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2014 (9) TMI 310 - AT - Income TaxInvocation of proceedings u/s 153C assessment made on the basis of material found during seizure - Whether the seized material found from Shri Vikas A. Shah belongs to the assessee and assessment made on the basis of material is in confirmation of Section 153C of Income Tax Act Held that - Revenue was of the view that the assessee being one of the signatory, therefore, the document in question belonged to the assessee - relying upon Central Bureau of Investigation v. V.C. Shukla 1998 (3) TMI 675 - SUPREME COURT They had admittedly executed such sale deeds - It cannot be stated that the sale deeds do not belong to them - the receipts of payments also are documents belonging to the petitioners - They are alleged to have received various payments in cash from the purchasers - If there are documents evidencing such particulars and if such documents are also signed by the petitioners, it can certainly be stated that such documents do belong to the petitioners - the action initiated u/s 153C of the Act cannot be quashed - after examining the document it was found that it belonged to the assessee although it was requisitioned from the possession of an another person, hence, the action u/s. 153C was rightly initiated against the assessee Decided against assessee. The document is written in gujarati which was duly signed by the concerned two parties in the presence of the witnesses - the document has been signed in the name of God as also in the presence of the witnesses - it is difficult to hold that the said document was merely a dumb document or an irrelevant document - the amount of the construction, as well as the details of the plot have clearly been noted - The assessee was given sufficient opportunity to rebut the said document but he has preferred not to attend properly the proceedings before the AO - in a situation when any books of account or documents, etc. have been delivered to the requisitioning officer having jurisdiction over such other person i.e., other than the person who has been searched; then those documents, etc., delivered or requisitioned shall be dealt with as if they have been found in the possession or control of such other person against whom the proceedings have been initiated u/s.153C of IT Act - Such books of account or documents shall be deemed to have been found in the possession or control of such other person as if recovered in the course of search u/s. 132 of IT Act - the assessee being one of the signatory of the contents recording the transactions hence the documents was belonging to the assessee - the amount was rightly assessed in his hand Decided against assessee.
Issues Involved:
1. Validity of service of notice and assessment. 2. Validity of assessment based on seized material. 3. Merits of the addition of Rs. 12,24,000 to the total income. Detailed Analysis: 1. Validity of Service of Notice and Assessment: The appellant initially challenged the validity of the assessment on the grounds of improper service of notice. However, during the proceedings, the appellant's representative stated that this ground was not to be pressed. Consequently, the tribunal dismissed this ground as not pressed. 2. Validity of Assessment Based on Seized Material: The appellant raised an additional ground questioning whether the seized material found from a third party (Shri Vikas A. Shah) could be used for assessment under Section 153C of the Income Tax Act. The tribunal admitted this additional ground, referencing the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383. The appellant argued that the seized Memorandum of Understanding (MOU) was found in the possession of Shri Vikas A. Shah and not the appellant, invoking Section 132(4A) which presumes that documents found in a person's possession belong to that person. The appellant contended that since the document was found with Shri Vikas A. Shah, the proceedings under Section 153C against the appellant were invalid. The appellant cited the Gujarat High Court decision in Vijaybhai N. Chandrani v. Asstt. CIT [2011] 333 ITR 436 to support this argument. The tribunal, however, held that Section 132(4A) is a deeming provision and should not be extended to Section 153C. The tribunal emphasized that Section 153C is meant to assess the income of any person other than the one searched, if incriminating material related to them is found. The tribunal also referenced Section 292C, which presumes that documents found in possession of a person during a search belong to them, even when transferred to another assessing officer. Therefore, the tribunal concluded that the proceedings under Section 153C were valid. 3. Merits of the Addition of Rs. 12,24,000 to the Total Income: The appellant contested the addition of Rs. 12,24,000, arguing that no amount or plot was received from Shri Vikas A. Shah. The tribunal examined the MOU, which indicated that the appellant was to receive Rs. 12,24,000 for a plot in the Chitvan Scheme. The appellant failed to disprove the contents of the MOU or provide any explanation for signing it. The tribunal noted that the MOU was signed by the appellant and Shri Vikas A. Shah in the presence of witnesses, and the appellant did not deny the signatures. The tribunal held that the onus was on the appellant to disprove the MOU's contents, which the appellant failed to do. The tribunal also referenced the decision in Kamleshbhai Dharamshibhai Patel v. CIT [2013] 31 taxmann.com 50, which supported the view that documents signed by a person belong to them. The tribunal rejected the appellant's reliance on cases such as Prarthana Construction Pvt. Ltd. v. DCIT and Unique Organisers & Developers (P.) Ltd. v. Dy. CIT, as they were factually distinguishable. The tribunal concluded that the addition of Rs. 12,24,000 was justified based on the MOU and upheld the assessment. Conclusion: The tribunal dismissed the appeal, upholding the validity of the assessment under Section 153C and the addition of Rs. 12,24,000 to the appellant's total income. The tribunal emphasized the legal principles of deeming provisions, the onus of disproving signed documents, and the purpose of Section 153C in assessing income related to persons other than the one searched.
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