2015 (3) TMI 605 - AT - Income Tax

Tribunal quashes AO's jurisdiction assumption under Section 153A, rules additions as invalid; emphasizes Chapter XIVB for pre-31-05-2003 cases.

The Tribunal allowed the assessee's appeals, quashing the AO's assumption of jurisdiction under Section 153A and the related additions of undisclosed ... Undisclosed income of the assessee on account of the value of seized precious stones - whether the impugned Assessment Order passed by the AO under sec. 143(3)/153A on 28th December 2006 is without jurisdiction, illegal and void an-initio? - when the AO assumed his jurisdiction, when the Income Tax department issued search warrant on 28-02-2001, which was communicated on 5-3-2001 or whether the AO has assumed jurisdiction on 9-9-04 when the seized materials were handed over to the Income Tax department? - Held that:- Thus on plain reading the provisions of section 132A, 153A, 158BI of the Act, it is clear that the assumption of jurisdiction depends on the date of requisition u/s. 132A. In the Act it has nowhere been provided that assumption of jurisdiction depends on supply of requisitioned materials. Pursuant to the requisition u/s. 132A on 28.2.2001 the jurisdiction could have been assumed only under Chapter XIVB i.e from the date on which the authorized officer has made the requisition and not the date when he received the records/assets pursuant thereto. It is evident that AO assumed jurisdiction on 28.2.2001 when requisition was issued. Section 153A also postulates that action should be initiated as per this section from the date on search u/s. 132 or section 132A by requisition. In the present case, since requisition was made prior to 31-05-2003 when section 153A was not in existence, the assumption of jurisdiction u/s. 153A of the Act by the AO is bad in law and the same is liable to be quashed.AO was not correct in assuming his jurisdiction u/s. 153A of the Act inasmuch as the requisition u/s. 132A was made in this case prior to 31-05-2003. Since we have already quashed the assumption of jurisdiction - Decided in favour of assessee. Issues Involved:1. Addition of Rs. 1,79,47,462/- as undisclosed income from seized precious stones.2. Addition of Rs. 6,98,880/- as unexplained income from seized cash.3. Addition of Rs. 1,50,000/- as undisclosed income from advance received on sale of car.4. Assumption of jurisdiction under Section 153A of the Income Tax Act.Detailed Analysis:1. Addition of Rs. 1,79,47,462/- as Undisclosed Income from Seized Precious Stones:The assessee contested the addition of Rs. 1,79,47,462/- by the Assessing Officer (AO) as undisclosed income from seized precious stones. The Commissioner of Customs, West Bengal, conducted a search on 16-09-2000, seizing precious stones valued at Rs. 1,79,47,462/- and cash of Rs. 6,98,880/-. The Custom Authorities informed the Income Tax Department, which issued a warrant on 28-02-2001. The stones and cash were handed over to the Income Tax Department in 2004. The AO's jurisdiction was challenged on the grounds that the search and requisition were conducted before 31-05-2003, making the invocation of Section 153A inappropriate. The Tribunal found that the AO's assumption of jurisdiction under Section 153A was incorrect and quashed the addition.2. Addition of Rs. 6,98,880/- as Unexplained Income from Seized Cash:Similar to the first issue, the assessee challenged the addition of Rs. 6,98,880/- as unexplained income from seized cash. The Tribunal's analysis and decision were the same as for the precious stones, focusing on the jurisdictional error in invoking Section 153A. The Tribunal quashed the addition based on the same reasoning.3. Addition of Rs. 1,50,000/- as Undisclosed Income from Advance Received on Sale of Car:For the assessment year 2003-04, the assessee contested the addition of Rs. 1,50,000/- as undisclosed income from an advance received on the sale of a car. The Tribunal did not provide a separate detailed analysis for this issue, as the primary focus was on the jurisdictional challenge under Section 153A. Since the assumption of jurisdiction was quashed, the Tribunal deemed the adjudication on this issue academic and did not address it further.4. Assumption of Jurisdiction under Section 153A:The core issue was whether the AO correctly assumed jurisdiction under Section 153A. The Tribunal examined the facts and legal provisions, noting that the requisition under Section 132A was made on 28-02-2001, before the cut-off date of 31-05-2003. The Tribunal referred to Sections 132A, 153A, and 158BI, concluding that the AO should have proceeded under Chapter XIVB, which was applicable for requisitions made before 31-05-2003. The Tribunal emphasized that the assumption of jurisdiction depends on the date of requisition, not the date of receiving the requisitioned materials. Citing relevant case law, the Tribunal found that the AO's jurisdiction under Section 153A was not sustainable, leading to the quashing of the jurisdiction and the related additions.Conclusion:The Tribunal allowed the assessee's appeals, quashing the AO's assumption of jurisdiction under Section 153A and the related additions of Rs. 1,79,47,462/-, Rs. 6,98,880/-, and Rs. 1,50,000/-. The decision was based on the incorrect invocation of Section 153A for requisitions made before 31-05-2003, which should have been handled under Chapter XIVB.