Filing your income tax returns can be a tricky business. This is why there are CAs and audit firms to help you out. But this doesn’t mean that you should not hold the knowledge of the basic sections and sub-sections. Having some basic information will let you convey your returns without getting scammed. So, keeping in mind your benefit, two important parts of the Income Tax Act– one that deals with the source of unexplained expenditure and the other that sets rules on the income of any other person, have been explained below.
The Section 69C of the Income Tax Act mainly refers to the source of the expenditure, but not the expenditure itself. Moreover, it says that in the absence of any material found during the search, it is not justifiable to add expenditure in a block assessment.
The Section 153C of the Income Tax Act, states that the assessment of the income of any person other than the one in whose case the search has been initiated or the book of account, or other documents or assets have been requisitioned.
The provision of Section 153C
The sub-section (1) of Section enlists the provision of the Section 153C, which states: Notwithstanding anything that is contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, the Assessing Officer must be satisfied with the requisitioned or seized money, bullion, jewelry or other valuable articles or things or book of accounts or documents belong to any person who isn’t the same person as mentioned in Section 153A. Once the Assessing Officer is satisfied that with the person’s identity, the Assessing Officer has jurisdiction over such other person and the Assessing Officer will proceed against each such other person and issue notice against them to assess or reassess income of such other person as per the Section 153A.
CIT vs. Lavanya Land Pvt. Ltd. (Bombay High Court)
In the ruling of CIT vs. Lavanya Land Pvt. Ltd. the Bombay High Court shed some light on the Section 69C and Section 153C of the Income Tax Act and arrived at a decision.
- The Tribunal considered the merits at great length, by Section 69C and finally arrived at a conclusion. The Tribunal said that merely on the strength of the alleged admission of Dilip Dherai the additions could not have been made. The Tribunal further concluded that the allegations the authority made are not at all supported by actual cash passing hands. It said that the entire decision has been based on seized documents and there was no material that was referred which would help to get to a conclusion, showing that huge amounts which were revealed from the seized documents actually transferred from one side to another. Thus the Tribunal found that the additions cannot be sustained on legal issue as well as the merits.
- Since the Tribunal negated the allegations by referring Section 69C, based on pure merits and facts, Section 153C had no place for invocation.