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2019 (4) TMI 1232 - HC - Income TaxScope of assessment u/s. 153C - no incriminating material found during the search - recording of satisfaction - HELD THAT - Tribunal has come to the conclusion that, there was no incriminating material found during the search on the basis of which the additions for any of the years under consideration could have been sustained. In that view of the matter, keeping other conclusions of the Tribunal aside, the additions were correctly deleted. This view is taken by Delhi High Court in the case of Commissioner of Income Tax V/s. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT - no question of law arises - Decided against revenue
Issues:
1. Interpretation of Section 153C of the Income Tax Act, 1961. 2. Scope of assessment under Section 153C. 3. Requirement of incriminating material for invoking Section 153C. 4. Validity of assessment made under Section 153C without incriminating material. 5. Comparison between Section 153A and Section 153C assessments. Analysis: Issue 1: Interpretation of Section 153C of the Income Tax Act, 1961 The main issue in this judgment revolves around the interpretation of Section 153C of the Income Tax Act, 1961. The Tribunal examined the language of the section and concluded that the legislature did not provide for making assessments for all six years in the case of a third party. It was held that the Assessing Officer must be satisfied that the seized documents have a bearing on the total income of the third party for the relevant assessment year. Issue 2: Scope of assessment under Section 153C The Tribunal clarified that while Section 153A allows for assessing or reassessing six years' income in the case of an assessee on whom a search action was initiated, Section 153C comes into play when incriminating material pertaining to a third party is found during the search. The scope of assessment under Section 153C is limited to the relevant assessment year/years based on the seized material. Issue 3: Requirement of incriminating material for invoking Section 153C A crucial aspect highlighted in the judgment is the necessity of incriminating material to invoke Section 153C. The Tribunal emphasized that for Section 153C to be applicable, the Assessing Officer must establish that the seized or requisitioned documents have a direct impact on determining the total income of the third party for the relevant assessment year. Issue 4: Validity of assessment made under Section 153C without incriminating material The Tribunal found that in the present case, there was no incriminating material discovered during the search that could impact the assessment for the years under consideration. Consequently, the Assessing Officer was deemed unjustified in invoking Section 153C for those assessment years, leading to the quashing of the assessments made under Section 153C. Issue 5: Comparison between Section 153A and Section 153C assessments The judgment also draws a comparison between Section 153A and Section 153C assessments. It was noted that while Section 153A allows for broader assessments covering six years, Section 153C focuses on specific assessments based on seized material related to a third party for the relevant assessment year/years. The Tribunal's decision aligned with the view taken by the Delhi High Court in a similar case. In conclusion, the High Court dismissed the Income Tax Appeals, affirming the Tribunal's decision to quash the assessments made under Section 153C due to the lack of incriminating material and the limited scope of assessment provided under the said section.
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