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Friday, 03 June 2016 10:55

Section 153C - In the Absence of any Incriminating Material relating to the Assessee Found during the Course of Search, the Provisions of Section 153C of the Act Cannot be Invoked - Bangalore Tribunal

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Provisions of Section 153C Cannot be Invoked in Absence of Incriminating Material

As per the provisions of section 153C, notice can only be issued to a person with respect to whom some incriminating material is found and the AO forms a belief that this material relates to the said person. Unless and until the AO forms a belief that such seized material belongs to the third person, the provisions of section 153C cannot be invoked

Facts

1. Solitary ground in this appeal as raised by Revenue is that the CIT(Appeals) has erred in fact and in law in holding that the addition cannot be sustained u/s. 153A r.w.s. 153C of the Income Tax Act as no incriminating material to justify the additions made have unearthed during the search

2. Search was conducted at M/s. India Builders Corporation and others at their residential premises, Diamond District, Airport Road, Bangalore

3. A notice u/s. 153C was issued to the assessee on 29.12.2008, in response to which the assessee has filed the return declaring income. The AO examined return filed by the assessee and made certain additions

4. Against the assessment order, the assessee has preferred appeal before the CIT(Appeals) with the submission that during the course of search no incriminating material relating to assessee was found, therefore there was no proper assumption of jurisdiction u/s. 153C of the Act

5. The CIT(Appeals) examined the claim of the assessee and being convinced with the explanation of the assessee, the CIT(Appeals) held that no incriminating material have been brought on record to justify the disallowances and he accordingly deleted the additions

6. Aggrieved, the Revenue has preferred these appeals before the Tribunal and besides placing reliance upon the assessment order, the ld. DR has contended that during the course of search, certain documents relating to the assessee were found, therefore the AO has rightly issued a notice u/s. 153C of the Act

7. During the course of hearing, a specific query was raised to the ld. DR with regard to the incriminating material relating to the assessee found during the course of search

8. The ld. DR could not explain as to what material relating to the assessee was found

9. Honb. Tribunal confirmed order of the CIT(A) and decided appeal in favour of Assessee and dismissed department's Appeal

Adjudication

Having given a thoughtful consideration to the rival submissions and from a perusal of the orders of authorities, we find that there is no indication of the evidence/incriminating material relating to the assessee found during the course of search. During the course of hearing, a specific query was raised to the ld. DR with regard to the incriminating material relating to the assessee found during the course of search. The ld. DR could not explain as to what material relating to the assessee was found. In the absence of any incriminating material relating to the assessee found during the course of search, the provisions of section 153C of the Act cannot be invoked.

As per the provisions of section 153C, notice can only be issued to a person with respect to whom some incriminating material is found and the AO forms a belief that this material relates to the said person. Unless and until the AO forms a belief that such seized material belongs to the third person, the provisions of section 153C cannot be invoked. In the instant case, nothing is brought on record as to what was the incriminating material found during the course of search which relates to the assessee. Therefore, we are of the view that the AO has not assumed jurisdiction to issue notice u/s. 153C of the Act to the assessee. Therefore, we find ourselves in agreement with the findings of the CIT(Appeals). Accordingly, we confirm his order.

Cases Referred to

None

Additional Info

Read 13200 times Last modified on Friday, 03 June 2016 11:14
Amit

Amit is a Chartered Accountant and a part of Taxpundit's Support Team. He has experience in various industry sectors including manufacturing, power and utilities, financial services, alternative investments etc. He is a passionate blogger and keep writing articles on Income Tax for various publications.

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