2023 (11) TMI 347 - HC - Income Tax

ITAT correctly rejects rectification applications seeking re-argument of decided issues under Section 254(2)

Principal Commissioner Of Income Tax (Central), Ahmedabad Versus Hitesh Ashok Vaswani

Principal Commissioner Of Income Tax (Central), Ahmedabad Versus Hitesh Ashok Vaswani - (2023) 459 ITR 610 Issues Involved:1. Whether the assessment proceedings undertaken under Section 153C are sustainable in the eye of law.2. Whether the assessments under Section 153A are to be framed strictly on the basis of incriminating material found during the course of search in the case of the concerned assessee.3. Whether the assessments completed under Section 153A are within limitation.4. Whether the reopening of the assessments in the case of Ashok Sundardas Vaswani is justifiable.Summary:Issue 1: Whether the assessment proceedings undertaken under Section 153C are sustainable in the eye of law.The Tribunal held that jurisdiction under Section 153C of the Act prior to 01.06.2015 could be invoked only if the material seized during the course of search in the case of third parties 'belongs to' some persons other than the searched person. After 01.06.2015, the information embedded in the document is sufficient for taking action under Section 153C. The Tribunal found that the satisfaction note did not indicate that the documents belonged to the assessee, and since the search was prior to 01.06.2015, the appeals of the assessees were allowed. The Tribunal dismissed the Misc. Applications, stating that the power of rectification under Section 254(2) can be exercised only when the mistake is obvious and patent, which was not the case here.Issue 2: Whether the assessments under Section 153A are to be framed strictly on the basis of incriminating material found during the course of search in the case of the concerned assessee.The Tribunal, relying on the decision of the Delhi High Court in CIT v. Kabul Chawla, held that assessments under Section 153A have to be made on the basis of material found during the search. Material found during the search of third parties cannot be used for the purposes of Section 153A. The Tribunal dismissed the Misc. Applications, stating that the issues raised by the Revenue required long drawn arguments, which is not allowed under Section 254(2).Issue 3: Whether the assessments completed under Section 153A are within limitation.The Tribunal held that the assessment orders were framed beyond the time limit prescribed under Section 153B of the Act. The search was carried out on 10.03.2015 and 12.03.2015, and the time limit for passing the assessment orders expired on 31.03.2017. The Tribunal found that the prohibitory orders were invalid as the search team had seized only 277 pages, which was possible to seize during the search proceedings. The Tribunal dismissed the Misc. Applications, stating that there was no apparent mistake in the order.Issue 4: Whether the reopening of the assessments in the case of Ashok Sundardas Vaswani is justifiable.The Tribunal held that the reasons recorded for reopening the assessment under Section 147 were not reasons but conclusions and a reproduction of the information received from the Director (Investigation), amounting to 'borrowed satisfaction'. The Tribunal dismissed the Misc. Applications, stating that the issues raised by the Revenue required long drawn arguments, which is not allowed under Section 254(2).Conclusion:In cases where the Revenue has filed Tax Appeals, the petitions are not entertained, reserving the liberty to urge the grounds raised in the respective Tax Appeals. In cases where no Tax Appeals are filed due to low tax effect, the petitions are dismissed, upholding the Tribunal's decision that no rectification could be made on the grounds stated in the Miscellaneous Applications.