2015 (8) TMI 1286 - HC - Income Tax

Assessment u/s 153C - Whether the hard disc found in the premises of the searched entity i.e. GLOBAL HERITAGE VENTURE PVT. LTD belonged to the Assessee for the purposes of Section 153 C of the Act as it stood prior to its amendment with effect from 1st June 2015? - Held that - Assessing Officer failed to record his satisfaction in that regard in terms of the law as explained by the Court in Pepsico India Holdings (P) Ltd. v. ACIT 2014 (8) TMI 898 - DELHI HIGH COURT The finding of photocopies in the possession of a searched person does not necessarily mean and imply that they belong to the person who holds the originals - Possession of documents and possession of photocopies of documents are two separate things. The AO should not confuse the expression belongs to with the expressions relates to or refers to - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Section 153 C of the Income Tax Act 1961.
2. Ownership of hard disc found in the premises of a searched entity.
3. Requirement of Assessing Officer's satisfaction for Section 153 C.

Analysis:
The judgment by the Delhi High Court involved appeals under Section 260-A of the Income Tax Act 1961 against a common order passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Years 2006-07, 2007-08, and 2008-09. The central issue in question was whether the hard disc discovered in the premises of the searched entity belonged to the Assessee for the purposes of Section 153 C of the Act. The Court noted that the Assessing Officer failed to record his satisfaction regarding this matter, as required by law, as highlighted in the case of Pepsico India Holdings (P) Ltd. v. ACIT [2015] 370 ITR 295 (Del).

The Court had previously dismissed Revenue's appeals involving similar questions, such as ITA No. 373/2015 and ITA 406-409/2015. These cases further emphasized the necessity for the Assessing Officer to fulfill the requirement of recording satisfaction under Section 153 C. Consequently, the Court dismissed the appeals in question based on the failure to establish ownership of the hard disc and the lack of satisfaction recorded by the Assessing Officer. The judgment reaffirmed the importance of adhering to legal procedures and precedents in matters concerning the interpretation and application of tax laws.