Mandatory provisions of Section 153C must be followed where AO is same for person searched and third party

Mandatory provisions of Section 153C must be followed before proceeding where AO is same for person searched and third party

ABCAUS Case Law Citation
ABCAUS 3496 (2021) (04) ITAT

Important case law relied referred:
CIT vs. RRJ Securities Pvt. Ltd. 380 ITR 612 (Del.) (HC)
CIT vs. Swar Agencies 397 ITR 400 (Del.
M/s.  Ambawatta Build well Pvt. Ltd
M/s BNB Investment & Properties Ltd.
M/s Commitment Mortality Vision Education Society

In the instant case, the assessee had challenged the order passed by the CIT(A) contending that the assessment, without following the mandatory provisions of law applicable for cases covered under section 153C of the Income Tax Act, 1961 (the Act) was bad in law and void ab-initio.

A search and seizure action was conducted in a company. Pursuant to which the impugned assessment order was passed by the Assessing Officer (AO).

The case of the assessee was that the AO erred in framing the assessment under section 143(3) of the Act instead of passing the Order under section 153C of the Act.

The assessee relying on the reply under RTI Act further submitted that AO had not recorded any satisfaction under section 153C of the Act. As per RTI reply, the AO had specifically admitted that no such satisfaction was recorded.

It was contended that no satisfaction note had been recorded in the case of the person searched, therefore, assessment order was invalid and bad in Law.

The Tribunal found that he Coordinate Bench considered the identical issue and declared the assessment order to be null and void. The Cross Objection of the Assessee was allowed and Departmental Appeal was dismissed.

The Tribunal noted that sixth assessment year u/s 153C  included the year under consideration and thus that the AO ought to have passed the assessment order under section 153C of the Act instead of passing assessment order under section 143(3) of the Act.

The AO had not followed the proviso to Section 153C of the Act. No satisfaction note had been recorded in the case of person searched and no notice under section 153C had been issued to the assessee.

The Tribunal noted that identical issue had been decided in favour of the assessee by following the Judgment of Hon’ble Delhi High Court.

Accordingly, the Tribunal held that assessment order was vitiated and was void, illegal and bad in Law and cannot be sustained because the mandatory

provisions of Section 153C shall have to be followed by the A.O. before proceeding in the matter where A.O. is same in the case of person searched or the third party.

Thus the appeal was allowed in favour of the assessee.

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