MPS Structure Private Limited Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the assessee’s appeal by holding that the proceedings initiated under Section 153C of the Income Tax Act were invalid because the jurisdiction was assumed on the basis of a defective and composite satisfaction note that did not contain assessment year-wise bifurcation or correlate the seized material to the relevant assessment year.
The case arose from a search conducted on 22 October 2016 in the Ashish Bhegwani Group. During the search, the Revenue alleged that the assessee had received accommodation entries in the form of unsecured loans from entities controlled by the searched person. Based on a satisfaction note recorded by the Assessing Officer (AO) of the searched person and a subsequent satisfaction note recorded by the AO of the assessee, proceedings under Section 153C were initiated for Assessment Years 2011-12 to 2017-18. The AO treated an unsecured loan of ₹4.98 crore as an unexplained cash credit under Section 68 and also added ₹14.94 lakh as commission allegedly paid for obtaining the accommodation entry, resulting in a total assessed income of ₹5.16 crore. The Commissioner (Appeals) upheld these additions, following which the assessee approached the Tribunal.
