2022 (3) TMI 1571 - HC - Income Tax

Assessment under Section 153A r.w. 153C upheld based on seized documents establishing clear connection with assessee

K.M. FATHIMA Versus COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, KOCHI

Kerala HC upheld assessment under Section 153A r.w. 153C based on documents seized during search operations. Court rejected assessee's objections to the ... Assessment u/s 153A r.w/s 153C - validity of documents found during search - HELD THAT:- After appreciating the materials, referring to which proceedings under Section 153A r.w.s. 153C have been initiated, we find it difficult to appreciate how the assessee can object to the instant enquiry, mainly initiated by reference to documents recovered in the search. We express our agreement with the view expressed by the CIT (Appeals) and the Tribunal., which are again based on the documents seized, and the connection the said documents establish with the assessee. The questions are answered in favour of the Revenue and against the assessee. Nature of income - rejecting the claim of agricultural income and treating the income as income from other sources - HELD THAT:- This Court, in the appeals filed by the assessee’s husband [2018 (4) TMI 1969 - ITAT COCHIN] considered the claim of all the assesses subjected to reopening of assessment upon search and seizure. The case of the assessee, for agricultural income, is from two sources of agricultural income. The finding recorded by the Commissioner is that nothing is forthcoming for accepting the agriculture income. Though a general ground is raised, in our considered view , after perusing the findings recorded by all the authorities under the Act on this behalf, we are satisfied that substantial questions do not arise, and we affirm the findings recorded on this behalf. Hence, the questions are answered in favour of the Revenue and against the assessee. Issues Involved:1. Legality of assessment proceedings initiated under Section 153A read with Section 153C of the Income Tax Act.2. Validity of treating agricultural income as income from other sources.Issue-wise Detailed Analysis:1. Legality of Assessment Proceedings under Section 153A read with Section 153C:The appellant, aggrieved by the common order dated 23.04.2018, filed appeals under Section 260A of the Income Tax Act, 1961. The primary contention was against the reassessment initiated under Section 153A read with Section 153C based on documents seized from the premises of her husband, K A Rauf. The appellant argued that the residence 'Shelter' was not in the exclusive possession of K A Rauf and that the seized documents did not belong to her, thus making the reassessment illegal and unauthorized.The Assessing Authority dismissed these objections, stating that the search under Section 132 could be carried out at places not exclusively belonging to the assessee's husband. The authority noted that the appellant was a partner in M/s. Nilambur Traders and Director of K A Latex (P) Ltd, entities covered by the notice under Section 132. The Commissioner of Income Tax (Appeals) upheld the reassessment, citing that the appellant was linked to the premises searched and the documents seized justified the initiation of proceedings under Section 153A read with Section 153C. The Tribunal affirmed this view, noting the direct connection between the appellant and the premises searched, and the necessity of action under Section 153A read with Section 153C due to the documents recovered.The High Court agreed with the lower authorities, stating that the documents seized and the connection established with the appellant justified the reassessment. The questions raised were answered in favor of the Revenue and against the assessee.2. Validity of Treating Agricultural Income as Income from Other Sources:The appellant claimed agricultural income for several assessment years, which was rejected by the Assessing Authority due to a lack of supporting evidence. The authority noted that the appellant failed to provide details or evidence for the claimed agricultural income, leading to its disallowance and addition to the total income as income from other sources.The Commissioner of Income Tax (Appeals) upheld this decision, stating that the appellant did not establish the veracity of the agricultural income claim. The Tribunal affirmed this view, noting that an income claim cannot be based on mere ownership of agricultural land without detailed records of receipts and expenses.The High Court, after reviewing the findings of the lower authorities, agreed that the appellant failed to substantiate the agricultural income claim. The substantial questions of law raised were answered in favor of the Revenue and against the assessee, affirming the findings of the lower authorities.Conclusion:The appeals were dismissed with no order as to costs. The High Court upheld the reassessment proceedings under Section 153A read with Section 153C and the treatment of agricultural income as income from other sources, aligning with the findings of the lower authorities.