2021 (6) TMI 368 - AT - Income Tax

Assessment u/s 153C - HELD THAT - Hon ble Delhi High Court in the case of Pr. CIT v Sarwar Agency (P.)Ltd. 2017 (8) TMI 733 - DELHI HIGH COURT clearly held that in case of other person u/s 153C of the Act, the starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person - As further held by the Hon ble court that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st April 2017 which states that block period for the searched person as well as the other person would be same six AYs immediately preceding the year of search is only prospective. It makes the things clear that the search that took place on 7/4/2016 in this case is prior to amendment unaffected by the amendment made by way of Finance Act 2017. We are of the considered opinion that since the date of search is 07.04.2016, the amendment brought by the Finance Act, 2017 would not be applicable and consequently the order of assessment dated 31.12.2019 passed u/s 153C r.w.s. 144 of the Act is bad and is liable to be quashed. Appeal of the assessee is allowed.

Issues Involved:
1. Validity of assessment proceedings initiated under Section 153C.
2. Jurisdiction and limitation of the assessment proceedings.
3. Enhancement of income by the CIT(A).
4. Addition of ?2,50,000 for non-deduction of TDS.
5. Addition of ?7,00,000 on account of debtors written off.
6. Approval under Section 153D.
7. Non-generation of Document Identification Number (DIN).

Issue-wise Detailed Analysis:

1. Validity of Assessment Proceedings Initiated Under Section 153C:
The assessee challenged the validity of the assessment proceedings initiated under Section 153C, arguing that the proceedings were bad in law, without jurisdiction, and barred by limitation. It was contended that the notice issued under Section 153C and the recording of satisfaction were contrary to the provisions of law, making the assessment proceedings and the order passed on such notice liable to be quashed.

2. Jurisdiction and Limitation of the Assessment Proceedings:
The assessee argued that the assessment proceedings were time-barred. The search in the case of the searched person took place on 07.04.2016, and the satisfaction was recorded on 29.03.2019. According to the assessee, the relevant six assessment years should be from A.Y. 2013-14 to A.Y. 2018-19, making the notice for A.Y. 2012-13 barred by limitation. The Revenue contended that there should not be different sets of six years for the person searched and the other person, emphasizing a harmonious interpretation of Sections 153A and 153C. The Tribunal referred to several judgments, including Pr. CIT v. Sarwar Agency P. Ltd., CIT v. RRJ Securities Ltd., and ARN Infrastructure India Ltd v. ACIT, which supported the assessee's contention that the six-year period should commence from the date of recording satisfaction, making the assessment for A.Y. 2012-13 time-barred.

3. Enhancement of Income by the CIT(A):
The assessee challenged the enhancement of income by ?2,23,25,000 under Section 69 by the CIT(A), arguing that it was beyond the scope of Section 153A read with Section 153C. The assessee also contended that the enhancement resulted in double addition/taxation and that the amount should be reduced from the income already shown. The Tribunal did not specifically address this issue due to the finding that the assessment itself was barred by limitation.

4. Addition of ?2,50,000 for Non-Deduction of TDS:
The assessee argued that the addition of ?2,50,000 made by the Assessing Officer and confirmed by the CIT(A) was beyond the scope of Section 153A read with Section 153C. The Tribunal did not specifically address this issue due to the finding that the assessment itself was barred by limitation.

5. Addition of ?7,00,000 on Account of Debtors Written Off:
The assessee contended that the addition of ?7,00,000 confirmed by the CIT(A) was beyond the scope of Section 153A read with Section 153C. The Tribunal did not specifically address this issue due to the finding that the assessment itself was barred by limitation.

6. Approval Under Section 153D:
The assessee argued that the assessment order was liable to be quashed as the approval under Section 153D by the JCIT/Addl CIT was not in accordance with the provisions of the Act. The Tribunal did not specifically address this issue due to the finding that the assessment itself was barred by limitation.

7. Non-Generation of Document Identification Number (DIN):
The assessee argued that the assessment order was liable to be quashed as no Document Identification Number (DIN) was generated. The Tribunal did not specifically address this issue due to the finding that the assessment itself was barred by limitation.

Conclusion:
The Tribunal concluded that the assessment proceedings for A.Y. 2012-13 were barred by limitation as the relevant six assessment years should be reckoned from the date of recording satisfaction, which was 29.03.2019. Consequently, the order of assessment dated 31.12.2019 passed under Section 153C read with Section 144 was quashed. The appeal of the assessee was allowed, and the Tribunal did not adjudicate other grounds as they were rendered academic.

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