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2026 Supreme(Online)(ITAT) 7919
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
Satbeer Singh Godara, Judicial Member, M. Balaganesh, Accountant Member
ACIT, Central Circle-2 – Appellant
Versus
M/s Grand Venice Developers Pvt. Ltd. – Respondent
ITA No. 5579/Del/2016
For the Appellants/Petitioners: None
For the Respondents: Ms. Monika Singh, CIT-DR
Section 153C assessment invalid if seized documents do not belong to assessee but to third party; cogent material required to rebut presumption; no additions in unabated assessments without incriminating search material.
Headnote:(A) Income Tax Act, 1961 - Sections 153C, 153A, 143(3), 132(4A)(i), 292C(1)(i) - Search and seizure - Assessment u/s 153C - Document seized from searched person’s premises must belong to other person for jurisdiction - Mere relation or reference insufficient - Satisfaction note must rebut presumption that document belongs to searched person using cogent material - No addition permissible in unabated completed assessment without incriminating material unearthed in search - Assessment quashed for jurisdictional defect where seized document pertained to third entity, not assessee, and no bearing on assessee’s income shown. (Paras 3, 4.1, 4.1.4, 5)
(B) Assessment procedure - Principles of natural justice - Assessing Officer must provide seized documents to assessee and afford opportunity - Non-compliance by AO despite repeated directions leads to inference of no valid basis for proceedings.
Facts of the case:
Revenue’s appeal against first appellate order quashing assessment u/s 153C r.w.s. 143(3) for assessment year 2012-13. Search conducted on third party; satisfaction recorded linking seized document (RTGS application of another entity) to assessee. Assessee’s return filed, assessment completed (unabated). Addition made treating fund flow from third entity as income, without confronting incriminating material to assessee. CIT(A) quashed assessment after AO failed to provide documents despite directions and on finding document did not belong to assessee.
Findings of Court:
Impugned assessment quashed as unsustainable lacking incriminating material belonging to assessee; proceeded ex-parte against assessee in tribunal.
Issues: Validity of s.153C notice and jurisdiction where seized document neither belonged to nor mentioned assessee; permissibility of additions in unabated assessment absent incriminating material; adequacy of AO’s satisfaction.
Ratio Decidendi: For s.153C jurisdiction, AO of searched person must record satisfaction with cogent material that seized document belongs to other person, rebutting statutory presumption; distinction between 'belongs to' and 'relates to'; in unabated assessments, interference only on basis of search-incriminating material.
Result: Revenue’s appeal dismissed.
| Table of Content |
|---|
| 1. appeal introduction and ex-parte proceedings (Para 1 , 2) |
| 2. assessee's arguments challenging section 153c jurisdiction (Para 3 , 4) |
| 3. no incriminating material for unabated assessment (Para 5) |
| 4. revenue appeal dismissed upholding quashing of assessment (Para 6) |
ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2012-13, arises against the CIT(A)-23, New Delhi’s order dated 09.08.2016 in case No. 67/15-16, in proceedings u/s 153C r.w.s. 143(3) of the Income Tax Act, 1961 (in short “the Act”).
2. Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex-parte.
3. It next transpires during the course of hearing that the learned CIT(A)’s lower appellate discussion has quashed the impugned assessment itself dated 30.03.2015 as not sustainable in law; reading as under:
3. Sh. Vikash Jain, Advocate & AR of the assessee attended with Sh. Ravi K. Rampal, filed written submission (WS) and other documents relevant to the case. The submissions filed on behalf of the appellant are reproduced hereunder:
Legal Issues: Notice U/s 153C of the act is illegal, bad in law and without jurisdiction
1) No documents belonging to the appellant was found from the premises of searched person (Addl. Ground No. 8)
Document found during the course of search and seizure operation were never confronted to the appellant. However after looking at the material shown/given by the AO at the time of assessment and assessment order, the appellant found that alleged material did not belonged to the assessee company.
Section 132(4A)(i) and 292C(1)(i) clearly stipulates that when, inter alia, any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else.
Case Laws Relied Upon:
(i) Pepsi Food Pvt. Ltd. vs ACIT (2014) 367 ITR 112 (Del.)
(ii) PepsiCo India Holdings Pvt. Ltd. vs ACIT and Anr. (2015) 370 ITR 295 (Del.)- The AO should not confuse the expression “belongs to” with the expressions “relates to" or “refers to".
(iii) CIT vs. Mechmen 11-C [2015] 60 taxmann.com 484 (MP)
2) No satisfaction was recorded by the AO of searched person (Addl. Ground No.7)
In the present case alleged satisfaction was not recorded in the file of the searched person. The satisfaction was recorded in the file of Bhasin Infotech and Infrastructure Pvt. Ltd...The AO of the searched person should recorded the satisfaction in the file of searched person.
Case Laws
(i) DSL Properties (P) Ltd. (ITAT Delhi) 60 SOT 88
(ii) ACIT vs. Inlay Marketing (P.) Ltd. 60 taxmann.com 431 (Delhi Trib.)
(iii) CIT vs. Mechmen 11-C [2015] 60 taxmann.com 484 (MP)
(iv) CIT vs. Gopi Apartment [2014] 46 taxmann.com 280 (Allahabad)
(v) PCIT vs. Aakash Arogya Mandir (P.) Ltd. [2015] ITA 509/15 (Del)
3) No incriminating material found during the course of search which will have bearing on the total income of the assessee (Addl. Ground No. 6)
As pointed out above all the material found during search does not belong to the appellant. Even no information was found from the search material disclosing unaccounted transaction entered by the appellant.
(i) CIT vs Kabul Chawla in ITA 707/2014 decided on August 28, 2015:
Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment”.
(ii) CIT v. M/s. Murli Agro Pro
