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2019 (5) TMI 1265 - AT - Income TaxAssessment u/s 153C - no incriminating document was found - addition relating to photocopy of gift deed found in search action with the donors and disallowance of various expenses on adhoc basis @ 5% - HELD THAT:- The assessment proceedings are initiated in case of the person searched u/s 153A, wherein also assessment for six years immediately preceding the year of search are open for assessment or reassessment. Further proceedings can be initiated u/s 153C against other person, in case any document or asset is found relating to him. So, there is no merit in the order of CIT(A) in holding that word ‘incriminating’ is not mentioned to the document found, seized or requisitioned in section 153C is an incorrect interpretation of law. Search and seizure machinery is to be initiated in order to detect the undisclosed income or property of the person searched and in case during the course of search of a person, any document relating to any other person is found, then such a transaction which is recorded in the books of account of such other person cannot be the basis for initiating action u/s 153C which admittedly, are relation to the determination of undisclosed income / property in the hands of such other person. Accordingly, we hold so. Addition of gift - Coming to the facts of present case, search u/s 132 was conducted on the premises of Ashoka group of cases on 20.04.2010 the alleged undisclosed income was on account of gift deed which was executed on 02.02.2010 i.e. relevant for financial year 2009-10, which is the year before the year of search. Since the search took place in April, 2010, on the basis of copy of such gift deed, which is one time transaction, there is no merit in initiating proceedings u/s 153C starting from assessment year 2005-06 onwards. No such gift deed was found for those years - as perused the assessment records, which revealed that no incriminating material at all was found during the course of search or survey in Ashoka group Assessing Officer has failed to bring anything incriminating with regard to donations received by the assessee trust in pursuing its various objects or with regard to inflated expenses, if any. there is no specific doubt over the correctness of expenses claimed by the assessee trust in various assessment years under reference. In such scenario, where no incriminating material at all was found against the assessee, there is no merit in initiating proceedings u/s 153C for assessment years 2005-06 to 2009-10. Assessment year 2010-11 i.e. the year in which gift deed was executed, again the document which was found was in respect of transaction which was duly recorded in the books of account of both the donor and donee and such a document to be even though belonging to assessee, cannot be the basis for initiating proceedings u/s 153C ; since it has failed to fulfill the basic condition of it being an incriminating document which kick start from the search action being carried out under the provisions of section 132. Accordingly, we hold that proceedings initiated u/s 153C against the assessee for assessment year 2010-11 are without any basis and initiation is bad in law. Consequently, the assessment order passed u/s 143(3) r.w.s. 153C of the Act for assessment years 2005-06 to 2010-11 do not stand and the same are held to be bad in law.- Decided in favour of assessee
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