The Gujarat High Court dismissed the appeal filed by the revenue citing that there is no base for initiating proceedings under Section 153C of the Income Tax Act. The court stated that an unsigned excel sheet without corroborative evidence fails as evidence.
The bench of Chief Justice Sunita Agarwal and Justice Aniruddha P. Mayee observed that the Income Tax Assessing Officer failed to clarify the document’s nature while initiating action under Section 153C of the IT Act of 1961, disregarding the lack of disclosure of statements from persons referenced in the search related to seized materials, thus rendering the proceedings invalid.
Income tax proceedings under Section 153C were initiated against the respondent-assessee, Kaushik Nanubhai Majithia on the basis of an excel sheet found from the computer of a person, associated with the Company, namely Navratna Organizers and Developers Private Limited (‘the Developer’), in the premises of whom the search was conducted.
According to the revenue’s counsel, the excel sheet lists payments from the assessee to the developer, who had paid taxes before the Settlement Commissioner. They challenged the findings of CITA and ITAT, asserting the developer’s tax payment as evidence of transactions mentioned in the assistant’s possession.
The court identified fallacies in the revenue’s argument presented by the, stating insufficient grounds for proceedings against the assessee based solely on the developer’s tax payment related to the excel sheet.
Additionally, the High court observed no verification of whether the amount shown in the excel sheet was actually paid by the assessee to the developer. Both the CITA and ITAT concurred that the excel sheet, lacking signatures and corroborative evidence, formed the basis of unsupported proceedings.
The appeal filed by the Principal Commissioner of Income Tax was dismissed by the High Court citing there was no question of law much less any substantial question of law arises to entertain this appeal.
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