RENU SINGH,DELHI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, DELHI, DELHI
Facts
The case involves two assessees, Renu Singh and Pradeep Singh, who are co-owners of a property. Following a search on Pranjil Batra, a photocopy of an unsigned 'Agreement to Sale' was found, suggesting the property was sold for a higher consideration (INR 4.49 Cr) than declared (INR 1.49 Cr). The AO, invoking Section 153C, made an addition of INR 75,08,750/- for under-reported Short Term Capital Gain, which was upheld by the CIT(A).
Held
The Tribunal held that the AO's 'satisfaction note' for initiating proceedings under Section 153C was vague and lacked specific details linking incriminating material to particular assessment years, thus rendering the assumption of jurisdiction invalid. Furthermore, on merits, the Tribunal found the additions unjustified, noting the AO's sole reliance on an unsigned photocopy of an Agreement to Sale, especially when the Departmental Valuation Officer's report and the purchaser's affidavit supported the assessee's declared sale consideration.
Key Issues
The key legal issues were the validity of jurisdiction assumed under Section 153C due to a defective 'satisfaction note' and the justification of additions made on merits based on an unsubstantiated "Agreement to Sale" photocopy versus a DVO report and purchaser's affidavit.
Sections Cited
153C, 153A, 132, 142A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, N THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI PRADIP KUMAR KEDIA & SHRI PRADIP KUMAR KEDIA & SHRI PRADIP KUMAR KEDIA & SHRI VIMAL KUMARSHRI VIMAL KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI “F” BENCH: NEW DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI VIMAL KUMAR, JUDICIAL MEMBER SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No ITA No.2806/Del/2024 [Assessment Year : Assessment Year : 2019-20] Renu Singh vs ACIT Pranshu Pranshu Goel, Goel, C Chartered Central Circle-3 3 Accountant 5A/3A 5A/3A Delhi Ansari Raod Darya Ganj Ansari Raod Darya Ganj New Delhi-110002 110002 PAN-CHVPS2282J CHVPS2282J APPELLANT RESPONDENT
ITA No ITA No.2810/Del/2024 [Assessment Year : Assessment Year : 2019-20] Pradeep Singh vs ACIT Pranshu Pranshu Goel Goel C Chartered Central Circle-3 3 Accountant 5A/3A 5A/3A Delhi Ansari Raod Darya Ganj Ansari Raod Darya Ganj New Delhi-110002 2 PAN-AOOPS5630J 30J APPELLANT RESPONDENT
Appellant by Shri Pranshu Goel, CA & Shri Aditya Gupta, Adv. Respondent by Shri Sumer Singh Meena, CIT DR Shri Sumer Singh Meena, CIT DR Date of Hearing 30.10.2024 Date of Pronouncement Date of Pronouncement 25.11.2024
ORDER PER PRADIP KUMAR KEDIA PRADIP KUMAR KEDIA- AM : The captioned appeal appeals arising from the First Appellate order First Appellate orders tabulated hereunder :- Sl.No. ITA No. Parties Ld. CIT(A)’s Assessment Assessment Assessment Assessment Name CIT(A) order order order dated order dated Year dated passed u/s 1. 2805/Del/2024 Renu Ld.CIT(A)- 27.05.2024 153C 15.03.2023 15.03.2023 2019-20 Singh 23 2. 2810/Del/2024 Pradeep Pradeep Ld.CIT(A)- 27.05.2024 153C 15.03.2023 15.03.2023 2019-20 Singh 23
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh The issues being identical in both the appeals 2. identical in both the appeals, both appeals were , both appeals were heard together and are being disposed of together and are being disposed off by a common order.
ITA No.2806/Del/2024 [AY : AY : 2019-20]-Renu Singh: 3. Grounds of appeal raised by the assessee read as under: Grounds of appeal raised by the assessee read as under:-
“That on the facts and circumstances of the case, assessment order “That on the facts and circumstances of the case, assessment order “That on the facts and circumstances of the case, assessment order passed under Section 153C of the Act as sustained by the Ld. CIT(A) passed under Section 153C of the Act as sustained by the Ld. CIT(A) passed under Section 153C of the Act as sustained by the Ld. CIT(A) is bad in law, illegal and void ab initio; is bad in law, illegal and void ab initio; 2. That without prejudice, considering the facts and circumstances of That without prejudice, considering the facts and circumstances of That without prejudice, considering the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in not rendering the e and in law, the Ld. CIT(A) grossly erred in not rendering the e and in law, the Ld. CIT(A) grossly erred in not rendering the notice issued under section 153C and consequent assessment bad notice issued under section 153C and consequent assessment bad notice issued under section 153C and consequent assessment bad in law as the satisfaction note recorded by the Ld. AO is invalid, bad in law as the satisfaction note recorded by the Ld. AO is invalid, bad in law as the satisfaction note recorded by the Ld. AO is invalid, bad in law and void ab initio; in law and void ab initio; 3. That on the facts and circu That on the facts and circumstances of the case and in law, the Ld. mstances of the case and in law, the Ld. CIT(A) grossly erred in not considering that the Ld. AO failed to CIT(A) grossly erred in not considering that the Ld. AO failed to CIT(A) grossly erred in not considering that the Ld. AO failed to dispose off the objections of the appellant against the satisfaction dispose off the objections of the appellant against the satisfaction dispose off the objections of the appellant against the satisfaction note vide a separate speaking order; note vide a separate speaking order; 4. That on the facts and circumstances of That on the facts and circumstances of the case and in law, the Ld. the case and in law, the Ld. CIT(A) grossly erred in not considering that the Ld. AO failed to CIT(A) grossly erred in not considering that the Ld. AO failed to CIT(A) grossly erred in not considering that the Ld. AO failed to provide the copy of the satisfaction note of the AO of the searched provide the copy of the satisfaction note of the AO of the searched provide the copy of the satisfaction note of the AO of the searched person to the appellant during the assessment proceedings; person to the appellant during the assessment proceedings; person to the appellant during the assessment proceedings; 5. That on the facts and circumst That on the facts and circumstances of the case and in law, the Ld. ances of the case and in law, the Ld. CIT(A) grossly erred in sustaining the order of the Ld. AO whereby CIT(A) grossly erred in sustaining the order of the Ld. AO whereby CIT(A) grossly erred in sustaining the order of the Ld. AO whereby impugned addition amounting to Rs. 75,08,750/ impugned addition amounting to Rs. 75,08,750/- was made; was made; 6. That on the facts and circumstances of the case and in law the Ld. That on the facts and circumstances of the case and in law the Ld. That on the facts and circumstances of the case and in law the Ld. AO grossly erred in not AO grossly erred in not considering the valuation report furnished by considering the valuation report furnished by the Ld. Valuation Officer the Ld. Valuation Officer -1, Income Tax Department, New Delhi; 1, Income Tax Department, New Delhi;
