2022 (7) TMI 327 - AT - Income Tax

Tribunal Upholds Decision on Assessing Officer's Jurisdiction

The Assistant Commissioner of Income Tax, Central Circle – 3 (4), Chennai Versus Shri M. Sukumar Reddy

The Tribunal upheld the Commissioner of Income Tax (Appeals)' decision, dismissing the Revenue's appeal challenging the jurisdiction of the Assessing ... Validity of assessment u/s 153C r.w.s. 153A - search and seizure operation u/s.132 of the Act was carried out on 21.06.2011 at the business and residential premises of the Platinum Group of cases to which the Assessee also belongs - HELD THAT:- We noted that only the document seized relates to the Assessment Year 2011 – 2012 that is the ‘sale deed’ - Apart from this, there is no incriminating material or seized material found by the Department during the course of search at the business and residential premises of the Assessee. We are of the view that once there is no incriminating material found during the course of search, then the Assessing Officer cannot exercise any power u/s.153C r.w.s.153A of the Act because the power u/s.153A being not accepted, to be exercised redundantly, but the same should be exercised if the search reveals any incriminating material. Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Continental Warehousing Corporation (Nhava Sheva) Limited [2015 (5) TMI 656 - BOMBAY HIGH COURT] has laid the same proposition. Further, we are of the view that the assessment has to be made u/s.153A of the Act only on the basis of the seized material. This view is also found by the Hon’ble Delhi High Court in the case of the Commissioner of Income Tax Vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] - Decided in favour of assessee. Issues:1. Jurisdiction of Assessing Officer u/s.153C of the Income Tax Act, 1961 based on seized material.2. Validity of assessment framed u/s.143C without incriminating material found during search.3. Interpretation of relevant case laws regarding satisfaction of Assessing Officer for issuing notices u/s.153C.Issue 1: Jurisdiction of Assessing Officer u/s.153C:The appeal by the Revenue challenged the order of the Commissioner of Income Tax (Appeals) regarding the jurisdiction of the Assessing Officer under section 153C of the Income Tax Act, 1961. The Revenue contended that the Assessing Officer had acquired jurisdiction based on the seized documents belonging to the Assessee found during a search operation. The CIT(A) held that the Assessing Officer lacked jurisdiction as there was no incriminating material found during the search pertaining to the Assessee for the relevant assessment year. The Revenue raised specific grounds challenging this decision, citing relevant case laws to support their argument. The Tribunal analyzed the facts, noting that the search operation did not yield any incriminating material related to the Assessee for the assessment year in question. The Tribunal referred to precedents and held that the power under section 153C should only be exercised if the search reveals incriminating material, as established by various High Court judgments. Consequently, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.Issue 2: Validity of assessment without incriminating material:The assessment for the Assessee under section 143C of the Act was challenged by the Revenue for lacking jurisdiction due to the absence of incriminating material found during the search. The Assessing Officer had issued notices under section 153C based on seized documents, leading to additions in the assessment. The CIT(A) quashed the assessment, emphasizing the necessity of incriminating material for jurisdiction under section 153C. The Tribunal examined the assessment process, noting that the seized document forming the basis for the Assessing Officer's satisfaction did not relate to the relevant assessment years. The Tribunal reiterated the requirement of incriminating material for jurisdiction under section 153C, as per legal principles and case laws. As no such material was found during the search, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.Issue 3: Interpretation of relevant case laws:The Tribunal considered the interpretation of relevant case laws in determining the satisfaction of the Assessing Officer for issuing notices under section 153C. Specific references were made to judgments by the Delhi High Court and Chennai ITAT regarding the scope and application of section 153C in cases where incriminating material is absent. The Tribunal analyzed the legal principles established in these judgments to conclude that the absence of incriminating material during the search operation precludes the Assessing Officer from exercising jurisdiction under section 153C. By aligning with the precedents and legal interpretations, the Tribunal upheld the decision of the CIT(A) and dismissed the Revenue's appeal.In conclusion, the Tribunal's judgment focused on the jurisdictional aspects of the Assessing Officer under section 153C, emphasizing the necessity of incriminating material for initiating assessments. The decision was guided by legal principles and precedents, ultimately leading to the dismissal of the Revenue's appeal due to the absence of such material during the search operation.