Case Law Details
Smt. L. Ammini Vs ACIT (ITAT Chennai)
ITAT Chennai held that acquiring jurisdiction u/s 153C of the Income Tax Act without fulfilling the requirement of satisfaction note in case of searched person is unsustainable and liable to be quashed.
Facts- A search was conducted by the department at residential premises of one Shri Madanlal D. Chawla of Salem. During the search, a copy of Sale Agreement was found which was entered into between Shri Sanjay M. Chawla s/o Shri Madanlal D. Chawla and the assessee. The document was seized. Upon perusal of this document, AO arrived at a conclusion that real estate profit of Rs.17 Lacs was unaccounted income of the assessee. Accordingly, notice u/s 153C was issued and the assessee was directed to file the requisite details. After considering assessee’s submissions, AO made certain addition on account of income from land sale and property sale. Similar assessments were framed for AYs 2011-12 and 2012-13.
The assessee contested that no satisfaction note was recorded by AO of searched person i.e., Shri Madanlal D. Chawla and therefore, jurisdiction acquired by Ld. AO u/s 153C stood vitiated. However, Ld. CIT(A) rejected the same and confirmed action of AO. Being aggrieved, the present appeal is filed.
Conclusion- Held that satisfaction note in case of searched person is mandatory requirement before acquiring jurisdiction u/s 153C of the Act. In this note, AO has to reach a conclusion that the documents seized / recovered belonged to the other person. Thereafter, this satisfaction note along with documents may be transmitted to Assessing Officer having jurisdiction over such other person. Thus, when proceedings are proposed to be initiated u/s 153C against the “other person”, it has to be preceded by a satisfaction note by the Assessing Officer of the searched person. Without fulfilling this requirement, no jurisdiction could be acquired u/s 153C.
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