Bhartiya International Ltd. Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed appeals filed for Assessment Years 2018-19 and 2019-20 challenging assessments framed under Section 153C read with Section 143(3) of the Income Tax Act. The assessees argued that the assessments were invalid because the Assessing Officer had failed to record proper satisfaction as required under Section 153C.
The dispute arose after a search under Section 132 was conducted in the cases of M/s K.K. Spun Group on 23.03.2021. Following the search, the departmental authorities recorded satisfaction stating that the seized documentary evidence “belonged to” the assessees, who were treated as third parties for proceedings under Section 153C.
The assessees contended that after the amendment to Section 153C(1) by the Finance Act, 2015 with effect from 01.06.2015, documents seized during search could not merely be described as “belonging to” a third party. It was argued that the Assessing Officer was required to record satisfaction that the seized documents either “pertained to” or “related to” the third party.
The Tribunal relied on its earlier decisions, including Narender Nath v. DCIT and Prashant Premchand Bafana v. ACIT, where similar issues had been decided in favour of assessees. ITAT observed that Section 153C distinguishes between assets such as money, bullion or jewellery “belonging to” a person and documents or information that should “pertain to” or “relate to” such person. The Tribunal held that the Assessing Officer failed to properly record satisfaction in accordance with the amended statutory requirement.
