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2023 (1) TMI 898 - AT - Income TaxAssessment u/s 153C - undisclosed investment u/s 69 - Whether any incriminating documents relating to the assessee were found and seized and the AO formed a belief that the case of the assessee falls within the four walls of section 153C? - HELD THAT - Page 3 is the receipt cum agreement to sell wherein a consideration of Rs. 1.10 crores is mentioned. It is true that the name of the assessee is not mentioned in the said receipt. In our considered opinion, assuming that the said receipt pertained to the assessee but does not belong to the assessee as per section 153C of the Act as they stood at that point of time. The said receipt is dated 28.03.2009 and as per the Certificate of Incorporation, the appellant company came into existence on 08.04.2009. Therefore, ld. CIT(A) has rightly deleted the addition holding that a non existing person cannot earn undisclosed income. The seized document referred to by the AO in his assessment order and which are made basis for the impugned addition do not belong to the assessee. It would be pertinent to refer to the observations of the Hon'ble High Court of Delhi in the case of Ankit Gupta 2017 (9) TMI 670 - DELHI HIGH COURT - Appeal of assessee allowed.
Issues:
1. Validity of notice issued under section 153C of the Income Tax Act. 2. Jurisdictional conditions for proceedings initiated under section 153C. 3. Determination of undisclosed income based on seized documents. 4. Addition of unexplained investment and commission expenses. 5. Applicability of section 153C to seized documents. Analysis: Issue 1: Validity of notice under section 153C The appellant challenged the notice issued under section 153C, arguing it was without jurisdiction and sought to quash the assessment order based on it. The additional grounds raised questioned the legality of the notice and subsequent orders. The Tribunal considered these arguments in light of the law and observed that the appellant, being incorporated after the date of the seized documents, could not have earned undisclosed income at that time. Consequently, the Tribunal upheld the deletion of the addition related to the appellant's non-existent period. Issue 2: Jurisdictional Conditions for Proceedings The appellant contended that the seized documents did not belong to them, challenging the basis for the additions made by the Assessing Officer. The Tribunal analyzed the documents and concurred that the documents did not pertain to the appellant as per section 153C requirements. Citing relevant case law, including decisions by the Supreme Court and High Court, the Tribunal emphasized the necessity for seized documents to belong to a person other than the one referred to in section 153C. As the documents did not meet this criterion, the Tribunal quashed the assessment order. Issue 3: Determination of Undisclosed Income The Assessing Officer determined undisclosed income based on seized documents related to property transactions. However, the Tribunal found that the documents did not establish a connection with the appellant, as it was not in existence when the transactions took place. Therefore, the Tribunal held that the additions made by the Assessing Officer were not valid due to lack of jurisdiction and relevance to the appellant. Issue 4: Addition of Unexplained Investment and Commission Expenses The Assessing Officer added amounts under section 69 for alleged unexplained investments and commission expenses. The appellant challenged these additions, arguing that the seized documents did not pertain to them. The Tribunal agreed with the appellant, noting the absence of the appellant's details in the documents. Consequently, the Tribunal allowed the appeal and quashed the assessment order. Issue 5: Applicability of Section 153C to Seized Documents The Tribunal extensively reviewed the seized documents and their connection to the appellant. Finding no conclusive link between the documents and the appellant, the Tribunal emphasized the importance of establishing ownership of seized documents for invoking section 153C. Relying on legal precedents, the Tribunal concluded that the seized documents did not belong to the appellant, leading to the quashing of the assessment order. In conclusion, the Tribunal allowed the appeal, emphasizing the necessity for seized documents to belong to a person other than the one referred to in section 153C for valid assessments. The Tribunal's decision focused on jurisdictional requirements and the lack of connection between the seized documents and the appellant, leading to the quashing of the assessment order.
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