2020 (4) TMI 124 - AT - Income Tax

Validity of Assessment order passed u/s 143(3)/153A instead of u/s 153C - In the present case assessee is not a searched person , but a person other than searched person - scope of amendment made in 153C - HELD THAT - According to Section 153A of the Act assessment or re-assessment relating to any assessment year falling within the period of 6 assessment year pending on the date of initiation of the search under Section 132 would abate. Apparently in this case the date of search is 16.07.2009 and this year s period would be assessment year 2004-05 to assessment year 2009-10. Therefore, it is apparent that the assessee for assessment year 2008-09 should have been made under Section 153C of the Act and not under Section 143(3) of the Act as has been done. The Hon ble Delhi High Court in the case of Pr. CIT Vs. Sarwar Agency Pvt. Ltd. 2017 (8) TMI 733 - DELHI HIGH COURT clearly covers the issue in favour of the assessee. Amendment made in 153C of the Act by the Finance Act applies from 1st April, 1970 which covers the issue that hence-forth the period of the search pressing as well as the other person would be the same sixth assessment years immediately proceeding the year of search. However, the above amendment does not apply to the assessment year 2008-09 as the impugned assessment order has been passed under Section 143(3) of the Act same is not sustainable in law. Assessing Officer himself has not considered the assessment year 2008-09 as covered under Section 153C of the Act. The assessing Officer has issued notice in the impugned assessment year under section 143(2) of the Act and thus passed the assessment order under Section 143(3) of the Act. The above assessment order passed was not in pursuance of any notice issued under Section 153C of the Act. In view of the above facts we found that the impugned assessment order passed under Section 143(3) of the Act is invalid as such assessment order should have been passed under Section 153C - Decided in favour of assessee.

Summary

Issues:
1. Jurisdictional challenge regarding passing of assessment order under Section 143(3) instead of Section 153C of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Jurisdictional Challenge
The case involved a challenge to the jurisdiction of the Assessing Officer regarding the passing of the assessment order under Section 143(3) instead of Section 153C of the Income Tax Act, 1961. The search and seizure operation on BPTP Ltd. and its group companies led to proceedings under Section 153C being initiated for assessment years 2002-03 to 2007-08. The assessee, a group company, filed its return for the assessment year 2008-09, showing income of ?25,35,840. The Assessing Officer made various additions to the income, leading to a total taxable income of ?3,19,222. The assessee challenged the assessment order, arguing that it should have been passed under Section 153C instead of Section 143(3) as it fell within the block of six previous years. The additional ground raised by the assessee was admitted as it challenged the basic jurisdiction of the Assessing Officer. The Tribunal proceeded to decide the issue as it was a jurisdictional one.

The Authorized Representative contended that the assessment order should have been passed under Section 153C, citing precedents and legal provisions. However, the Departmental Representative objected to this argument, stating that the order passed under Section 143(3) was proper and valid. The Tribunal noted that the satisfaction note for initiating Section 153C proceedings was dated 16.07.2009, which should have been the date of search for the assessment year 2008-09. Referring to relevant case law and statutory provisions, the Tribunal found that the assessment order passed under Section 143(3) was invalid. The Tribunal quashed the assessment order, allowing the appeal of the assessee on the additional ground challenging jurisdiction.

As a result of quashing the assessment order, the appeal of the Revenue against the assessee also did not survive and was dismissed. The Tribunal pronounced the order in open court on 14.02.2020, thereby resolving the jurisdictional challenge in favor of the assessee.