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M/s. Super Malls Private Limited v. Principal Commissioner of Income Tax 8

Civil Appeal · 2020 INSC 277Decided 5 Mar 2020
Civil Appeal Nos. 2006-2007 of 2020
Justice Ashok Bhushan · Justice M.R. Shah

Background

During a tax department search at the residence of a company director, a pen drive was found containing documents relating to cash receipts from the sale of shops/offices by the assessee company, M/s Super Malls. The Assessing Officer relied on Section 153C of the Income Tax Act, 1961 to reopen the assessee's assessment on the footing that the seized documents belonged to the assessee rather than the person actually searched. The assessee challenged whether the mandatory statutory pre-conditions for invoking Section 153C had actually been satisfied, in a batch of appeals covering multiple assessment years.

Decision Breakdown

The Supreme Court examined the Assessing Officer's recorded "satisfaction note" and found it specifically and clearly stated that the seized documents belonged to the assessee, not the searched person, satisfying the jurisdictional requirement under Section 153C. Agreeing with the High Court's view that this requirement had been fulfilled, the Court dismissed all the appeals on this point, while directing the Income Tax Appellate Tribunal to decide the appeals afresh on their other merits.

Lesson Learnt

When tax authorities seek to reopen a third party's assessment based on material found during someone else's search, they must specifically record their satisfaction that the material belongs to that third party; once such satisfaction is properly recorded, courts will not second-guess the jurisdictional basis merely because the assessee disputes the underlying facts.

Official source (sci.gov.in)View Judgment (PDF)

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