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh 7. That in the facts and circumstances of the case and in law, the order That in the facts and circumstances of the case and in law, the order That in the facts and circumstances of the case and in law, the order passed by the Ld. CIT(A) and by the Ld. AO is against the principles passed by the Ld. CIT(A) and by the Ld. AO is against the principles passed by the Ld. CIT(A) and by the Ld. AO is against the principles of natural justice, equity, judicial discipline and fair play; natural justice, equity, judicial discipline and fair play; natural justice, equity, judicial discipline and fair play; 8. That in the facts and circumstances of the case and in law, the That in the facts and circumstances of the case and in law, the That in the facts and circumstances of the case and in law, the Hon'ble CIT(A) grossly erred in upholding the order of Ld. AO in Hon'ble CIT(A) grossly erred in upholding the order of Ld. AO in Hon'ble CIT(A) grossly erred in upholding the order of Ld. AO in charging interest under Section 234B and Section 234C of the A charging interest under Section 234B and Section 234C of the Act; charging interest under Section 234B and Section 234C of the A 9. That the penalty proceedings initiated under Section 270A and 271D That the penalty proceedings initiated under Section 270A and 271D That the penalty proceedings initiated under Section 270A and 271D of the Act is incorrect, illegal and bad in law; of the Act is incorrect, illegal and bad in law; All of the above grounds of appeal are without prejudice and All of the above grounds of appeal are without prejudice and All of the above grounds of appeal are without prejudice and notwithstanding each other. notwithstanding each other. The Appellant craves leave to add, amend, The Appellant craves leave to add, amend, vary, omit or substitute any of vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of the aforesaid grounds of appeal at any time before or at the time of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. hearing of the appeal. Any consequential relief, to which the Appellant may be entitled under the Any consequential relief, to which the Appellant may be entitled under the Any consequential relief, to which the Appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or o law in pursuance of the aforesaid grounds of appeal, or otherwise, thus therwise, thus may be granted.” 4. Briefly stated, the assessee filed return of income for Assessment Year the assessee filed return of income for Assessment Year the assessee filed return of income for Assessment Year 2019-20 in question on 31.08.2019, declaring total income of on 31.08.2019, declaring total income of INR 12,20,970/ INR 12,20,970/-. A search and seizure operation A search and seizure operations under section 132 of the Income Tax A of the Income Tax Act, 1961 [“the Act”] was carried out 1961 [“the Act”] was carried out on Pranjil Batra Group of cases on n Pranjil Batra Group of cases on 17.08.2020. Consequently Consequently, a ‘satisfaction note’ was prepared by the Assessing was prepared by the Assessing Officer [“AO”] of the searched Officer [“AO”] of the searched person under section 153C of the Act. The AO of 153C of the Act. The AO of the third person i.e. assessee sessee herein also happen to be same AO as that of also happen to be same AO as that of searched person.
Pursuant to the ‘satisfaction note satisfaction note’ prepared under section under section 153C of the Act, the proceedings under section under section 153C of the Act were set in motion 153C of the Act were set in motion by issuance of notice dated 14.01.2022 under section 153C r.w.s. issuance of notice dated 14.01.2022 under section 153C r.w.s. section section 153A of the Act. Based on the ‘satisfaction note satisfaction note’ as well as facts emerging in the as well as facts emerging in the course of assessment proceedings, the AO observed that the assessee has course of assessment proceedings, the AO observed that the assessee has failed course of assessment proceedings, the AO observed that the assessee has Page | 3
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh to offer full value of sale e of sale consideration on sale of joint property property. The sale consideration was accordingly consideration was accordingly, enhanced based on the alleged incriminating enhanced based on the alleged incriminating material in the form of photocopy of Agreement to material in the form of photocopy of Agreement to Sale found in the course of found in the course of search in the case of Pranjil Batra Group search in the case of Pranjil Batra Group of cases. The addition of INR of cases. The addition of INR 75,08,750/- was made to the returned income on the basis of was made to the returned income on the basis of substituted substituted sale consideration as emanating from the as emanating from the Agreement to Sale, found in the course of found in the course of search. While making addition, the AO search. While making addition, the AO inter-alia observed that the observed that the total sale consideration of the property under consideration of the property under consideration situated at 61, 61, Vijay Block, 110092 is found to be at INR 4,49,50,000/- as against the as against the Laxmi Nagar, Delhi-110092 amount of sale consideration shown to have been received by the joint owner amount of sale consideration shown to have been received by the joint owners amount of sale consideration shown to have been received by the joint owner of the property collectively at INR 1,49,15,000/ collectively at INR 1,49,15,000/-. The property was sold by the . The property was sold by the assessee alongwith other two persons namely, Shri Pradeep Singh assessee alongwith other two namely, Shri Pradeep Singh (share of 25%) and Shri Tarun Gupta (share of 50%). Shri Tarun Gupta (share of 50%). The assessee holds 25% share in The assessee holds 25% share in such property. The AO accordingl such property. The AO accordingly, carried out proportionate substitution of substitution of sale consideration having regard to the having regard to the percentage share held in the property ld in the property sold and consequently, additions were made which worked out to I and consequently, additions were made which worked out to INR and consequently, additions were made which worked out to I 75,08,750/- as under reporting of Short Term Capital gain [“STCG”]. reporting of Short Term Capital gain [“STCG”]. reporting of Short Term Capital gain [“STCG”].
Aggrieved by the additions on account of alleged by the additions on account of alleged under reporting of sale reporting of sale consideration for the purposes purposes of determination of capital gains, the assessee of determination of capital gains, the assessee preferred appeal before the the Ld.CIT(A). The CIT(A) however, also declined any wever, also declined any relief on the additions so made by the AO. relief on the additions so made by the AO.
Further aggrieved, assessee filed appeal befo assessee filed appeal before the Tribunal. e the Tribunal.
When the matter was called for When the matter was called for hearing, the Ld. Counsel for the assessee for the assessee adverted to the grounds of appeal and made wi grounds of appeal and made wide ranging submissions on lack de ranging submissions on lack of jurisdiction under section nder section 153C of the Act as well as placed arguments 153C of the Act as well as placed arguments towards untenability of additions on merits. towards untenability of additions on merits.
8.1. On aspects of lack of lack of jurisdiction, Ld. Counsel for the assessee referred for the assessee referred to ‘satisfaction note’ drawn by the AO for assumption of jurisdiction u wn by the AO for assumption of jurisdiction under wn by the AO for assumption of jurisdiction u
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh section 153C of the Act and submitted that the 153C of the Act and submitted that the ‘satisfaction note satisfaction note’ prepared apparently suffers from the vice of being vague, non apparently suffers from the vice of being vague, non-descript and unintelligible and unintelligible.
