2017 (7) TMI 141 - HC - Income Tax

Assessment under Section 153C - addition u/s 69C - Held that - The jurisdiction and vesting in the Assessing Officer could have been exercised and the satisfaction in that regard was enough are not matters which can be decided in the further appellate jurisdiction of this Court. It is not possible for us to reappraise and re-appreciate the factual findings. The finding that Section 153C was not attracted and its invocation was bad in law is not based just on an interpretation of Section 153C but after holding that the ingredients of the same were not satisfied in the present case. That is an exercise carried out by the Tribunal as a last fact finding authority. Therefore the finding is a mixed one. There is no substantial question of law arising from such an order and which alternatively considers the merits of the case as well. As a result of the above conclusion we cannot agree with the learned Additional Solicitor General that we can pass a different order and entertain these Appeals for the current year of the search namely the Assessment Year 2009-10. That was based on the argument that the action under Section 153C for this year is an incorrect conclusion. All the earlier orders in these Appeals having being noted by us we have no hesitation in concluding that despite sufficient opportunity being given to the Revenue it has not been able to satisfy this Court that a different view can be taken.

Issues Involved:
1. Validity of the action under Section 153C of the Income Tax Act.
2. Justification of additions made under Section 69C of the Income Tax Act.
3. Jurisdiction of the Assessing Officer under Section 153C.

Issue-wise Detailed Analysis:

1. Validity of the action under Section 153C of the Income Tax Act:

The Revenue's appeal challenges the Tribunal's decision that the action under Section 153C was invalid. The Tribunal noted that the primary condition for issuing a notice under Section 153C is that the seized documents must belong to the assessee. In this case, the documents were seized from the residence of a third party, not the assessee, and there was no evidence that the documents were in the handwriting of anyone related to the assessee. The Tribunal emphasized that the broad principles of the law of evidence apply, and mere notations on loose papers are insufficient without corroborative evidence. The Tribunal concluded that the legislative intent of Section 153C would be defeated if the Assessing Officer could reopen assessments without recording any basis or satisfaction. Consequently, the Tribunal held that the action under Section 153C was bad in law.

2. Justification of additions made under Section 69C of the Income Tax Act:

The Tribunal also addressed the merits of the additions under Section 69C, which pertains to unexplained expenditure. The Tribunal found that the additions were primarily based on the statement of Dilip Dherai, which he later retracted. The Tribunal noted that the Revenue did not produce any corroborative evidence, such as statements from vendors or sellers, to substantiate the claim of cash transactions. The Tribunal emphasized that the mere mention of villages where the companies may have purchased lands does not justify the additions. The Tribunal concluded that the essential ingredients of Section 69C were not satisfied, and there was no evidence to support the Revenue's claim of unexplained expenditure. Therefore, the Tribunal held that the additions under Section 69C could not be sustained.

3. Jurisdiction of the Assessing Officer under Section 153C:

The Tribunal's decision also addressed the jurisdiction of the Assessing Officer under Section 153C. The Tribunal found that the Assessing Officer did not have the jurisdiction to pass the assessment order as the conditions under Section 153C were not met. The Tribunal noted that the seized documents did not belong to the assessee, and there was no basis for the Assessing Officer to assume jurisdiction. The Tribunal emphasized that the satisfaction of the conditions under Section 153C is a prerequisite for the Assessing Officer to exercise jurisdiction. The Tribunal concluded that the Assessing Officer's action was without jurisdiction and, therefore, invalid.

Conclusion:

The High Court upheld the Tribunal's decision, dismissing the Revenue's appeals. The Court agreed with the Tribunal's findings that the action under Section 153C was invalid, the additions under Section 69C were unjustified, and the Assessing Officer did not have jurisdiction. The Court emphasized that the Tribunal's findings were based on a thorough examination of the facts and evidence, and there was no substantial question of law for the Court to consider. Consequently, the Court dismissed the appeals without any orders as to costs.

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