INCOME TAX ACT, 1961

Section 153C

Search and seizure - Assessment under section 153C - No incriminating materials concerning assessee were found -

A survey operation under section 133A was conducted by authorized officer and instead of conducting a survey assessment opposite party invoked the jurisdiction under section 153C for making a block assessment. This was as a result of searches being conducted in premises of two persons. Assessee submitted that there was no recording of satisfaction by AO of the searched persons and that the materials seized during the said search revealed the undisclosed income of assessee. No such note of satisfaction was transmitted to AO having jurisdiction to assess assessee under section 153C. Held: There was no denial that no incriminating materials concerning the assessee were found in the premises of the two searched persons. Assessment order challenge was related to disallowance of expenditure under section 140A(3) that was payable to the cultivators, expenses towards Hamali i.e. labour charges, unexplained money under section 69A, negative cash and unaccounted stock. This was not on account of the discovery of incriminating materials concerning assessee found in the course of the search. In absence of incriminating materials being found in the course of the search of the searched persons, assessment order and the consequential demand order were unsustainable in law.

Provisions:CIT v. Calcutta Knitwears (2014) 362 ITR 673 (SC) : 2014 TaxPub(DT) 1547 (SC), Pepsico India Holdings (P) Ltd. v. Asstt. CIT & Anr. (2015) 370 ITR 295 (Del) : 2014 TaxPub(DT) 3925 (Del-HC), Pepsi Foods (P) Ltd. v. Asstt. CIT (2014) 367 ITR 112 (Del-HC) : 2014 TaxPub(DT) 3687 (Del-HC) and Savesh Kumar Agarwal v. UOI (2013) 353 ITR 26 (All-HC) : 2013 TaxPub(DT) 1495 (All-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

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