2019 (2) TMI 1333 - HC - Income Tax

Assessment u/s 153A - AO of the searched person has recorded satisfaction on 16.03.2018, i.e. after a period of more than one year from the date of the assessment order - HELD THAT - As submitted that upon receipt of the satisfaction note, the petitioner had raised objections in respect of the same and requested the respondent to pass a reasoned order disposing of the same. However, the respondent instead of deciding the objections, has straightaway proceeded to pass assessment order under section 143(3) read with section 153C read with section 153A(1)(b) of the Income Tax Act, 1961. Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 04.02.2019. By way of ad-interim relief, the impugned assessment orders dated 22.12.2018 (Annexure G collectively to the petition) for Assessment Years 2009-10 to 2014-15 are hereby stayed.

Summary

Issues:
1. Delay in passing assessment order after recording satisfaction under section 153C of the Income Tax Act.
2. Compliance with Circular No.24 of 2015 issued by the Central Board of Direct Taxes.
3. Interpretation of the first proviso of section 153C regarding the date of initiation of search.
4. Validity of proceedings under section 153C post-amendment.
5. Failure to address objections before passing assessment order.

Analysis:

1. The petitioner argued that there was a significant delay in passing the assessment order after the Assessing Officer recorded satisfaction under section 153C of the Income Tax Act. The assessment order was passed on 31.12.2016, while the satisfaction was recorded on 16.03.2018, which exceeded a year from the date of the assessment order.

2. Reference was made to the Supreme Court decision in the case of Commissioner of Income Tax-III v. Calcutta Knitwears, emphasizing the importance of a satisfaction note before transmitting records to the Assessing Officer with jurisdiction over the other person. The petitioner highlighted Circular No.24 of 2015, indicating that the provisions of section 153C are similar to section 158BC, and argued that the initiation of proceedings in this case did not align with the Circular due to the delay.

3. The petitioner drew attention to the first proviso of section 153C, stating that the date of initiation of search for a person other than the searched person should be considered as the date of receiving seized documents. In this case, as the documents were received on 16.03.2018, the Assessing Officer could assess the petitioner for six years prior to that date, starting from Assessment Year 2013-14.

4. Another argument raised was the validity of proceedings under section 153C post-amendment, as the search had taken place before the amendment. The petitioner contended that the proceedings under section 153C were invalid due to the search occurring prior to the legislative change.

5. The petitioner also highlighted the failure of the respondent to address objections raised by the petitioner before passing the assessment order. Despite requesting a reasoned order, the respondent proceeded to pass the assessment order under relevant sections of the Income Tax Act without addressing the objections raised.

In light of the submissions made by the petitioner, the High Court issued a notice returnable on 04.02.2019 and stayed the assessment orders for the relevant Assessment Years 2009-10 to 2014-15 as an ad-interim relief.