TMI Blog2021 (8) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... of A.Y. 2007-08 as 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.A. No. 4045/DEL/2017 - - - Dated:- 9-7-2021 - Shri Amit Shukla, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Appellant : Shri Ajay Wadhwa, Adv. For the Respondent : Shri Sushma Singh, CIT-D.R. ORDER PER AMIT SHUKLA, JM The aforesaid appeal pertaining to A.Y.2007-08 has been filed by the Income-tax Department against the order of Commissioner of Income Tax (Appeals) 30, New Delhi wherein the assessment hasbeen 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 Id. CIT(A) has erred in law on facts in directing the AO to delete the addition made u/s. 88 of the IT Act on account of unexplained cash credits amounting to ₹ 4,88.00,000/-, 2. On the facts and in the circumstances ofthe case, the ld. CIT(A) has erred in law and on facts in directing the A.O. to del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant were found during the course of search on PIL. 4. 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 and the 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. 5. The following additions were made by the Ld. AO by passing order under section 153C of the Act on 31.03.2015: a. Unexplained cash credit under section 68 of the Act on account of share capital and share premium of ₹ 4,97,00,000/- received during the year and ₹ 1 lakh promoters capital.- Refer page no. 34-35 of the paper book. b. Unexplained expenditure on account of brokerage @ 0.5% i.e, ₹ 2,49,200/- 6. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant assessment year. It filed its return of income u/s 139 of the Act on 24.10.2007 declaring income of ₹ 230/-. Refer page no. 1 of the paper book. 2. The case 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. Refer page no. 12 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. 13-14 of the PB) 4. The assessee again vide letter dated 27.02.2015 requested the Ld. AO to provide the satisfaction recorded by him and the seized material also 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. 15-16 of PB) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dated 11.03.2017 and full copy of submissions dated 21.03.2017 filed before the Ld. CIT (A) is attached at page no.71-123 and 124-131 of the paper book. 11. The Ld. CIT (A) after examining the case in detail passed the order on 31.03.2017 in favour of assessee on the following grounds: i. The assessment completed under section 153C of the Act is voidab- initio as the AO has no jurisdiction to for making assessment for A.Y. 2007-08, being beyond the period of 6 years. Refer page no. 10-12 of 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 AO of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the recording of satisfaction under Section 153C of the Act, i.e., 8th September, 2010. In this view, the assessments made in respect of assessment years 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount 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 132A in the second proviso to 5 [sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. The position of law is very clear and there is no ambiguity in the Act. This is further clarified by the jurisdictional Hon ble Delhi High Court in the case of SSP Aviation Ltd. Vs. DCIT in W.P.C. No. 309/2011 dated 29.03.2012 in Para No. 13, 14 amp;amp; 15 which are as under:- 13. Sections 153A to 153D are placed in Chapter XIV of the Act, which is titled amp;quot;procedure for assessment amp;quot;. Section 153A provides for the assessment in case of search or requisition. This section applies to a person in whose case a search is initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luable 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 or reassess the income of such other person in the manner contemplated by the provisions of Section 153A. Now a question may arise as to the applicability of the second proviso to Section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153C (1) of the Act, the reference date for taking action u/s 153C, will be as 22.12.2014, in the case of appellant, instead of date of search on 30,10:2012, which is required for taking action u/s 153 A, and the 6 preceding A.Ys. , will be from A.Y. 2009-10 to A.Y. 2014-15 only. From the above, it is clear that A.O, has wrongly issued notices u/s. 153C of the Act, for A.Y. 2007-08, since the documents were handed over on 22.12.2014. Therefore, the notice Issued by the A.O., is beyond the limitation period of 6 years from the reference date, prescribed in the first proviso to section 153C(1) of the Act and I53A(1) of the Act. From these facts, it is clear that the action initiated u/s 153C of the Act, for A.Y. 2007-08, is beyond die time limitation period prescribed under the Act, as die reference date for taking action u/s 153C of the Act, is 22,12.2014. In view of the above, I am of the considered opinion that the assessment completed u/s 153C/ 153A of the Act, Is void ab-inido, as the A.O. has no jurisdiction for making the assessment for A.Y. 2007-08, being beyond the period of 6 years. Accordingly, I agree with the arguments of the appellant and also the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action under Section 153C of the Act, i.e., 8th September, 2010. In this view, the assessments made in respect of assessment years 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction 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 constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) has held that: dated 23.10.2018 The Assessing Officer of the search party and the respondent assessee was the same. In such a factual matrix, the Assessing Officer could not have been initiated and passed an Assessment Order 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: Held: 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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