Court Quashes Tax Notices Due to Lack of Direct Evidence Linking Petitioner to Alleged Incriminating Material.

The court allowed the petition, setting aside the impugned notices under Section 153C of the Income Tax Act, 1961, as the information found during the search did not establish any connection to the petitioner. The court clarified that the mere presence of an Agreement to Sell between third parties on the husband's phone did not imply relevance to the petitioner. The judgment focused on the requirement of incriminating material directly linked to the assessee for the validity of notices under Section 153C, emphasizing the jurisdictional aspect in such cases.

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Issues: Jurisdiction of notices under Section 153C of the Income Tax Act, 1961

Analysis:
The petitioner challenged the notices dated 18.10.2023 issued under Section 153C of the Income Tax Act, 1961, for the assessment years 2015-16 to 2021-22, alleging lack of jurisdiction due to the absence of incriminating material related to the petitioner in any search conducted under Section 132 of the Act or any requisition made under Section 132A of the Act. The court directed the Revenue to produce material found during search proceedings, which led to the discovery of an Agreement to Sell involving cash transactions. The Revenue claimed the information was related to the petitioner based on the Agreement to Sell retrieved from the husband's mobile phone, indicating a property transaction. However, the court found that the information did not pertain to the petitioner, as it involved a transaction between other parties. The court emphasized that the absence of incriminating material directly linked to the petitioner rendered the notices without jurisdiction.

Conclusion:
The court allowed the petition, setting aside the impugned notices under Section 153C of the Income Tax Act, 1961, as the information found during the search did not establish any connection to the petitioner. The court clarified that the mere presence of an Agreement to Sell between third parties on the husband's phone did not imply relevance to the petitioner. The judgment focused on the requirement of incriminating material directly linked to the assessee for the validity of notices under Section 153C, emphasizing the jurisdictional aspect in such cases.

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