Manalparambil Aboobacker Vs ACIT (ITAT Cochin)
The ITAT Cochin addressed appeals from multiple assessees, challenging orders from the National Faceless Appeal Centre (CIT(A)). These cases centered on assessments made under Section 153C of the Income Tax Act, based on evidence found during a search and seizure operation against the Malabar Group of concerns. The Assessing Officer (AO) determined that the assessees had received undisclosed income from the Malabar Group, based on entries in digital records found during the search. The assessees contested these assessments, arguing that no direct evidence linked them to the alleged income and that assessments based solely on third-party records were invalid. They further claimed that the mandatory satisfaction required for issuing a Section 153C notice was not properly recorded.
The ITAT found that the CIT(A) had failed to adequately address the assessees’ contentions, merely stating that satisfaction was recorded and evidence existed, without providing specific details or referring to the satisfaction notes or the seized material. The tribunal emphasized that assessments based on third-party evidence require a thorough examination and disclosure of that evidence to the assessee. In this case, the AO’s assessment order lacked clarity regarding the recording of satisfaction and the specific evidence linking the assessees to the alleged income. Crucially, the seized material was not provided to the assessees. Consequently, the ITAT concluded that the CIT(A)’s order was flawed and remanded the cases for fresh adjudication. The tribunal directed the CIT(A) to re-examine the cases, considering all the assessees’ contentions, and to ensure that any assessment is based on evidence properly disclosed and examined. The ITAT stressed the importance of adhering to procedural requirements and ensuring fairness in assessments based on third-party information.
