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2019 (2) TMI 164 - AT - Income TaxAssessment u/s 153C - recording of satisfaction note - Held that - It is not in dispute that search was conducted in the cases of Shri B.K. Dhingra and Others on 20.10.2008 and during the course of search certain documents belonging to assessee were seized. Accordingly proceedings under section 153C were initiated by recording the satisfaction note Dated 08.09.2010 for assessment year under appeals i.e., 2003- 2004 to 2008-2009 (PB-1). It is also not in dispute that the search in the cases of Shri B.K. Dhingra and Others connected to cases were of M/s. RRJ Securities Ltd., and M/s. Sanchit Consultants Pvt. Ltd.. The ITAT, Delhi G-Bench, in the case of M/s. Sanchit Consultants Pvt. Ltd. 2018 (2) TMI 434 - ITAT DELHI , following the decision of RRJ Securities Ltd. 2015 (11) TMI 19 - DELHI HIGH COURT , on identical facts concluded that the assessments made by the A.O. under section 153C of the I.T. Act for A.Ys. 2003- 2004 and 2004-2005 are beyond the scope of Section 153C and the same being void abinitio, deserves to be quashed. - Decided in favour of assessee.
Issues Involved:
1. Legality of the assessment orders under section 153C of the I.T. Act, 1961. 2. Validity of the additions made by the Assessing Officer (A.O.) under sections 69C and 68 of the I.T. Act. 3. Timeliness and jurisdiction of the assessments. Detailed Analysis: 1. Legality of the Assessment Orders under Section 153C of the I.T. Act, 1961: The core issue revolves around whether the assessments made under section 153C for various assessment years were within the legal framework. The search and seizure action under section 132 in the case of other individuals led to the discovery of documents belonging to the assessee-company. The satisfaction note, a prerequisite for initiating proceedings under section 153C, was recorded on 08.09.2010. The Tribunal noted that assessments under section 153C could only be framed for six preceding assessment years from the date of the satisfaction note, i.e., A.Ys. 2005-2006 to 2010-2011. Consequently, assessments for A.Ys. 2003-2004 and 2004-2005 were found to be beyond the permissible period and thus void ab initio. This position was supported by the decisions in the group cases of RRJ Securities Limited and M/s. Sanchit Consultants Pvt. Ltd., which the Tribunal followed. 2. Validity of the Additions Made by the A.O. under Sections 69C and 68 of the I.T. Act: For A.Ys. 2005-2006 to 2008-2009, the Tribunal addressed the merits of the additions made by the A.O. The assessee contended that no incriminating material was found during the search to justify the additions under sections 69C (unexplained purchases) and 68 (unexplained share capital). The Tribunal, referring to the group case of M/s. Devi Dayal Petrochemicals Pvt. Ltd., restored the matter to the A.O. for fresh examination. The A.O. was directed to verify whether the seized documents belonged to the relevant assessment years and if the transactions were duly accounted for in the books of accounts. If the documents did not pertain to the specific years or were already accounted for, the proceedings under section 153C were to be dropped. 3. Timeliness and Jurisdiction of the Assessments: The Tribunal emphasized that the date of recording the satisfaction note (08.09.2010) was crucial for determining the block period for assessments under section 153C. The assessments for A.Ys. 2003-2004 and 2004-2005 were beyond the six-year period from the date of satisfaction and thus were quashed. The Tribunal also highlighted the necessity of proper recording of the satisfaction note, even if the A.O. of the searched person and the other person were the same, as clarified by the CBDT Circular No. 24 of 2015. This ensured compliance with the legal provisions and upheld the procedural integrity of the assessments. Conclusion: The Tribunal's judgment quashed the assessments for A.Ys. 2003-2004 and 2004-2005 as they were beyond the permissible period under section 153C. For A.Ys. 2005-2006 to 2008-2009, the matters were remanded to the A.O. for fresh assessment, ensuring that the seized documents were relevant to the respective years and that the transactions were not already accounted for. The judgment underscores the importance of adhering to procedural requirements and the proper recording of satisfaction notes in search-related assessments.
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