Commissioner Of Income Tax vs. M/S Hotel Paradies,

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ITA/100/2011HC Madhya Pradesh10 July 2015Bench: HON'BLE THE CHIEF JUSTICE3 pages
For Petitioner: S. Tuli
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Department. The Court noted that the substantial questions of law pressed in these appeals were identical to those dealt with in companion appeals (I.T.A. No.44/2011 and other connected cases) which had been heard analogously. Since those companion appeals had failed for the same reasons, these appeals were also bound to fail. The Court did not elaborate on the specific reasoning for dismissing the companion appeals but indicated that the outcome would be the same. Therefore, the ITAT's order upholding the quashing of the assessment proceedings under Section 153C was affirmed. The operative direction was the dismissal of the appeals. No issue was expressly left undecided.

What were the facts?

The appeals were filed by the Commissioner of Income Tax (appellant/Revenue) against a common order dated February 28, 2011, passed by the Income Tax Appellate Tribunal (ITAT), Indore Bench. The appeals pertained to the assessee M/s Hotel Paradise for assessment years 1999-2000, 2001-02, 2002-03, 2003-04, and 2004-05. The ITAT had upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which had quashed the assessment proceedings initiated under Section 153C of the Income Tax Act, 1961. The Revenue challenged the ITAT's decision on two substantial questions of law. The respondent assessee was not represented before the High Court.

What were the issues?

The High Court had to decide two substantial questions of law: 1. Whether the ITAT was justified in upholding the CIT(A)'s order quashing assessment proceedings under Section 153C, on the ground that the Assessing Officer (AO) had not recorded his satisfaction, even though the AO making the assessment of the searched person had jurisdiction over the assessee and thus was not required to record satisfaction for initiating proceedings under Section 153C. 2. Whether the ITAT was justified in upholding the quashing of assessment proceedings under Section 153C, based on the AO not recording his satisfaction in writing, by relying on the Supreme Court decision in Manish Maheshwari vs. ACIT (289 ITR 341), which was rendered in the context of Section 158BD and not Section 153C. Contentions: Assessee: The assessee argued that the assessment proceedings under Section 153C were invalid because the AO had not recorded the requisite satisfaction. The ITAT upheld this view, relying on the Supreme Court's decision in Manish Maheshwari (supra) concerning Section 158BD, which was applied analogously to Section 153C. Revenue: The Revenue contended that the ITAT erred in upholding the quashing of the assessment proceedings. The Revenue argued that the satisfaction requirement under Section 153C was either met or not applicable in the manner interpreted by the lower authorities, particularly when the AO making the assessment of the searched person also had jurisdiction over the assessee.

Which sections of the Income-tax Act were involved?

Section 153C,Section 158BD

AI-generated summary — verify with the full judgment below

1 HIGH COURT OF MADHYA PRADESH : JABALPUR I.T.A. No.93/2011, I.T.A. No.95/2011 I.T.A. No.97/2011, I.T.A.98/2011 I.T.A.No.100/2011 Commissioner of Income Tax …..Appellant Versus M/s Hotel Paradise ….Respondent ============================================= Coram: Hon’ble Shri Justice A. M. Khanwilkar, Chief Justice Hon’ble Shri Justice K.K.Trivedi, J. Whether approved for reporting : No ============================================= Shri Sanjay Lal, Advocate for the appellant/Commissioner of Income Tax, Jabalpur. None for the respondent. ============================================= Reserved On : 02.07.2015 Date of Decision : 10.07.2015 J U D G M E N T {10th July, 2015} Per: A.M. Khanwilkar, Chief Justice: These appeals are filed by the Department qua single assessee regarding three separate assessment years i.e. 1999-2000, 2001-02, 2002-03, 2003-04 and 2004-05 bearing I.T.A. Nos.95, 100, 93, 98 and 97 of 2011 respectively. Moreover, these appeals emanate from a common order passed by the Income Tax Appellate Tribunal, Indore Bench, at Indore dated 28.2.2011. Since common substantial 2 questions of law have been pressed in these appeals, the same were heard analogously and, therefore, are being disposed of by this common judgment. 2. The two substantial questions of law were pressed at the hearing, which read thus:- “(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the CIT(A) quashing the assessment proceedings on the ground that the AO had not recorded, his satisfaction even which the AO making the assessment of searched person was himself having jurisdiction over such other person (i.e. the assessee) and thus was not required to record any satisfaction for initiating proceedings u/s 153C in case of the assesse? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the quashing of the assessment proceedings u/s 153C on the ground that the AO had not recorded, in writing, his satisfaction, by placing reliance on the decision of the Hon’ble Supreme Court in the case of Manish Maheshwari vs. ACIT, 289 ITR 341 which was delivered in the context of section 158BD and not section 153C of the I.T. Act?”

3.

As the aforesaid substantial questions of law have been elaborately dealt with in the companion appeals heard analogously being I.T.A. No.44/2011 and other companion cases, even these appeals must fail for the same reasons. 4. Accordingly, these appeals are dismissed with no order as to costs. (A.M. Khanwilkar) (K.K.Trivedi) Chief Justice Judge 3

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