Satisfaction to be Recorded by the AO before issue of 153C Notice: ITAT

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By Gayathri C.H – On September 26, 2022 4:42 pm

AO - Notice - ITAT - taxscan

The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam Bench, has recently in the appeals filed before it by an Assessee, held that satisfaction is to be recorded by the Assessing Officer (AO), before the issue of a notice under section 153C of the Income Tax Act, 1961.

The aforesaid observation was made by the tribunal when appeals were filed before it by the assessee, against the order of the Commissioner of Income Tax (Appeals) -9, Hyderabad [the Ld. CIT(A)], in ITA Nos. 10482, 10483, 1048410490/CIT(A)-9/Hyd/2018-19, arising out of the order passed U/s. 153C.

The contentions raised by the assessee was that the assumption of jurisdiction by the AO was bad in law for the reason that the notice issued u/s. 153C is not in conformity with the requirements of section 153C, and the CIT(A) cannot be justified in confirming the taxing of rent received from leasing of house property, under the head income from other sources, instead of considering the same under the head income from house property.

Per contra, the argument of the department was that it was based on voluntary admission by the searched person, a notice u/s. 153C was issued by the AO and the AO being the same for both the searched person and the assessee, the satisfaction note as required by section 153, need not be issued.

Hearing both sides and considering the facts & circumstances of the case, the tribunal, however, was of the opinion that from the plain reading of the Circular in question, it is to be noticed that even if the AO of the searched person and the other person is one and the same, then also the recording of the satisfaction under section 153 is necessary, as was held by various Courts of the country.

Thus, allowing the appeals of the assessee, the Tribunal observed:

“In the instant case, no such material has been brought before us by the ld. DR. In view of the above discussions, since the satisfaction was not recorded by the Assessing Officer before issuing of notice U/s. 153C of the Act, we are of the considered view that the order passed by the Ld. CIT(A) U/s. 153C of the Act deserves to be set aside for all the impugned assessment years. It is ordered accordingly.”To Read the full text of the Order CLICK HERE

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