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2011 (4) TMI 1339 - AT - Income TaxAssessment made u/s 153C r.w.s. 153A - Validity of Order Passed u/s 153C rws 143(3) - Unfettered Powers of AO - Incriminating Documents found pertaining to the third party - Documents were seized from a employee looking after the accounts of assessee's trust - AO after satisfying himself about the invocations of provisions of section 153C, issued a notice HELD THAT - In SINHGAD TECHNICAL EDUCATION SOCIETY VERSUS ACIT, CENTRAL CIRCLE 2 (2) , PUNE 2011 (4) TMI 871 - ITAT, PUNE , it was held AO shall not possess unfettered powers of summarily opining or reopening the concluded assessments of all the six assessment years in respect of the third party mentioned in section 153C without having in possession the AY-specific incriminating documents/other listed items. Settled assessments must not be disturbed merely based on the dumb documents gathered and seized by the revenue. It is the decision of this bench of the Tribunal, taken relying on the decision of the Tribunal ie in the case of LMJ INTERNATIONAL LIMITED. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX. 2007 (12) TMI 237 - ITAT CALCUTTA-E that where nothing incriminating is found in the course of search relating to any assessment year, the assessments for such years cannot be distributed. Thus, the assessments made by the AO u/s 153C of the Act without the existence of AY-specific incriminating documents are invalid. In present case, based on the existence of the seized documents, these six AYs can categorized into two categories AYs without seizure of any documents - In the present case regarding AYs 2000-01 to 2003-04 2005-06, admittedly, there is no seizure of the documents, thus issuance of notices u/s 153C, is invalid. AY with the seizure of some documents - For AY 2004-05, admittedly, there is some seizure of the documents. We are convinced that the said ledger is an accounted one. Mere appearance of names does not mean anything as section 153C is intended for taxing the undisclosed income of the third party based on the material/others seized during the search action. The documents, the ledger in the instant case relevant for the AY 2004-05, with no financial implications can neither be considered incriminating nor be considered capable of springing satisfaction to any AO that there is scope of undisclosed income in respect of the third party assasable u/s 153C. Accordingly, the legal grounds raised by assessee relating to the validity of the notice u/s 153C are allowed in favour of the assessee in respect of all the AYs under consideration - Decision in favour of Assessee
Issues Involved:
1. Validity of notice issued under section 153C. 2. Validity of reference for special audit under section 142(2A). 3. Entitlement of the appellant trust to exemption under section 11. 4. Applicability of section 10(23C) to the activities of the appellant trust. 5. Violation of provisions under section 13(1)(d) by the appellant trust. 6. Violation of provisions under section 13(1)(c) by the appellant trust. 7. Allegation of charging capitation fee for admissions. 8. Ownership and relevance of cash and loose papers found with an individual. 9. Confirmation of various additions to the total income. 10. Set-off of excess deficit against the income of the appellant. 11. Nature of donations received against the issue of coupons. 12. Nature of corpus donations received by cheques. 13. Denial of deduction under section 80L. 14. Request for reduction in interest charged under sections 234A/B/C. Issue-wise Detailed Analysis: 1. Validity of Notice Issued Under Section 153C: The appellant argued that the notice issued under section 153C was invalid as the documents found with Shri R.D. Shinde were not incriminating and were already accounted for in the appellant's books. The Tribunal found that the Assessing Officer (AO) issued notices under section 153C without having assessment year (AY)-specific incriminating documents. The Tribunal relied on the decision in the case of Sinhgad Technical Education Society, which held that the AO cannot assume jurisdiction under section 153C without AY-specific incriminating documents. Consequently, the Tribunal concluded that the issuance of notices under section 153C for AYs 2000-01 to 2004-05 was invalid, as there were no seized documents for these years. For AY 2005-06, the only document was an inward register without financial transactions, making the notice invalid. 2. Validity of Reference for Special Audit Under Section 142(2A): The appellant argued that the reference for special audit under section 142(2A) was invalid. However, the Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 3. Entitlement of the Appellant Trust to Exemption Under Section 11: The appellant contended that it was entitled to exemption under section 11. The AO argued that the receipts credited in the books were not from genuine sources and thus not eligible for exemption. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 4. Applicability of Section 10(23C) to the Activities of the Appellant Trust: The appellant argued that its activities were covered under section 10(23C) and not under sections 11-13. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 5. Violation of Provisions Under Section 13(1)(d) by the Appellant Trust: The appellant argued that it did not violate the provisions of section 13(1)(d). The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 6. Violation of Provisions Under Section 13(1)(c) by the Appellant Trust: The appellant argued that it did not violate the provisions of section 13(1)(c). The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 7. Allegation of Charging Capitation Fee for Admissions: The appellant argued that it did not charge capitation fees for admissions. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 8. Ownership and Relevance of Cash and Loose Papers Found with an Individual: The appellant argued that the cash and loose papers found with Shri Shinde did not belong to it. The AO argued that the documents indicated collection of donations/capitation fees. The Tribunal found that the documents were not incriminating and were already accounted for in the appellant's books, making the notice under section 153C invalid. 9. Confirmation of Various Additions to the Total Income: The appellant contested various additions to its total income. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 10. Set-off of Excess Deficit Against the Income of the Appellant: The appellant argued for setting off the excess deficit against its income. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 11. Nature of Donations Received Against the Issue of Coupons: The appellant argued that donations received against the issue of coupons were corpus donations. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 12. Nature of Corpus Donations Received by Cheques: The appellant argued that donations received by cheques were corpus donations. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 13. Denial of Deduction Under Section 80L: The appellant contested the denial of deduction under section 80L. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. 14. Request for Reduction in Interest Charged Under Sections 234A/B/C: The appellant requested a reduction in interest charged under sections 234A/B/C. The Tribunal did not specifically address this issue in detail, focusing more on the validity of the notice under section 153C. Conclusion: The Tribunal allowed the appeals of the appellant, holding that the notices issued under section 153C were invalid due to the lack of AY-specific incriminating documents. Consequently, the Tribunal dismissed the appeals of the revenue as academic.
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