The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) ruled proceedings under Section 153C of the Income Tax Act, 1961 could not be started in absence of incriminating material revealed in the search.
While in the assessment proceedings, the AO sees that the taxpayer, A. Gandhimathi has incurred unregistered dealer purchases. The taxpayer would perform the payment in cash against the unregistered dealer buying.
Hence AO post acknowledging the related facts expressing personal concern, an unregistered dealer buys the claims so as to secure from some people would not be real which does not be assisted via needed proofs. Hence they disallowed buying of the claims so as to secure them from the unregistered dealers which amount to Rs 5 cr to the total income.
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Dissatisfied with the assessment order, the taxpayer preferred the petition to the commissioner of the income tax (appeals) (CIT(A)), the taxpayer has contested the assessment order which the AO has passed under Section 143(3) r.w.s.153C of the Income Tax Act, 1961 on the basis of the conditions precedent to invoke the provisions of section 153C of the income tax act related to the books of accounts and the additional related documents revealed in the investigation in the concern of the other individual which does is of the taxpayer.
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CIT(A) post recognizing the related submissions of the taxpayers and considering some of the facts said that it erred in doing the additions for the buying from the unregistered dealers in the assessment mentioned under section 153C of the income tax act, in the absence of incriminating the materials revealed as a search result, dissatisfied by the revenue would be in the petition to the Tribunal.
A Bench ruled “Therefore, in our considered view, in absence of any incriminating material found during the course of search of other person, the Assessing Officer (AO) cannot initiate proceedings u/s.153C of the Income Tax Act, and complete assessment, when a simultaneous survey u/s.133A of the Income Tax Act, was carried out on the very same day in the case of the assessee”.
| Case Title | Dy. Commissioner of Income Tax vs Smt. A. Gandhimathi |
| Citation | ITA Nos.13-15/Chny/2019 |
| Date | 10.10.2022 |
| Department By | Mr. Guru Bashyam, CIT-DR |
| Assessee By | Mr. Philip George, Adv |
| ITAT Chennai | Read Order |
