Addition based on seized document related to year different than notice issued U/s. 153C not valid

Pr. CIT Vs Shrim Investment Solutions (P) Ltd. (Delhi High Court)

A perusal of the aforesaid satisfaction note recorded by the assessing officer reveals that the satisfaction note pertains to assessment year 2004-05 to assessment year 2009-10. It is undisputed that the documents referred to by the assessing officer pertain to assessment year 2010-11 and not to assessment year 2004-05 to 2009-10. It is also undisputed that the impugned transactions are duly recorded in the regular books of accounts pertaining to assessment year 2010-11. We agree with the contentions of the learned AR that although section 153C does not require the assessing officer to be conclusively satisfied with the documents belonging to other person must conclusively reflect or disclose any undisclosed income, there must be some prima facie rationale behind initiating the proceedings under section 153C of the Act and that the satisfaction should be logical, rational and objective. The assessing officer has initiated assessment proceedings under section 153C of the Act for assessment year 2004-05 to assessment year 2009-10 without pointing out or referring to any seized material/document belonging to those years. Thus, there is nothing on record which could have persuaded the assessing officer to issue notice under section 153C. It is undisputed that no document/books of account/records pertaining to assessment year 2004-05 to assessment year 2009-10 for which the assessing officer has recorded satisfaction under section 153C have been found or seized and, therefore, there was no logic behind the action of the assessing officer for initiating proceedings under section 153C.

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