No search proceedings against client due to seizure of CA's hard disk containing ITR data of client

October 31, 2015[2015] 62 taxmann.com 391 (Delhi)

IT : Delhi HC lays down principles to avoid vexatious proceedings u/s 153C against person other than person searched

• Court rules on relevant date for application of sec 153A where AO of searched is also AO of the other person

If AO of the searched person and the other person is one and the same, date on which satisfaction is recorded by the AO that assets/documents belong to the other person is the relevant date for application of section 153A

• Hard disk seized from CA with data pertaining to ITR filing of client doesnt "belong to" client for invoking sec 153C

The hard disk recovered from computer belonging to CA during search on CA's premises containing workings supporting client's ITR filing cannot be said to "belong to the client". Therefore, section 153C cannot be invoked against the client based on such seized hard disk. Merely because the data pertained to the client, the hard disk seized from CA cannot be said to belong to the client

• If is apparent that assets seized from another person do not pertain to assessee, AO cann't commence enquiry u/s 153C

It is not necessary for AO to be satisfied that assets/documents seized during search of another person reflect assessee's undisclosed income before commencing an enquiry u/s 153C. However, it would be impermissible for AO to commence an enquiry u/s 153C if it is apparent that assets/documents seized from another person do not pertain to assessee, AO cann't commence enquiry u/s 153C