2024 (6) TMI 1026 - AT - Income Tax

Assessment u/s 153A/153C - additions based on seized documents belonging to the relevant assessment year and transactions not recorded in the books of account - HELD THAT - In the instant case, we find that the AO, while passing the consequent order, has nowhere in the order specified that the documents seized belong to the assessment year under appeal and the transactions, reflected in the seized documents are not recorded in the books of account of assessee. It is no more re-integra that provisions of section 153C of the Act can be invoked only if any incriminating material seized during the course of search action pertain to that particular assessment year. Re. CIT vs Sinhgad Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT DR could not controvert the findings of the CIT(A), hence, we find no infirmity in the impugned order. In the result, impugned order is upheld and appeal of the Revenue is dismissed.

Summary

Issues:
The judgment involves the interpretation of provisions of section 153C of the Act, specifically focusing on the jurisdiction of the Assessing Officer to make additions based on seized documents belonging to the relevant assessment year and transactions not recorded in the books of account.

Issue 1 - Jurisdiction under Section 153C:
The appeal by the Revenue challenges the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2008-09, following directions from the Tribunal in a previous decision. The Assessing Officer had disallowed cash purchases as bogus in earlier assessment years under section 153C, leading to a similar addition in the impugned assessment year. The Department sought to reverse the findings of the CIT(A) and reinstate the addition.

Issue 2 - Compliance with Tribunal Directions:
The assessee's representative argued that the Assessing Officer did not follow the Tribunal's directions in the second round of assessment. The Tribunal had mandated consideration of seized documents relevant to the assessment year and unrecorded transactions in the books of account. The representative contended that there was no incriminating material and no evidence that the transactions indicated in the seized documents were unrecorded.

Judgment Analysis:
The Tribunal examined the orders of the authorities and the directions provided in the previous Tribunal decision. The Tribunal had directed the Assessing Officer to verify the relevance of seized documents to the assessment year and whether the transactions were recorded in the books of account. However, the subsequent assessment order did not specify these crucial aspects. The CIT(A) found that the AO lacked jurisdiction under section 153C and made additions without incriminating seized material, leading to a favorable decision for the appellant.

Legal Precedent:
The judgment reaffirmed that section 153C can only be invoked if incriminating material seized pertains to the specific assessment year, citing the case of CIT vs Sinhgad Technical Education Society. The Tribunal upheld the CIT(A)'s findings, noting the absence of any challenge from the Department, and consequently dismissed the Revenue's appeal.

Conclusion:
The Tribunal upheld the impugned order, emphasizing the necessity for seized documents to relate to the assessment year in question and transactions to be unrecorded in the books of account for jurisdiction under section 153C. The judgment highlights the importance of following Tribunal directions and ensuring the presence of incriminating material for valid additions in such cases.