2019 (12) TMI 218 - HC - Income Tax

Assessment u/s 153C - HELD THAT - As submitted that from the satisfaction note it is evident that the gold has been sent to the petitioner for job work. As submitted that the expression job work has not been defined in the Income Tax Act but has been defined under sub-section (68) of section 2 of the Central Goods and Services Tax Act, 2017, to mean any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly. It was submitted that, therefore, from the definition of job work it is evident that the goods belong to another person and not the person to whom it is sent for job work. It was submitted that, therefore, the question of the seized gold belonging to the petitioner does not arise, and hence, the impugned notice under section 153C lacks validity. Advocate made an alternative submission that in this case the search was conducted on 27.10.2017, that is, in the financial year 2017-18 relatable to assessment year 2018-19. It was submitted that, therefore, if the gold seized is incriminating material against the petitioner, the same relates to assessment year 2018-19 in respect of which proceedings of scrutiny assessment have already been initiated. It was submitted that, therefore also, the impugned notices under section 153C are not sustainable. Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable

Summary

Issues:
1. Validity of impugned notices issued under section 153C of the Income Tax Act for assessment years 2012-13 to 2017-18.
2. Applicability of the seized gold as incriminating material against the petitioner for assessment year 2018-19.

Analysis:

Issue 1: Validity of impugned notices under section 153C
The petitioner's advocate argued that the Assessing Officer's satisfaction note for issuing the impugned notices mentioned parcels seized during a search containing gold sent by a third party to the petitioner for job work. The advocate contended that since only parcels containing gold were seized, without any books of account or documents, the reference to section 153C(1)(b) was misconceived. The advocate highlighted that the term "job work" was defined under the Central Goods and Services Tax Act, indicating that the goods belonged to another person and not the petitioner. Therefore, the advocate concluded that the seized gold did not belong to the petitioner, rendering the impugned notice under section 153C invalid.

Issue 2: Applicability of seized gold as incriminating material
Additionally, the petitioner's advocate made an alternative submission stating that the search conducted related to the financial year 2017-18, which corresponds to assessment year 2018-19. As scrutiny assessment proceedings had already commenced for assessment year 2018-19, the advocate argued that if the seized gold was incriminating material against the petitioner, it should pertain to the ongoing assessment year. Consequently, the advocate asserted that the impugned notices under section 153C were not sustainable based on the timing of the search and the related assessment proceedings.

In response to the arguments presented, the court issued a notice returnable on a specified date and granted ad-interim relief by staying further proceedings following the impugned notices for assessment years 2012-13 to 2017-18. Direct service of the order was permitted for compliance purposes.