Rachita Sahgal vs. ACIT, Central Circle-8, New Delhi, ITA No. 1836/Del/2023, ITAT Delhi
Brief Facts of the Case:
The case involved a search conducted at a third party’s premises (M/s ABC Realtors Pvt. Ltd.), during which certain documents were found. Based on these, the Assessing Officer initiated proceedings under Section 153C against the assessee, alleging unexplained on-money receipts.
The AO’s satisfaction note stated that the seized document “belonged to” the assessee, but failed to establish how it “pertained to” the assessee—a key requirement post the 2015 amendment to Section 153C.
Tribunal’s Observations and Decision:
- Jurisdictional Defect in Invoking Section 153C:
- The ITAT observed that as per the amended provisions of Section 153C (effective 01.06.2015), the document must “pertain to” the assessee.
- Merely stating that the document “belongs to” the assessee is insufficient.
- Since the AO had not demonstrated how the seized document pertained to the assessee, the invocation of Section 153C was held to be bad in law.
- On-Money Addition Unjustified:
- The tribunal held that the on-money addition of ₹42,94,000 each (for both Mr. and Mrs. Sahgal) had no supporting evidence.
- The seized document was not recovered from the assessee but from a third party.
- The presumption under Section 292C could not apply to the assessee since the document was not found in their possession.
- Assessment Quashed on Both Legal and Factual Grounds:
- The tribunal quashed the assessment by holding both the assumption of jurisdiction under Section 153C and the addition made on merit to be unsustainable.
Conclusion:
This decision reinforces that for invoking Section 153C, it is crucial that the seized document must “pertain to” the assessee—not just “belong to” them. Jurisdictional lapses and absence of corroborative evidence can render such assessments void ab initio.