Income Tax, Issue Update

Documents seized during search of a person other than the person against whom assessment proceedings are initiated under section 153A: Basis for passing order under section 153C

Case: DY. COMMR. OF INCOME TAX, CEN. CIR.-1 vs LATE SHRI PRAVINSINH N. ZALA, RAJKOT ITAT

Outcome: Assessee

Facts

  • A search was conducted at the premises of the company namely M/s Amidhara Developers Pvt. Ltd., where certain documents belonging to Assessee were found. Accordingly, the Assessing Officer initiated proceedings under section 153C of the Act against the Assessee.

Key Points

  • Reliance was placed on the decision of the Hon’ble Gujarat High Court in the case of Anil Kumar Gopikisan Agrawal vs. ACIT, wherein it was concluded that, in the opinion of the court, if a date other than the date of search is taken to be the relevant date for the purpose of recording satisfaction one way or the other, it would result in an anomalous situation wherein in some cases, because the notices under section 153C of the Act were issued prior to the amendment, they would be set aside on the ground that the books of account or documents seized or requisition did not belong to the other person though the same pertained to or the information contained therein related to such person, whereas in other cases arising out of the same search proceedings, merely because the notices were issued after the amendment, the same would be considered to be valid as the books of account or documents seized or requisitioned pertain to or the information contained therein relate to the other person. It could not have been the intention of the legislature to deal with two sets of identically situated persons differently, merely because in one case the Assessing Officer of the searched person records satisfaction as required under section 153C of the Act prior to the coming into force of the amended provisions and in any another case after the coming into force of the amended provisions.
  • Thus, there remained no ambiguity to the fact that the provisions of section 153C of the Act prior to the amendment therein, will be applicable in the case on hand which requires the Assessing Officer to arrive at a satisfaction that the documents found from the premises of the third party in the course of search belongs to the Assessee. Thus, it was inferred that the proceedings under section 153C of the Act could not have been been initiated.

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