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Facts
The assessee filed an appeal against an order for AY 2017-18, where lower authorities initiated Section 153C proceedings against them, an entity other than the searched assessee (Jindal Bullion Ltd.), adding Rs. 23,78,141/- as 'cash received'. The assessee did not appear for the hearing, leading to an ex parte proceeding.
Held
The Tribunal held that the initiation of Section 153C proceedings against the assessee was invalid. It reasoned that Section 153C(1)(a) requires physical seizure or requisition of specific articles for establishing 'belongingness' to a third party, and mere ledger entries for cash transactions do not satisfy this legal prerequisite. Consequently, the assessment was quashed as the satisfaction for proceedings was not as per law.
Key Issues
Whether the initiation of Section 153C proceedings against a person other than the searched assessee is valid when the satisfaction relies on ledger entries of cash transactions rather than actual seized or requisitioned assets as per Section 153C(1)(a).
Sections Cited
153C, 153C(1)(a), 250
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI SATBEER SINGH GODARA
This assessee’s appeal for assessment year 2017-18 arises against order dated 10.05.2023 passed by the Commissioner of Income-tax (Appeals)-24, New Delhi, in appeal no. CIT(A), Delhi-24/10440/2016-17, in proceedings u/s 250 of the Income-tax Act, 1961. Case called twice. None appears at the assessee’s behest. He is accordingly proceeded ex parte. the Revenue’s side that both the learned lower authorities had initiated section 153C proceedings in case of this taxpayer, who happens to be a person other than the searched assessee, after the impugned search action dated 05.01.2017 conducted in Jindal Bullion Ltd. (JBL), group of cases.
Learned Departmental Representative vehemently submitted that both the learned lower authorities had not only rightly initiated the impugned proceedings but also the addition herein amounting to Rs. 23,78,141/- under the head ‘cash received’ deserves to be upheld.
I have given my thoughtful consideration to the Revenue’s foregoing vehement contentions and find no reason to express my concurrence with the same.
This is for the precise reason that going by para 2 in assessment discussion, the learned departmental authorities had treated some ledger account revealing cash transaction as ‘belonging to the assessee’, whereas section 153C(1)(a) of the Act envisages that only “any money, bullion, jewellery or other valuable article or thing, seized or requisitioned” could be taken as belonging to such other person. It is, therefore, clear that the impugned section 153C satisfaction to this effect itself does not satisfy the test of law and, therefore, this assessment deserves to be quashed as a necessary corollary. Ordered accordingly.
Order pronounced in open court on 14.11.2024