ITAT quashes S. 153C Proceedings since Documents relied on was neither belong to Assessee nor were ‘Incriminating’ [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has deleted an assessment order passed under section 153C of the Income Tax Act, 1961 by holding that the document relied on by the department was neither belongs to the assessee nor were incriminating in nature.

The assessee challenged the validity of the proceedings initiated under section 153C of the Income Tax Act by contending that the requirement of law for initiating proceedings u/s 153C of the Act, was that the Assessing Officer should be satisfied that incriminating material belonging to the assessee had been found during the course of search on a third person.

Shri U.S. Bhati, & Shri Abhimanyu S. Bhati, the counsels appeared for the assessee contended that the requirements of documents belonging to the assessee being found and the documents being incriminating also, both were not fulfilled in the present case.

The Tribunal bench comprising Ms. Annapurna Gupta, Accountant Member and Ms. Madhumita Roy, Judicial Member has accepted the contention of the assessee that the document relied on by the AO certainly does not reveal any information having a bearing on the determination of income or being incriminating in other words, being already duly accounted for in its books.

“Further admittedly no addition has been made on account of the said document. Therefore we agree with the Ld. Counsel for the assessee that this document cannot be said to be sufficient for the A.O. to assume jurisdiction to initiate proceedings u/s. 153C of the Act. We draw support from the order of the coordinate Bench of the ITAT in the case of Green Range Farm (P) Ltd.(supra) wherein it was held that documents having no bearing on the determination of income and on the basis of which no addition also is made in assessment framed u/s 153C of the Act, the initiation of proceedings u/s 153C of the Act basis such documents is bad in law,” the Tribunal said.

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