Case Law Details
PCIT Vs N.S. Software (Firm) (Delhi High Court)
It is now a settled proposition of law that even if AO for the person from whose premises documents were seized is the same as the AO for the person to whom document belonged, separate satisfaction notes must be recorded. In the instant case, the AO’s note nowhere reflected whether any document seized, on application of his mind, disclosed that it belonged to the assessee, and if so, its prima facie nature. Therefore, proceedings under section 153C were void ab initio.
In the present case, therefore, the failure of the AO to record a specific satisfaction as to how the recovered material belonged to the assessee in the note that preceded the notice issued under it, vitiates the assessments. As far as the pending assessment year is concerned, the return was filed on 29.09.2009. No notice in terms of Section 143 (2) had been issued to the assessee, and the time provided by law had expired by the time its AO received the papers from the searched party. Notice issued, necessarily, in terms of Section 153C (2) had to be in the light of the satisfaction that the books of account or materials seized are relevant (i.e. “..that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned 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”. As held by previous decisions, without that nexus, and fulfillment of the preconditions, clearly, the option provided by Section 153C (2) to proceed against pending or assessments cannot be made recourse to. Since the satisfaction in terms of Section 153C (1) was clearly inadequate (assuming that the original satisfaction, transmitting the papers to the assessee‟s AO was valid), the assessment completed for these years was also invalid. The court also notices in this regard, that the non- obstante provisions in both Sections 153A and 153C are identical; they override Sections 136, 147, 148, 149, 151 and 153. However, they do not override the mandatory provisions of Sections 142 (2) or 143 (2). This legislative design is taken further by Section 153 (2) (a) to (c) which are relatable to the satisfaction under Section 153C (1) notice, i.e. that if notice for pending assessments have not been issued, to take further proceedings, and the time has lapsed, the only condition when they can be taken forward, is if the satisfaction with respect materials seized are relatable to the assessee is through application of mind and not a mechanical one, as insisted by RRJ Securities (supra), Pepsico Holdings India Ltd (supra), Nikki Drugs (supra) etc. For the above reasons, the question of law is answered against the revenue; its appeal fails. The Appeal is, therefore, dismissed without costs.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
I. FACTS
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