TMI Blog2021 (8) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of A.Y. 2008-09. It was clearly barred by limitation. Hence, there is no option but to annul the assessment and all consequent additions made in the assessment also stand deleted. - Decided in favour of assessee. - I.T.As. No.4059/DEL/2017 - - - Dated:- 9-7-2021 - Shri Amit Shukla, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Assessee : Shri Ajay Wadhwa, Adv. For the Department : Shri Sushma Singh, CIT-D.R. ORDER PER AMIT SHUKLA, JM The aforesaid appeal pertaining to A.Y.2008-09 has been filed by the Income-tax Department against the order of Commissioner of Income Tax (Appeals) 30, New Delhi wherein the assessment has been quashed on the ground that it is barred by limitation. 2. The grounds of appeal taken by the Department before us are reproduced under: 1 . On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing the A.O. to delete the addition made u/s 68 o,f the I.T. Act on account of unexplained cash credits amounting to ₹ 23,68,50,000/-. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging to the appellant were found during the course of search on PIL. A satisfaction note before issuance of notice under section 153C of the Act was recorded by Assessing Officer (AO) in the capacity of the AO searched person i.e. PIL and also in the capacity of the AO of the appellant andthe same was duly communicated to the appellant. The appellant filed detailed objections against the issuance of notice under section 153C of the Act and the satisfaction recorded by the AO.These objections were also considered by the AO and disposed off. 4. The following additions were made by the Ld. AO: a. Unexplained credit under section 68 of the Act of ₹ 23,68,50,000/- being share capital and security premium received by the appellant; b. Unexplained expenditure in the form of brokerage @ .5% i.e, 11,84,250/- 5. The appellant, before the Commissioner of Income Tax (Appeal) took the jurisdictional ground contending inter-alia that the assessment, so framed under section 153C of the Act in the case of the appellant, is barred by limitation. According to the appellant, the provisionsof section 153C come into play on handing over of documents seized and belonging to the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the assessee company was reopened under section 153C of the Act by issuing notice on 12.02.2015 consequent to the search and seizure operation u/s 132 of the Act on M/s Prakash Industries group of Companies on 30.10.2012. Copy of notice issued is attached at page no. 10 of the paper book. 3. The assessee filed reply in response to the aforesaid notice vide letter dated 25.02.2015 requested the Ld. AO to provide the copy of satisfaction note recorded by him as well as the Assessing Officer of searched person and also requested to provide the details of search and the material seized and relied upon by the Ld. AO for recording the satisfaction required u/s 153C of the Act. (Refer page no. 11-12 of the PB) 4. The assessee vide letter dated 27.02.2015again requested to provide the copy of satisfaction note and seized material relied upon by the Ld. AO for recording the satisfaction required u/s 153C of the Act and stated that the return filed under section 139 of the Act may be treated as filed in response to notice under section 153C of the Act (Refer page no. 13-14 of PB) 5. The Ld. AO provided the copy of satisfaction note recorded by him and the AO of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) order. 12. Being aggrieved by the order of Ld. CIT(A), the department had filed an appeal before Your Honours. I. Issuance of notice under section 153C for the relevant assessment year is barred by limitation; notice issued by the AO and the consequential order passed under section 153C deserves to be quashed 1. Your Honours, in the present case the search was conducted at the premises of M/s Prakash Industries Ltd. on 30.10.2012. The searched person is M/s Prakash Industries Ltd. and the assessee is other person in terms of section 153C of the Act. 2. The date of search is 30.10.2012 and the date of recording satisfaction by the Ld. AO is 12.02.2015. In absence of any specific date of handing over of material in the satisfaction note, it was only on 12th February, 2015, the date of recording of satisfaction will be assumed to be the date of handing over the material. 3. Prior to the amendment by Finance Act, 2017, in terms of the proviso to Section 153C (1) of the Act, the date of receipt of the books and accounts by the AO of the Assessee is deemed to be the date of search.In the present case in absence of any specific date of handing over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as below : 153C. 3 [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person 3a [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] 4 [Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment proceedings in respect of any those six assessment years that will abate; in case the assessment or reassessment for any of those 6 years have already been completed as on the date of search then there is no question of any of them abating for the simple reason that what can abate is only what remains pending. 14. Now there can be a situation when during the search conducted on one person under Section 132, some documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the Assessing Officer has to first be satisfied under Section 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced as under:- From the above, it is clear that AX), has wrongly issued notices u/s 153C of the Act, for A.Y. 2008-09, since the documents were handed over on 12.02.2015, Therefore, the notice issued by the A.O., is beyond the limitation period ot 6 years from the reference date, prescribed in the fust proviso to Section 1S3C(!) of the Act and 153A(I) of the Act From these facts, it is clear that the action initiated u/s 153C of the Act, for A.Y. 2008-09, is beyond the lime limitation period prescribed under the Act, as the reference date for taking action u/s 153C of the Act, is 12.02.2015. In view of the above, 1 ant of the considered opinion that the assessment completed uis 153C/153 A of the Act, is void ab-initio, as the AO, has no jurisdiction for making the assessment for A.Y. 2008-09, being beyond the period of 6 years. Accordingly,, I agree with the arguments of the appellant and also the facts of the appellant arc squarely covered by the ratio laid down by Hoo'ble Jurisdictional High Court of Delhi, in the case of ClT-7 Vs. M/s RRJ Securities Ltd., [2016J 380 1TR 612 (Delhi) (supra). In these facts and circumstances, I bold that the assessment complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C (1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under Section 153C of the Act for the Assessment Year 2007- 08 as the same was beyond the period of six years from the end of the financial year in which the satisfaction note was recorded by the Assessing Officer. iii) Hon ble High Court of Delhi in the case of Sarwar Agency Pvt. Ltd. (85 taxmann.com 269) has held that: Mr. Ashok Manchanda, learned Senior Standing counsel for the Appellant, sought to pursue this Court to reconsider its view in RRJ Securities (supra). The Court declines to do so for more than one reason. First, for reasons best known to it, the Revenue has not challenged the decision of this Court in RRJ Securities (supra) in the Supreme Court. The said decision has been consistently followed by the authorities under this Court as well as by this court. Thirdly, the recent amendment to Section 153 C(1) of the Act states for the first time that for both the searched person and the other person the period of reassessment would be six AYs preceding the year of search. The said amendment is prospective. 14. Under these facts and circumstances, we have to hold that no assessment under section 153C could have been made in respect of A.Y. 2008-09. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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