2013 (6) TMI 825 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdictional issue regarding the assumption of jurisdiction by the Assessing Officer u/s 153C of the Income-tax Act, 1961.

Summary:

Jurisdictional Issue:
The primary issue raised by the assessee was the challenge to the assumption of jurisdiction by the Assessing Officer u/s 153C of the Income-tax Act, 1961. The assessee contended that the documents found during the search operations did not belong to the appellant company within the meaning of section 153C. The CIT(A) had dismissed this ground, referencing a similar decision for the assessment year 2004-05.

The ITAT noted that the same material was considered in the present assessment year for issuing notice u/s 153C. The ITAT had previously quashed the assessment orders for the years 2000-01 to 2004-05 on the grounds that no material belonging to the assessee was found during the search. The ITAT, Bangalore Bench, in the case of DCIT vs. United Spirits Ltd., held that no material belonging to the assessee was found at the premises of the searched person, which could authorize the initiation of proceedings u/s 153C.

The ITAT emphasized that for proceedings u/s 153C to be valid, the seized documents must belong to the person against whom the proceedings are initiated. In this case, the documents were found to belong to Shri Miglani, not the assessee. The ITAT referenced various judicial pronouncements, including the Gujarat High Court's decision in Vijaybhai N Chandrani v. ACIT, which stated that the condition precedent for issuing notice u/s 153C is that the seized documents must belong to the person being assessed.

The ITAT concluded that the Assessing Officer was not justified in initiating proceedings u/s 153C, as no documents belonging to the assessee were found during the search. Consequently, the ITAT quashed the assessment orders for the relevant years.

Decision:
Respectfully following the ITAT's previous order in the assessee's own case, the preliminary ground of appeal raised by the assessee was allowed, and the assessment order was quashed. Consequently, the appeal of the revenue was also dismissed. Decision pronounced in the open court on 14.06.2013.