The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the assessment under Section 153C of the Income Tax Act 1961 as the seized documents were not containing the name of the assessee.
The assessee, Shroff Krishnarajasetty who was a partner in a firm filed his return of income. A search action u/s 132 of the Income Tax Act 1961 was conducted in the case of C. P. Exports and during the course of search proceedings some documents were found and seized related to the purchase of property by the assessee from E.Jawahar, partner of C.P.Exports . After recording satisfaction, the proceedings u/s 153A of the Income Tax Act 1961 had been initiated presuming that the seized documents belonged to the assessee and the information contained therein relates to the assessee. Then proceedings under Section 153C of the Act were initiated against the assessee.
provisions of section 153 C of the Act to take effect, The incriminating material should be one which has an impact on the determination of total income. If satisfaction is arrived at, the documents need to be handed over to the AO of the “other person”.
Thereafter, the AO of the “other person” has to segregate the incriminating material, year wise and has to satisfy himself that there is year specific incriminating material which will have an impact on the determination of total income of the “other person” for that assessment year. Notice u/s 153C can be issued only in respect to those assessment years for which incriminating material is identified.
Manjunath Karkihalli on behalf of the revenue submitted that during the course of search, statement was recorded from Sri.E.Jawahar, who was the vendor of the property and seized copy of register and it was related to the assessee which was an incriminating document for invoking provisions of section 153C of the Act. He further contended that the on-money received by the vendor on sale of property had been received from the assessee.
AkkalDudhwewala, on behalf of the assessee contended that the name of the assessee was not mentioned in the register and retraction filed by Sri.E.Jawahar is not correct and his action seems to be directed towards saving his own skin from further harassment from the Revenue and instead passing on the blame on to the assessee. He also submitted that the documents were found from the business premises of C.P.Exports not belonged to the assessee
The bench of George George K (Judicial Member) & Laxmi Prasad Sahu (Accountant Member) observed that “noted that the validity of the period of the document was five months and no extension was granted beyond five months and no further new agreement has been executed after expiry of five months . We further noted from the copy of the ledger that the name of the assessee is not noted and this has also been accepted by the A.O. during the course of assessment proceedings and AO has presumed that the entry made in the register is related / pertains to the sale of land and payment has been made by the assessee, which is not correct.”
The Bench accordingly dismissed the appeal filed by the revenue.
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