2016 (5) TMI 1520 - AT - Income Tax

Assessment u/s 153A - Period of limitation - Six preceding years will have to be reckoned from the date of recording of satisfaction note u/s 153C and not from the date of search - HELD THAT - Referring to CBDT Circular dated 31.3.2014 and cases SSP AVIATION LTD. 2012 (4) TMI 335 - DELHI HIGH COURT and SHREE JASJIT SINGH 2015 (8) TMI 982 - DELHI HIGH COURT clinch the issue in favour of the assessee and, accordingly, we quash the assessment framed u/s 153A/143(3) for assessment year 2007-08 as being void ab initio as being barred by limitation. Ground of the assessee s appeal is allowed.

Summary

Issues:
Assessment year 2007-08 - Validity of notice u/s 153C - Barred by limitation - Jurisdiction under Section 153C - Applicability of CBDT Circular.

Analysis:

1. The appellant challenged the order passed by the Ld. CIT(A)-III, New Delhi, dismissing the appeal for assessment year 2007-08 on legal grounds and merits. The case involved a search and seizure operation in the Modi Family Group, leading to the seizure of documents related to the appellant. The Assessing Officer issued a notice u/s 153C of the Income Tax Act, 1961, based on the seized documents. The appellant contended that the notice was barred by limitation as the satisfaction was recorded after the relevant assessment year. The appeal was dismissed, prompting the appellant to challenge the decision.

2. The main contention revolved around the validity of the notice u/s 153C for the assessment year 2007-08. The appellant argued that the assessment was time-barred as the satisfaction under section 153C was recorded after the relevant assessment year. Citing a judgment by the Hon'ble Delhi High Court, the appellant contended that the six preceding years should be reckoned from the date of recording satisfaction, not the date of search.

3. The Ld. DR argued that since the Assessing Officer for the searched party and the Third Party was the same, the date of search should determine the period of preceding six years. However, the appellant relied on the judgment in SSP Aviation Ltd. vs DCIT, where the Hon'ble High Court clarified the procedure under sections 153A to 153D concerning assessment in cases of search or requisition.

4. The Hon'ble Delhi High Court's judgment in SSP Aviation Ltd. vs DCIT was crucial in determining the applicability of section 153C and the relevance of the date of recording satisfaction for initiating proceedings against a Third Party. The judgment emphasized the importance of maintaining institutional memory and proper documentation in such cases. The CBDT Circular issued on 31.3.2014 further supported the appellant's argument regarding the jurisdiction under section 153C.

5. Considering the precedents and the CBDT Circular, the Tribunal ruled in favor of the appellant, quashing the assessment for the assessment year 2007-08 as void ab initio due to being barred by limitation. The Tribunal allowed ground no. 2 of the appellant's appeal while dismissing the other grounds as in fructuous. The appeal was partly allowed based on the detailed analysis and interpretation of relevant legal provisions and judgments.

6. The judgment delivered by the Appellate Tribunal ITAT DELHI on 17th May, 2016, clarified the legal intricacies surrounding the validity of the notice u/s 153C and the jurisdictional aspects under the Income Tax Act, providing a comprehensive analysis of the issues raised by the appellant.