8.2. Besides, it was contended that it was contended that the AO has derived unlawful satisfaction derived unlawful satisfaction alleging under reporting reporting of sale consideration without identifying the sale consideration without identifying the documents found attributable to the assessee. The AO attributable to the assessee. The AO has vaguely referred to has vaguely referred to perusal of documents/information perusal of documents/information involved without identifying the documents. without identifying the documents. The AO further alleged casually without showing whether The AO further alleged casually without showing whether the the so called information/document “belongs to or pertains to the assessee”. “belongs to or pertains to the assessee”. Significantly, the ‘satisfaction note’ has been drawn has been drawn under section 153C of the Act in a 153C of the Act in a combined manner for several year several years starting from 2015-16 to 2021 16 to 2021-22 without identifying as to whether so called documents/information attributable to any identifying as to whether so called documents/information attributable to any identifying as to whether so called documents/information attributable to any of the Assessment Year. The The Ld. Counsel for the assessee adverted to various for the assessee adverted to various judicial decisions to contend that it is paramount for th judicial decisions to contend that it is paramount for the AO to spell out the e AO to spell out the nature of documents in a precise manner ments in a precise manner which has a bearing on the bearing on the determination of total income for a particular Assessment Year falling within total income for a particular Assessment Year falling within total income for a particular Assessment Year falling within the period which can be assessed the period which can be assessed under section 153C of the Act. The AO has 153C of the Act. The AO has sweepingly covered seven A AYs starting from Assessment Year 2016 starting from Assessment Year 2016-17 to 2021- 22 within the ambit of assessment within the ambit of assessment under section 153C of the Act without 153C of the Act without showing the documents which showing the documents which is found to relate to a given Assessment Year. relate to a given Assessment Year. As judicially viewed by the different rulings, the AO is viewed by the different rulings, the AO is entitled to assess the income under section 153C of the Act 153C of the Act in the hands of non-searched person searched person only for Assessment Year to which such seized documents relate only for Assessment Year to which such seized documents relate to and has only for Assessment Year to which such seized documents relate bearing on the determination of total inc ing on the determination of total income. The material unearthed he material unearthed must be found to be germane for the purposes of assessment o for the purposes of assessment of a given assessment f a given assessment year. This is the marked distinction between the provision of section 153A and the marked distinction between the provision of section 153A and the marked distinction between the provision of section 153A and 153C of the Act. Since conditions have not been conditions have not been fulfilled; the ‘satisfaction note satisfaction note’ clearly suffers from the vice of non vice of non-application of mind as well as non application of mind as well as non-speaking ‘satisfaction note’. Such ‘satisfaction note satisfaction note’ drawn sweepingly to cover all AYs drawn sweepingly to cover all AYs and without making mention of specific document and without making mention of specific document does not give rise to the does not give rise to the jurisdiction available under section under section 153C of the Act. The Ld. Counsel Counsel for the
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh assessee thus, submitted that in the absenc submitted that in the absence of fulfillment of pre pre-requisites of section 153C of the Act, the jurisdiction to assess the returned income section 153C of the Act, the jurisdiction to assess the returned income under section 153C of the Act, the jurisdiction to assess the returned income section 153C of the Act is void void, ab-initio and a nullity in law.
The Ld. Counsel for the assessee for the assessee next submitted that at the time of submitted that at the time of drawing satisfaction for the purposes of assumption of drawing satisfaction for the purposes of assumption of jurisdiction jurisdiction under section 153C of the Act, the assessment for Assessment Year 2019 153C of the Act, the assessment for Assessment Year 2019-20 stood 153C of the Act, the assessment for Assessment Year 2019 concluded/completed under concluded/completed under the normal provisions of Act. Consequently, as e normal provisions of Act. Consequently, as per the judgement referred by Hon’ble High Court of Delhi in the case of per the judgement referred by Hon’ble High Court of Delhi in the case of Pr.CIT per the judgement referred by Hon’ble High Court of Delhi in the case of 115 taxmann.com 370 (Delhi), no addition could be no addition could be vs Ankush Saluja [2020] made in the absence of any incriminating documents found in the course of made in the absence of any incriminating documents found in the course of made in the absence of any incriminating documents found in the course of search. The Ld. Counsel fo Counsel for the assessee pointed out that the assessee raised r the assessee pointed out that the assessee raised objection to the impugned objection to the impugned ‘satisfaction note’, prepared by the AO vide letter AO vide letter dated 06.12.2022. The AO dated 06.12.2022. The AO, in turn, disposed off the objection vide interim disposed off the objection vide interim order dated 08.12.2022 by a cryptic order by a cryptic order.
On merits, the Ld. Counsel Counsel for the assessee pointed out the additions for the assessee pointed out the additions made, are not justified for multiple reasons: made, are not justified for multiple reasons:-
[i] the Agreement to S the Agreement to Sale dated 06.08.2018 found in the dated 06.08.2018 found in the course of search in the case of Pranjil Batra cannot be regarded as search in the case of Pranjil Batra cannot be regarded as search in the case of Pranjil Batra cannot be regarded as sacrosanct for the reason such as the Agreement to S sacrosanct for the reason such as the Agreement to Sale was not sacrosanct for the reason such as the Agreement to S signed by the S signed by the Shri Pranjil Batra. Secondly the Agre the Agreement to Sale found in reason in reason was only a zerox copy;
[ii] the valuation report obtained by the AO from the Department the valuation report obtained by the AO from the Department the valuation report obtained by the AO from the Department Valuation Officer [“DVO”] Valuation Officer [“DVO”] itself indicate the fair market value of self indicate the fair market value of the property at INR the property at INR 1,68,59,788/- as against the transaction price the transaction price of INR 1,49,15,00 of INR 1,49,15,000/-. Thus, there is a very meager difference . Thus, there is a very meager difference between FMV of the property FMV of the property and actual consideration consideration received by the assessee. Hence, in the light of the report of the DVO, the the assessee. Hence, in the light of the report of the DVO, the the assessee. Hence, in the light of the report of the DVO, the contents of the Agreement to S contents of the Agreement to Sale towards sale towards sale consideration
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh shown to be agreed shown to be agreed at INR 4,49,50,000/- cannot be relied upon be relied upon and the sale consideration decaled is rather vindicated. and the sale consideration decaled is rather vindicated.. and the sale consideration decaled is rather vindicated.
The Ld. Counsel for the assessee pointed out that such Agreements are for the assessee pointed out that such Agreements are, for the assessee pointed out that such Agreements are at times, prepared to negotiate better price by the sellers from third parties. prepared to negotiate better price by the sellers from third parties. prepared to negotiate better price by the sellers from third parties. Nothing turns on such unsigned MoU. Nothing turns on such unsigned MoU. The Ld. Counsel for the assessee thus r the assessee thus, submitted that even on merits, the additions are not sustainable submitted that even on merits, the additions are not sustainable in view of submitted that even on merits, the additions are not sustainable FMV vouched by DVO.
