Facts of the Case

The assessee, M/s Meja Filling Station, a partnership firm engaged in the business of retail sale of petroleum products, filed multiple appeals before the Income Tax Appellate Tribunal (ITAT), Allahabad Bench, against orders passed under Section 153C of the Income-tax Act, 1961 for several assessment years.

The proceedings were initiated pursuant to a search and seizure action under Section 132 conducted in the case of another person. During the search, certain documents were found and seized, which the Assessing Officer considered to be related to the assessee firm. Based on such material, proceedings under Section 153C were initiated against the assessee.

The Assessing Officer made additions to the income of the assessee on the basis of the seized documents, which were confirmed by the Commissioner of Income Tax (Appeals), leading to the present appeals before the Tribunal.

Issues Involved

Whether assessments under Section 153C and the consequent additions are valid when the seized material does not have a direct nexus with determination of the assessee’s income for the relevant assessment years.

Petitioner’s (Assessee’s) Arguments

  • The seized documents did not belong to or pertain to the assessee in a manner required under Section 153C.
  • The material seized related to earlier periods and had no bearing on the income disclosed in the relevant assessment years.
  • The assessee had already filed returns declaring income from its business activities.
  • The additions were made without any incriminating evidence linking undisclosed income to the assessee.

Respondent’s (Department’s) Arguments

  • The seized documents recovered during search contained information relating to the assessee firm.
  • The Assessing Officer had recorded satisfaction for initiating proceedings under Section 153C.
  • The additions were made on the basis of material obtained during search proceedings.

Court Order / Findings

  • For invoking Section 153C, the seized material must belong to or pertain to the assessee and must have a bearing on determination of total income.
  • The documents relied upon did not establish undisclosed income for the relevant assessment years.
  • The assessee had already disclosed income from its business through regular returns.

Important Clarification

This ruling reiterates that Section 153C is not intended to permit roving or fishing inquiries. Additions in search-related assessments must be supported by incriminating material specifically relating to the assessee and relevant assessment years.

Link to download the order –https://itat.gov.in/public/files/upload/1613978996-48%20to%2055%20Meja%20Filing%20Station.pdf

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