Whether ITAT is required to mechanically uphold Sec 153C proceedings merely because it had done so in some other Assessment Years - NO: HC

THE issues before the Bench are - Whether Tribunal should have upheld the proceedings u/s 153C against the assessee even in the absence of any incriminating evidence, merely because it has done so in some other AYs; Whether Tribunal's observations must be held as confined and restricted to the facts of each case and AY and Whether relying upon such observations of the Tribunal applicable to some other AY, the Revenue can initiate proceedings against the assessee . And the verdict goes against the Revenue.

Facts of the case

The assessee is a trust established in the year 1990 by a Trust Deed, which promotes education,

medical research and health and relief as its objects. A search operation was carried in the premises of the accounts officer of the Trust, which lead to seizure of cash and some loose documents. The statement of the accounts officer was also recorded. The AO initiated proceedings u/s 153C against the Trust. Aggrieved, the assessee filed an appeal before the Tribunal, which was allowed. Dissatisfied by the order, the Departmental Representative submitted that there was enough material which was of incriminating nature and that the Tribunal was not justified in interfering with such an exercise of the AO.

Having heard the parties, the HC held that,

++ in the case of another Assessee the Tribunal has examined the scope of section 153C of the act and observed that the provision cannot be resorted to without any material which is incriminating in nature. However, we have clarified while dismissing the Appeals of the Revenue in the case of S. Kumar that the Tribunal's observations must be held as confined and restricted to the facts of each case. There is no general rule laid down, save and except, outlining the seriousness of the proceedings. In the present case as well, the Tribunal has found from factual material including satisfaction note that there was no justification for proceeding under section 153C of the Act. The Tribunal's order relates to AY 2004-5 and not for AY 2003-04 which is the year in question;

++ the next finding of fact is that in the case of the present Assessee , apart from this, no other seized document pertaining to Assessment Year under consideration was found. The seized document was not belonging to the Assessee . The rest of the documents relate to the assessment Year 2006-07 which is not the subject matter of Commissioner of Income Tax (Appeals) and Appellate Tribunal's orders. It is in these circumstances and commenting upon somewhat casual approach of the Department, the Tribunal has made the subject observations. In these circumstances and finding that the Tribunal's view was justified in the facts and circumstances peculiar to the Assessee and do not lay down any general rule or principal law, we are of the opinion that the present appeal does not raise any substantial question of law