Social Realtors (P) Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that in the satisfaction note AO failed to narrate specific documents which has been replied upon for initiating action under section 153C of the Income Tax Act. Accordingly, appeal allowed since essential element for invoking provision of section 153C found missing.
Facts- A search and seizure operation u/s 132 of Income Tax Act, 1961 was conducted on 21/07/2016 at the residential premises of M3M Group of cases. Among the documents seized contained information pertaining to the Assessee and AO recorded his satisfaction that those documents have bearing on the determination of total income of the Assessee. The assessment proceedings have been initiated and the assessment order came to be passed u/s 153A (1)(b) of the Act on 18/12/2018 for Assessment Year 2011-12 and 2012-13 by making certain additions.
CIT(A) vide order dated 29/09/2023 upheld the partial addition by applying rate of 1% on the income from commission on total credits and debits reflected in the bank statement of the Assessee. Being aggrieved, the Assessee preferred the present Appeals
Conclusion- Held that on plain reading of the provision of Section 153C it is clear that in order to reopen the assessment of the other person u/s 153C of the Act for the Assessment Years earlier to the year of search, direct co relation must exist between the existence of incriminating material and relevant Assessment Year and the reasoning should be logical while recording the satisfaction. In the present case, the seized document at Annexure A-3 does not speak about the issue in respect of the respective Assessment Years sought to be reopened which could ultimately be said to be unexplained and addition thereupon could be made and the said document is not establishing any co-relation, document wise with years under consideration. The essential element for invoking the provision of Section 153C is found missing in the satisfaction recorded on 25/09/2018.