The Ld.CIT DR for the Ld.CIT DR for the Revenue on the other hand, strongly on the other hand, strongly supported the additions made by the AO and endorsed by the Ld.CIT(A). the additions made by the AO and endorsed by the Ld.CIT(A). The The Ld.CIT DR also adverted to the ‘satisfaction note satisfaction note’ and submitted that the AO has broadly and submitted that the AO has broadly reiterated the nature of transaction under reiterated the nature of transaction under consideration which m which may have bearing on the determination determination of total income of the assessee. Therefore, the AO total income of the assessee. Therefore, the AO has rightly assumed the jurisdiction based on such satisfaction note has rightly assumed the jurisdiction based on such satisfaction note providing has rightly assumed the jurisdiction based on such satisfaction note prima-facie reasons. The Ld.CIT DR also referred to the decision rendered by Ld.CIT DR also referred to the decision rendered by Ld.CIT DR also referred to the decision rendered by the Hon’ble Delhi High Court Court in the case of Indian National Congress vs DCIT ian National Congress vs DCIT [2024] 160 taxmann.com 606 (Delhi) to contend that the ‘satisfaction note satisfaction note’ [2024] 160 taxmann.com 606 (Delhi) covering multiple years carries no infirmity in law. The AO is entitled to covering multiple years carries no infirmity in law. The AO is entitled to covering multiple years carries no infirmity in law. The AO is entitled to prepare a common satisfaction note covering the various Assessment Years prepare a common satisfaction note covering the various Assessment Years prepare a common satisfaction note covering the various Assessment Years falling within the limitation period available for assessment u lling within the limitation period available for assessment under section nder section 153C of the Act.
12.1. The Ld.CIT DR also defended the action of the AO in placing reliance over Ld.CIT DR also defended the action of the AO in placing reliance over Ld.CIT DR also defended the action of the AO in placing reliance over the Agreement to Sale found at the premises of S found at the premises of Shri Pranjil Batra ri Pranjil Batra and submitted that on reading of t on reading of Agreement to Sale, it will be evident that the , it will be evident that the understanding between the assessee, sellers and the corresponding buyer understanding between the assessee, sellers and the corresponding buyer, Shri understanding between the assessee, sellers and the corresponding buyer Pranjil Batra was to acquire the property at a higher Pranjil Batra was to acquire the property at a higher consideration consideration of INR 4,49,50,000/- and while registering the and while registering the Sale Agreement, the assessee i Sale Agreement, the assessee in collusion with the purchaser have collusion with the purchaser have drastically reduced the sale drastically reduced the sale consideration depriving the Revenue of its lawful taxes. of its lawful taxes.
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh 12.2. The Ld.CIT DR thus pointed out that the lack of jurisdiction as pleaded The Ld.CIT DR thus pointed out that the lack of jurisdiction as pleaded The Ld.CIT DR thus pointed out that the lack of jurisdiction as pleaded on behalf of the assessee, is totally unjustified in the facts of the present case. assessee, is totally unjustified in the facts of the present case. assessee, is totally unjustified in the facts of the present case. The satisfaction note broadly provides the nature of undisclosed income The satisfaction note broadly provides the nature of undisclosed income The satisfaction note broadly provides the nature of undisclosed income emanating from the incriminating material found in the course of search. emanating from the incriminating material found in the course of search. The emanating from the incriminating material found in the course of search. Ld.CIT DR for the Revenue Ld.CIT DR for the Revenue also submitted that report of DVO showing lesser ed that report of DVO showing lesser fair market value as not bearing in the instant case where the assessee and the as not bearing in the instant case where the assessee and the as not bearing in the instant case where the assessee and the purchaser have mutually agreed for a higher have mutually agreed for a higher consideration.
In re-joinder, the Ld. Ld. Counsel for the assessee reiterated the factual for the assessee reiterated the factual aspects and submitted that ts and submitted that apart from the DVO report, affidavit of S from the DVO report, affidavit of Shri Pranjil Batra dated 18.12.2022 placed in the Paper Book also supports the sale Batra dated 18.12.2022 placed in the Paper Book also supports the sale Batra dated 18.12.2022 placed in the Paper Book also supports the sale consideration received by the assessee received by the assessee. As per the affidavit of the p s per the affidavit of the purchaser Shri Pranjil Batra, the tot ri Pranjil Batra, the total sale consideration involved in the property involved in the property transaction stands at INR 1,49,15,000/ stands at INR 1,49,15,000/- only and no more. Some ome photocopy of Agreement to Sale remaining remaining unsigned by the purchaser is thus is thus, of no consequence, more so, when the purchase when the purchaser as well as the DVO repo as well as the DVO report supports the veracity of actual sale actual sale consideration.
We have carefully considered considered the rival submissions and perused the the rival submissions and perused the assessment order, first appellate appellate order, documents and material referred documents and material referred to and relied upon and the case laws cited. the case laws cited.
The controversy involved in the present case The controversy involved in the present case are two fold two fold:-[a] lack of jurisdiction usurped under section 153C as alleged on behalf of the assessee; under section 153C as alleged on behalf of the assessee; under section 153C as alleged on behalf of the assessee; and [b] additions unjustified on merits as claimed by the assessee. additions unjustified on merits as claimed by the assessee. additions unjustified on merits as claimed by the assessee.
The assessee has made wide ranging The assessee has made wide ranging submissions towards lack of submissions towards lack of jurisdiction assumed under section nder section 153C of the Act to re-assess the returned assess the returned income in a concluded assessment. The assessee has contested the in a concluded assessment. The assessee has contested the in a concluded assessment. The assessee has contested the assumption of jurisdiction jurisdiction on the strength of alleged infirmities alleged infirmities in the ‘satisfaction note’ prepared by the AO of the searched person as well as that of prepared by the AO of the searched person as well as that of prepared by the AO of the searched person as well as that of AO of the assessee to usurp jurisdiction under section 153C of the Act. to usurp jurisdiction under section 153C of the Act. to usurp jurisdiction under section 153C of the Act.
