2010 (3) TMI 770 - HC - Income Tax

Search and seizure - Undisclosed income - it is apparent that sections 153A, 153B and 153C lay down a scheme for assessment in case of search and requisition - it is an admitted position as emerging from the record of the case, that the documents in question, namely the three loose papers recovered during the search proceedings do not belong to the petitioner - It may be that there is a reference to the petitioner inasmuch as his name is reflected in the list under the heading Samutkarsh Members Details and certain details are given under different columns against the name of the petitioner along with other members, however, it is nobody s case that the said documents belong to the petitioner - It is not even the case of the Revenue that the said three documents are in the handwriting of the petitioner. In the circumstances, when the condition precedent for issuance of notice is not fulfilled any action taken under section 153C of the Act stands vitiated. - Decided in the favour of the assessee

Summary

Issues:
Challenge to notices under section 153C of the Income-tax Act, 1961 for assessment years 2001-02 to 2006-07 based on seized documents not belonging to the petitioner.

Analysis:

1. The petitioner challenged notices issued under section 153C of the Income-tax Act, 1961 for the assessment years 2001-02 to 2006-07. The notices were based on documents seized during a search at Samutkarsh Co-operative Housing Society and Savvy Infrastructure Ltd. The petitioner argued that the seized documents did not belong to him, and thus, the notices were invalid.

2. The petitioner requested copies of the seized material and an extension to file the return, but received only three loose sheets of paper which the petitioner claimed did not belong to him. The petitioner contended that under section 153C, a notice can only be issued if the seized documents belong to a person other than the one in whose case the search was initiated.

3. The respondent argued that the impugned notices were issued based on documents found during the search that contained details of members of Samutkarsh Co-operative Housing Society. However, it was acknowledged that the documents did not belong to the petitioner, even though there was a reference to the petitioner in one of the papers.

4. Section 153C of the Income-tax Act, 1961 allows for the assessment of income of another person if the seized documents belong to that person. It is a condition precedent for issuing a notice under this section. In this case, since the seized documents did not belong to the petitioner, the actions taken under section 153C were deemed invalid.

5. The court found that the documents in question did not belong to the petitioner, and there was no evidence to suggest otherwise. As a result, the impugned notices issued under section 153C were quashed and set aside. The petition succeeded, and the rule was made absolute with no order as to costs.