2011 (4) TMI 1162 - HC - Income Tax

Search - materials pertaining to on-money payment paid to the assessee in respect of property purchased from the assessee were seized - Assessing Officer adopted the sale consideration at Rs. 24, 50, 000 as against Rs. 15 lakhs adopted and the fair market value as on April 1 1981 was adopted at Rs. 300 per cent. as against Rs. 5, 000 per cent. as claimed by the assessee and reworked the capital gains Held that - Revenue did not produce any material to show that the materials were available at the hands of the Assessing Officer at the time of issuing notice Income-tax Officer did not have the benefit of the seized materials while issuing the notice under section 153C of the Act

Summary

Issues: Valid assumption of jurisdiction under section 153C of the Income-tax Act, 1961

Analysis:
1. The case involved an appeal by the Revenue against the order of the Tribunal regarding the assessment made under section 153C of the Income-tax Act, 1961. The Assessing Officer adopted a higher sale consideration and fair market value, leading to a dispute with the assessee.

2. The Commissioner of Income-tax (Appeals) held that the Assessing Officer lacked jurisdiction under section 153C as the seized materials were not available during the assessment. The Commissioner canceled the assessment, emphasizing the lack of jurisdiction and the absence of application of mind by the Assessing Officer.

3. The Tribunal noted that the Assessing Officer issued the notice under section 153C without the seized materials, which were not provided despite requests. The Tribunal concluded that the assumption of jurisdiction without the seized materials was unsustainable, leading to the setting aside of the entire proceedings.

4. The Revenue contended that there were sufficient materials to show that the seized materials were available to the Assessing Officer during the notice issuance. However, the Tribunal's decision was based on the lack of seized materials at the time of assessment, questioning the validity of jurisdiction under section 153C.

5. The Tribunal's decision was upheld by the High Court, emphasizing that the Revenue failed to demonstrate the availability of seized materials to the Assessing Officer during the notice issuance. The Court confirmed the lack of valid assumption of jurisdiction under section 153C, leading to the dismissal of the appeals.

6. Despite the appellant's arguments that files were accessible to the Assessing Officer, the Court found insufficient evidence to support this claim. The Court reiterated that the absence of seized materials during the notice issuance was a crucial factor in determining the jurisdictional validity under section 153C.

7. The High Court affirmed the Tribunal's decision, stating that the Income-tax Officer did not have the seized materials while issuing the notice under section 153C, confirming the lack of valid jurisdiction. Consequently, the tax case appeals were dismissed, and no costs were awarded.