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh 17. The ‘satisfaction note satisfaction note’ recorded by the AO of assessee recorded by the AO of assessee (also AO of searched person) being germane to the determination of challenge to determination of challenge to assumption of jurisdiction. It would be apt . It would be apt to reproduce the ‘satisfaction note’ to reproduce the ‘satisfaction note’ recorded hereunder:-
“A search was conducted in the case of Shri Pranjil Batra on 17/08/2020. A search was conducted in the case of Shri Pranjil Batra on 17/08/2020. A search was conducted in the case of Shri Pranjil Batra on 17/08/2020. During the proceedings proceedings of Search and Seizure action at premises of Shri n at premises of Shri Pranjil Batra, incriminating documents were found and seized. There are Pranjil Batra, incriminating documents were found and seized. There are Pranjil Batra, incriminating documents were found and seized. There are various documents/ inform various documents/ information which suggests that Sh. Pranjil Batra has that Sh. Pranjil Batra has acquired huge wealth and has invested acquired huge wealth and has invested in various properties, d in various properties, deposited in bank accounts in the names of various persons and entities. Most of these n the names of various persons and entities. Most of these n the names of various persons and entities. Most of these persons are related to Sh. Pranjil Batra or his employees. Most of the persons are related to Sh. Pranjil Batra or his employees. Most of the persons are related to Sh. Pranjil Batra or his employees. Most of the entities are paper entities and are controlled and managed by Sh. Pranjil entities are paper entities and are controlled and managed by Sh. Pranjil entities are paper entities and are controlled and managed by Sh. Pranjil Batra. However, in sake of name Sh. Pranjil Batra ha Batra. However, in sake of name Sh. Pranjil Batra has appointed his s appointed his relatives/employees as directors/share holders in these entities. On relatives/employees as directors/share holders in these entities. On relatives/employees as directors/share holders in these entities. On perusal of such documents/information it has been observed that many of perusal of such documents/information it has been observed that many of perusal of such documents/information it has been observed that many of such information/ documents belongs to or pertains to the assessee as per such information/ documents belongs to or pertains to the assessee as per such information/ documents belongs to or pertains to the assessee as per brief description given u brief description given under:- S.No. Premise/Party/Annexure Premise/Party/Annexure Description of document seized /Page No. 1. Premise of Shri Pranjil Baua. Premise of Shri Pranjil Baua. Sh. Pranjil Batra has entered into a transaction of has entered into a transaction of F 193 Laxmi Nagar, New F 193 Laxmi Nagar, New sale/purchase of property with the assessee. As per sale/purchase of property with the assessee. As per Delhi incriminating incriminating documents documents and and of of sale sale deed deed agreement. has been evident that there is a huge agreement. has been evident that there is a huge difference difference in in the the consideration consideration price pr as per agreement and sale deed. Further, cash exchange is cash exchange is also involved in this transaction. As per incriminating also involved in this transaction. As per incriminating documents there is a difference of Rs. 300 Lacs and documents there is a difference of Rs. 300 Lacs and cash exchange of Rs. 90 Lacs. Panchnama was signed on 18/08/2020. Panchnama was signed on 18/08/2020. The above documents have been examined and I am, being the assessing The above documents have been examined and I am, being the assessing The above documents have been examined and I am, being the assessing officer of the searched person. satisfied that the information contained in officer of the searched person. satisfied that the information contained in officer of the searched person. satisfied that the information contained in documents seized during the course of search u/s 132 of the 1.T. Act, documents seized during the course of search u/s 132 of the 1.T. Act, documents seized during the course of search u/s 132 of the 1.T. Act, 1961 at the premises of Shri Pranjil Bat 1961 at the premises of Shri Pranjil Batra, pertains to the assessee, who is , pertains to the assessee, who is a case of a person other than the person referred to in Section 153A ie. a case of a person other than the person referred to in Section 153A ie. a case of a person other than the person referred to in Section 153A ie. Page | 9
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh Shri Pranjil Batra. Hence, the information is being sent to the assessing Shri Pranjil Batra. Hence, the information is being sent to the assessing Shri Pranjil Batra. Hence, the information is being sent to the assessing officer of the such other person. Further, I am satisfied within the mean officer of the such other person. Further, I am satisfied within the meaning officer of the such other person. Further, I am satisfied within the mean of Section 153C r.w.s. 153A of the Act, that the documents have bearing on of Section 153C r.w.s. 153A of the Act, that the documents have bearing on of Section 153C r.w.s. 153A of the Act, that the documents have bearing on the determination of the total income of Renu Singh for the A.Y. 2015 the determination of the total income of Renu Singh for the A.Y. 2015-16 to the determination of the total income of Renu Singh for the A.Y. 2015 2021-22.” 18. The AO being common to the searched person as well as the assessee. The AO being common to the searched person as well as the assessee. The AO being common to the searched person as well as the assessee. The ‘satisfaction note’ prepared in the capacity of the AO of the searched note’ prepared in the capacity of the AO of the searched note’ prepared in the capacity of the AO of the searched person is identical and therefore, not reproduced. person is identical and therefore, not reproduced.
Section 153C of the Act pertains to the assessment if income in cases Section 153C of the Act pertains to the assessment if income in cases Section 153C of the Act pertains to the assessment if income in cases where certain documents, assess or books of accounts etc. pertains to or where certain documents, assess or books of accounts etc. pertains to or where certain documents, assess or books of accounts etc. pertains to or relates to person other than the person on whom search was conducted under relates to person other than the person on whom search was conducted under relates to person other than the person on whom search was conducted under section 132 of the Act or requisition section 132 of the Act or requisitioned under section 132A of the Act. This ed under section 132A of the Act. This section allow the AO to initiate proceedings against any other person (not the section allow the AO to initiate proceedings against any other person (not the section allow the AO to initiate proceedings against any other person (not the searched person) if there are indications of undisclosed income. A key searched person) if there are indications of undisclosed income. A key searched person) if there are indications of undisclosed income. A key component of initiating search proceedings under section 153C of component of initiating search proceedings under section 153C of the Act is the component of initiating search proceedings under section 153C of ‘’satisfaction note’ to be recorded by the AO of the searched person as well as ‘’satisfaction note’ to be recorded by the AO of the searched person as well as ‘’satisfaction note’ to be recorded by the AO of the searched person as well as AO of the third person. The ‘satiation note’ is the first step and a foundational AO of the third person. The ‘satiation note’ is the first step and a foundational AO of the third person. The ‘satiation note’ is the first step and a foundational document to determine the validity of the assessment process against a third document to determine the validity of the assessment process against a third document to determine the validity of the assessment process against a third parties whose documents or assets etc. are found in a search. Satisfaction arties whose documents or assets etc. are found in a search. Satisfaction arties whose documents or assets etc. are found in a search. Satisfaction note is critical because it serves as a safeguard against arbitrary proceedings note is critical because it serves as a safeguard against arbitrary proceedings note is critical because it serves as a safeguard against arbitrary proceedings and ensures that the powers of section 153C of the Act is exercise judiciously. and ensures that the powers of section 153C of the Act is exercise judiciously. and ensures that the powers of section 153C of the Act is exercise judiciously. It is a formal statutory requirement without which the proceedings against utory requirement without which the proceedings against utory requirement without which the proceedings against other person could be considered invalid. The ‘satisfaction note’ being so other person could be considered invalid. The ‘satisfaction note’ being so other person could be considered invalid. The ‘satisfaction note’ being so critical and powers under section 153C of the Act being contingent upon such critical and powers under section 153C of the Act being contingent upon such critical and powers under section 153C of the Act being contingent upon such Note, the information contained therein need to Note, the information contained therein need to be actionable. This being so, be actionable. This being so, the ‘satisfaction note’ is exp the ‘satisfaction note’ is expected to identify the relevant material found in to identify the relevant material found in search and that it pertains to or relates to third person. Such material found search and that it pertains to or relates to third person. Such material found search and that it pertains to or relates to third person. Such material found should reliably indicate or suggest the bearing of such documen should reliably indicate or suggest the bearing of such documents/assets etc. should reliably indicate or suggest the bearing of such documen to the income in the hands of third person. The ‘satisfaction note’ should to the income in the hands of third person. The ‘satisfaction note’ should to the income in the hands of third person. The ‘satisfaction note’ should record such material to provide accountability of the AO and to justify the record such material to provide accountability of the AO and to justify the record such material to provide accountability of the AO and to justify the
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh initiation of proceedings against other person. In summary, such Note should initiation of proceedings against other person. In summary, such Note should initiation of proceedings against other person. In summary, such Note should set the narrative in an objective manner rative in an objective manner, as far as possible, to enable judicial to enable judicial scrutiny of such document, if so called for. scrutiny of such document, if so called for.
