2015 (2) TMI 11 - HC - Income Tax

Scope of Section 153C - whether it enables the assessing officer to issue notice to third parties, on the basis of the satisfaction that any money, bullion, any jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, i.e. the person searched, is wide enough to lead to a notice only on the basis of entries in some documents? - Held that - ITAT should render specific findings as to the status of the documents and in that sense, connect with the concerned assessee s third parties who were issued notice under Section 153C, and not merely the general nature of the documents in the form of production figures or amounts tabulated in a chart. This would give a clearer picture as to whether any document or material seized during the course of the proceedings belonged to any of the assessees. Thus remit the matter for reconsideration on the lines indicated above. The ITAT shall refer to the material in entirety in respect of each assessee and render specific findings on this aspect. - Decided in favour of revenue for statistical purposes.

Summary

Issues:
Challenge to ITAT order under Section 153C regarding notice to third parties based on documents seized during search.

Analysis:
1. The revenue contested the ITAT's common order challenging the validity of notice issued under Section 153C, questioning if it can be based solely on entries in documents seized during a search.

2. A search at M/s Radico Khaitan premises and UPDA led to recovery of documents showing alleged payments. The assessees argued these documents did not "belong" to them, successfully before the Tribunal.

3. Various authorities were cited on interpreting "belongs to." The revenue argued that the seized documents were not the sole basis for the notice, also relying on statements and production figures.

4. The ITAT analyzed the material forming the basis for Section 153C satisfaction, emphasizing that documents must belong to the assessee to be valid. It discussed the definition of "document" and ownership presumption.

5. The revenue highlighted additional materials like production figures and statements. The ITAT was asked to give specific findings on the status of such documents to determine if they belonged to the assessees.

6. The Court directed the ITAT to provide specific findings on the documents' status to connect them with the assessees issued notices under Section 153C.

7. The matter was remitted to the ITAT for reconsideration, instructing to refer to all material in respect of each assessee and give specific findings. All parties' rights and contentions were kept open for appeal.

8. The appeals were remitted to the ITAT for fresh consideration, clarifying that it includes hearing other grounds raised by the concerned assessees.

9. The appeals were disposed of accordingly, and parties were directed to receive copies.

Conclusion:
The judgment addressed the challenge to the ITAT order under Section 153C, emphasizing the need for documents to belong to the assessee for a valid notice. The Court directed specific findings on document status and remitted the matter for reconsideration, keeping all parties' rights open for appeal.