2022 (7) TMI 255 - AT - Income Tax

Assessment u/s 153C v/s 143 - HELD THAT - Considering the peculiar facts and circumstances, as the assessment year under consideration falls under six assessment years for the purpose of section 153C, therefore, the assessment order should have been passed as per provisions of section 153C and but not u/s. 143(3) of the Act. Consequently, the assessment order, being void ab initio, is liable to be quashed. Thus, the same stands quashed and impugned order is set aside.

Summary

Issues:
1. Jurisdiction of Assessing Officer to pass assessment order under section 143(3) instead of section 153C of the Income-tax Act.
2. Interpretation of the time limit for reopening assessments under section 153C based on the date of satisfaction note.

Issue 1: Jurisdiction of Assessing Officer

The appeal was against the order of the Commissioner of Income-tax (Appeals) upholding the assessment order passed under section 143(3) of the Income-tax Act for the assessment year 2014-15. The Assessee contended that the assessment should have been made under section 153C instead of section 143(3) due to a search and seizure operation conducted by the Revenue Department. The Tribunal held that as the assessment year fell within six years for the purpose of section 153C, the assessment order under section 143(3) was incorrect. The Tribunal quashed the assessment order, ruling it as void ab initio, and allowed the appeal.

Issue 2: Interpretation of Time Limit for Reopening Assessments

The Tribunal considered various judgments, including the case of ACIT vs. Ankit Nivesh, to interpret the time limit for reopening assessments under section 153C based on the date of satisfaction note. The Tribunal referred to judgments by the Delhi High Court in cases such as RRI Securities, ARN Infrastructure India Ltd., Raj Buildworth Pvt. Ltd., and Sarwar Agency Pvt. Ltd. to establish that the period of six years for assessing years preceding the year of the search should be calculated from the date of recording of satisfaction. Following the High Court's ratio, the Tribunal held that the terminal date for determining the six preceding assessment years for section 153C would be the date of handing over the documents or the date of recording of satisfaction. Consequently, assessments for certain years were found to be beyond the limitation period of six years and were held to be void.

In conclusion, the Tribunal allowed the appeal, quashed the assessment order passed under section 143(3), and set aside the order of the Commissioner of Income-tax (Appeals) based on the jurisdictional issue and the interpretation of the time limit for reopening assessments under section 153C.