1. CIT Vs. Rachna Agarwal, ITA No. 701/2012, Date of Order: 09/07/2014, Delhi High Court
AO is not authorized to make any estimate under the provisions of section 142(2A) of the Income tax Act.
Held Yes
During
the course of search AO Find that assessee purchase a property for a
consideration of 51 Lakhs and same is let out for a monthly rent of Rs.
3,10,114/-. AO asked to explain why the purchase price is not determined
on the basis of return on investment method. Assessee stated that the
property is purchased for the consideration shown in the sale deed.
AO
referred the matter for valuation of property U/s 142(2A) of the Act. AO
complete assessment on the basis of his estimation and added 74 Lakhs
on the account of unexplained investment. Apparently, valuation report
was not available at that time. Hon’ble High Court held that addition
made for 74 Lakhs is purely based on estimate and conjecture and there
is no substance in the estimate made by the AO, who in any case is not
authorized to make any estimate under the provisions of section 142(2A)
of the Income tax Act.
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2. Asstt.CIT Vs. Pepsi Foods Pvt. Ltd., W.P.(C) 415/2014 & CM 823/2014, Date of Order: 07/08/2014, Delhi High Court
For
issuing Notice u/s 153C mere use or mention of the word “satisfaction”
or the words “I am satisfied” in the order or the note is not enough.
Held No
Assessee
challenged Notice issued U/s 153(C) for A.Y. 2006-07 to 2011-12 on the
basis that it is not at all clear as to on what basis the AO has
arrived at the so called satisfaction that the seized documents belong
to the assessee. It is, therefore, contended that the notices under
Section 153C of the Act are without any basis and ought to be quashed.
Revenue contended that the documents which have been seized during the
search operations conducted on third party related to the assessee and
AO prepared satisfaction note on the basis of these documents.
Hon’ble
High Court held that mere use or mention of the word “satisfaction” or
the words “I am satisfied” in the order or the note would not meet the
requirement of the concept of satisfaction as used in Section 153C of
the Act. The satisfaction note itself must display the reasons or basis
for the conclusion that the Assessing officer of the searched person is
satisfied that the seized documents belong to a person other than the
searched person. The writ petitions are allowed.
(Please click here for judgment)
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