Section 153C Assessment to be based on incriminating documents or evidence discovered during search: Madras HC [Read Judgment]
The Madras High Court held that the Assessment under Section 153C has to be based on incriminating documents or evidence discovered during the search.
The assessee, M/s.S.R.Trust is a registered charitable trust. A search was conducted under Section 132 of the Act during November 2014 in the case of the managing trustee of the assessee, which established and is administering a multi-specialty hospital at Madurai.
Simultaneously, the search action was conducted in the case of one who is stated to be the supplier of medical and surgical equipment and other accessories to the hospital.
The Department was of the prima facie view pursuant to the search that the funds were siphoned off through the said Mr.T.John Rajasekhar allegedly resorting to huge inflation of expenses through salaries paid to staff members by transfer of funds to the bank accounts of the employees as if salaries were paid to them.
Based on the seized documents, a notice under Section 153 of the Act was issued for the assessment years under consideration in the case of the assessee’s trust. Ultimately, the assessments were completed under Section 143(3) read with Section 153C of the Act for the years under consideration.
The Revenue filed the appeal against the order of the Tribunal wherein it was held that the Assessing Officer ought not to have assumed the jurisdiction under Section 153C of the Act.
The division bench of Justice T.S. Sivangananam and Justice Pushpa Sathyanarayan upheld the decision of the Tribunal wherein it was held that in the absence of any incriminating documents or evidence discovered during the course of a search under Section 132 of the Act in the case of the searched person against the assessee, the jurisdiction under the provisions of Section 153C of the Act cannot be assumed.