2016 (10) TMI 160 - AT - Income Tax

Assessment u/s 153A - absence of satisfaction note - Held that - Entries in the name of the assessee as contained in the books of accounts of Sh. B.M. Gupta, are not the books of accounts of the assessee and, therefore, the books of accounts does not belong to the assessee and, thus we approve the action taken by the learned Commissioner of Income-tax (Appeals) in annulling the assessment. The documents on the basis of which proceedings under section 153C of the Act had been initiated, did not belong to the assessee. - Decided in favour of assessee

Summary

Issues:
1. Jurisdiction under section 153C of the Income-tax Act.
2. Interpretation of the term "belonging to" in section 153C of the IT Act.

Jurisdiction under section 153C of the Income-tax Act:
The case involved a search and seizure action under section 132 of the Income-tax Act, 1961, in the cases of "B.M. Gupta Group." The Assessing Officer issued a notice under section 153A r.w.s. 153C of the Act based on satisfaction note recorded under section 153C, resulting in an assessment against the returned income of the assessee. The assessee challenged the jurisdiction under section 153C, arguing that the seized documents did not belong to them. The learned Commissioner of Income-tax (Appeals) annulled the assessment, concluding that the proceedings under section 153C were not justified as the documents in question did not belong to the assessee. The Revenue appealed, contending that the term "documents belong to" includes entries related to the assessee.

Interpretation of the term "belonging to" in section 153C of the IT Act:
The crux of the issue revolved around the interpretation of the term "belonging to" in section 153C of the IT Act. The Departmental Representative argued that the term encompasses entries related to the assessee, while the Authorized Representative of the assessee relied on precedents where similar assessments were annulled based on the lack of belonging of seized documents to the assessee. The Tribunal examined the satisfaction note and observed that the entries in the name of the assessee were found alongside other family members in the seized documents. The Tribunal, in alignment with previous decisions, held that the documents seized did not belong to the assessee, as they were not indicative of any limited ownership interest or continuity with the assessee. Consequently, the Tribunal upheld the annulment of the assessment by the learned Commissioner of Income-tax (Appeals) based on the lack of belonging of the documents to the assessee.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the annulment of the assessment by the learned Commissioner of Income-tax (Appeals) due to the lack of belonging of the seized documents to the assessee. The decision was pronounced on 22nd August 2016.