INCOME TAX ACT, 1961

Section 153C

Search and seizure - Assessment under section 153C - No incriminating documents found - Unabated assessment

Search and seizure action was carried out at various premises of BPTP Group and associate persons. Assessee-company which was a subsidiary of BPTP International Trade Centre Ltd., received 10,000 shares and certain share application money letters were found from the residence of N.K. Jain, who was a Company Secretary of BPTP Group and was also subjected to search and seizure. AO framed assessment under section 153C and treated the amount concerned as unexplained credit under section 68. Assessee challenged this on the ground that documents found were not in the nature of incriminating documents. Held: The so-called documents found stated to be relating to assessee company were not found from any of the premises of BPTP Group, except for Annexure 7, albeit from one of the premises of N.K. Jain who was the Company Secretary of BPTP Group and also ex-director of assessee-company. All these documents were related to company law requirements, i.e., share certificates, memorandum of association, copy of resolution passed by Board Meeting of the assessee-comany and copy of notice given to the members for EGM along with explanatory notice, copy of the register of Members, register of share/debenture, transfer register of share application and allotment, copy of share transfer forms, return of allotment and list of allottees, etc., and were found from N.K. Jain in his professional capacity as he was the Company Secretary of assessee-company. None of these documents could be remotely inferred as incriminating which could remotely deduce that there was any element of undisclosed income or any income which had escaped assessment. Most of these documents were available in public domain and easily accessible to all which could be downloaded from website of MCA. Apart from that, one very important fact to be noted is that nowhere in the assessment order AO referred to these documents while making additions under section 68 nor there was any adverse inference on any of these documents. As regular assessment for the year under consideration remained unabated as on late of search, therefore, same could not be interfered with while framing search assessment under section 153C in the absence of incriminating material found during search.

Followed:CIT v. Kabul Chawla (2015) 380 ITR 573 (Delhi) : 2015 TaxPub(DT) 3486 (Del-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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