Case Law Details

Case Name : The Commissioner Of Income Tax (Central) Vs Mohan Meakins Limited & Ors. (Delhi High Court)
Appeal Number : ITA 429/2013-ITA 432/2013
Date of Judgement/Order : 22/01/2015
Related Assessment Year :
Courts : All High Courts (4317) Delhi High Court (1307)

Brief about the case

A search took place on 14.02.2006 in the premises of M/s Radico Khaitan.In the course of these search proceedings, various documents including reports narrating amounts alleged to have been received or receivable from various members of the UPDA and the basis thereof were recovered. The revenue also relied upon the statement of Mr. R K Miglani. On the basis of these materials, notice was issued under Section 153C to the assessee/respondents. The notice was challenged by the respective assessees on the ground that the documents could not constitute valid material since they did not “belong” to them. Persons in respect of whom a search is conducted and books of account, documents or assets are recovered and other persons (other than those persons referred to in section 153A) to whom books of account, documents or assets recovered belong, cannot be treated on the same basis for the purposes of assessing or reassessing their income. This ground was successfully pleaded before the Tribunal.

The revenue challenged the common order of the Income Tax Appellate Tribunal (ITAT) at the High Court of Delhi who opined that the ITAT should render specific findings as to the status of the documents and in that sense, connect with the concerned assessee’s third parties. Thereby the High Court remitted the matter to the ITAT for fresh consideration.

Facts of the case:

  • The assessee was issued notice under section 153C subject to a search conducted in the premises of M/s Radico Khaitan and Mr.R.K. Miglani Sec.General of Uttar Pradesh Distillery Association.
  • This notice was issued on the basis of documents recovered in the search premises.
  • The assessees challenged the validity of the notice on the ground that the documents did not constitute valid material as it did not belong to the assessees.
  • The material emanating from the alleged compilation of details from Mr. Miglani can be an information pertaining to the assessee disclosing the details of income or expenditure but that cannot be a document belonging to the assessee.
  • In this batch of appeals, the revenue challenges the common order dated 23.11.2012 of the Income Tax Appellate Tribunal (ITAT). The question of law sought to be urged is whether Section 153C enables the assessing officer to issue notice to third parties.
  • The Delhi Court is of the opinion that the ITAT should render specific findings as to the status of the documents and in that sense, connect with the concerned assessee’s third parties who were issued notice under Section 153C, and not merely the general nature of the documents in the form of production figures or amounts tabulated in a chart.
  • Accordingly the High Court dismissed the appeal and remanded back the matter to ITAT.

Contention of the Revenue

  • The Revenue urged that the notice issued to the assessee u/s 153C is constitutionally valid.
  • Further it contended that essentially both categories of persons viz.referred in section 153A and section 153C, are the same in as much as their books of account, assets, documents, etc., are seized or requisitioned, though from different locations.

Contention of the Assessee

  • The assessee challenged the validity of the notice on the ground that the documents did not constitute valid material as it did not belong to the assessee.
  • The material emanating from the alleged compilation of details from Mr. Miglani can be an information pertaining to the assessee disclosing the details of income or expenditure but that cannot be a document belonging to the assessee.

Held by High Court

  • It appears that the ITAT has not rendered any specific findings on the status of such documents.
  • Having regard to these factors, this Court is of the opinion that the ITAT should render specific findings as to the status of the documents and in that sense, connect with the concerned assessee’s third parties who were issued notice under Section 153C, and not merely the general nature of the documents in the form of production figures or amounts tabulated in a chart.
  • The matter is remanded in entirety to ITAT for reconsideration.
Download Judgment/Order

More Under Income Tax

Posted Under

Category : Income Tax (28069)
Type : Judiciary (12316)

Leave a Reply

Your email address will not be published. Required fields are marked *

Featured Posts