2022 (9) TMI 1331 - HC - Income Tax

Assessment u/s 153C - incriminating documents / material - Satisfaction Note for issue of notice u/s 153C - HELD THAT - As in the present case a satisfaction note was drawn up u/s 153C - Consequently, the search year would be the AY 2016-17 and Revenue would be entitled to re-open the returns for the AY 2010-11 to 2015-16. Perusal of the satisfaction note reveals that no document pertaining to AY 2011-12 was seized during search. As in Sinhgad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT has held that seized material can be considered to be incriminating in terms of Section 153C of the Act only if the said material pertains to the AY in question. This Court is of the view that the recovery of the annual report and the share certificate of the Petitioner from premises of Minda Group cannot be considered to be incriminating documents. After all, the Minda Group was not a third party but the issuing authority of the share certificates. In fact, both the appellate authorities below have given a concurrent finding that no incriminating material had been brought on record by the AO to sustain the additions on merit. Also, the genuineness of the share capital has been accepted both by CIT (A) and ITAT and also there is no live link between seized material and the additions made. This Court is of the view that assumption of jurisdiction in the present cases by the Assessing Officer was erroneous. No substantial question of law arises

Summary

Issues:
Income tax appeals challenging ITAT's order on protective additions made in the hands of the respondent-assessee for multiple assessment years.

Analysis:
1. The appeals challenged the ITAT's order deleting protective additions made in the hands of the respondent-assessee for the Assessment Years 2010-11, 2011-12, and 2012-13. The appellant argued that incriminating material was found at the premises of the issuing company, indicating the investor companies were bogus. They emphasized the live link between the additions and the incriminating material.

2. The respondent contended that the alleged incriminating materials did not relate to the assessment years in question. They relied on a satisfaction note from 2016, stating that the seized documents belonged to persons other than the Minda Group of cases. The respondent also highlighted that the genuineness of the share capital had been accepted in the case of JP Minda Group of Companies by the ITAT.

3. The Court observed that no document pertaining to the Assessment Year 2011-12 was seized during the search. Referring to a Supreme Court judgment, the Court noted that seized material could be considered incriminating under Section 153C only if it pertained to the assessment years in question.

4. Regarding the assessment years 2010-11 and 2012-13, the Court found that the recovery of documents from the Minda Group's premises could not be considered incriminating as the group was the issuing authority of the share certificates. Both appellate authorities had found no incriminating material to sustain the additions on merit. The Court concluded that there was no live link between the seized material and the additions made, deeming the assumption of jurisdiction by the Assessing Officer as erroneous.

5. In a separate order on a batch of appeals related to JP Minda Group, the Court upheld the ITAT's decision to delete substantive additions on merits. Consequently, the issue of protective addition in the hands of the respondent-assessee did not arise. The Court found no substantial question of law for consideration and dismissed the appeals.