No Assessment Order shall be passed u/s 153C of Income Tax Act when Seized documents did not establish any correlation with that Assessment Year :ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi bench held that no assessment order should be passed under Section 153C of the Income Tax Act, 1961 when seized documents did not establish any correlation with that assessment year.

When a search and seizure operation under Section 132 of the Income Tax  Act was conducted on 23.07.2015 and on subsequent dates at the residential as well as office premises of Assessee, Zoom Developers SEZ [Indore] Pvt. Ltd .

Various incriminating papers/documents were found and seized during the course of search and seizure operation in the group case and statements were recorded during the course of search and seizure operation.

During the course of search and seizure operations, incriminating papers/documents were found related to the captioned assessees and on the basis of such impounded material, satisfaction note was drawn on 23.03.2018 in the case of searched person and the other person [captioned assessee] under Section 153C of the Income Tax  Act.

 On the basis of the aforementioned satisfaction, the Assessing Officer initiated proceedings u/s 153C of the Act and completed proceedings by making addition on account of commission on accommodation entries on account of bogus purchases and bogus sales

Aggrieved by the order, the assessee filed an appeal  before the Commissioner of Income Tax (Appeals) [CIT(A)], who deleted the addition on account commission on accommodation entries and partly confirmed the disallowance of ad hoc expenditure. Therefore the assessee filed another appeal before the tribunal by challenging the assessment proceedings and action of CIT(A).

It was argued before the bench that when the seized documents did not establish any correlation document wise with the assessment years in question, then the validity of the assessment so framed was legally unsustainable.

Counsel for revenue supported the decision of assessing officers.

During the proceedings  tribunal observed that additions/disallowance, devoid of any incriminating material found during the course of search, cannot validate the assessment orders framed under Section  153C of the Income Tax Act.

After considering  the facts submitted by both parties, the two member bench of N.K. Billaiya (Accountant Member) and Kul Bharat (Judicial Member) held that no assessment order should be passed under Section 153C of the Income Tax Act.  When seized documents did not establish any correlation with that assessment year.

Therefore the bench allowed the appeal filed by the assessee.

Sapna Bhatia appeared for the revenue and Kapil Goel appeared for assessee.

To Read the full text of the Order CLICK HERE

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