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Heaven Suppliers Pvt. Ltd. vs Acit - (Income Tax Appellate Tribunal) (04 May 2022)

Documents seized must be incriminating and must relate to each of the assessment years whose assessments are sought to be reopened


Direct Taxation

The appeal is preferred by the assessee against order in appeal for the assessment year 2013-14 passed by Learned Commissioner of Income Tax (Appeals) under Section 250(6) of the Income Tax Act, 1961 (IT Act) making additions. Assessee submitted that, the order of the Commissioner of Income Tax (A) is arbitrary, against law and facts on record.

The original return of income was filed by the assessee on 30th March, 2015 and the time limit to issue notice under Section 143(2) was up to 30th September, 2015. However, on the basis of satisfaction note recorded on 29th January, 2016, notice under Section 153C was issued in pursuance of which return was filed on 25th February, 2016. The satisfaction note is on record at which makes it apparent that, admittedly the alleged incriminating evidence related to the assessee pertains to financial years 2008-09 and 2009-10. However, there was no reference to them in the assessment orders. The assessment proceedings were on extraneous facts and evidences then the one referred in the satisfaction note and which were basis for issuing notice under Section 153C of the IT Act.

Supreme Court in Commissioner of Income Tax-iii, Pune vs. Singhad Technical Education Society, settles the issue that in order to justify assumption of jurisdiction under Section 153C of the IT Act. The documents seized must be incriminating and must relate to each of the assessment years whose assessments are sought to be reopened. Supreme Court has held that, incriminating material in regard to the assessee has to pertain to the assessment years in question. Delhi High Court in the case of CIT vs. Kabul Chawala has held that if no incriminating material was found during the course of search in respect of the issue, no addition in respect of that issue can be made to the assessment under Section 153A and 153C of the IT Act.

Thus, the bench is of considered opinion that, Tax Authorities below were not justified in making assessment, not based upon incriminating material mentioned in the satisfaction note and thus acted beyond jurisdiction and scope of Section 153C / 143(3) of the IT Act. That being so, the assessment order deserves to be quashed and the remaining grounds as raised in appeal need not be examined further. The impugned orders are set aside. Appeal allowed.


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