2018 (5) TMI 2075 - AT - Income Tax

Assessment u/s 153C - search and seizure operation u/s 132 - HELD THAT - We find the Hon ble Delhi High Court in the case of RRJ Securities Ltd. 2015 (11) TMI 19 - DELHI HIGH COURT has held that the proviso to section 153C(1) expressly indicate that reference to the date of initiation of search for the purpose of second proviso to section 153A shall be construed as a reference to the date on which valuable assets or documents are received by the Assessing Officer of an assessee (other than the search person). Since in the instant case also the documents were handed over to the Assessing Officer on 03.12.2013 and action u/s 153C was also initiated on 03.12.2013 a finding given by the ld. CIT(A) and not controverted by the ld. DR therefore the six preceding assessment years will be from A.Y. 2008-09 to 2013-14. Since in the instant case the Assessing Officer has issued notice u/s 153C to the assessee for assessment year 2006-07 therefore the same being beyond the period of six preceding assessment years from the reference date is void ab-initio. The assessment completed u/s 153C/153A for the impugned assessment year is void ab-initio since the Assessing Officer has no jurisdiction for making the assessment for assessment year 2006-07 being beyond the period of six years. Since the order of the ld. CIT(A) is in accordance with law laid down by the Hon ble Jurisdictional High Court in RRJ SECURITIES LTD. AND VICA-VERSA 2015 (11) TMI 19 - DELHI HIGH COURT therefore in absence of any contrary material brought to our notice we do not find any infirmity in the order of the ld. CIT(A) holding the assessment as void ab-initio. Accordingly the order of ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed.

Summary

Issues Involved:
1. Validity of assumption of jurisdiction under Section 153C of the Income Tax Act.
2. Limitation period for issuing notice under Section 153C.
3. Validity of assessment completed under Section 153C/153A for the assessment year 2006-07.

Issue-wise Detailed Analysis:

1. Validity of assumption of jurisdiction under Section 153C of the Income Tax Act:
The assessee challenged the initiation and completion of the assessment under Section 153C, arguing that the proceedings were initiated beyond the prescribed limitation period. The Assessing Officer (AO) issued a notice under Section 153C on 03.12.2013 after a search and seizure operation conducted on 14.11.2011 in the Jindal Group of cases. The documents belonging to the assessee were found and seized from the premises of the searched parties. The assessee contended that the date of handing over of material or recording of satisfaction under Section 153C should be considered the reference date, not the date of search.

2. Limitation period for issuing notice under Section 153C:
The CIT(A) held that the assessment completed under Section 153C/153A was void ab-initio since the notice under Section 153C was issued beyond the limitation period of six years from the reference date. The CIT(A) relied on the decision of the Hon’ble Delhi High Court in the case of CIT vs. M/s RRJ Securities Ltd., which stated that the reference date for initiating action under Section 153C should be the date of handing over of material, not the date of search. Consequently, the AO could only take action for the assessment years 2008-09 to 2013-14, making the notice issued for the assessment year 2006-07 invalid.

3. Validity of assessment completed under Section 153C/153A for the assessment year 2006-07:
The Tribunal upheld the CIT(A)’s decision, confirming that the AO issued the notice under Section 153C for the assessment year 2006-07 beyond the six-year limitation period from the reference date. The Tribunal referred to the provisions of Section 153C and the judgments of the Hon’ble Delhi High Court in the cases of RRJ Securities Ltd. and Sarwar Agency (P.) Ltd., which clarified that the six-year period should be reckoned from the date of receipt of documents by the AO having jurisdiction over the other person. Since the documents were handed over on 03.12.2013, the six preceding assessment years would be from 2008-09 to 2013-14, making the notice for the assessment year 2006-07 void ab-initio.

Conclusion:
The Tribunal dismissed the Revenue’s appeal, holding that the assessment completed under Section 153C/153A for the assessment year 2006-07 was void ab-initio as the AO had no jurisdiction for making the assessment beyond the period of six years. The Cross Objection filed by the assessee was also dismissed as infructuous, being academic in nature. The Tribunal's decision was pronounced in the open Court on 25th May 2018.