The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has quashed an assessment under Section 153C of the Income Tax Act, 1961, against an assessee due to lack of valid grounds and corroborative evidence and section 153C allows the Income Tax Department to assess an assessee other than the person searched, if incriminating material is found during the course of a search of that person.
The assessee, Jethmal Mehta, is a businessman. In 2022, the Income Tax Department searched the premises of a close associate of assessee. During the search, incriminating material was found, including documents and electronic evidence that suggested that Mr. A had evaded taxes.
The Assessing Officer issued an assessment order under Section 153C of the Income Tax Act, 1961, against assessee. The assessee challenged the assessment order in the ITAT.
The assessee argued that seized documents, including cash entries with his name, did not belong to him and that he had disowned any association with them. His legal representatives argued that tax authorities had no valid grounds to assume the surname “Mehta” referred to him.
The Income Tax Department argued that the appellant’s full name was not explicitly mentioned, but the circumstances indicated a connection. They cited a letter acknowledging financial transactions in seized documents by the Antriksh Group, indicating no direct involvement. They emphasized the presumption under Section 292C of the Income Tax Act.
The Tribunal found that the seized documents, which did not explicitly mention the appellant’s name, were deemed “dumb” and that the Revenue’s assumption of the appellant’s surname lacked conclusive evidence, highlighting the need for further collaboration.
The Two member bench comprising Chandra Mohan Garug (Judicial Member) and M. Balaganesh (Accountant Member) ruled that the Assessing Officer failed to prove that the incriminating material found during the search belonged to the assessee. The assessee denied wrongdoing and provided an explanation for its possession. The Assessing Officer also failed to provide evidence to support the assessment, stating that the incriminating material was circumstantial and did not prove beyond a reasonable doubt that the assessee had evaded taxes.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
