Assessing Officer can't invoke jurisdiction u/s 153C and Seize material belonging to a Third Party before 1-6-2015: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the Assessing Officer can't invoke jurisdiction under section 153C of the Income Tax Act,1961 and seize material belonging to a third party before 1-6-2015.

M/s Ashrita Construction Pvt. Ltd, the assessee is a private limited company engaged in the business of construction activity. The assessee maintained regular books of accounts which are duly audited and original returns of income were filed. A search action u/s. 132 of the Act was conducted in the case of Venus Group of Ahmedabad on 10.03.2015, various premises were covered u/s. 132/133A of the Income Tax Act, during the search and various incriminating documents, were seized.

On the terrace of Crystal Arcade, C.G. Road, Ahmedabad documents related to unaccounted cash transactions of Venus Group were seized. On analysis of the documents seized and their co-relation, it was found that unaccounted cash transactions were first recorded on cash vouchers. Based onrecordings made on these cash vouchers, the entries were recorded on the day cash book.

Before CIT(A), the assessee challenged the proceedings initiated u/s. 153C of the Income Tax Act on the ground that no seized materials “pertains” to the assessee found during the course of the search conducted in the case of Venus Group persons, hence no addition can be made in the case of the assessee and 153C notice itself is bad in law. 

The CIT(A) held that the assessee could not prove with documentary evidence that the transaction shown in the seized documents was considered in the hands of the persons of Venus Group. Even if unaccounted transactions are considered in the hands of one party.

In the case of Anil Kumar Gopikishan Agrawal vs. ACIT, it was held that in the case of search action carried out u/s. 132 of the Income Tax Act before 01.06.2015 jurisdiction u/s. 153C of the Income Tax Act can be invoked only if the material seized during the course of search in the case of a third party ‘belongs to’ to some person other than the searched person.

A Coram comprising of Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member observed that search action has been taken place on 10.03.2015 much before 01.06.2015 and the seized material does not belong to the assessee. The basic requirement to justify the assumption of jurisdiction u/s. 153C of the Income Tax Act does not exist, therefore the issuance of notice u/s. 153C is not valid.  The Cross objection filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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