The assessee contends that ‘satisfaction note’ which is the first step for The assessee contends that ‘satisfaction note’ which is the first step for The assessee contends that ‘satisfaction note’ which is the first step for assumption of jurisdiction under section 153C of the Act and p assumption of jurisdiction under section 153C of the Act and provides assumption of jurisdiction under section 153C of the Act and p foundation for conferment of jurisdiction is plagued with for conferment of jurisdiction is plagued with multiple multiple legal infirmities. Viz:
[i] the ‘satisfaction note’ has the ‘satisfaction note’ has been recorded by the AO of searched been recorded by the AO of searched person and that of assessee collectively for the period AY 2015 person and that of assessee collectively for the period AY 2015-16 person and that of assessee collectively for the period AY 2015 to AY 2021-22 without 22 without identifying the incriminating material in identifying the incriminating material in respect of any any particular Assessment Year; [ii] the AO has thrown the AO has thrown open the whole basket of six years without hole basket of six years without giving reference to any concrete incriminating material of a giving reference to any concrete incriminating material of a giving reference to any concrete incriminating material of a particular assessment Year; particular assessment Year; [iii] the act of the AO making sweeping averment f the AO making sweeping averment in the satisfaction in the satisfaction note that documents have bearing on determination of total income documents have bearing on determination of total income documents have bearing on determination of total income of Smt.Renu Singh for AY 2015 of Smt.Renu Singh for AY 2015-16 to 2020-21, is without legal is without legal foundation as the AO has even f foundation as the AO has even failed to name the name the alleged documents and fu documents and further failed to mention as to how it is related mention as to how it is related /pertained to which Assessment Year; /pertained to which Assessment Year; [iv] the AO on receipt of on receipt of material/documents from the AO material/documents from the AO of the searched person must searched person must necessarily apply his mind on n the material received and ascertain precisely the specific year to which received and ascertain precisely the specific year to which received and ascertain precisely the specific year to which incriminating incriminating material material relate relates. . It It is is only only when when this this determination/ascertainment is complete that the flood gate determination/ascertainment is complete that the flood gates of an determination/ascertainment is complete that the flood gate assessment would open qua those particular years. The assessment would open qua those particular years. The issuance assessment would open qua those particular years. The of notice cannot be an automated function unconnected to this of notice cannot be an automated function unconnected to this of notice cannot be an automated function unconnected to this exercise of analysis and ascertainment by the AO exercise of analysis and ascertainment by the AO i in the light of judgement rendered in the case of judgement rendered in the case of Agni Vishnu Feature Pvt.Ltd. vs Agni Vishnu Feature Pvt.Ltd. vs DCIT [2023] 157 taxmann.com 2 DCIT [2023] 157 taxmann.com 242 (Madras); Page | 11
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh [v] the ‘satisfaction note’ do not provide any ion note’ do not provide any particulars particulars of documents seized from the premises of Shri Pranjil Batra seized from the premises of Shri Pranjil Batra. N . Nothing is mentioned with regard to Annexure No., page no. of the mentioned with regard to Annexure No., page no. of the mentioned with regard to Annexure No., page no. of the panchnama through which the documents were seized and the panchnama through which the documents were seized and the panchnama through which the documents were seized and the basis which prompted the AO t basis which prompted the AO to record satisfaction that the same o record satisfaction that the same pertains to the assessee herein. The pertains to the assessee herein. The basic facts such as basic facts such as nature of documents, type of documents, name of parties, amount of documents, type of documents, name of parties, amount of documents, type of documents, name of parties, amount of transaction, assessment year to which such document relate to transaction, assessment year to which such document relate to transaction, assessment year to which such document relate to etc. is not discernible from the etc. is not discernible from the satisfaction note. In the absence of satisfaction note. In the absence of such information, no reasonable such information, no reasonable person instructed in law can rson instructed in law can derive his independent satisfaction which impacts the foundational derive his independent satisfaction which impacts the foundational derive his independent satisfaction which impacts the foundational jurisdiction to assess third persons. The ‘satisfaction note’ also jurisdiction to assess third persons. The ‘satisfaction note’ also jurisdiction to assess third persons. The ‘satisfaction note’ also fails to unequivocall unequivocally ascertain whether it is a sale transaction or a ascertain whether it is a sale transaction or a purchase transaction of the property. The AO has purchase transaction of the property. The AO has used used both the expressions i.e. purchase expressions i.e. purchase and sale for the impugned transaction and sale for the impugned transaction in the satisfaction note; in the satisfaction note; [vi] the ‘satisfaction note’ do not even mention th the ‘satisfaction note’ do not even mention the details of co e details of co-seller or address of the property to which alleged documents belong to; or address of the property to which alleged documents belong to; or address of the property to which alleged documents belong to; [vii] the ‘satisfaction note’ has made an the ‘satisfaction note’ has made an allegation of cash exchange of allegation of cash exchange of INR 90,00,000/ NR 90,00,000/- but the assessment order refers to a but the assessment order refers to an altogether different figure of INR 3,00, figure of INR 3,00,35,000/-; and [viii] the ‘satisfaction note’ is clearly very generic the ‘satisfaction note’ is clearly very generic and devoid of any basic devoid of any basic detail of the transacti detail of the transaction in question. 21. We find potency in, the plea of assessee towards allegation of infirmities allegation of infirmities in the ‘satisfaction note’. The Hon’ble De in the ‘satisfaction note’. The Hon’ble Delhi High Court in the case of lhi High Court in the case of Sakham Commodities Ltd. Vs ITO 161 taxmann.com 485 Ltd. Vs ITO 161 taxmann.com 485 (Delhi) deftly expounded the deftly expounded the imperatives of a ‘satisfaction note’, imperatives of a ‘satisfaction note’, and observed that unearthing of observed that unearthing of incriminating material in respect of particular AY will not automatically confe incriminating material in respect of particular AY will not automatically confer incriminating material in respect of particular AY will not automatically confe jurisdiction to invoke section jurisdiction to invoke section 153C of the Act in respect of all the AYs 153C of the Act in respect of all the AYs mentioned therein. The Hon’ble Delhi High Court further observed that mentioned therein. The Hon’ble Delhi High Court further observed that mentioned therein. The Hon’ble Delhi High Court further observed that discovery of material for a particular AY is not intended to trigger a chain discovery of material for a particular AY is not intended to trigger a chain discovery of material for a particular AY is not intended to trigger a chain Page | 12
