By Ajay R. Singh, Advocate
Commissioner of Income
Tax III, vs. Arpit Land Pvt. Ltd. and M/s. Ambit Realty Pvt. Ltd. [ Income tax
Appeal no 83 of 2014 and 150 of 2014 dated : 07/02/2017 (Bombay High Court)].
[Arpit Land Pvt. Ltd,
vs. ACIT, and M/s. Ambit Realty Pvt. Ltd. [dated 22/03/2013 ; Mum.ITAT]
In search and seizure
action u/s. 132 of the Act carried out in case of Jay Corporation group. Mr.
Dilip Dherai was managing and handling land acquisition on behalf of Jay
Corporation group. During the course of search, certain documents were found in
possession of Mr. Dilip Dherai on the basis of which the AO after recording
satisfaction u/s. 153C of the Act proceeded to initiate proceedings in respect
of both the assessees.
The Tribunal found that
the documents seized from possession of Mr. Dilip Dherai did not belong to the
assessee. Consequently, it held that the AO did not have jurisdiction to
initiate proceedings u/s. 153C of the Act, as at the relevant time jurisdiction
of AO to proceed consequent to the search is only when money, bullion,
jewellery or other valuable article or thing or books of accounts or documents
seized or requisitioned belongs or belonged to a person other than the person
who has been searched, then the AO having jurisdiction over such person on
being handed over seized document etc could proceed against such other person
by recording satisfaction and issuing a notice in accordance with the
provisions of the Act.
The Tribunal recorded the
fact that the documents seized from the possession of Mr.Dilip Dherai do not
belong to any of two assessees, consequently, the AO did not have jurisdiction
u/s. 153C of the Act to issue notice to the assessee’s.
The Tribunal also held
that satisfaction recorded by the AO before initiating assessment proceedings
in respect of two assessees were also not sustainable. In the above view, the
Tribunal held that the AO did not have jurisdiction to initiate proceedings
u/s. 153C of the Act on the two assessee’s before the high Court .
The Revenue submitted that
the assessees and Mr.Dilip Dherai are all hand-in- glove working in tandem to
acquire land. Therefore, in the above facts the impugned notice under Section
153C of the Act and also satisfaction note recorded by the AO cannot be found
fault with. Thus the impugned order of the Tribunal calls for interference and
these appeals be admitted.
The Hon. High Court noted
that in terms of Section 153C of the Act at the relevant time i.e. prior to 1st
June, 2015 the proceedings u/s. 153C of the Act could only be
initiated/proceeded against a party – assessee if the document seized during
the search and seizure proceedings of another person belonged to the party –
assessee concerned. The impugned order recorded a finding of fact that the
seized documents which formed the basis of initiation of proceedings against
the assessees do not belong to it. This finding of fact has not been shown to
be incorrect.
The High Court also
referred to a similar view taken in CIT vs. Sinhgad Technical Education
Society (2015) 378 ITR 84.
The court observed that, the
requirement of section 153C of the Act cannot be ignored at the altar of
suspicion. The Revenue has to strictly comply with section 153C of the Act. The
seized document must belong to the assessee is a jurisdictional issue and non
satisfaction thereof would make the entire proceedings taken there under null
and void. The issue of section 69C of the Act can only arise for consideration
if the proceedings u/s. 153C of the Act are upheld. Therefore, in the present
facts, the issue of section 69C of the Act is academic. In view of the above,
the revenue Appeal was dismissed.
