INCOME TAX ACT, 1961

Section 153C

Search and seizure - Assessment under section 153C - Validity - Seized document did not belong to assessee

A search and seizure operation at premises of a person named 'L', i.e., a third party was conducted. On the basis of a document seized from the premises of 'L', assessment proceedings under section 153C were initiated against assessee, wherein certain addition was made to the income of the assessee. CIT(A) deleted such addition and held that initiation of assessment proceedings under section 153C was invalid because the seized document belonged to 'L' and not to the assessee. Aggrieved, Revenue was in appeal. Held: It was not the case of the Revenue that the person searched 'L' expressly disclaimed or disowned the seized document as belonging to him. Unless and until it is established that the document does not belong to the searched person, the provisions of section 153C do not get attracted because the language used by the legislature in section 153C mandates that where the AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belonged to a person other than the person referred to in section 153A. Further, even according to 'L', the document in question did not belong to the assessee. He submitted that the document was a proposal delivered at his residence by some other broker and which proposal remained with him before it could be forwarded to the assessee. Therefore, since the seized document, which was the very basis of addition made by the AO, did not belong to assessee, the very initiation of proceedings under section 153C against the assessee on the basis of such document would not be sustainable.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

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