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: Asst. CIT vs Lakshmi Venketesh Minerals Hospet, Bangalore ITAT

Outcome: Assessee


  • There was a search & seizure action conducted on 25.11.2010 under section 132 of the Income Tax Act, 1961 in the case of K. Mahesh Kumar, who happened to be one of the partner of Assessee Firm. Since the Assessee was not subjected to search under section 132 of the Act, proceedings consequent to search in the case of K. Mahesh Kumar was initiated under section 153C of the Act.

Key points

  • No incriminating material was found in respect of any of the additions made by the Assessing Officer which had nexus to the Assessee.
  • The assessments for AY 2008-09 to 2010-11 were already completed in the case of the Assessee prior to the date of search. Therefore, the scope of making assessment of total income under section 153C of the Act was limited and could be only of assessing income that was not disclosed which was detected or which emanated from material found in the course of search of some other person and which related to the Assessee.
  • Since the impugned addition of disallowance of expenses were not based on any incriminating material found during the course of search, the additions were liable to be deleted. Hence, it was inferred that the proceedings under section 153C were not sustainable.

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