PALADUGU PRABHAKAR,HYDERABAD vs. DCIT, CENTRAL CIRCLE-2(2), HYDERABAD

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ITA 675/HYD/2015Status: DisposedITAT Hyderabad06 January 2022AY 2008-095 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a satisfaction note recorded by the Assessing Officer, stating that seized material belongs to the assessee, is a mandatory condition for initiating proceedings under section 153C. As this was absent, the assessment was quashed. Consequently, the revision order based on this assessment was also rendered infructuous.

What were the facts?

The assessee's appeals arose from assessment proceedings under section 153C and revision proceedings under section 263. The primary issue was the validity of the assessment framed under section 153C due to the absence of a mandatory satisfaction note.

What were the issues?

Whether proceedings under Section 153C are valid without a mandatory satisfaction note from the Assessing Officer. Whether a revision order under Section 263 can sustain if the underlying assessment is quashed.

Which sections of the Income-tax Act were involved?

Section 153C,Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, HYDERABAD ‘B’ BENCH, HYDERABAD.

Before: SHRI S.S. GODARA & SHRI L. P. SAHU

Heard together (3 matters)

ITA Nos.675/Hyd/2015
ITA 677/Hyd/2017
ITA 677/Hyd/2019

Read from the judgment's own cause title. This page is filed under one of them.

Shri Paladugu Prabhakar, Hyderabad. PAN AGYPP0536C …..Appellant. Vs.

1.

Dy. Commissioner of Income Tax, Central Circle 2(2), Hyderabad.

2.

Jt. Commissioner of Income Tax (OSD), Central Circle 4, Hyderabad. …..Respondents. Appellant By : Shri Pawan Kumar Chakrapani (A.R.) Respondents By : Shri YVST Sai (CIT, D.R.) Date of Hearing : 05.01.2022. Date of Pronouncement : 06.01.2022. O R D E R Per Bench : These assessee's twin appeals for Assessment Year 2008-09 arise against the CIT (Central) and CIT(Appeals)- 12, Hyderabad’s orders dt.5.9.2013 and 28.12.2016 in case No.CIT(C)/263/45/12-13 and 0173/2014-15 involving

677/Hyd/2017 proceedings u/s. 263 and 143(3) r.w.s. 153C of the Income Tax Act, 1961 ('the Act'); respectively.

Heard both the parties. Case files perused.

2. A combined perusal of both the instant case files suggested that the assessee's appeal ITA 677/Hyd/2017 has emanated from the JCIT (OSD), Central Circle 4, Hyderabad’s search assessment dt.30.12.2011 making various additions; as upheld in CIT(A)’s order under challenge whereas his other appeal ITA 675/Hyd/2015 seeks to reverse the CIT(Central) 263 revision direction holding the foregoing assessment as an erroneous one causing prejudice to interest of the revenue; respectively. It is in this factual backdrop that we first of all take assessee's latter appeal ITA 677/Hyd/2019 involving section 143(3) r.w.s. 153C assessment.

3.

We next note with the able assistance of both the parties that this tribunal had directed the learned CIT-DR to produce the relevant satisfaction note u/s. 153C of the 677/Hyd/2017 Act to the effect that the specified incriminating material, found or seized during the course of search dt.3.10.2009; had in fact belong to this assessee as per the statutory position. There is no such satisfaction note coming from the department side.

4.

Learned CIT, DR vehemently contended during the course of hearing that such a satisfaction note is merely a procedural irregularity; if at all, which does not vitiate assessment framed u/s. 153C of the Act. He further sought to buttress the point that the legislature has nowhere prescribed any specific mode of the impugned satisfaction which sufficiently indicates that Assessing Officer could very very initiate proceedings after coming across the alleged seized material.

5.

We find no merit in the Revenue’s foregoing arguments. Case laws Pepsi Foods Pvt. Ltd. Vs. ACIT 231 Taxman 58 (Del); Pepsico India Holdings Pvt. Ltd. Vs. ACIT 370 ITR 215 (Del) and PCIT Vs. N S Software (Firm) 403 ITR 259 (Del) along with similar other various judicial precedents have 677/Hyd/2017 already settled the law that such a satisfaction note is indeed a mandatory condition on the Assessing Officer’s part so as to set section 153C proceedings in motion. He is supposed to record that the alleged incriminating and seized material in fact “belongs to” the assessee concerned as per the statutory position upto 1.6.2015. We thus accept the assessee's legal ground and quash the impugned assessment herein dt.30.12.2011 for this precise reason only. This appeal 677/Hyd/2017 stands accepted.

6.

We now advert to the assessee's revision appeal ITA 675/Hyd/2015 filed against the CIT(A)’s 263 order. It transpires at the outset that the same is time barred by 561 days delay stated attributable to communication gap and other miscellaneous reasons. This is coupled with th4e fact that the impugned assessment has already been quashed in preceding paras. We thus condone the foregoing delay and hold that impugned revision directions have no legs to stand since the assessment itself stands quashed. We

677/Hyd/2017 therefore accept the assessee's instant former appeal ITA 675/Hyd/2015 as well as a necessary corollary.

9.

All other pleadings on merits are rendered infructuous.

10.

These assessee's twin appeals are allowed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open court on 6th Jan., 2022.

Sd/- Sd/- (L.P. SAHU) (S.S. GODARA) Accountant Member Judicial Member Hyderabad, Dt. 06.01.2022. * Reddy gp Copy to :

1. 1. Shri Paladugu Prabhakar, 8-2-293/82/J/70B, Plot No.70, Journalist Colony, Jubilee Hills, Hyderabad. 2. i) DCIT, Central Circle 2(2), Hyderabad. ii) JCIT (OSD), Central Circle 4, Hyderabad.

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