2014 (6) TMI 995 - HC - Income Tax

Proceedings initiated u/s 153A - non-availability of the books of accounts - Held that - We notice that the Tribunal on fact found that assessment was done on the basis of the estimated income. It was found again that there is no incriminating material and in the course of search no books of accounts and vouchers were found and it was admitted that the M.D. consequent to the completion of the assessments the relevant books of accounts and vouchers were shifted to a godown and they were not able to locate the relevant books of accounts. We fail to understand when the assessment was made on the estimated income how there can be relevancy of books of accounts and for that matter non-availability of the books of accounts could be a factor to exercise the jurisdiction under Section 153-C of the Income Tax Act 1961. The learned Tribunal on appreciation of fact correctly concluded that such exercise was not called for.

Summary

Issues:
1. Validity of proceedings under section 153A of the Income Tax Act.
2. Jurisdiction of the Assessing Officer for assessing the income of the assessee.
3. Requirement of incriminating materials for search assessments.

Analysis:
1. The High Court addressed the validity of proceedings under section 153A of the Income Tax Act. The Tribunal had held that the proceedings initiated under section 153A were bad in law and that the Assessing Officer (AO) had no jurisdiction for assessing the income of the assessee. The High Court observed that the assessment was done based on estimated income without any incriminating material found during the search. The Tribunal correctly concluded that the exercise of jurisdiction under section 153C was not warranted in this case. Therefore, the High Court upheld the Tribunal's decision on this issue.

2. The jurisdiction of the AO for assessing the income of the assessee was another issue considered by the High Court. It was noted that no incriminating material was found during the search, and the relevant books of accounts and vouchers were not available as they had been shifted to a godown. Despite the non-availability of books of accounts, the assessment was made on estimated income. The High Court agreed with the Tribunal's finding that the absence of books of accounts did not affect the assessment process based on estimated income. Therefore, the High Court dismissed the appeal on this ground.

3. The requirement of incriminating materials for search assessments was also discussed in the judgment. The ITAT had observed that search assessments cannot be done without incriminating materials. However, the High Court found that in this case, the assessment was based on estimated income, and the absence of incriminating materials did not invalidate the assessment process. The High Court, therefore, upheld the Tribunal's decision on this issue as well.

In conclusion, the High Court dismissed the appeal and upheld the Tribunal's decision on all the issues raised in the case concerning the validity of proceedings under section 153A, the jurisdiction of the AO, and the requirement of incriminating materials for search assessments.