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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI G. MANJUNATHA
आदेश /O R D E R आदेश आदेश आदेश
PER MAHAVIR SINGH, VP:
This appeal by the Revenue is arising out of the order of the Commissioner of Income Tax (Appeals)-19, Chennai in appeal No.ITA No.254/CIT(A)-19/2017-18, order dated 17.09.2018. The assessment was framed by the Deputy Commissioner of Income Tax, Central Circle – III(4), Chennai for the Assessment Year 2006 – 2007 u/s.153C read with section 153A of the Income Tax Act, 1961 (hereinafter “the Act”) vide order dated 26.03.2014.
The first issue in this appeal of the Revenue is as regards to the order the Commissioner of the Income Tax (Appeals) in holding that the assessment framed u/s.143C of the Act is without jurisdiction, as there is no search material or incriminating material found during the search pertaining to the Assessee for this assessment year. For this, the Revenue has raised Ground Nos.2.1 to 2.4 reproduced as under:
“2.1 The learned CIT(A) erred in holding that the Assessing Officer cannot acquire jurisdiction u/s.153C of the Income Tax Act, 1961 even though the documents pertaining to the Assessee were seized from the premises of M/s. Platinum Holdings Private Limited.
2.2 The learned CIT(A) erred in holding that once the seized material which forms the basis for satisfaction, fails to result in assessment of income, the Assessing Officer will loose the jurisdiction u/s.153C of the Act.
2.3 The learned CIT(A) failed to appreciate that the Hon’ble Delhi High Court in the case of SSP Aviation Limited Vs. DCIT [346 ITR 177] has held that ‘whereas Section 158D refers to the satisfaction of the Assessing Officer that “undisclosed income” belongs to any person other than the searched person, Section 153C(1) in contrast refers merely to the satisfaction of the Assessing Officer that the valuable article or books
:: 3 :: of account or document “belongs” to a person other than the searched person’.
2.4 The learned CIT(A) ought to have noted that the Chennai ITAT in the case of Harvey Heart Hospitals Limited Vs, ACIT [130 TTJ 700] has held that ‘assessment or reassessment relating to the assessment year falling within the block of six years, consequent upon the search and such assessment need not be based on incriminating material found during the search and that Section 153C of the Income Tax Act only mandates satisfaction by the Assessing Officer that the materials seized / requisition belongs to the other person’.”
We have heard the rival contentions and have gone though the facts and circumstances of the case. We noted that a search and seizure operation u/s.132 of the Act was carried out on 21.06.2011 at the business and residential premises of the Platinum Group of cases to which the Assessee also belongs. The Assessee deals in real estate and earns rental income also. Shri M. Sukumar Reddy is the ‘Karta’ of the HUF. The Assessing Officer issued notice u/s.153C of the Act dated 09.01.2013 asking the Assessee to furnish return of income for the Assessment Year 2006 – 2007 and for this he noted the following reasons in the notice reproduced, as under:
“2. On examination of the seized material, I, as the Assessing Officer in the above case, am
:: 4 :: satisfied that out of the aforesaid, the following seized materials belong to you:
Documents belonging to Shri Sukumar Reddy [HUF] were seized vide ANN/AH/B&D/S-1 and ANN/AH/B&D/S-9 and copy of Doc. No.7112/2010 dated 20.12.2010 by which HUF purchased a property of Rs.3.75 crores seized vide ANN/B&D/AH/S-1 (file marked Karapakam).
3. Accordingly, your total income for the Assessment Year 2006-2007 is required to be assessed / reassessed in accordance with the provisions of Section 153C r.w.s.153A of the Income Tax Act.”
