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2018 (6) TMI 829 - AT - Income TaxValidity of the proceedings and order u/s 153C on the basis of documents seized - notings in the seized documents made reference to the name of third party - Held that - Seized documents make reference to the payments made to TIPL by the person to whom the document belonged to.the document was found from the premises of N.K.G. with whom TIPL was having business transactions. In the circumstances if the documents seized from the custody of Sr. Officer of N.K.G referred to payments made to TIPL then the only logical inference that one can draw is that the seized document belonged to the person who had made payment to TIPL. Admittedly therefore such documents could not be presumed to be belonging to the appellant that i.e. TIPL - thus seized documents that are pages 35 and 38 of AVR-2 did not belong to the appellant company. In the present case the facts and material on record prove that the seized documents did not belong to the appellant company and therefore we hold that the proceedings u/s 153C could not have been validly initiated against the appellant company. Such findings of ours get support from the judgement of the Hon ble Delhi High Court in the case of PEPSICO INDIA HOLDINGS PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME TAX & ANOTHER 2014 (8) TMI 898 - DELHI HIGH COURT - hence the Tribunal accordingly quashed the assessment framed u/s 153C since it was found that seized documents recovered from N.K.G. did not belong to the said assessee - Decided in favor of assessee.
Issues Involved:
1. Validity of proceedings under section 153C/143(3) of the Income Tax Act, 1961. 2. Determination of whether the seized documents belonged to the appellant company. 3. Applicability of the amended provisions of section 153C by the Finance Act, 2015. Detailed Analysis: 1. Validity of Proceedings under Section 153C/143(3) of the Income Tax Act, 1961: The appellant company challenged the validity of the proceedings initiated under section 153C/143(3) of the Income Tax Act, 1961, by the Assessing Officer (A.O.). The A.O. had issued notices for assessment of six years based on documents seized during a search and seizure operation conducted against Naresh Kumar Group (NKG). The appellant contended that the seized documents did not belong to them, thus questioning the jurisdiction of the A.O. to initiate proceedings under section 153C. 2. Determination of Whether the Seized Documents Belonged to the Appellant Company: The appellant argued that the seized documents marked as AVR-2 and AVR-5 did not belong to them. The documents were found in the possession of NKG, and the notings therein referred to payments made to TIPL (Tycoons Industries Pvt. Ltd.). The appellant contended that if the documents belonged to them, the notings would have indicated amounts received from TIPL rather than payments made to TIPL. The appellant further argued that the documents referred to M/s. S.K.S. Infrastructure Ltd., which shared the same business address but was a separate entity. The Revenue, however, maintained that the documents related to the appellant and justified the proceedings under section 153C. 3. Applicability of the Amended Provisions of Section 153C by the Finance Act, 2015: The appellant highlighted that the relevant assessment orders were passed before the amendment to section 153C by the Finance Act, 2015, which inserted the expression "related to." Prior to the amendment, it was necessary for the Revenue to prove that the seized documents "belonged" to a person other than the one searched. The appellant argued that the un-amended provisions governed their case, and the Revenue failed to establish that the seized documents belonged to them. Judgment Analysis: The Tribunal examined the submissions and material on record, including judicial precedents. It found that the lower authorities had mainly dealt with pages 35 and 38 of AVR-2, which referred to payments made to TIPL. The Tribunal noted that the documents were found from NKG's premises and referred to payments made to TIPL, indicating that the documents belonged to NKG, not the appellant. The Tribunal also considered the computer printouts of M/s. S.K.S. Infrastructure Ltd., which shared the same address but was a separate entity. The Tribunal concluded that the seized documents did not belong to the appellant, and the invocation of section 153C was invalid. The Tribunal further noted that the amendment to section 153C was effective from 01.06.2015, and the un-amended provisions required the Revenue to prove that the seized documents belonged to a third person. The Tribunal held that the A.O. failed to establish that the seized documents belonged to the appellant, making the assumption of jurisdiction under section 153C invalid. The Tribunal referred to judgments in Pepsico India Holding (P) Ltd. vs CIT, Vijaybhai N. Chandrani vs ACIT, and DCIT vs Dhansar Engineering Co. Pvt. Ltd., which supported the appellant's case. Conclusion: The Tribunal allowed the appeals, holding that the A.O. was not justified in invoking jurisdiction under section 153C of the Act. The assessment orders were declared null and void, and other grounds were deemed academic and infructuous. The order was pronounced in the open court on 13.06.2018.
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