Documents found during Search must ‘belong to Assessee’ is a necessary Condition to invoke Assessment u/s 153C: Bombay HC

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The division bench of the Bombay High Court, in a recent decision, held that the documents found during search must “belong to the assessee” is a necessary condition to invoke assessment u/s 153C of the Income Tax Act. Concurring with the findings of the ITAT, the bench noted that the above requirement is a condition precedent and a jurisdictional issue and the non-satisfaction of the condition renders the entire proceedings null and void.

A search was conducted on the premises of a Company as a result of which, certain documents related to the respondent-assessees were recovered from one of the key persons of the Company. Consequently, the assessment under s. 153C of the Income Tax Act was initiated.The assesses questioned the orders by stating that the documents seized from the above person is not belong to the assesses and therefore, the assessment is passed without jurisdiction and is liable to be quashed. The tribunal accepted the contention and therefore, the Revenue preferred an appeal before the High court.

The division bench comprising of Justice M.S Sanklecha and Justice A.K Menon noted that the revenues’ submission solely on the basis of suspicion and not on the basis of any evidence on record which would indicate that the respondent – assessee and persons searched were all part of the same group. “Be that as it may, the requirement of Section 153C of the Income Tax Act cannot be ignored at the alter of suspicion. The Revenue has to strictly comply with Section 153C of the Income Tax Act. We are of the view that non satisfaction of the condition precedent viz. the seized document must belong to the respondent – assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken there under null and void. The issue of Section 69C of the Income Tax Act can only arise for consideration if the proceedings under Section 153C of the Income Tax Act are upheld.”

Read the full text of the Judgment below.

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