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2017 (9) TMI 670 - HC - Income TaxAnnulling the block assessment order - validity of proceedings under Section 153C - Held that - Supreme Court in Commissioner of Income Tax, Pune v. Sinhgad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT OF INDIA settles the legal position in favour of the Assessee held that a document seized should belong to a person other than the person referred to in Section 153A of the Act . It has been categorically observed by the Supreme Court that the above position of law laid down by the Gujarat High Court in Kamleshbhai Dharamshibhai Patel v. Commissioner of Income Tax-III 2015 (8) TMI 966 - GUJARAT HIGH COURT is correct. Consequently, this Court rejects the contention of the learned counsel for the Revenue that even prior to 1st June 2015 at the stage of initiation of proceedings under Section 153C of the Act, it is sufficient if the seized document pertained to the other person and it is not necessary to show that the seized material belonged to the other person. - Decided in favour of Assessee
Issues involved:
1. Validity of block assessment order under Section 153C of the Income Tax Act, 1961. 2. Ownership of seized documents for jurisdiction under Section 153C. 3. Perversity of the order of the Income Tax Appellate Tribunal (ITAT). Issue 1: Validity of block assessment order under Section 153C: The appeals by the Revenue under Section 260A of the Income Tax Act, 1961 challenged a common order passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2002-03. The primary question revolved around the correctness of annulling the block assessment order. The Commissioner of Income Tax (Appeals) had earlier held the assumption of jurisdiction under Section 153C as erroneous, which was upheld by the ITAT. The Revenue contended that the seized documents only needed to pertain to the Assessee, not necessarily belong to them, for initiating proceedings under Section 153C. However, the Court, citing precedents and recent Supreme Court decisions, rejected this argument, emphasizing the requirement that seized documents must belong to a person other than the one referred to in Section 153A. Issue 2: Ownership of seized documents for jurisdiction under Section 153C: The crux of the matter lay in determining whether the seized documents belonged to the Assessees or merely pertained to them. The Revenue argued that the documents did not have to be shown as belonging to the Assessee at the initiation stage under Section 153C. In contrast, the Assessees contended that the seized documents must belong to the other person for initiating proceedings. The Court, relying on various judgments, including a recent Supreme Court decision, clarified that the documents seized should belong to a person other than the one mentioned in Section 153A. The Court rejected the Revenue's argument and affirmed the settled legal position that ownership of seized documents is crucial for jurisdiction under Section 153C. Issue 3: Perversity of the order of the ITAT: The ITAT concurred with the CIT(A) that the assumption of jurisdiction under Section 153C was vitiated due to the seized documents not belonging to the Assessees. The Revenue's appeals were dismissed as the Court found no perversity in the ITAT's order. The Court emphasized that the satisfaction note by the Assessing Officer did not even refer to the seized documents in one case, further supporting the dismissal of the Revenue's appeals. Consequently, the Court ruled in favor of the Assessees, rejecting the Revenue's contentions and upholding the decisions of the lower authorities. In conclusion, the High Court dismissed the appeals by the Revenue, affirming the decisions of the lower authorities regarding the validity of the block assessment orders under Section 153C. The Court clarified the requirement that seized documents must belong to a person other than the one mentioned in the relevant section, emphasizing the importance of ownership for jurisdictional purposes. The judgments cited and the recent Supreme Court decision provided a clear legal position on this matter, leading to the rejection of the Revenue's arguments and the dismissal of their appeals.
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