ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-19, DELHI, JHANDEWALAN EXTN., NEW DELHI vs. TEENA GHAI, HARYANA

The revenue has challenged the order of the Ld.CIT(A) in deleting the addition made u/s. 69A of the Act in respect of jewellery seized and whereas the cross objection is filed by the assessee challenging the order of the Ld. CIT(A) on the ground that the common satisfaction note recorded by the AO for all the seven years without correlating the seized materials to a particular assessment year in question as defective and void-ab-initio in terms of provision of section 153C of the Act.

The Ld. Counsel for the assessee referring to ground Nos. 7 and 8 of the grounds of cross objection and the copy of satisfaction note recorded by the AO u/s.153C of the Act, submitted that a common satisfaction note was recorded for the A.Ys 2014-15 to 2020-21. Referring to para-3 of the satisfaction note Ld. Counsel for the assessee submitted that the AO in the satisfaction note stated that the seized jewellery may have bearing on the determination of the total income of the assessee Smt. Teena Ghai for various assessment years. The Ld. Counsel referring to the satisfaction note submits that the AO has listed out of Page | 2

The Ld. Counsel for the assessee placing reliance on the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Sinhgad Technical Education Society (378 ITR 84) submitted that the Hon’ble High Court held that in the absence of correlating document wise with the assessment years involved in question, notice issued u/s.153C of the Act to the assessee to assess such income was held to be bad in law. The Ld. Counsel further submitted that this decision of the Hon’ble Bombay High Court was affirmed by the Hon’ble Supreme Court in the case of CIT Vs. Sinhgad Technical Education Society (397 ITR 344). Referring to the said decision of the Hon’ble Supreme Court, the Ld. Counsel submits that the Apex Court held that where loose papers found and seized from residence of the President of educational institution, indicating capitation fees received by various institutions run by the assessee, did not establish correlation document wise with assessment year in question, notice issued u/s.153C of the Act had rightly been quashed and set aside by the Hon’ble Tribunal and rightly affirmed by the Hon’ble High Court.

The Ld. Counsel for the assessee submitted that in the case of the assessee also the jewellery which was listed out in the satisfaction note found from various lockers were not correlated with assessment year wise and not established by the AO to which assessment year it has a bearing on determination of total income. Therefore, in absence of correlation of amount i.e. seized jewellery with the assessment years, the common satisfaction note recorded by the AO for the A.Y. 2014-15 to 2020-21 and consequent issue of notice u/s.153C of the Act are bad in law and thus, the assessment year framed based on such satisfaction note and notice u/s.153C are bad in law and void ab-initio and the same are liable to be quashed.

On the other hand the Ld. DR submitted that jewellery seized from the lockers pertains to only one assessment year and therefore, the satisfaction note issued by the AO is valid.

Heard rival contentions and perused the orders of the authorities below and the case laws relied on. On plain reading of the satisfaction note recorded u/s.153C r.w.s. 153A of the Act by the AO in the case of the assessee, we observed that the AO referred to lockers from which certain jewellery was found and seized. The said satisfaction note was a common satisfaction note recorded by the AO for the A.Y. 2014-15 to 2020-21. In the satisfaction note recorded the AO did not correlate the amount of jewellery seized i.e. Rs.1,38,30,214/- with that of the assessment year. In other

The Hon’ble Supreme Court in the case of CIT Vs. Sinhgad Technical Education Society (397 ITR 344) affirming the decision of the Hon’ble Bombay High court in the case of CIT Vs. Sinhgad Technical Education Society (378 ITR 84), held as under :-

As could be seen from the above, the Hon’ble Apex Court affirmed the decision of the Tribunal and also the High Court in holding that as per provision of section 153C of the Act incriminating material which was seized had to pertain to assessment years in question and if the documents which were seized did not establish any correlation, document wise with the assessment year, the requirement u/s.153C of the Act which is essential for assessment under that provision which is jurisdictional fact, is not met.

In the case before us also the AO while recording the satisfaction note u/s.153C of the Act did not correlate the seized materials / jewellery with that of the assessment years in question establishing the fact of having a bearing on determination of total income of a relevant assessment Page | 7

Since we have quashed the assessment framed u/s.153C r.w.s. 143(3) of the Act on legal ground all other grounds of the assessee in the cross objection need not be adjudicated as they become academic in nature at this stage and the same are left open.

Further as we have quashed the assessment framed u/s.153C r.w.s. 143(3) of the Act allowing ground No.7 and 8 of grounds of appeal of cross objection of the assessee, the appeal filed by the revenue became infructuous.

In the result, the cross objection filed by the assessee is partly allowed as indicated above and appeal filed by the revenue is dismissed as infructuous.