2019 (2) TMI 907 - HC - Income Tax

Assessment u/s 153C - AY covered in the six year period envisioned under Section 153A(1) - Search and seizure operation was conducted on 05.01.2009 - Held that - It is quite evident that like in RRJ Securities 2015 (11) TMI 19 - DELHI HIGH COURT the AO of the searched person recorded satisfaction, at a time when the assessee had filed its return for the concerned year. In the circumstances, the AO upon receipt of the papers ought to have taken steps under Section 153(1) and completed the assessment in the manner known to law, in accord with the decision in RRJ Securities (supra). The AO s failure, therefore, was correctly interfered with. The impugned order of the ITAT was, therefore, justifiable and apposite in the facts of this case. No substantial question of law, therefore, arises.

Summary

Issues:
1. Interpretation of provisions under Section 153A and 153C of the Income Tax Act regarding the abatement of assessments.
2. Justification of the Tribunal's decision in holding that the assessment for A.Y. 2009-10 was covered under the six-year period envisioned under Section 153A(1).

Analysis:
1. The High Court addressed the question raised by the Revenue in its appeal under Section 260A of the Income Tax Act regarding the interpretation of provisions under Section 153A and 153C. The issue revolved around whether the Tribunal was correct in holding that the assessment for the assessment year 2009-10 fell within the six-year period specified under Section 153A(1), despite the language in the first proviso to Section 153C(1) referring to the second proviso to Section 153A(1).

2. The Court noted that a search and seizure operation was conducted on various premises related to a specific group, during which incriminating documents were found, including a provisional balance sheet of the assessee for the year 2005. The Assessing Officer (AO) of the searched party expressed satisfaction on a date after the assessee had filed its return for the assessment year 2009-2010. The assessment for the said year was ultimately completed under Section 143(3) on a later date.

3. The assessee appealed to the CIT(A), who partially accepted the appeal. However, the ITAT, on further appeal, reversed the CIT(A)'s decision based on a Division Bench ruling of the Court in a previous case. The Court cited the ruling in Commissioner of Income Tax vs. RRJ Securities Ltd., emphasizing that assessments pending at the time of search initiation abate as per the provisions of Section 153A. The Court highlighted the importance of correctly interpreting the provisions to determine the jurisdiction of the AO.

4. The Court considered the arguments presented by the Revenue and observed similarities with the RRJ Securities case, where the AO recorded satisfaction after the assessee had filed its return. The Court emphasized that the AO should have proceeded under Section 153(1) upon receiving the relevant documents to complete the assessment, as per the legal requirements outlined in previous judgments.

5. Consequently, the Court upheld the decision of the ITAT, stating that the AO's failure to follow the correct procedure as per the law warranted intervention. The judgment emphasized the importance of adhering to legal provisions and past rulings to ensure the proper completion of assessments. The Court concluded that no substantial question of law arose in this case, leading to the dismissal of the appeal.

6. In conclusion, the High Court dismissed the appeal, affirming the Tribunal's decision based on the correct interpretation of the provisions under the Income Tax Act and the precedents set by previous judgments.