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E.N. GOPAKUMAR Versus COMMISSIONER OF INCOME TAX (CENTRAL)

2016 (11) TMI 72 - KERALA HIGH COURT

Validity of assessment u/s 153A - whether it is necessary that incriminating materials should be unearthed in a search under Section 132 of the Act to sustain a notice issued under Section 153A(1)(a)? - Held that:- As per the judgment of this Court in St.Francis Clay Becor Tiles's case (2016 (6) TMI 378 - KERALA HIGH COURT ) and Promy Kuriakose's case (2016 (8) TMI 327 - KERALA HIGH COURT ) though the second among them relates to a third person to the search as well; which cases would fall under .....

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see following notice under Section 153A(1)(a)? - Held that:- Once a return is filed in answer to such a notice, the Explanation to Section 153A provides, among other things, that all provisions of the Income Tax Act will apply to the assessment made under Section 153A of the Act. This is the manner in which the provisions in Sections 153A, 153B and 153C of the Act would regulate. Once that is done, it is well within the jurisdiction of the a ssessing authority to proceed with any lawful modes of .....

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erefore, the assessment proceedings generated by the issuance of a notice under Section 153A (1)(a) of the Act can be concluded against the interest of the assessee including making additions even without any incriminating material being available against the assessee in the search under Section 132 of the Act on the basis of which the notice was issued under Section 153A(1)(a) of the Act. We answer this issue accordingly. - I.T.A. Nos. 31, 38, 53, 60, 63 and 64 of 2016 - Dated:- 3-10-2016 - THO .....

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enior Standing Counsel for the Department of Income Tax. 3. The assessee, an individual, has different sources of income either relating to trade and commerce or otherwise. For the relevant years, he voluntarily filed returns under Section 139 of the Act. The assessments were completed. Thereafter, on 19.2.2010, there was a search and seizure operation under Section 132 of the Act in the residential premises of the assessee. Consequent thereto, notice was issued under Section 153A(1)(a) of the A .....

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tly argued that having regard to the quality of jurisdiction under Section 153A(1)(a), it is imperative that though notice under that provision could be issued following search under Section 132 of the Act, the further assessment proceedings on the basis of the returns filed by the assessee in answer to notice under Section 153A(1)(a) cannot be concluded adversely to the interest of the assessee unless incriminating materials were unearthed in the search which formed the foundation for the issua .....

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l premises of the appellant on 19.2.2010 did not lead to any material which could be utilised against him. The learned counsel pointed out the judgment of the Bombay High Court in Commissioner of Income-tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd.[(2015)374 ITR 645], the judgments of the Delhi High Court in Principal Commissioner of Income-tax v. Kurele Paper Mills P.Ltd. [(2016)380 ITR 571] and Commissioner of Income-tax v. Kabul Chawla [(2016)380 ITR 573] and the decision of t .....

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Tiles [(2016)385 ITR 624 (Ker)] and Commissioner of Income-tax v. Promy Kuriakose [(2016)386 ITR 597] and argued for the position that the provisions of Section 153A clearly show that notice could be issued calling for filing of return even when no incriminating material has been unearthed as against the assessee or as against any third person during the course of a search under Section 132. He further argued that the Tribunal being the last authority to decide on issues on facts and law and th .....

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, is it an imperative that the search under Section 132 of the Act, on the basis of which the notice is sought to be issued, should have resulted in unearthing incriminating material against the assessee? (ii) While concluding the assessment following the notice issued under Section 153A(1)(a) of the Act, is it necessary that incriminating materials were unearthed as against the assessee in the search under Section 132 of the Act? Is it legally sustainable to conclude an assessment of such a nat .....

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1)(a) is concerned, the issue stands covered in favour of the Department as per the judgment of this Court in St.Francis Clay Becor Tiles's case (supra) and Promy Kuriakose's case (supra) though the second among them relates to a third person to the search as well; which cases would fall under Section 153C of the Act. We, therefore, answer the said question stating that for the issuance of a notice under Section 153A(1)(a), it is not necessary that the search on which it was founded shou .....

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ceed in that line. Once that is done, Section 153A(1)(a) authorises the issuance of notice calling for filing of returns. This has been noted even under the point decided above. Once a return is filed in answer to such a notice, the Explanation to Section 153A provides, among other things, that all provisions of the Income Tax Act will apply to the assessment made under Section 153A of the Act. This is the manner in which the provisions in Sections 153A, 153B and 153C of the Act would regulate. .....

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