2018 (5) TMI 1024 - AT - Income Tax

Assessment u/s 153A - time barred assessment - proof of incriminating documents whatsoever has been found and seized by the search team during the search u/s 132 - Held that - It is not in dispute that the last authorisation u/s.132 of the Act was executed on 28.5.2014. Twenty- one months from the end of the financial year 2014-2015 expires on 31.12.2016. Therefore, the orders of assessment in pursuance to the said search for the assessment years 2009-2010 to 2015-2016 were to be made on or before 31.12.2016. It is not in dispute that the orders of assessment under consideration were dispatched only on 7.1.2017. Hence, in our considered opinion, the said orders of assessment were time barred and consequently, we set aside the same and allow this ground of appeal of the assessee for all the seven years under appeal.

Issues Involved:
1. Validity of assessment orders under Section 153A due to lack of incriminating documents.
2. Assessment orders being barred by limitation.
3. Validity of assessment orders under Section 144.
4. Compliance with Section 153D.
5. Rejection of books of accounts under Section 145(3).
6. Addition of suppressed receipts based on non-incriminating documents.
7. Disallowance of remuneration and interest to partners under Section 184(5).
8. Overall legality and validity of the assessment orders.

Detailed Analysis:

1. Validity of Assessment Orders under Section 153A:
The assessee contended that the assessment orders under Section 153A were invalid as no incriminating documents were found during the search under Section 132. The Tribunal noted that the sine qua non for making an assessment under Section 153A is the presence of incriminating documents. The assessee argued that the assessments were arbitrary, excessive, and contrary to facts, thus bad in law.

2. Assessment Orders Being Barred by Limitation:
The primary legal ground raised by the assessee was that the assessment orders were barred by limitation. The orders, dated 30.12.2016, were dispatched on 07.01.2017 and served on 09.01.2017. The Tribunal referred to Section 153B(1)(a), which mandates that the assessment order must be made within twenty-one months from the end of the financial year in which the last authorization for search was executed. The Tribunal held that merely determining the total income and signing the assessment does not constitute a valid order unless communicated within the prescribed period. Relying on the Karnataka High Court decision in CIT vs. B J N Hotels Ltd., the Tribunal concluded that the orders were time-barred as they were dispatched after the prescribed period.

3. Validity of Assessment Orders under Section 144:
The assessee argued that the provisions of Section 144 were not properly invoked as the requirements of notices under Sections 142(1) and 143(2) were duly complied with during the assessment proceedings. The Tribunal did not specifically adjudicate this issue due to the decision on the limitation ground.

4. Compliance with Section 153D:
The assessee contended that the requirements under Section 153D were not properly complied with, making the assessments under Section 153A invalid. The Tribunal did not specifically address this issue due to the decision on the limitation ground.

5. Rejection of Books of Accounts under Section 145(3):
The assessee challenged the rejection of books of accounts under Section 145(3), arguing that the books were produced and seized during the search. The Tribunal did not specifically adjudicate this issue due to the decision on the limitation ground.

6. Addition of Suppressed Receipts Based on Non-Incriminating Documents:
The assessee contested the addition of suppressed receipts based on non-incriminating documents and statements recorded during the search. The Tribunal did not specifically adjudicate this issue due to the decision on the limitation ground.

7. Disallowance of Remuneration and Interest to Partners under Section 184(5):
The assessee argued that the disallowance of remuneration and interest to partners led to double taxation as the partners had already offered it for taxation. The Tribunal did not specifically adjudicate this issue due to the decision on the limitation ground.

8. Overall Legality and Validity of the Assessment Orders:
The assessee contended that the assessment orders were illegal, unjust, and not based on the facts of the case. The Tribunal, based on the primary ground of limitation, set aside the assessment orders for being time-barred.

Conclusion:
The Tribunal concluded that the assessment orders for the years 2009-2010 to 2015-2016 were time-barred as they were dispatched after the prescribed period. Consequently, the assessment orders were set aside, and the appeals of the assessee were allowed. Other grounds of appeal were rendered infructuous and were not adjudicated upon. The stay applications filed by the assessee were dismissed as infructuous. The order was pronounced on 16/05/2018.

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