The Mumbai bench of Income Tax appellate tribunal (ITAT) recently held that addition under section 153C of Income Tax Act 1961 could not be made based on documents found during the survey.
Section 153 (C) of Income Tax Act 1961 provides that assessment of income of any other person who are not mentioned in section153 (A) of Income Tax Act 1961.If any money ,bullion or jewelry or book of accounts seized by the assessing officer from any other person shall order to reassess the income of the that person.
Assessee Sai Shraddha Enterprises is a partnership firm engaged in the business of builders and developers. After conducting survey and search as per the Income Tax Act the department impounded some documents showing cash transactions belonging to the assessee. After recording the satisfaction note a notice under Section 153C of the Income Tax Act 1961 was issued. Then the assessee filed a return of income under Section 153C of the Income Tax Act 1961. Thereafter Assessing Officer found that assessee has incurred cash expenditure which are recorded in the books of account of the assessee and made additional amount on the income of the assessee along with passed order under section 143(3) read with section 153C of the Income Tax Act 1961.Against the order assesee filed an appeal before ITAT.
Subodh Ratnaparkhi counsel for the Assesee submit that “the alleged incriminating evidence on which the addition is made was not seized in the case of search action under Section 132 of the Income Tax Act 1961, but these are the documents impounded during the survey under Section 133A of the Act and therefore, all these four assessment orders passed under Section 143(3) read with section 153C of the Act are not valid”.
H.N. Singh, counsel for the assessee content that when the search and survey actions was carried out on 31st July, 2011 simultaneously, all the documents whether found during the course of survey or during the search, on the same day authorizes the learned Assessing Officer to pass an assessment order under Section 153C of the Income Tax Act 1961.
After considering the contentions of the both parties The Division bench of ITAT comprising Prashant (Maharishi Accountant)t Member, and Pavan Kumar Gadale(Judicial Member), allowed the appeal filed by the assessee and observed that search under Section 132(1)Income Tax Act 1961 as well as survey under Section 133A of the Income-tax Act, 1961 was carried out at various premises of Ameya Group,and also There is no order required to be passed under Section 133A of the Act if the documents are found and seized during the course of search .
Further addition had been made in the hands of the assessee on the basis of material found during the course of survey and not search. It was clear that all the additions made in the hands of the assessee were arising out of the documents impounded during the course of survey under Section 133A of the Act. Thus, no material was found during the course of search based on which addition under section 153C of the Income Tax Act 1961 is made merely because search and survey are carried out simultaneously at several places, material found during the course of survey did not authorize the assessing officer to make assessment under section 153C of the Income Tax Act 1961.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
