2013 (9) TMI 1115 - AT - Income Tax

Invalid search renders Section 153A assessments null. Tribunal dismisses appeal, emphasizes statutory requirements not met.

Assistant Commissioner of Income-tax, Central Circle -2 Versus MAB Finlease Ltd.

The Tribunal upheld the decision to annul assessments under Section 153A of the Income Tax Act, finding that no valid search was conducted on the ... Assessment u/s 153A - Held that:- No search has been conducted against the assessee and there is no validity in the action of the Assessing Officer in issuance of the notice u/s 153A of the Act under which the jurisdictional area of operation in the six assessment years immediately preceding to assessment year relevant to the previous year in which search was conducted. In such a case, where no search was conducted against a person, the period of operation to which the provisions of Section 153A are applicable cannot be determined by invoking provisions of section 153A of the Act. Issues Involved:1. Validity of assessment under Section 153A of the Income Tax Act, 1961.2. Interpretation of Section 153A regarding the requirement of a search.3. Consideration of material seized during the search.Issue-Wise Detailed Analysis:1. Validity of assessment under Section 153A of the Income Tax Act, 1961:The Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which annulled the assessment under Section 153A, contending that no search was conducted on the assessee. The Assessing Officer issued notices under Section 153A following a search on 1.6.2006 at premises associated with the Vipul Group. The CIT(A) found that the name of the assessee was mentioned in the warrant of authorization but not in the Panchnama, which is a record of the search. The Tribunal upheld the CIT(A)'s decision, emphasizing that the absence of the assessee's name in the Panchnama indicated that no search was conducted on the assessee's premises. The Tribunal concluded that the assessments made under Section 153A were null and void as the statutory requirements were not met.2. Interpretation of Section 153A regarding the requirement of a search:The CIT(A) and the Tribunal interpreted Section 153A to mean that a valid search must be conducted for the provisions to apply. The Tribunal referred to the statutory language of Section 153A, which necessitates a search under Section 132 or requisition under Section 132A. The Tribunal agreed with the CIT(A) that merely mentioning the assessee's name in the warrant of authorization did not suffice to constitute a valid search. The Tribunal cited case law, including the Karnataka High Court's decision in CIT v. Wipro Finance Ltd. and the ITAT Mumbai's decision in J.M. Trading Corpn. v. Asstt. CIT, to support the view that a search must be initiated and conducted for Section 153A to be applicable.3. Consideration of material seized during the search:The Revenue argued that the CIT(A) ignored material seized during the search. However, the Tribunal found that the Assessing Officer made additions based on documents found at the residence of another individual, not the assessee's premises. The Tribunal noted that the search was conducted at a location occupied by other entities, and no incriminating material related to the assessee was found or seized. The Tribunal concluded that the absence of any search or seizure at the assessee's premises invalidated the assessments under Section 153A.Conclusion:The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to annul the assessments under Section 153A. The Tribunal held that no valid search was conducted against the assessee, and the mere inclusion of the assessee's name in the warrant of authorization did not meet the statutory requirements for assessments under Section 153A. Consequently, the assessments were deemed null and void.