1) HC: Copied satisfaction note valid since AO independently applied mind on Sec.153C preconditions. HC upholds assessment proceedings under Section 153C initiated on the basis of the satisfaction note draw after independent application of mind, even though the said satisfaction note was carbon copy of satisfaction note of searched person AO; Rejects Assessee’s contention that AO failed to record independent satisfaction since the order was verbatim and observes that perusal of satisfaction note of search persons, it is evident that during the course of search certain documents such as sale deed of a property were seized which reflects that the payments were made by the Assessee in cash; Observes that the satisfaction note of searched person AO was forwarded to Assessee’s AO and in pursuance to which a notice was issued to the Assessee and the objections were recorded and subsequently rejected by way of detailed order; Observes that detailed order passed by Assessee’s AO categorically stated that material seized during search pertains to Assessee and the information contained therein relates to Assessee which have a bearing on determination of income, accordingly, ingredients of Section 153C was fulfilled; Distinguishes Assessee’s reliance on Delhi HC judgment in Canyon Financial Services Limited (subsequently affirmed by SC) and observes that in the said case, the issue was whether seized material during course of search could belong to Assessee which pertains to period prior to Finance Act, 2015, however, in the present case, the seized material belongs to the Assessee; Also rejects Assessee’s contention on invalidation of satisfaction sans DIN on the basis of CBDT Circular 19 dt. Aug 14, 2019 and observes that a copy of letter of communication which contains DIN as well as satisfaction note to initiate assessment under Section 153C was placed on record, accordingly, the requirement of CBDT Circular No. 19 of 2019 dt. Aug 14, 2018 was compiled by the AO; Notes Revenue’s reliance on SC judgment in Vijaybhai wherein it was held that at the stage of issuance of notice under Section 153C, the High Court ought not have entertained the writ petition and relegated the Assessee to file the reply and upon receipt of decision from the AO, if for any reason, it was aggrieved by the said decision, to question the same before the forum provided under the Act; Accordingly, holds that no jurisdictional error could be found from AO’s decision to initiate proceedings under Section 153C and the contention on lack of jurisdiction under Section 153C does not hold good; Assessee was subjected to post search assessment under Section 153C on the basis of search conducted at the premises of third party wherein document pertaining to sale deed were seized and statements were recorded highlighting payments made by the Assessee; Consequently, notice was issued to the Assessee alleging that sale deed seized reflects the payment made it; Assessee objected and contended that the satisfaction note was issued without application of mind and in absence of DIN; Revenue rejected Assessee’s objection and issued notice under Section 142(1)………………Click here to read and download HC Judgment

2) HC: Absent documentary evidence proving contract of sale, Nil TDS not permissible – HC holds that the transactions between Assessee and HUL comes under the domain of “works contract" falling under Section 194C; The writ petition was filed challenging the denial of issuance of Nil TDS certificate under Section 197 in respect of amount received or receivable by the Assessee under the Purchase Agreement entered into with HUL; Assessee entered into purchase agreement with HUL whereby it is required to manufacture and package the products in accordance with the specifications and formulations stipulated in the said agreement and using the technology provided by HUL; All the raw material and packing materials used for the manufacture of the said products were procured from third party suppliers except for one raw material from HUL unit in an independent commercial transaction with a separate invoice raised in its name on the same; Observes that it is not possible to ascertain from the Agreement from whom the materials used in manufacturing were procured; Notes that Agreement expressly states that Assessee can purchase materials even from HUL; Holds in absence of adequate information relating to purchase, it cannot be ascertained whether the entire purchase was made directly from the third party or from HUL; Holds that onus of proving transactions between Assessee and HUL that it does not fall under Section 194C lies with Assessee and it is required to provide sufficient documents in support of the transaction that it is a contract for sale; Observes that Assessee has not adduced any documents/correspondences disputing the deduction of tax at source under section 194C by HUL and evidently, Assessee did not consider such action by HUL as "dispute" suitable for agitation unless rate of IDS for FY 2020-21 was fixed at 1.25%; Observes that Form 13 filed for various FYs,, Assessee claimed the amount receivable from HUL as "contractual receipts" and it has not made HUL as a party to this writ which indicates that it primarily has no objection with HUL treating it's payment to Assessee as "contractual payment”. ...................Click here to read and download HC Judgment

 

