TMI Blog2022 (8) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person - As further held that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block period for the searched person as well as the other person would be same six AYs immediately preceding the year of search is only prospective. It makes the things clear that the search that took place in this case is prior to amendment unaffected by the amendment made by way of Finance Act 2017. As respectfully following the decision ARINA AIRLINES INTERNATIONAL LIMITED VERSUS ACIT, CIRCLE-05, NEW DELHI [ 2022 (2) TMI 1270 - ITAT DELHI] we hold that the impugned assessment order passed under section 153C of the Act, is wholly without jurisdiction, hence, invalid. Accordingly, we quash the same. Consequently, the order of learned Commissioner (Appeals) is set aside. - Decided in favour of assessee. - ITA No.202/Del/2021 And ITA No.955/Del/2021 - - - Dated:- 29-7-2022 - Shri C.M. Garg, Judicial Member And Shri Anadee Nath Misshra, Accountant Member For the Assessee : Shri Ruchesh Sinha, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years would be AYs 2014-15 to 2019-20, therefore, initiation of the assessment proceedings u/s 153 of the Act, notice issued and assessment order framed u/s 143(3) r.w.s. 153C of the Act dated 31.10.2019 is bad in law being passed without assuming valid jurisdiction to issue notice and frame assessment u/s 153C of the Act. It was, therefore, submitted that in view of the orders of the ITAT D Bench (supra), the entire proceedings including the assessment order and first appellate order may kindly be quashed. 4. Replying to the above, the ld.CIT-DR vehemently supported the assessment order as well as the first appellate order passed u/s 143(3) r.w.s. 153C and submitted that in view of the subsequent amendment with effect from 01.04.2017, the year of search and block of six assessment years would be same for the person searched as well as for the other person, therefore, the contentions of the ld. Counsel of the assessee are not plausible and sustainable. 5. Placing rejoinder to the above, the ld. Counsel again drew our attention towards the order of the ITAT D Bench in the case of Karina Airlines for AY 2011-12 (supra) and submitted that the contention of the ld.CIT- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment in case of a person other than the searched person, contemplates that the date of search for a case falling under this provision would be reckoned from the date of recording of satisfaction by the Assessing Officer of the searched person and handing over of the seized material. 10. By Finance Act, 2017, amendment was made to section 153A as well as 153C of the Act, simultaneously, empowering the Assessing Officer to make assessment not only for six preceding assessment years but for the relevant assessment year or years. Thus, effectively, the aforesaid amendment to sections 153A and 153C of the Act allows the Assessing Officer to make assessment for the same set of assessment years, both in case of searched person as well as the person other than the searched person. The crucial issue which arises for consideration is, whether the aforesaid amendment made to sections 153A and 153C of the Act would apply prospectively or retrospectively and, if prospectively, whether it will cover the present assessee. Now, it is fairly well settled through a number of judicial precedents that the amendment to sections 153A and 153C of the Act would apply prospectively w.e.f. 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from 1st April, 2017. 12. In the aforesaid Explanatory Notes, the CBDT has not only clarified that such amendment would be effective from 1st April, 2017 but also made it clear that amended provisions would apply where search under section 132 of the Act is initiated or requisition under section 132A of Act was made on or after 1st April, 2017. Thus, the crucial date that has to be borne in mind is the date of search. Admittedly, in the facts of the present case, the date of search is 07.04.2016, which is prior to the date of amendment made to section 153A and 153C vide Finance Act, 2017. Thus, as per CBDT circular mentioned above, the amended provisions would not be applicable to the present case. Taking note of the aforesaid CBDT circular, the Hon ble Gujarat High Court, in case of Anil Kumar Gopikishan Arawal Vs. CIT, (418 ITR 25), has held that the amended provisions of section 153C of the Act would apply where search and seizure is made after the amendment 7. Therefore, keeping in view the facts of the case that the date of search was 07.04.2016, date of recording satisfaction by the AO of searched person was 29.03.2019 and the date of recording of satisfactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further held by the Hon ble court that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block period for the searched person as well as the other person would be same six AYs immediately preceding the year of search is only prospective. It makes the things clear that the search that took place on 7/4/2016 in this case is prior to amendment unaffected by the amendment made by way of Finance Act 2017. 12. In CIT v RRJ Securities Ltd. (supra) the Hon ble High Court held as under : 24. As discussed hereinbefore, in terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. Further proceedings, by virtue of Section 153C(1) of the Act, would have to be in accordance with Section 153A of the Act and the reference to the date of search would have to be construed as the reference to the date of recording of satisfaction. It would follow that the six assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO had no jurisdiction to make an assessment of the Assessee's income for that year. 13. Further, in the case of ARN Infrastructure India Ltd v ACIT (supra) the Hon ble High Court held that,- 12. The decision in RRJ Securities Ltd. {supra) is categorical that under Section 153C of the Act, the period of six years as regards the person other than the searched person would commence only from the year in which the satisfaction not is prepared by the AO of the searched person and a notice is issued pursuant thereto. The date of the Satisfaction Note is 21st July. 2014 and the notice under Section 153C of the Act was issued on 23rdJuly 2014. The previous six AYs would therefore be from AY 2009-10 to AY 2014- 15.This would therefore not include AYs 2007-08 and 2008-09.The decision in RRJ Securities Ltd. (supra) is also an authority for the proposition that for the proceedings under Section 153C to be valid, there had to be a satisfaction note recorded by the AO of the searched person. 14. Lastly, in MIKADOREALTORS P. LTD. VERSUS PR. CIT (CENTRAL) GURUGRAM. 2021 (5)TMI 722 - ITAT DELHI I.T.A. No.50/DEL/2021 a coordinate Bench of this Tribunal held that,- 7. We wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earched 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 than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153 A of the Act. We, therefore, accept the contention that in any view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Jurisdictional High Court in the case of CIT vs. Sarwar Agency P Ltd. as reported in 397 ITR 400, wherein the Hon ble Court observed and held as under: 10. Mr. Salil Aggarwal, learned counsel for the Assessee, has drawn the attention of the Court to the recent amendment made in Section 153 C of the Act by the Finance Act, 2017 with effect from 1st April 2017. This amendment in effect states that the block period for the searched person as well as the 'other person' would be the same six AYs immediately preceding the year of search. This amendment is prospective. 11. 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 153C (1) of the Act states for the first time that for both the searched person and the other person the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, 2014. Therefore, Section 153C as it stood prior to the amendment with effect from 1st June, 2015 applied to the case on hand. In terms of the said provision ie., 153C(1), the AO of the searched person had to be satisfied that the documents seized belongs or belong to a person other than the person referred to in Section 153 A' in order that the AO of the searched person could to hand over such documents to the AO having jurisdiction over such other person . The change brought about by the prospective amendment, with effect from 1st June 2015, is that for initiating proceedings under Section 153 C arising from searches after that date it is enough for the Department to show that a particular seized document 'pertains to' the other person. However, in the present case, since the proceedings under Section 153 C (1) of the Act against the Assessee commenced prior to 1st June 2015, the Department is not relieved of the burden of showing that the seized documents in fact belong to (and not merely pertain to) the Assessee. ii) 417 ITR 617 (Del) PCIT vs. Dreameity Buildwell (P) Ltd. 17. In 14 the present case the search took place on 5th January 2009. Notice to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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