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2021 (5) TMI 722 - AT - Income TaxRevision u/s 263 - revision of invalid assessment - Assessment u/s 153C - Assessment u/s 143(3) in pursuant to notice u/s. 142(1) - whether in cases of Section 153C, the period of six years has to be reckoned from the date of recording of satisfaction note or from the date of search carried out in a case of a person provided in Section 153A? - Scope of amendment - HELD THAT:- The date of satisfaction, i.e., 25.09.2018 has to be reckoned as the date of reference from where six assessment years immediately preceding assessment years has to be construed and therefore, six preceding assessment years in this case shall be from Assessment Year 2012-13 to Assessment Year 2018-19. The instant Assessment Year, i.e., Assessment Year 2017-18 ergo would be covered in the earlier six assessment years where the assessments have to be framed u/s.153C only, whereby the Assessing Officer was required to issue a notice u/s.153C, and frame the assessment u/s.153C/143(3). Assessing Officer had issued notice u/s.142(1) and resultantly has framed the assessment u/s.143(3), treating it to be regular assessment for the year of search. The amendment to clarify this position u/s. 153C (1) was brought in the statute by the Finance Act, 2017 w.e.f. 01.04.2017, wherein it has been provided that the six preceding assessment years for the person covered u/s 153C would be same as that of the searched person covered u/s 153A. In other words, in case of ‘the other person’ (i.e. person covered u/s 153C), six preceding assessment years has to be reckoned from the year of search. This amendment has been held to be prospective by the Hon’ble Jurisdictional High Court in the case of CIT vs. Sarwar Agency P Ltd. [2017 (8) TMI 733 - DELHI HIGH COURT] Here in this case, since the date of search is 21.07.2016, therefore, the amendment brought by the Finance Act, 2017 would not be applicable and ex consequenti the assessment for the instant Assessment Year 2017-18 ought to have been completed u/s.153C of the Act and the order of assessment dated 18.12.2018 passed u/s 143(3) in pursuant to notice u/s. 142(1) is bad in the eyes of law in view of the law interpreted and upheld by the Hon’ble Jurisdictional High Court in CIT vs. RRJ Securities Ltd. [2015 (11) TMI 19 - DELHI HIGH COURT] and ARN Infrastructure India Ltd. v. ACIT [2017 (4) TMI 1194 - DELHI HIGH COURT] It is incontrovertible that proceedings u/s. 263 are collateral proceedings of the assessment, because ld. CIT/PCIT exercise revisionary jurisdiction u/s.263 seeking to revise the assessment order on the ground that it is erroneous in so far as it is prejudicial to the interest of revenue. The edifice of the proceedings u/s 263 is the assessment order which is the original proceedings which has come to an end. However, if the original assessment order itself was invalid or illegal in terms of jurisdiction or was not in accordance with the provisions of the statute or was barred by limitation, then such an invalid order cannot be subject matter of further proceedings so as to validate the said assessment order in collateral proceedings like u/s 263. We hold that the present proceedings being collateral proceedings and if the assessment order is inherently invalid or bad in law, then validity of such an order can be challenged at any stage in the collateral proceedings including the proceedings u/s.263, because invalid order cannot be set aside or can be revised to make it valid. Though assessment order may be said to be erroneous but certainly it cannot be held prejudicial to the interest of the revenue in such circumstances when assessment order itself is unsustainable, in view of the provisions of law we set aside the impugned order passed u/s.263, as Ld. PCIT could not have revised the assessment order which itself is an invalid order. - Decided in favour of assessee.
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