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2020 (10) TMI 993 - AT - Income TaxValidity of assessment proceedings u/s 153C - documents must pertain to the assessee and must have a bearing on the income of the assessee - HELD THAT - When Annexure A-1, Page 5, which is the very basis of addition made by the AO in this case, has been held to be belonging to Lalit Modi, the very initiation of proceedings u/s 153C on the basis of the same against assessee are held to be not sustainable by the Hon ble Delhi High Court 2017 (5) TMI 992 - DELHI HIGH COURT . Ld. CIT (A) has rightly deleted the addition made by the AO following the order passed by the Tribunal in assessee s own case (supra) and confirmed by Hon ble Delhi High Court and Hon ble Supreme Court 2018 (8) TMI 1154 - SC ORDER . So, finding no illegality or perversity in the impugned order passed by the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed.
Issues:
1. Validity of deletion of addition of ?4,00,00,000 based on initiation of assessment proceedings u/s 153C. 2. Determination of ownership of seized document Annexure A-1, Page 5. 3. Applicability of Section 153C of the Income-tax Act, 1961. 4. Judicial interpretation of the phrase "belongs to" in Section 153C. Issue 1: The appeal sought to set aside the order deleting the addition of ?4,00,00,000 by the Commissioner of Income-tax (Appeals) for the assessment year 2009-10. The Revenue contended that the initiation of assessment proceedings under section 153C was valid despite previous rulings by the Hon'ble High Court of Delhi and ITAT. The Revenue argued that the amendment in section 153C was retrospective and required documents to pertain to the assessee and have a bearing on their income. The Department was in the process of filing an SLP against the Delhi High Court's order. Issue 2: The controversy revolved around the ownership of the seized document Annexure A-1, Page 5, found during a search operation at the premises of a third party, Lalit Modi. The document was the basis for initiating assessment proceedings under section 153C. The ld. CIT (A) directed the AO to assess a sum of ?4 crores in the hands of the assessee for AY 2009-10 based on the same seized document related to a property purchase by the assessee. Issue 3: The Tribunal examined whether the initiation of proceedings under section 153C against the assessee was justified based on the seized document belonging to Lalit Modi. The Tribunal and the Hon'ble Delhi High Court held that the document did not pertain to the assessee, leading to the deletion of the addition made by the AO. The Tribunal referred to previous decisions and emphasized the requirement for the seized material to belong to a person other than the one referred to in section 153A for section 153C to be invoked. Issue 4: The Hon'ble Delhi High Court further analyzed the phrase "belongs to" in Section 153C and confirmed that the document in question did not belong to the assessee. The Court highlighted the lack of evidence to justify invoking Section 153C against the assessee based on the seized document. The Court dismissed the SLP filed by the Revenue against its judgment, affirming that the initiation of proceedings under section 153C against the assessee was not sustainable. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition by the ld. CIT (A) based on the ownership of the seized document and the judicial interpretations of Section 153C. The decisions by the Tribunal, Delhi High Court, and Supreme Court confirmed that the document belonged to Lalit Modi and not the assessee, rendering the initiation of proceedings under section 153C against the assessee invalid.
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