The ITO Ward-7(2)(1), Ahmedabad V. Vaishal Kismatlal Shah, Ahmedabad

ITSSA 4/AHD/2022

AI Insights

The case revolves around an appeal by the Income Tax Officer (ITO), Ward-7(2)(1), Ahmedabad against Vaishal Kismatlal Shah concerning an assessment order for the year 2011-12. The assessment was based on documents seized during a search operation under section 132 of the Income Tax Act, 1961, which were later used to initiate proceedings under section 153C. The primary legal contention was whether the documents seized, which formed the basis of the assessment, belonged to the assessee. The Tribunal referenced a significant judgment by the Gujarat High Court, which clarified that for searches conducted before June 1, 2015, the documents must belong to the assessee for proceedings under section 153C to be valid. Since the documents were found to pertain to another individual and not the assessee, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to annul the assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114083 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2022
• Other Referred Cases: Anilkumar Gopikishan Agarwal vs. ACIT, PCIT-3 vs Himanshu Chandulal Patel
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 153A; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member The ITO, Ward-7(2)(1), Ahmedabad (Appellant) Vs Vaishal Kismatlal Shah A-502, “Deevpreet”, Nr. DLA School, NFD Circle, Bodakdev, Ahmedabad-380054 PAN: ACVPS6854R (Respondent) Assessee by : Shri Chetan Agarwal, A.R. Revenue by : Shri Vijay Kumar Jaiswal, CIT-DR Date of hearing : 30-01-2022 Date of pronouncement : 01-02-2023 आदेश/ORDER PER: Ms. MADHUMITA ROY, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against the order dated 20.01.2022 passed by the Commissioner of Income Tax (Appeals), Ahmedabad-12 arising out of the Assessment order passed under section 153C r.w.s. 153A of the Income Tax Act, 1961 (hereinafter IT(SS)A No. 04/Ahd/2022 Assessment Year 2011-12 I.T(SS).A No. 04/Ahd/2022 A.Y. 2011-12 Page No ITO vs. Vaishal Kismatlal Shah 2 referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2011- 12. 2. At the very outset of the proceedings, the Ld. Advocate appearing for the assessee submitted before us and that the issue is covered by the decision passed by the Hon’ble Jurisdictional High Court at Gujarat in the case of Anilkumar Gopikishan Agarwal vs. ACIT reported in [2019] 418 ITR 25 (Guj.). In fact, the search was initiated u/s. 153C of the Act on the basis of the seized material found from and belonging to one Shri Anil Hiralal Shah. The search u/s. 132 on the group was conducted on 04.12.2014 and the Ld. A.O. of the said Shri Anil Hiralal Shah has not given any finding that the documents seized “belongs to” the appellant while recording satisfaction. 3. As it is the settled principle of law that before arriving at the satisfaction, the Ld. A.O. must come to a conclusion that the seized material does not “belong to” the search person but somebody else as per the judgment passed by the Hon’ble Gujarat High Court as mentioned hereinabove and as the proceedings initiated u/s. 153C of the Act without being satisfied that the documents “belongs to” the assessee which was subsequently amended w.e.f. 01.06.2015 with the substitution of “pertains to”, the proceedings initiated against the assessee for the year under consideration before us is not sustainable in the eye of law as submitted by the Ld. A.R. I.T(SS).A No. 04/Ahd/2022 A.Y. 2011-12 Page No ITO vs. Vaishal Kismatlal Shah 3 4. Such submission made by the Ld. A.R. has not been able to be controverted by the Ld. D.R. 5. We have further considered the judgment passed in the matter of Shri Anilkumar Gopikishan Agarwal vs. ACIT reported in [2019] 418 ITR 25 (Guj.). While dealing with the identical issue, the Hon’ble Court was pleased to observe as follows: 5.6 The appellant has claimed that the document found from the Hard Disc (supra) which formed the basis of notice u/s 153C of the Act for initiating the proceedings does not belong to it He has stated that 'Before 01.06.2015 the word belongs too assessee was there is the Act, which was substitute with word pertains to w.e.f 01.06.2015, since our period was before 01.06.2015 old law will be applicable to us.' He has relied on two case laws including the jurisdictional HC order in the case of Anilkumar Gopikishan Agarwal (supra). 5.7. There is no dispute that assessment in the case of the appellant was initiated U/S.153C of the Act on the basis of the seized material found from and belonging to the Anil Hiralal Shah et al. Search u/s 132 of the Act on the Group was conducted on 04/12/2014. The AO of Anil Hiralal Shah has not given any finding that the documents transferred ‘belongs to” the appellant while recording the satisfaction note. To the contrary he has given a finding; that the document pertains to appellant. The AO of appellant has also before issuing 153C notice concluded that the seized document 'pertain/relate to' the appellant. The Hon'ble Gujarat High Court in the case of Anilkumar Gopikishan Agrawal and others vs. ACIT (referred supra) has held that the notice u/s 153C of the Act issued in view of seized incriminating document/paper hot belonging to third party as invalid, in all cases where the search was initiated before 01/06/2015 holding that the amendment in the Act incorporating the words "any books of account or documents, seized or requisitioned/pertains or pertain to, or any information contained therein, relates to’ is prospective in nature and applicable for searches conducted after 01.06,2015. The impugned assessment in this case is framed pursuant to the notice u/s 153C of the Act issued on the basis of the documents belonging to Anil Hiralal Shah found and seized during search action dated 04/12/2014. Further Gujarat High Court in the case PCIT-3 vs Himanshu Chandulal Patel (supra) has held there must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction". No such finding is found to have been made. Hence, respectfully following the binding judgments of the Hon'ble jurisdictional High Court, I also hold that the very initiation of proceedings under section 153.C of the Income-tax Act, 1961 was without jurisdiction and I.T(SS).A No. 04/Ahd/2022 A.Y. 2011-12 Page No ITO vs. Vaishal Kismatlal Shah 4 therefore invalid. The assessment on the basis of such notice does not survive, hence, the impugned assessment is annulled. In the result, the relevant grounds of appeal 1 & 2 are allowed. 6. Having heard the Ld. Counsel appearing for the parties, having regard to the facts and circumstances of the case and particularly the ratio laid down by the Jurisdictional High Court, we find no other alternative but to come to a conclusion that the issue is squarely covered by the said judgment and as the documents does not “belong to” the assessee noted by the A.O., the entire proceedings is thus vitiated. Hence, we find no ambiguity in the order passed by the ld. CIT(A) in deleting the addition made by the A.O. so as to warrant interference. The same is therefore upheld. 7. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 01-02-2023 Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 01/01/2023 True Copy आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद