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2014 (2) TMI 260 - AT - Income TaxAnnulment of assessment u/s 153C of the Act Interpretation of section 153A/153C of the Act - Assessment of income of any other person Held that - The documents recovered during the search and seizure operation were not discussed by the Assessing Officer or Ld CIT(A) regarding its nature and belongingness - section 153C is triggered when the documents or any money or bullion belonging to another person is recovered from the premises of person searched and assessment has to be made as per the provisions of the section 153A of the Act - The Assessing Officer has referred to a number of documents which were recovered during search and seizure operations but has not mentioned the nature of documents - The CIT(A) has cancelled the assessments holding that documents did not belong to assessee thus, the action of CIT(A) in annulling the assessments is not correct and is not as per law orders of the CIT(A) set aside and the matter remitted back to the CIT(A) for re-adjudication Decided in favour of Revenue.
Issues:
Validity of assessment under section 153A/153C of the Income Tax Act, 1961. Analysis: The case involved four appeals by the revenue against orders of the Ld CIT(A) and cross objections filed by the assessee. The main issue was the validity of the assessment made under section 153A/153C of the Income Tax Act, 1961. The revenue contended that the CIT(A) erred in annulling the assessment made under section 153C, citing that the seized documents did not belong to the assessee. The assessee challenged the assessment order, arguing that the provisions of section 153A were not applicable, as no search was initiated against them. The Ld CIT(A) annulled the assessment, stating that the documents seized did not belong to the assessee, and the Assessing Officer had not made any additions based on those documents. The Ld CIT(A) based the annulment on the interpretation of the term "belonging to," emphasizing the need for a connection with the person over time. The Ld CIT(A) highlighted the difference between section 153C and section 158BD of the Act regarding undisclosed income related to other persons. The Ld CIT(A) referred to judicial pronouncements to support the decision to cancel the assessment under section 153A/153C. The revenue appealed the decision, arguing that the documents did belong to the assessee, as evidenced by various documents presented. The Tribunal observed that the documents recovered during the search were not discussed in detail by the Assessing Officer or the Ld CIT(A) regarding their nature and ownership. The Tribunal noted that the Ld CIT(A) had canceled the assessments without determining whether the documents belonged to the assessee. The Tribunal found that the documents mentioned by the revenue did indeed belong to the assessee, as indicated in the annexures. Therefore, the Tribunal set aside the Ld CIT(A)'s orders and remitted the case back for re-adjudication in accordance with the law. Ultimately, the appeals of the revenue were allowed for statistical purposes, and the cross objections filed by the assessee were dismissed as they became infructuous. The assessee was given the opportunity to present their case before the Ld CIT(A) in the reassessment. In conclusion, the judgment focused on the interpretation of the term "belonging to" in the context of seized documents and the validity of the assessment under section 153A/153C of the Income Tax Act, 1961. The Tribunal emphasized the importance of establishing ownership and connection with the seized documents to justify the initiation of proceedings under section 153C.
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