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. CIT vs Shri Jugal Kishore Garg(Derewala), Jaipur ITAT

This case delves on the issue whether the order under section 153C can be passed only on the basis of the seized documents.

The Assessee was a partner in various firms. Since the returns were originally filed and processed and since no additional material was found pertaining to the Assessee, which was held to be belonging to the Assessee, the Assessing Officer could not assume jurisdiction for framing assessment under section 153C of the Income Tax Act. See Facts & Key Points.

A related issue to this docket would be ‘Claim of deduction for the first time during the proceeding under Section 153A’.

If you are a tax professional who advises individuals or companies on aspects of search & seizure and assessment procedures, you may like to track such cases using our Telescope dashboard.

Facts

  • The Assessee was a partner in the firms M/s. J.K. Jewellers (3.3.34% share), M/s. JK Jewellers International (20% shares), M/s. JK Jewells (50% shares), M/s. Upasand Colonizers (50% shares) , M/s. JK International (33.33% shares), M/s. Neemrana Developers (40% shares) and M/s. Precious Buildcon (50% shares) respectively. A search and seizure action under section 132(1) of the Act was carried out on 04.11.2016 at the various premises of Manglam Group, Jaipur. Pursuant to this, the Assessing Officer issued a notice under section 153C of the Act for Assessment years 2014-15 to 2016-17 respectively to the Assessee.

Key points

  • It was seen that when the search was conducted at the premises of Shri Subhash Gambhir, no amount of money, bullion. jewellery or other valuable article or thing or books of account or documents seized belonged to the Assessee. Nothing was handed over to the Assessing Officer having jurisdiction over the Assessee. No such valuable article or thing or any books of account or documents were referred even in the assessment order for framing assessment under section 153C of the Income Tax Act, 1961.
  • Since for all these years, the returns were originally filed and processed and since no additional material was found pertaining to the Assessee, which was held to be belonging to the Assessee, thus the Assessing Officer could not assume jurisdiction for framing assessment under section 153C of the Income Tax Act.

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