By TIOL News Service

NEW DELHI, DEC 08, 2016: THE ISSUE IS - Whether too literal interpretation of a word while construing the satisfaction note, can be a ground for reversal of an order based on undisputed facts found during search and seizure operations by AO. NO IS THE VERDICT.

Facts of the case:

The assessee, a private limited company's premises was subject to survey & seizure u/s 133A along with two other persons. Consequent to the assessments and additions finally made in the block period, the assessee appealed before the CIT(A) who upheld such decision of AO. Appeal lied to the tribunal and tribunal upheld it at the threshold stating that the satisfaction note recorded under Section 153C of the Act in respect of the assessee i.e., the third party was invalid.

On appeal, the HC held that,

++ A plain reading of the satisfaction note clearly shows that search in the business premises of two individuals was carried out; equally, survey of premises of the assessee was also carried out. In the course of this search of Shri Ved Prakash Bharti, who also was a director and assessee, some pen drives were found and seized. Further documents listed in Annexure A-1 too were seized after their print outs were obtained. These documents detailed cash receipts for the sale of the shops and offices in the assessee's other concerns. In these circumstances, having regard to all these conspectus of facts, the AO expressed u/s 153C that the documents so seized "belonged" to the assessee;

++ this court is unpursuaded by the assessee's submissions that the expression "belonged", in the context in which it was used has to be understood as imputing "relating to", or any other term. Plainly put, the AO was satisfied that the documents belonged to the assessee in view of what was contained or brought out on a fair reading of their contents. It must not to be overlooked that while construing a document, expressions should not be interpreted too literally as if they are, words, carved in stone or in a Statute - as the ITAT did in this case. For these reasons, we are of the opinion that the ITAT should not have allowed the appeal only on this hyper technical ground with regard to the satisfaction note. Those findings are, accordingly, set aside.

(See 2016-TIOL-2953-HC-DEL-IT)