The Assessing Officer while completing the assessment made an addition of capital gains from the sale of land at G. Pochampally and at Paiyanoor and also made an addition of the deemed suppressed income from the sale of the above land. Aggrieved, the Assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The CIT(A) quashed the assessment as the Assessing Officer was not having jurisdiction for issuing notice u/s.153C of the Act as there is no incriminating material found during the course of search. The CIT(A) passed a common order but also it relates to the Assessment Year 2006 – 2007 and the relevant findings of the CIT(A) reads as under in paragraph Nos.4.1.7 to 4.1.9:
“4.1.7 In the present case the Assessing Officer issued notices u/s.153C for four assessment years (i.e. A.Ys 2006-07, 2007-08, 2010-11 and 2011- 12) apparently based on the seized document of ‘sale deed’ dated 20.12.2010. Though not :: 5 :: specifically mentioned in the assessment orders, apparently, this document alone is the basis for arriving at the satisfaction for the Assessing Officer before issuing notices u/s.153C of the Act for all four assessment years.
4.1.8 The above document which apparently formed the satisfaction for the Assessing Officer is the “registered sale deed” dated 20.12.2010 pertaining to the Assessee’s purchase of property in Financial Year 2010-11 (i.e. A.Y.2011-12). Therefore, if this document, in the opinion of the Assessing Officer, is an incriminating material and has a bearing on the determination of total income of the Assessee, then the Assessing Officer will acquire jurisdiction to issue a notice u/s.153C, only for the relevant assessment year (i.e.A.Y.2011-12). Since, the above document does not belong to any other assessment year, nor has any bearing for any other assessment year(s), atleast to the satisfaction of the Assessing Officer, the said document cannot be the reason for issuing the notices u/s.153C for the remaining assessment years. Thus in the absence of any seized material / information contained therein, the recording of improper reasons of satisfaction, the Assessing Officer fails to acquire jurisdiction for issuing notices u/s.153C of the Act for A.Y 2006-07, 2007-08 and 2010-11.
4.1.9 Further, mere presence of a document pertaining to a particular year, and its seizure will not confer automatic jurisdiction to the Assessing Officer to issue notice u/s.153C. The Assessing Officer should verify the seized material / information and satisfy himself that the seized material is incriminating and has bearing on the determination of total income of the Assessee for any particular year(s). Then only the Assessing Officer will acquire jurisdiction u/s.153C, that too or the relevant assessment year(s) for which the seized material / information pertains to. On the other hand, if the seized material / information is not incriminating and has no bearing on the determination of the total income, the Assessing Officer cannot acquire jurisdiction u/s.153C even
:: 6 :: for the year(s) for which the seized material / information pertains to.”
Now, before us, the learned Counsel for the Assessee filed the notice issued u/s.153C r.w.s.153A of the Act dated 09.01.2013 and the relevant text has already been reproduced in the above paragraph No.3.
The learned CIT-DR could not controvert to the above factual situation and he relied on the assessment order only.
We noted that only the document seized relates to the Assessment Year 2011 – 2012 that is the ‘sale deed’ as noted in the above paragraph No.3. Apart from this, there is no incriminating material or seized material found by the Department during the course of search at the business and residential premises of the Assessee. We are of the view that once there is no incriminating material found during the course of search, then the Assessing Officer cannot exercise any power u/s.153C r.w.s.153A of the Act because the power u/s.153A being not accepted, to be exercised redundantly, but the same should be exercised if the search reveals any incriminating material. Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Continental Warehousing Corporation (Nhava Sheva) Limited reported in [2015] 374 ITR 645 (Bom) has laid the same proposition. Further, we are of the view that the assessment has to be made u/s.153A of the Act only on the :: 7 :: basis of the seized material. This view is also found by the Hon’ble Delhi High Court in the case of the Commissioner of Income Tax Vs. Kabul Chawla reported in [2016] 380 ITR 573 (Delhi).
Since, the issue is squarely covered in favour of the Assessee and against the Revenue, we upheld the order of the CIT(A) on this issue and the appeal of the Revenue is accordingly dismissed. Since, we have adjudicated the jurisdictional issue in favour of the Assessee, we need not adjudicate the other issues on merits.
In the result, the appeal of the Revenue in I.T.A.
No.3438/Chny/2018 is dismissed.
Order pronounced in the court on 6th July, 2022 at Chennai.