The Delhi High Court remanded the Income Tax Matter to the Appellate Tribunal stating that Section 153C of the Income Tax Act, 1961 is also applicable to Searches Prior to Finance Act, 2015.
The Present Appeals was filed by the Revenue under Section 260A of the Income Tax Act, 1961 assailing the order dated 25.05.2018 which was passed by the Income Tax Appellate Tribunal ( ITAT ) and was captioned as Dharam Raj Construction and Infrastructure Private Limited v. DCIT in respect of assessment year 2007-08 and 2008-09 respectively.
The impugned order was a common order passed in a batch of appeals, the court noted. Also the court framed certain questions to be considered for the evaluation of the case law.
The court observed that “ the said questions are covered by the decision of the Supreme Court in Income-tax Officer v. Vikram Sujitkumar Bhatia: (2023) 453 ITR 417 (SC). The SC in its decision also noted that the Court in the case of Pepsico India Holdings (P.) Ltd. v. ACIT and Anr: (2014) SCC OnLine Del 4155 took a restrictive view of the words “belong to” as used in Section 153C of the Act.
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But even though incriminating material pertaining to the third parties was found during a search conducted u/s 132 of the Act, the Revenue could not proceed against such other persons if the document did not belong to the said person. In view of which, the Parliament substituted the words “belongs or belongs to” with the words “pertains or pertains to” by the Finance Act, 2015.
In the present case, the Tribunal proceeded on the restrictive interpretation of the words “belongs to” as interpreted by the Court in Pepsico India Holdings (P.) Ltd. v. ACIT and Anr. Further, in the case of Income-tax Officer v. Vikram Sujitkumar Bhatia, the SC authoritatively held that the same would be applicable to the searches conducted prior to the enactment of the Finance Act,2015.
Gaurav Jain and Shubham Gupta, Learned Counsel appearing for the assessee does not dispute that the questions now stand fully covered by the said decision in favor of the Revenue. They submitted that the other questions that were not decided by the Tribunal in view of its decision that the material found during the search did not belong to the assessee, and the same is to be considered.
Mr Ruchir Bhatia, SSC with Mr Anant Mann, Advocate, Counsel appearing for the revenue submitted that in view of the above, it is necessary to remand the matter to the Tribunal to decide the remaining grounds raised in the appeal.
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On above grounds, the Division Bench Comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma held that the impugned order is set aside and the appeals are restored before the Tribunal for consideration of the remaining grounds raised by the assessee.
The present appeal is disposed in the aforesaid terms and all the pending applications are also disposed of.
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