Salasar Dwellers Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Satisfaction in the case is not recorded by the AO of the searched party, which is a pre-condition for invoking jurisdiction u/s 153C of the Act and hence, the assessment framed u/s 153C read with Section u/s 143(3) of the Act is bad in law and hence, quashed. The jurisdictional issue of the assessee’s cross objection is allowed.
FULL TEXT OF THE ITAT JUDGMENT
Out of these two, one appeal filed by the Revenue and the Cross Objection by the assessee are arising out of the order of Commissioner of Income Tax (Appeals)-51, Mumbai [in short CIT(A)], in appeal No. CIT(A)- 51/IT-14/2013-14, dated 11.09.2015. The Assessment was framed by the Asst. Commissioner of Income Tax, Central Circle 34, Mumbai (in short ‘ACIT/ AO’) for the A.Y. 2008-09 vide order dated 29.12.2011 under section 143(3) read with section 153C of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. At the outset, the learned Counsel for the assessee stated that the assessee has raised jurisdictional issue in its cross objection against the order of CIT(A) upholding the validity of assessment under section 153C of the Act in the absence of any incriminating material found during the course of search under section 132 of the Act. Further, according to the learned Counsel there is no satisfaction recorded by the AO of the searched person as required under section 153C of the Act. For this assessee has raised the following two grounds in its Cross Objection: –
“1. The Ld. CIT(A) has erred in law and in facts in upholding the validity of assessment under section 153C of the Act in absence of any incriminating material found during the course of search.
2. The Ld. CIT(A) has erred in law and in facts in upholding the validity of the assessment tin absence of recording of a valid satisfaction as required under section 153C of the Act.”
3. Briefly stated facts are that a search was conducted by the Income Tax department under section 132 of the Act on Shri Gangadhar Shetty Group on 20.08.2009. The assessee company i.e. Salasar Dwellers Pvt. Ltd. was floated by one Shri Dinesh Punia along with Shri Madhusuden Budhia as its director and on 29.03.2007, Shri Dinesh Punia invested a sum of ₹25 lacs as share capital. The assessee company entered into development agreement dated 26.04.2007 with M/s Sagar developers a partnership firm of M/s Gangadhar Shetty and Mr. Diwakar Shetty with three other partners for buying development rights in respect of sale component area of 5344.74 sq. mtr. involved in SRA Project at Gundavali Village, Andheri, Mumbai. A notice under section 153C of the Act issued and served on the assessee on 20.12.2010. In response to the said notice, a return of income was filed by the assessee on 28.09.2008 declaring nil income. The AO framed assessment and made the following
additions: –
“8) Subject to the above discussion and after having considered the details filed the total income of the assessee is computed as follows:
