned action of Assessing Officer to issue notice under section 153C of the Act was null in the eyes of law and was to be quashed.

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