2016 (2) TMI 277 - HC - Income Tax

Validity of assessment u/s 153 C - Held that - In the present case, there is no doubt that it was only on 24th March 2009 that the AO of the Assessee received the documents seized and it was on that date a notice under Section 153C (1) was issued and served upon the Assessee. Consequently, this Court finds no legal error in the conclusion of the ITAT that notice under Section 153C (1) could not have been issued for AYs 2001-02 and 2002-03. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of proviso to Section 153C of the Income Tax Act, 1961 regarding limitation for reopening assessments.
2. Applicability of the date of search in assessments for Assessment Years (AYs) preceding the year of search.
3. Consideration of the first proviso to Section 153B (1) in conjunction with Section 153C (1) for assessments.

Analysis:
1. The primary issue in this case revolves around the interpretation of the proviso to Section 153C of the Income Tax Act, 1961 concerning the limitation for reopening assessments. The question raised was whether the assessments for certain Assessment Years (AYs) were time-barred in accordance with the said proviso. The contention of the Assessee, upheld by the ITAT, was that the assessments for AYs 2001-02 to 2002-03 were beyond the limitation period as the date of receipt of books and accounts by the Assessing Officer (AO) of the Assessee was deemed to be the date of search for the Assessee.

2. The Court examined the sequence of events related to a search and seizure action conducted on the RL Group, leading to the seizure of documents claimed to belong to the Assessee. The date of receipt of these seized materials by the AO of the Assessee was crucial in determining the starting point for the limitation period for reopening assessments. The Court emphasized that the date of handing over of assets/documents to the AO of the Assessee should be considered as the date of search for the Assessee, affecting the assessments for preceding AYs.

3. The issue of reconciling the provisions of the first proviso to Section 153B (1) with Section 153C (1) was also deliberated. The Revenue argued for a combined reading of these provisions to extend the period for reopening assessments beyond six years. However, the Court, after considering relevant precedents and statutory provisions, rejected this argument. The Court reiterated that in cases involving assessments of a person other than the searched person, the date of search gets postponed to the date of receipt of seized documents by the AO of the 'other person,' aligning with the interpretation of the first proviso to Section 153C (1).

4. Ultimately, the Court upheld the decision of the ITAT, concluding that the notice issued under Section 153C (1) for AYs 2001-02 and 2002-03 was legally erroneous as the documents were received by the AO of the Assessee on 24th March 2009. The Court found no legal error in the ITAT's determination and dismissed the appeals, stating that no substantial question of law arose for consideration in this matter.