Supreme Court Dismisses Appeal of Assessee Company, says Assessing Officer has complied with the requirements under Section 153C of the Income Tax Act

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The Special Leave Petition was filed before the Supreme Court of India to quash the Impugned orders issued by the Delhi High Court for holding that the satisfaction order was recorded by the Assessing Officer and complaisance of Section 153C of the Income Tax Act, 1961.

Brief facts of the case

The Respondents carried out a search and seizure operation at the residential and business premises of Shri Tejwant Singh and Shri Ved Pratap Bharti, Directors of M/s Super Mall Private Limited (referred to as assessee) at Karnal and New Delhi on 8/9.04.2010. While carrying out the search at the residence of Shri Ved Pratap Bharti, a Director of the assessee company, a pen drive was found and seized in the vehicle parked in front of the Director’s residence. It contained some documents containing the detail of the cash receipts on sale of shops and offices at the assessee company and other concerns. Hereafter, a notice was issued to the assessee under Section 153C of the Act by the Assessing Officer. It coincidentally happened that the Assessing Officer of the assessee and the Assessing Officer of the search persons were the same. The concern was that the assessee filed its return for the assessment year 2008-09 and some additions were made in this particular year. Thus, the assessment order was challenged on the ground that the satisfaction note recorded under Section 153C of the Act in respect of the assessee was invalid. The learned Income Tax Appellate Tribunal (ITAT) allowed the appeal and held that the satisfaction note recorded was invalid. However, an appeal to the High Court, of the impugned judgement order, ended up in the allowing of appeal preferred by the Revenue and held that there was complaisance of Section 153C of the Act. Therefore, the appellants filed an appeal to the Supreme Court for quashing the order of the Delhi High Court.

Arguments before the court

Shri R.P. Bhat, learned counsel for the appellant mainly contended that the High Court has materially erred in observing and holding that the Assessing Officer has complied with the provisions of Section 153C of the Act. One of the principal contentions is that, in this case, the Assessing Officer of searched person, that is, the Director has to be satisfied that any documents seized or requisitioned belong to the assessee company. It is submitted that after being satisfied that the books of accounts or documents so seized need to be handed over by the Assessing Officer of searched person to the Assessing Officer having jurisdiction over such other person, the assessee company. Secondly, it was contended that there was no satisfaction note by the Assessing Officer of the searched person recording details that the seized documents belong to other person, thus, resulting in the non-complaisance of the provisions of Section 153C of the Act.

Shri Arijit Prasad, learned counsel for the respondents mainly contended the High Court rightly observed and held that there is sufficient compliance of Section 153C of the Act and that the satisfaction note was recorded by the Assessing Officer of Searched Person. As the Assessing of the assessee and the Assessing Officer of the searched person was the same, therefore one satisfaction note was sufficient to be recorded by the Assessing Officer of the searched person. There was no requirement of transmitting the documents so seized as they were the same person. This establishes the contention that there was compliance of the requirements under Section 153C of the Act. Hence, they pray to dismiss the present appeals.

Court’s view

The court’s view is that there are two eventualities, one where the Assessing Officer of the searched person and the Assessing Officer of the other person are different. In such a case, there shall be a satisfaction note by the Assessing Officer of the searched person and he is required to transmit the documents so seized and forward his satisfaction note, to the Assessing Officer of the other person.

These requirements are to be complied with mandatorily. The second eventuality is where the Assessing Officer of the searched person is the same as the Assessing Officer of the other person and it is sufficient to prepare one satisfaction note as they are the same person. However, he must be conscious and satisfied that the documents seized from the searched person, belongs to the other person.

The second requirement of transmitting the documents so seized is also satisfied as they are the same persons and no transmitting is necessary. Based on the satisfaction note, it emerges that the Assessing Officer is satisfied that the seized documents belonged to the assessee company and the Director, Ved Pratap Bharti also believes that the documents belonged to the assessee. Therefore, it cannot be said that the requirements under Section 153C were not complied with. We are of the view that the High Court is justified in observing that the requirement of Section 153C has been fulfilled.

Court’s decision

The Court dismissed all the appeals and the learned ITAT was required to act in accordance with the law, as observed by the High Court in the impugned Judgment and Order. The respondents were allowed to assess and reassess the income of the appellants according to Section 153C of the Act.


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