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Pr. Commissioner of Income Tax (Central)-2 vs. Panchmukhi Management Services Pvt. Ltd. - (High Court of Delhi) (26 Sep 2022)

Seized material can be considered to be incriminating in terms of Section 153C of the IT Act only if it pertains to the Assessment Years in question


Direct Taxation

Present income tax appeals have been filed challenging the common order passed by the Income Tax Appellate Tribunal ('ITAT') deleting the protective additions made in the hands of the respondent-assessee.

Learned counsel for the Appellant states that, the ITAT has erred in holding that no incriminating material was found in the search, whereas the original copies of share certificates pertaining to share capital and premium allotted to investor companies were found at the premises of issuing company itself instead of investor company's premises evidencing, that, the investor companies were bogus/accommodation entry providing entities. He emphasises that in the present cases, there is a live link between the additions in question and the incriminating material.

Perusal of the satisfaction note reveals that, no document pertaining to Assessment Year 2011-12 was seized during search. The Supreme Court in Commissioner of Income Tax-III, Pune Vs. Sinhgad Technical Education Society has held that seized material can be considered to be incriminating in terms of Section 153C of the Act only if the said material pertains to the Assessment Years in question.

With respect to Assessment Years 2010-11 and 2012-13, this Court is of the view that the recovery of the annual report and the share certificate of the Petitioner from premises of Minda Group cannot be considered to be incriminating documents. The Minda Group was not a third party but the issuing authority of the share certificates. In fact, both the appellate authorities below have given a concurrent finding that no incriminating material had been brought on record by the Assessing Officer to sustain the additions on merit. Also, the genuineness of the share capital has been accepted both by CIT (A) and ITAT and also there is no live link between seized material and the additions made. Therefore, this Court is of the view that assumption of jurisdiction in the present cases by the Assessing Officer was erroneous.

The issue of protective addition in the hand of the Respondent-assessee does not arise. Accordingly, this Court is of the view that no substantial question of law arises for consideration in the present appeals and the same are dismissed.


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