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2016 (8) TMI 813 - CALCUTTA HIGH COURT

2016 (8) TMI 813 - CALCUTTA HIGH COURT - [2016] 388 ITR 574 - Assessment u/s 153A - disallowances of the expenditure - Held that:- We are in agreement with the views expressed in CIT, Bangalore Vs. IBC Knowledge Park (P) Ltd.[2016 (5) TMI 372 - KARNATAKA HIGH COURT ]that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. - In the case before us, the assessing officer has made disallowances of the expenditure, which were .....

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with Mr. A. Majumder, Adv. ORDER The Court : The subject matter of challenge is a judgment and order dated December 28, 2007 by which the learned Income Tax Appellate Tribunal, E Bench, Kolkata, in ITA No.2172 and 2174/Kol/2006, pertaining to the assessment years 1998-99 and 1999-2000, and I.T.(SS) A. Nos.61-63/Kol/2007, pertaining to the assessment years 2001-02, 2002-03 and 2003-04, allowed the appeals preferred by the assessee. The aggrieved revenue has come up in appeal. The following quest .....

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he I.T. Act and to consider the disallowance in the assessment to be made under section 153 of the I.T. Act? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in misinterpreting the CBDT s Circular No.7 as the same applies to assessments made u/ss.143(3), 144 or 147 of the I.T. Act where appeals or rectification application will not abate? 3. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is co .....

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he assessment under section 153C read with section 153A read with section 144 of the Income Tax Act was altogether without jurisdiction because such assessment was made for all the five years on the basis of survey conducted under section 133A of the Income Tax Act. He submitted that the power under section 153C read with section 153A cannot be exercised on the basis of any discovery made during survey under section 133A. (b) His next submission was that in any event, during the survey, no incri .....

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books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person .....

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second proviso to [sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person :] [Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice fo .....

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terial is necessary before exercising power under the aforesaid sections. He, in support of his submission, relied upon the words have a bearing on the determination of the total income of such other person . If the search or requisition did not unearth any incriminating material, the search or requisition was futile and can have no bearing on the determination of the total income of such other person. There shall thus be no occasion for exercise of power under section 153C.He, however, added th .....

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CIT, Bangalore Vs. IBC Knowledge Park (P) Ltd. reported in (2016) 69 taxmann.com 108(Karnataka):- Materials such as books of account, documents or valuable assets found during a search should belong to a third party which would lead to an inference of undisclosed income of such third party. Such an inference should be recorded by the Assessing Officer having jurisdiction over the searched persons and communicated to the Assessing Officer having jurisdiction over such third party along with the s .....

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during post-search enquiry, Section 153C would have no application. Thus, the detection of incriminating material leading to an inference of undisclosed income is a sine qua non for invocation of Section 153C of the Act. Mr. Nizamuddin, learned advocate, appearing for the revenue-appellant submitted that it is true that section 153C read with section 153A proceeds on the basis of search under section 132 or requisition under section 132A. There is no reference to any survey under section 133A. .....

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