R. Viswanathan Vs DCIT (ITAT Chennai)
Section 153C Invoked Without Jurisdictional Facts; Coal Commission Additions Quashed: ITAT Chennai Sets Aside ₹597+ Crore Additions Across AYs 2014-15 to 2017-18
The Chennai Bench of the ITAT allowed the assessee’s appeals for AYs 2014-15 to 2017-18 and dismissed the Revenue’s appeals, holding that the assumption of jurisdiction under section 153C was invalid, rendering the entire assessments void ab initio. The Tribunal found that the mandatory jurisdictional pre-conditions of section 153C were not satisfied, as the seized materials relied upon by the Department—account books, loose sheets, electronic data and third-party statements—did not “belong to”, nor “pertain to”, nor “relate to” the assessee, nor did they have a demonstrable bearing on the determination of his total income for the relevant years.
The case arose from multiple third-party searches (including on Shri C.P. Anbunathan, Coastal Energy Group and others), where the Department alleged that coded entries and statements reflected unaccounted coal commission and election-related cash expenditure of the assessee, a former Minister. The Tribunal noted that no incriminating material was found from the assessee’s own premises, and that the primary third-party witness (Shri C.P. Anbunathan) had consistently stated that the seized account books belonged to him, had retracted later statements implicating the assessee, and had himself disclosed substantial income to tax. Other relied-upon materials were held to be dumb documents, hearsay statements, or unsupported electronic data, lacking statutory corroboration.
Relying on binding precedents including Sinhgad Technical Education Society (SC), Abhisar Buildwell (SC), and Agni Vishnu Ventures (Madras HC), the ITAT held that recording of a valid satisfaction based on incriminating material is a sine qua non for invoking section 153C, and that general or inferential satisfaction cannot substitute jurisdictional facts. Since this foundational requirement failed, the Tribunal quashed the notices and assessments under section 153C/143(3) for all years. Consequently, the massive additions—aggregating to over ₹550 crore towards alleged coal commission, ₹41.55 crore based on CEG loose sheets, and ₹6.56 crore towards alleged election expenditure—were deleted in full.
Accordingly, the assessee’s appeals were allowed in entirety, and the Revenue’s appeals were dismissed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
