Jurisdictional Issue in Income Tax Case: ITA 1038/DEL/2022 between ACIT, Central Circle-2, Noida and Brys Resorts Pvt. Ltd.

Jurisdictional Issue in Income Tax Case: ITA 1038/DEL/2022 between ACIT, Central Circle-2, Noida and Brys Resorts Pvt. Ltd.

The Income Tax Appellate Tribunal’s ruling on case number ITA 1038/DEL/2022 brings to light a significant jurisdictional dispute. The case involves the appellant, ACIT, Central Circle-2, Noida, and the respondent, Brys Resorts Pvt. Ltd., Noida, concerning the assessment years 2012-13. The crux of the matter revolves around the validity of jurisdiction assumed under section 153C of the Income Tax Act by the assessing officer against Brys Resorts Pvt. Ltd.

Background

A search and seizure operation under section 132 of the Income Tax Act was conducted against Shubhkamna Buildtech Pvt. Ltd. Group, during which documents related to Brys Resorts were purportedly found, leading to the initiation of proceedings under section 153C against Brys Resorts Pvt. Ltd. for the assessment year 2012-13.

The Appeal

ACIT, Central Circle-2, Noida, filed appeals contesting the deletions made by ld. CIT (A). Conversely, Brys Resorts Pvt. Ltd. disputed the jurisdictional basis of these assessments, leading to a significant legal debate over the right of the assessing officer to assume jurisdiction under section 153C based on the documents seized during the search operation.

Dispute over Jurisdiction

The pivotal issue in this case was whether the documents seized constituted ‘incriminating material’, thereby justifying the initiation of proceedings under section 153C against Brys Resorts Pvt. Ltd. for the assessment years in question.

Judicial rulings cited, including cases like CIT vs. Sinhgad Technical Education Society and several others, have established that for proceedings under section 153C to be valid, there must be incriminating material found in the course of a search that pertains to the assessee against whom proceedings are initiated. The tribunal, considering the facts and precedents, concluded that the ‘satisfaction note’ and the documents seized did not qualify as incriminating material specific to Brys Resorts for the assessment year 2012-13, thus rendering the assumption of jurisdiction by the assessing officer under section 153C as invalid.

Conclusion and Implications

The tribunal’s decision to dismiss the appeals filed by the Revenue on the grounds of lack of jurisdiction, and to uphold the cross objections raised by Brys Resorts Pvt. Ltd., sets a precedent on the importance of establishing a clear basis of jurisdiction under section 153C based on incriminating material. This case underscores the critical nature of adhering to procedural and substantive legal requirements in the assessment process, ensuring fairness and clarity in the application of tax laws.

The ruling, while specific to the parties involved, holds broader implications for the principles governing jurisdiction under the Income Tax Act, especially in cases involving search and seizure operations.

Jurisdictional Issue in Income Tax Case: ITA 1038/DEL/2022 between ACIT, Central Circle-2, Noida and Brys Resorts Pvt. Ltd.