2019 (12) TMI 594 - AT - Income Tax

Assessment u/s.153C - Addition based on seized material - connection or corroboration between the seized Materials / documents - HELD THAT - Undisputedly, seized documents do not belong to the assessee and no incriminating documents/materials have been seized from other persons, which are being assessed u/s.153C r.w.s. 143(3), then no sustainable addition can be made in the hands of other persons in such assessment year. Our view also gets a strong support from the decision of Hon ble Supreme Court in the case of Sinhgad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT vehemently relied by ld Sr. counsel for the assessee. Therefore, we have no hesitation to hold that the addition made by the AO and confirmed by the CIT(A) have no legs to stand on the premises of relevant legal provisions of section 153C of the Act and thus, same are not sustainable and, hence, we hold so.

Summary

Issues involved:
- Transfer of jurisdiction without opportunity to appellant
- Completion of assessment proceedings in haste
- Lack of nexus between seized materials and additions in assessment order
- Admissibility of additional legal grounds raised by the appellant

Analysis:
1. Transfer of jurisdiction without opportunity to appellant:
The appellant raised concerns regarding the transfer of jurisdiction from Kolkata to Sambalpur without prior notice or opportunity to be heard, citing a violation of section 127 of the Income Tax Act. However, the appellant later decided not to press this issue, leading to its dismissal by the tribunal.

2. Completion of assessment proceedings in haste:
The appellant contested the swift completion of assessment proceedings within four days of the transfer of jurisdiction, arguing that such haste rendered the entire order invalid and without jurisdiction. Despite these arguments, the tribunal did not delve into this issue further as the appellant did not press additional Ground Nos. 1 to 3 of the appeal.

3. Lack of nexus between seized materials and additions in assessment order:
The crux of the matter revolved around the contention that there was no connection or correlation between the seized documents and the additions made in the assessment order. The appellant argued that the seized materials did not pertain to them and were not incriminating, thus rendering the additions unsustainable in law. Citing legal precedents and judgments, the tribunal agreed with the appellant's position, emphasizing that without a clear nexus between the seized documents and the additions, the assessment could not be upheld.

4. Admissibility of additional legal grounds:
The appellant raised additional legal grounds challenging the validity of the assessment order, which were initially opposed by the Revenue. However, the tribunal admitted these grounds for adjudication, considering them to be crucial legal issues that could impact the validity of the assessment. Ultimately, the tribunal allowed the additional grounds raised by the appellant for both assessment years, leading to the allowance of the appeals.

In conclusion, the tribunal addressed the issues raised by the appellant comprehensively, focusing on the legal aspects and precedents to determine the validity of the assessment orders. By allowing the additional legal grounds and finding merit in the appellant's arguments regarding the lack of nexus between seized materials and additions, the tribunal ruled in favor of the appellant, thereby allowing both appeals.