Assessment pursuant to search in case of third party – Section 153C: A. Ys. 2006-07 to 2011- 12 – ‘Satisfaction’ that the documents found in search belong to third party is a precondition – ‘Satisfaction’ should be recorded and should be supported by material on recorded – Presumption that the document belongs to the searched person has to be rebutted:

In these cases, the petitioners filed writ petitions and challenged the validity of notices issued u/s. 153C of the Income-tax Act, 1961. The Delhi High Court allowed the writ petitions and held as under:

“i) Whenever a document is found from a person who is being searched, the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to the conclusion or “satisfaction” that the document in fact belongs to somebody else.

ii) There must be some cogent material available with the Assessing Officer before he arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmises and conjectures do not take the place of “satisfaction”. 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.

iii) In order that the Assessing Officer of the searched person comes to the satisfaction that documents or material found during the search belong to a person other than the searched person, it is necessary that he arrives at the satisfaction that the said documents or materials do not belong to the searched persons. First of all, it is nobody’s case that the J Group had disclaimed the documents in question as belonging to them. Unless and until it is established that the documents do not belong to searched person, the provisions of section 153C do not get attracted.

iv) In the satisfaction note, there is nothing to indicate that the seized documents do not belong to the J Group where search took place. Secondly, the finding of photocopies in the possession of the searched person does not necessarily mean and imply that they ‘belong’ to the person who holds the originals. Further, the Assessing Officer should not confuse the expression ‘belongs to’ with the expression ‘relates to’ or ‘refers to’.

v) Going through the contents of the satisfaction note, one is unable to discern any “satisfaction” of the kind required u/s. 153C. Ingredients of section 153C have not been satisfied in this case. Consequently, the notices u/s. 153C are quashed.”