2017 (4) TMI 1519 - AT - Income Tax

Assessment u/s 153C - Assessee as contented proceedings u/s. 153C read with section 153A of the Act could not have been taken for the assessment year 2004-05? - HELD THAT - We find that pursuant to a conjoint reading of Section 153A and the 1st proviso of Section 153C, it emerges that for the purpose of assessment or re-assessment in the case of a person covered by Section 153C, the date of initiation of the search under Section 132 or making of requisition under Section 132A contemplated in the 2nd proviso of Section 153A, stands substituted by 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 In the case of the present assessee as the reasons recorded for issue of notice under Section 153C for A.Y. 2004-05 to 2009-10 are dated 21.12.2010, therefore though it can safely be presumed that the A.O of the searched person, viz. M/s Om Sai Motors Pvt. Ltd. must had handed over the seized material relatable to the assessee, to the A.O having jurisdiction over the latters case in the Financial year 2010-11 relevant to A.Y. 2011-12, and if that be so, then the A.O would had no jurisdiction for issuing notice under Section 153A r.w Sec. 153C for the said year, viz. A.Y. 2004-05, to the assessee, and as a fall out of the same the assessment framed in the hands of the assessee under Section 144 r.w.s. 153C, dated 30.12.2011, being devoid of any force of law, would be rendered non est D.R had neither placed on record any material to controvert and dislodge the claim of the ld. A.R that the handing over of the assets/documents relatable to the assessee by the Assessing officer of the searched person, to the Assessing officer of the asessee had taken place in F.Y. 2010- 11 relevant to A.Y. 2011-12, but then we being not oblivious of the fact that as the exact date of actual handing over of the material by the A.O of the searched person, viz. M/s Om Sai Motors Pvt. Ltd.cannot be deciphered from either the orders of the lower authorities, or the record before us, therefore in all fairness for the said limited purpose of verifying the said factual position, therein set aside the matter to the file of the A.O The Additional Ground of appeal No. 1 raised by the assessee before us is thus allowed for statistical purposes.

Summary

Issues Involved:
1. Insufficient opportunity of being heard under Section 144 r.w.s 153C.
2. Addition of ?17,00,000 as unexplained cash credit under Section 68.
3. Addition of ?2,57,350 as unexplained cash credit under Section 68.
4. Validity of assessment order under Section 144 r.w.s 153C for A.Y 2004-05.
5. Validity of additions without incriminating material under Section 153C.

Detailed Analysis:

1. Insufficient Opportunity of Being Heard:
The appellant contended that the Commissioner of Income Tax (Appeals) (CIT(A)) erred in upholding the assessment order passed by the Assessing Officer (A.O) under Section 144 r.w.s 153C without giving sufficient opportunity of being heard. The appellant argued that the A.O did not provide adequate chances to present his case, which led to an unfair assessment.

2. Addition of ?17,00,000 as Unexplained Cash Credit:
The appellant challenged the addition of ?17,00,000, which was a loan taken from M/S Divyasagar Restaurant (Prop: Mrs. Meera D. Shetty), as unexplained cash credit under Section 68 of the Income-tax Act, 1961. The CIT(A) upheld this addition, but the appellant argued that the amount should not have been added to his total income.

3. Addition of ?2,57,350 as Unexplained Cash Credit:
The appellant also contested the addition of ?2,57,350, which was cash deposited in PMC Bank, as unexplained cash credit under Section 68. The CIT(A) upheld this addition, but the appellant contended that the amount should not have been included in his total income.

4. Validity of Assessment Order Under Section 144 r.w.s 153C for A.Y 2004-05:
The appellant raised an additional ground challenging the validity of the assessment order dated 30.12.2011 passed under Section 144 r.w.s 153C. The appellant argued that the proceedings under Section 153C read with Section 153A for A.Y 2004-05 could not have been legally initiated. The Tribunal noted that the six assessment years for which assessment/reassessment could be made under Section 153C should be construed with reference to the date of handing over of the assets/documents by the A.O of the searched person to the A.O of the assessee. Since the reasons for assuming jurisdiction were recorded on 21.12.2010, it was inferred that the actual handing over of the seized material must have taken place in the financial year 2010-11, relevant to A.Y 2011-12. Consequently, the A.O had no jurisdiction to frame assessment for A.Y 2004-05, rendering the assessment order non est.

5. Validity of Additions Without Incriminating Material:
The appellant argued that the additions made under Section 153C were invalid as they were not based on any incriminating material on record. The Tribunal admitted this additional ground of appeal, noting that it involved a question of law emerging from the facts available on record.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, remanding the matter to the A.O for verification of the date of handing over of the seized material. If it is confirmed that the material was handed over in F.Y 2010-11, the assessment for A.Y 2004-05 would be invalid. The Tribunal did not address the remaining grounds of appeal due to the core issue being remanded. The order was pronounced in the open court on 07/04/2017.