3) HC: Rules on validity of tax recovery proceedings pursuant to DRT order - HC upholds tax recovery proceedings as well as sale proclamation of immovable property initiated by the Revenue pursuant to an order passed by DRT; Rejects Assessee’s contention that entire proclamation was contrary to Rule 55 of Second Schedule of the Act since the proclamation was issued on July 19, 2022 proposing to conduct sale on July 25, 2022 i.e., within four days of notice and observes that on perusal of the paper publication, it is evident that the same was made on June 11, 2022 and the affixture on the property was made on June 14, 2022, however, due to unavailability of any bidder, the sale was adjourned to Aug 24, 2022, thus, the conditions of Rule 55 was satisfied as there was no violation of the second schedule; Rejects Assessee’s contention that bank has committed fraud and observes that the application was filed before DRT before the closure of cash credit account, accordingly, the allegation does not hold the field; Notes that guarantee against the cash credit facility was enhanced with effect from Mar 31, 2005, however, the guarantor has undertaken to pay and discharge all present and future indebtedness and liabilities and therefore, the bank is entitled to proceed against Assessee’s property; Rejects Assessee’s contention that there was no guarantor to bill purchase and observes that the said argument was considered and rejected by DRT against which no appeal was filed; Assessee availed two cash credit facilities and a bill purchase facility from UCO Bank against which it failed to fulfil the obligation; UCO bank initiated recovery proceedings before Debt Recovery Tribunal (DRT) and ex-parte order was passed against the Assessee; Consequently, Assessee filed revision application which also rejected; Subsequently, bank proceeded with recovery and sold the properties for an amount of Rs 26.50 Lac…… Click here to read and download HC Judgment

4) ITAT: Capital gain tax paid by Assessee’s spouse instead of Assessee refundable - Mumbai ITAT holds that capital gain arising on sale of Assessee’s second property which the Assessee omitted to declare due to consultant’s error and inadvertently declared in spouse’s income tax return against which tax was paid is liable to be refunded since the income is to be declared by the rightful owner of the property i.e., Assessee; Holds that that both Assessee as well as spouse falls in same tax bracket and there is no loss to the Revenue; Opines that same transaction cannot be charged twice since the tax was rightly paid although by the wrong person; Accordingly, directs Assessee’s AO to intimate Assessee’s spouse AO to reassess the income and reject the capital gain declared by her in the return of income and initiate refund along with interest till date and consequently, Assessee’s AO has to initiate recovery of demand arising out the assessment; Observes that the refund from Assessee's spouse to be adjusted against the demand raised in Assessee's hands without creating further burden on the Assessee; Opines that since the Assessee has paid the due tax on the capital gain and the fact that there is no loss to the Revenue,  the legislatures intention is not to tax twice on the same transaction; Thus, allows Assessee’s appeal and directs the Assessing Officer to adjust the demand………….Click here to read and download ITAT Order 

5) ITAT: Sec.115BBE inapplicable on seized cash source is explained. ITAT partly rules in Assessee’s favour, holds that the entire cash found and seized of Rs.2.75 crores was generated from 01.04.2016 to the date of search on 25.04.2016 and the same has been recorded in the books of accounts i.e., the source is explained and once this is accounted cash, it cannot be subject matter of addition but in any case the assessee surrendered this amount just to buy peace and admitted this income in the return of income filed in response to notice u/s.153A of the Act, the same should not have been assessed as unexplained money u/s.69A of the Act. ITAT with regard to unaccounted gold coins, holds that the assessee could not explain the source of this unaccounted gold coins and hence, to the effect of this amount of Rs.7.35 lakhs, the provisions of section 115BBE of the Act will apply…………….Click here to read and download ITAT Order

6) ITAT: Incriminating material found from premises of Company relating to Director, Assessment could not have been framed on the basis of that material u/s 153A. ITAT holds that, manual cash book found at the premises of the Company, cannot be considered to be incriminating material for the purpose of section 153A to make addition in hands of assessee Director as a searched person; Notes that, the cash inwards and outwards are found in manual cash book to be from known sources and existing books, which have been considered final in the assessment of Company, then same set of books of the Company, including the manual cash book found at the premises of the Company, cannot be considered to be incriminating material for the purpose of section 153A to make addition in hands of assessee; ITAT further observes that the seized document of transactions reflected in manual cash book of the assessee, provisions of Section 153C should have been invoked. Thus, the change of head of the addition by CIT(A), has resulted in vitiating the exercise of jurisdiction u/s 153A and 153C. ……………….. Click here to read and download ITAT Order

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