2022 (8) TMI 1290 - ITAT SURAT

Validity of assessment u/s 153C - six previous assessment years for the purpose of assessment u/s 153C - Assessee challenged assessment on defective satisfaction note, stating that satisfaction-note was recorded on 13.01.2015, therefore, assessment year 2008-09 does not fall in the definition of previous six years to make the assessment under section 153C - Whether notice u/s 153C can be issued for six years immediately preceding the assessment year in which the search was initiated? - HELD THAT:- As satisfaction note has not been recorded within normal period allowed by the Act and rather it has been recorded after Fifteen Months and Thirteen days, and moreover it is combined satisfaction note and in the Income Tax Act there is no concept of combined satisfaction note, therefore such satisfaction note contains several defects and hence assessment framed based on such satisfaction note should be quashed.

Since the satisfaction note is recorded on 13.01.2015, which pertains to assessment year 2015-16. Therefore, six previous assessment years for the purpose of assessment under section 153C of the Act, would be assessment years: 2014-15, 2013-14, 2012-13, 2011-12, 2010-11 and 2009-10. Therefore, assessment year 2008-09 should be excluded from the ambit of section 153C of the Act. We find merit in the submission of ld Counsel that period of six years should be reckoned with respect to the date of recording of satisfaction note and not the date of search.

Respectfully following the judgment of Hon`ble High Court of Delhi in the case of RRJ Securities Limited [2015 (11) TMI 19 - DELHI HIGH COURT] and in the case of Sarwar Agency (P) Limited [2017 (8) TMI 733 - DELHI HIGH COURT] we quash the assessment order framed by the Assessing Officer under section 144 r.w.s. 153C - Decided in favour of assessee.

Allowability of expenditure - We note that assessee is not doing actual business and earned only commission income on sales, import and loan entry. Hence, the books of account maintained by the assessee is not reliable and rejected u/s 145(3) of the Act by the Assessing Officer and then after Assessing Officer passed order u/s 144 of Act, on best judged assessment basis. The assessee is doing import on behalf of client who is "not identified by the assessee" therefore it was held by the Assessing Officer that all expenses like exchange loss, VAT payment, octroi payment, custom duties and all statutory expenses are also met by such client on whose behalf the goods are imported.

As per the given working, we note that Assessing Officer also allowed deduction of expenses at the rate of 25% for paper transactions and related costs, hence we note that assessing officer passed reasoned and speaking order therefore assessee does not deserve further relief, therefore, we dismiss all the appeals of these assessee on merit.