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2020 (11) TMI 2 - AT - Income TaxAssessment u/s 153C - during the course of search and seizure operation certain books of accounts containing loose bundles identified as BNAH-01 BNAH-02 were found which relate to the assessee company - HELD THAT - CIT(A) examined the documents referred to by the AO i.e. BNAH-01, BNAH-02 and BNRO-18 and found that there is not a shred of incriminating material against the assessee. The judicial opinion on the issue of notice and framing of assessment u/s. 153C is that the assets or books of account or documents or information relating to/pertaining to the 'Other Person' must be incriminating in nature. Thereafter the CIT(A) annulled the assessment framed by the AO u/s. 153C of the Act relying on the decision of Hon'ble Supreme Court in the case of CIT Vs. Sinhgad Technical Education Society, 2015 (4) TMI 190 - BOMBAY HIGH COURT . DR before us unable to controvert the above findings recorded by the CIT(A) by bringing any cogent material evidence. The assessee had filed return of income u/s. 139(1) of the Act on 22.11.2011 declaring income of ₹ 46,450/- and in pursuant to search, he filed return of income on 20.04.2015 declaring the same. We also noticed that on the date of search or satisfaction recorded, there is no any iota of evidence that the assessment was pending before the Revenue department. Accordingly, we have no hesitation but to uphold the findings of the CIT(A) annulling the assessment completed u/s. 153C of the Act in absence of any incriminating material. - Appeal of the Revenue is dismissed.
Issues Involved:
1. Whether the CIT(A) erred in annulling the assessment order passed under section 153C read with section 144 of the Income Tax Act, 1961. 2. Whether the CIT(A) failed to properly apply the provisions of section 153C of the Income Tax Act, 1961. 3. Whether the CIT(A) incorrectly observed that section 153C proceedings can only be initiated if the seized documents are incriminating in nature. Detailed Analysis: Issue 1: Annulment of the Assessment Order under Section 153C read with Section 144 The Revenue contended that the CIT(A) erred in annulling the assessment order passed under section 153C read with section 144 of the Income Tax Act, 1961. The CIT(A) annulled the assessment on the grounds that the documents seized during the search did not contain any incriminating material against the assessee. The Tribunal upheld the CIT(A)'s decision, noting that the documents identified as BNAH-01, BNAH-02, and BNRO-18 contained no incriminating material against the assessee. The Tribunal emphasized that for an assessment under section 153C, the seized documents must be incriminating in nature, and in the absence of such material, the assessment cannot be sustained. Issue 2: Application of Provisions of Section 153C The Revenue argued that the CIT(A) did not properly apply the provisions of section 153C, which stipulate that the seized documents should belong to or pertain to the assessee. The Tribunal examined section 153C, which allows the assessing officer to initiate proceedings if the seized documents belong to a person other than the one referred to in section 153A. The Tribunal clarified that the term "belongs" refers to incriminating materials related to the assessee. The Tribunal cited judicial decisions, including the Hon'ble Supreme Court's judgment in the case of Sinhgad Technical Education Society, which held that assessments under section 153C require specific incriminating material. The Tribunal concluded that the CIT(A) correctly applied the provisions of section 153C by annulling the assessment in the absence of incriminating material. Issue 3: Requirement of Incriminating Material for Section 153C Proceedings The Revenue contended that the CIT(A) incorrectly observed that section 153C proceedings can only be initiated if the seized documents are incriminating in nature. The Tribunal upheld the CIT(A)'s observation, citing judicial precedents that require incriminating material for initiating proceedings under section 153C. The Tribunal referred to the case of Sinhgad Technical Education Society, where the Hon'ble Supreme Court held that assessments under section 153C require incriminating material. The Tribunal found that the documents seized during the search did not contain any incriminating material against the assessee, and therefore, the CIT(A) correctly annulled the assessment. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to annul the assessment under section 153C in the absence of incriminating material. The Tribunal emphasized that the jurisdiction of the assessing officer under section 153C requires specific incriminating material related to the assessee, and in this case, such material was absent. The Tribunal's decision was based on a thorough analysis of the provisions of section 153C and relevant judicial precedents.
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