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh reaction or have a water fall a water fall effect on all the AYs which can form part of the effect on all the AYs which can form part of the ‘relevant AYs’ under section 153C Of the Act. The Hon’ble Delhi High Court ‘relevant AYs’ under section 153C Of the Act. The Hon’ble Delhi High Court ‘relevant AYs’ under section 153C Of the Act. The Hon’ble Delhi High Court underscored well settled distinction which the law recognizes between the well settled distinction which the law recognizes between the well settled distinction which the law recognizes between the existence of power and the exercise thereof and thus existence of power and the exercise thereof and thus, held that unless the AO ld that unless the AO is satisfied that the material gathered can potentially impact the determination is satisfied that the material gathered can potentially impact the determination is satisfied that the material gathered can potentially impact the determination of total income, it will be abrupt exercise of powers abrupt exercise of powers in mechanically re in mechanically re-opening or assessing all over again of the AYs covered in the block that co over again of the AYs covered in the block that could possibly over again of the AYs covered in the block that co form part of block of relevant AYs. For holding so, the Hon’ble Delhi High part of block of relevant AYs. For holding so, the Hon’ble Delhi High part of block of relevant AYs. For holding so, the Hon’ble Delhi High Court relied upon the judgement Court relied upon the judgement delivered by the Hon’ble Supreme Court in by the Hon’ble Supreme Court in the case of Sinhgad Technical Education Society Sinhgad Technical Education Society wherein the Hon’ble Supreme wherein the Hon’ble Supreme Court held that ‘the assessment under section 153C could be made only for the e assessment under section 153C could be made only for the e assessment under section 153C could be made only for the year to which material relates to and exercise of power under section 153C of year to which material relates to and exercise of power under section 153C of year to which material relates to and exercise of power under section 153C of the Act in respect of other AYs would not sustain the Act in respect of other AYs would not sustain’. The Hon’ble Delhi High . The Hon’ble Delhi High Court also noted that the AO is bound to as Court also noted that the AO is bound to ascertain and identify the AY to which certain and identify the AY to which the material recovered relates and AYs which can then the material recovered relates and AYs which can then be subject to action subject to action under section 153C of the Act will have to be necessarily under section 153C of the Act will have to be necessarily those ose in respect of which the assessment is likely to be influenced or impacted by the which the assessment is likely to be influenced or impacted by the material which the assessment is likely to be influenced or impacted by the discovered. The Hon’ble Delhi High Court discovered. The Hon’ble Delhi High Court went one step further to hold that step further to hold that where material discovered in the course of search where material discovered in the course of search has the potential of as the potential of constituting incriminating material for more than one AY constituting incriminating material for more than one AYs, even in such a , even in such a situation, it will be incumbent umbent upon the AO to duly record reasons that upon the AO to duly record reasons that material is likely to be incriminating for more than one AY and thus is likely to be incriminating for more than one AY and thus, is likely to be incriminating for more than one AY and thus warranting the action under section 153C of the Act for years in addition to warranting the action under section 153C of the Act for years in addition to warranting the action under section 153C of the Act for years in addition to those to which material may be directly relatable. Thus, may be directly relatable. Thus, a nuanced application nuanced application of mind and recording of reasons for drawing satisfaction as contemplated of mind and recording of reasons for drawing satisfaction as contemplated of mind and recording of reasons for drawing satisfaction as contemplated under section 153C of the Act qua different AYs is paramount. The Hon’ble under section 153C of the Act qua different AYs is paramount. The Hon’ble under section 153C of the Act qua different AYs is paramount. The Hon’ble Delhi High Court noticeabl Court noticeably held that issuance of a notice under section 153C held that issuance of a notice under section 153C of the Act is clearly not intended to be Act is clearly not intended to be an inevitable consequence to the receipt inevitable consequence to the receipt of material by the Jurisdictional Jurisdictional AO and that the initiation of action under the initiation of action under section 153C of the Act will have section 153C of the Act will have to be founded on a formation of rmation of opinion by the Jurisdictional AO that the material handed over and received pursuant to a the Jurisdictional AO that the material handed over and received pursuant to a the Jurisdictional AO that the material handed over and received pursuant to a Page | 13
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh search is likely to influence the determination of total income and would be search is likely to influence the determination of total income and would be search is likely to influence the determination of total income and would be relevant for the purposes purposes of assessment/re-assessment in terms of section assessment in terms of section 153C of the Act.
The observation of the Hon’ble he observation of the Hon’ble Delhi High Court noted above, clearly High Court noted above, clearly provides vehement support to the plea taken by the assessee on aspects of provides vehement support to the plea taken by the assessee on aspects of provides vehement support to the plea taken by the assessee on aspects of jurisdiction flowing from ‘satisfaction note’ flowing from ‘satisfaction note’. The ‘satisfaction satisfaction note’ under scrutiny defies most of the paramete scrutiny defies most of the parameters expected of him while drawing while drawing satisfaction. While exercising the power under section 153C of the Act, neither satisfaction. While exercising the power under section 153C of the Act, neither satisfaction. While exercising the power under section 153C of the Act, neither has the AO related the material found in the course of search with a particular has the AO related the material found in the course of search with a particular has the AO related the material found in the course of search with a particular AY while making a consolidated AY while making a consolidated ‘satisfaction note’ nor provided any requisite d any requisite details of transaction to enable an nable an independent person to ascertain an person to ascertain and form any independent opinion any independent opinion on facts stated in Note that invocation of section that invocation of section 153C of the Act is indeed warranted in the facts of the case. Mere drawing of 153C of the Act is indeed warranted in the facts of the case. Mere drawing of a 153C of the Act is indeed warranted in the facts of the case. Mere drawing of perfunctory satisfaction without meeting basic ingredients of satisfaction without meeting basic ingredients of providing providing some tangible & descript information and application of mind thereon has no descript information and application of mind thereon has no descript information and application of mind thereon has no standing in law and would not confer drastic standing in law and would not confer drastic jurisdiction of assessment u/s of assessment u/s 153C of the Act on a person other than on a person other than searched person. The . The jurisdiction assumed based on such lackadaisical such lackadaisical ‘satisfaction note’ beset eset with vital infirmities cannot be countenanced in infirmities cannot be countenanced in law. The objection raised on behalf . The objection raised on behalf of the assessee towards lack of jurisdiction based on cryptic and non the assessee towards lack of jurisdiction based on cryptic and non-descript the assessee towards lack of jurisdiction based on cryptic and non satisfaction thus deserves to be sustained. satisfaction thus deserves to be sustained. While recording a consolidated While recording a consolidated ‘satisfaction note’ is not a bar in law a bar in law per se as rightly contended contended on behalf of the revenue, but however, the revenue, but however, in the same vain, the documents/assets searched the documents/assets searched need to be specified against each year covered in the satisfaction note to need to be specified against each year covered in the satisfaction note to depict need to be specified against each year covered in the satisfaction note to application of mind and initiation of action under section 153C of the Act qua application of mind and initiation of action under section 153C of the Act qua application of mind and initiation of action under section 153C of the Act qua such assessment years. The AO has failed to do so. such assessment years. The AO has failed to do so. As a corolla As a corollary, the notice issued under section 153C of the Act issued under section 153C of the Act and consequent assessment order consequent assessment order passed under section 153C o passed under section 153C of the Act is vitiated in law and requires to be the Act is vitiated in law and requires to be quashed.
