COMMISSIONER OF INCOME TAX Vs. LATE J. CHANDRASEKAR

JUDGEMENT

(1.) As against the order of the Tribunal, the Revenue is on appeal. It is seen from the order of the Tribunal that on the search conducted in the case of H. Anraj and group on 25th Nov., 2003, materials pertaining to "on-money" payment paid to the assessee in respect of property purchased from the assessee were seized. Based on that, the AO issued a notice under S. 153C of the IT Act, 1961. In the assessment, the AO adopted the sale consideration at Rs. 24,50,000 as against Rs. 15 lakhs adopted and the fair market value as on 1st April, 1981, was adopted at Rs. 300 per cent as against Rs. 5,000 per cent as claimed by the assessee and reworked the capital gains. Aggrieved by the same, the assessee preferred an appeal before the CIT(A). The CIT(A) held that there was no valid assumption of jurisdiction under S. 153C of the Act when the entire assessment was made, without the support of the seized materials to touch on the assessment of the assessee.

(2.) THE CIT(A) held that having regard to the fact that the AO did not have the seized materials while taking up the assessment under S. 153C of the Act the assessment suffered the total lack of jurisdiction. Consequently, any decision on the merits of the assessment with reference to the sale consideration would be an academic exercise only. Thus, the CIT(A) allowed the appeal by holding that there was no valid assumption of jurisdiction under S. 153C of the Act. There was no application of mind by the AO and consequently he cancelled the entire assessment. Aggrieved by the same, the Revenue went on appeal before the Tribunal, In para 6 of the order, the Tribunal pointed out that the AO issued the notice under s. 153C of the Act on the basis of the communication dt. 29th Dec., 2004, from the Dy. CIT(A) (Inv.). Further, a perusal of the record revealed that the AO issued the notice without having the seized material and that the same were not handed over to him by the investigating team or to the AO having jurisdiction over the persons searched during which the material was seized. Although steps were taken by the AO in addressing letters to the Dy. CIT(A) seeking the seized materials, the same were not furnished. It is further pointed out in the order of the Tribunal that the AO took steps to secure the seized materials only when the assessee sought for inspection of the material. Thus, the Tribunal came to the conclusion that in the absence of the seized materials obtained from the investigating officials the assumption of jurisdiction under auction 153C of the Act is wholly unsustainable and, hence, the entire proceedings had to be set aside. Quite apart from the jurisdiction, the Tribunal also went into the merits of the case and ultimately held that no direction could be issued as regards capital gains working in the absence of valid assumption of jurisdiction. Aggrieved by the same, the Revenue has come forward with the above tax case appeals.

(3.) AS already pointed out, the order of the CIT(A) gives the details of proceedings before the officer concerned who issued the notice under S. 153C of the Act, which clearly says that the seized materials were not available at the hands of the AO before issuing the notice under S. 153C of the Act. Even after the notice was issued, there were hardly any material to enable the officer for valid assumption of jurisdiction.