By TIOL News Service

NW DELHI, JULY 21, 2017: THE ISSUE BEFORE THE COURT IS - Whether proceedings u/s 153C can be invalidated, merely because the AO of the searched who was also that of the Assessee, did not record a separate satisfaction note. NO is the verdict.

Facts of the case:

The Revenue preferred the present appeal challenging the order, whereby the ITAT held that the proceeding was not validly initiated u/s 153C since there was no satisfaction note recorded by the AO of the searched person.

On appeal, the HC held that,

++ in the present case, the AO of the searched person and the other person (the Assessee) was the same. In similar circumstances, the Court has recently in the decision of Ganpati Fincap Services Pvt Ltd. v. Commissioner of Income Tax - 2017-TIOL-1033-HC-DEL-IT held, inter alia that: "....Where the AO of the searched person and the other person is the same, such a satisfaction note qua the other person has to be recorded by the AO of the searched person prior to the initiation of the proceedings against the other person. This is a sine die non for triggering the proceedings against the other person under Section 153C of the Act. Further, there do not have to be two separate satisfaction notes prepared by the AO of the searched person even where he is also the AO of the other person. In such event, the AO need make only one satisfaction note. That satisfaction note is qua the other person. Further, it is sufficient that such satisfaction note is placed in the file of the other person by the AO in his capacity as the AO of such other person...." In that view of the matter, the impugned order of the ITAT which proceeds to invalidate the proceedings u/s 153C only for the reason that the AO of the searched who was also that of the Assessee, did not record a separate satisfaction note cannot be sustained in law.

(See 2017-TIOL-1355-HC-DEL-IT)