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh 23. We however, also advert to the objections raised on merits of the We however, also advert to the objections raised on merits of the We however, also advert to the objections raised on merits of the additions made in the assessment order the assessment order. On facts, the AO has r . On facts, the AO has relied on some photographs of the Agreement to Sale dated 06.08.2018 and alleged that the photographs of the Agreement to Sale dated 06.08.2018 and alleged that the photographs of the Agreement to Sale dated 06.08.2018 and alleged that the total sale consideration of the property of the property situated at Laxmi Nagar, Delhi stands i Nagar, Delhi stands at INR 4,49,50,000/- instead of amount of instead of amount of INR 1,49,15,000/- and that the assessee holds 25% share in such property. The assessee on the other hand, assessee holds 25% share in such property. The assessee on the other hand, assessee holds 25% share in such property. The assessee on the other hand, claims that as per the Sale Agreement, the property sold as per claims that as per the Sale Agreement, the property sold as per ‘Sale Deed’ claims that as per the Sale Agreement, the property sold as per stands at actual sale consideration consideration at INR 1,49,15,000/- in which she ho in which she holds 25% shares and accordingly, declared the capital gains based on actual such 25% shares and accordingly, declared the capital gains based on actual such 25% shares and accordingly, declared the capital gains based on actual such sale consideration. The AO . The AO on the other hand, alleged that the difference , alleged that the difference between the sale consideration consideration mentioned in Agreement to Sale and Sale Deed mentioned in Agreement to Sale and Sale Deed is undisclosed part of the transaction. The basis of making additions is the he transaction. The basis of making additions is the he transaction. The basis of making additions is the photocopy of the Agreement to Sale alon photocopy of the Agreement to Sale alone as stated to be found from the e as stated to be found from the premises of searched person premises of searched person. No other documents of independent nature or . No other documents of independent nature or any inquiry with the purchase any inquiry with the purchase by the AO is brought on record. Noticeably Noticeably, the Department referred said property Department referred said property to the DVO for determination of FMV under for determination of FMV under section 142A of the Act. The DVO issued a Valuation section 142A of the Act. The DVO issued a Valuation Report as per which the as per which the total value of the property is INR 1,68,59,788/ total value of the property is INR 1,68,59,788/- approximately wherein the approximately wherein the cost of land was valued at INR 94,71,341/ of land was valued at INR 94,71,341/- and the cost of building was valued at of building was valued at INR 73,88,447/-. The assessee contends that the valuation report derived by . The assessee contends that the valuation report derived by . The assessee contends that the valuation report derived by the DVO after inquiry is quite quite close to the sale consideration declared declared by the assessee. The staggering differen ering difference as per the Agreement to Sale and Sale as per the Agreement to Sale and Sale Deed is thus unconceivable and totally contrary to the Deed is thus unconceivable and totally contrary to the estimated estimated market value of the property. The Report Report of the DVO thus assumes significance for the thus assumes significance for the cause of the assessee and cannot be brushed aside while weighi cause of the assessee and cannot be brushed aside while weighing the factual ng the factual position and giving over over-riding importance to a photocopy of photocopy of unsigned Agreement to Sale found from the premises of searched person Agreement to Sale found from the premises of searched person. B . Besides, the assessee has also placed an affidavit from the purchase, Shri Pranji an affidavit from the purchase, Shri Pranjil Batra wherein it is affirmed that the sale wherein it is affirmed that the sale consideration noted in the Sale Deed is noted in the Sale Deed is sacrosanct. In the light of the Sale Deed, the sacrosanct. In the light of the Sale Deed, the DVO report and in the absence of report and in the absence of any inquiry by the Revenue evenue on facts to support the amount mentioned in the to support the amount mentioned in the Page | 15
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh photocopy of the Agreement to sale photocopy of the Agreement to sale, the sale consideration declared declared by the assessee cannot be discredited discredited out rightly and substituted by whopping and substituted by whopping amount unconnected to the grounds amount unconnected to the grounds realities. We thus, find force in the plea find force in the plea raised on merits also.
Judged from any angle, the action of the AO does not appear justified. from any angle, the action of the AO does not appear justified. from any angle, the action of the AO does not appear justified. The order of the Ld.CIT(A) is thus, set aside and the AO is directed to restore The order of the Ld.CIT(A) is thus, set aside and the AO is directed to restore The order of the Ld.CIT(A) is thus, set aside and the AO is directed to restore the position claimed by the assessee and delete the ad the position claimed by the assessee and delete the additions made. ditions made.
In the result, the appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed.
ITA No.2810/Del/2024 [AY : AY : 2019-20]-Pradeep Singh: 26. The factual matrix and the and the respective contentions are identical contentions are identical to the case of Renu Singh (supra) case of Renu Singh (supra). The assessee Shri Pradeep Singh is stated to be Singh is stated to be another co-owner of the property property holding 25% shares similar to Smt. Renu holding 25% shares similar to Smt. Renu Singh (supra). Thus, the deliberations made in the case of Smt. Renu Singh in Singh (supra). Thus, the deliberations made in the case of Smt. Renu Singh in Singh (supra). Thus, the deliberations made in the case of Smt. Renu Singh in ITA No.2806/Del/2024(supra) shall apply ITA No.2806/Del/2024(supra) shall apply mutatis mutandis. Hence, . Hence, in consonance with the view expressed in ITA No.2806/Del/2024, the additions ith the view expressed in ITA No.2806/Del/2024, the additions ith the view expressed in ITA No.2806/Del/2024, the additions made made in in the the hands hands of of the the assessee, assessee, Shri Shri Pradeep radeep Singh Singh in in ITA ITA No.2810/Del/2024 stands deleted. No.2810/Del/2024 stands deleted.
In the result, the appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed.
In the combined result, both appeals o result, both appeals of different assessees, Smt Renu f different assessees, Smt Renu Singh in ITA No.2806/Del/2024 [Assessment Year 2019 Singh in ITA No.2806/Del/2024 [Assessment Year 2019-20] and Shri pradeep 20] and Shri pradeep Singh in ITA No.2810/Del/2024 [Assessment Year 2019 Singh in ITA No.2810/Del/2024 [Assessment Year 2019-20] are allowed. 20] are allowed.
Order pronounced in the open Court on Order pronounced in the open Court on 25th November, 202 , 2024. d/- Sd/- Sd (VIMAL KUMAR) (PRADIP KUMAR KEDIA) PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER * Amit Kumar *
ITA Nos.2806 & 2810/Del/2024 ITA Nos.2806 & 2810/Del/2024 Renu Singh & Pradeep Singh Renu Singh & Pradeep Singh
