2022 (11) TMI 615 - AT - Income Tax

Assessment u/s 153A/153C - Correct assessment year - HELD THAT - In this case, search was conducted on 17.11.2015 and six assessment years preceding to the year of search are AY 2010-11 to 2015-16. Therefore, the AO can frame assessment u/s. 153A/153C up to AY 2015-16. In the present case, assessment year in question before us is AY 2016-17 and said AY is the year of search. Therefore, the question of issue of notice u/s. 153C does not arise. In fact, the AO has not issued notice u/s. 153C of the Act and this fact has been fairly accepted by Ld. DR present for the Revenue. AO has issued notice u/s. 142(1) of the Act and completed assessment u/s. 143(3) r.w.s. 153C of the Act, even though he cannot issue notice u/s. 153C for the impugned assessment year. Therefore, we are of the considered view that, in absence of notice u/s. 153C assessment framed by the AO u/s. 143(3) r.w.s. 153C of the Act dated 29.12.2017 is void and ab-initio and liable to be quashed. Thus, we quash the assessment order passed by the AO u/s. 143(3) r.w.s. 153C - Appeal filed by the assessee is allowed.

Summary

Issues:
Delay in filing appeal due to Covid-19 lockdown, Condonation of delay in filing appeal, Assessment year 2016-17, Validity of assessment completed under section 143(3) r.w.s. 153C of the Income-tax Act, Issue of notice under section 153C of the Act, Quashing of assessment order.

Analysis:

1. Delay in Filing Appeal due to Covid-19 Lockdown:
The appeal filed by the assessee was delayed by 65 days, attributed to the Covid-19 lockdown. The Hon'ble Supreme Court, in suomotu Writ Petition No.3 of 2020, extended the limitation period for all proceedings in Courts and Tribunals due to the pandemic. The delay was condoned considering the specific problem faced by the public during the Covid-19 pandemic.

2. Validity of Assessment under Section 143(3) r.w.s. 153C:
The assessment for the year 2016-17 was completed under section 143(3) r.w.s. 153C of the Income-tax Act following a search conducted in November 2015. However, it was argued that since the assessment year in question was the year of search, the issuance of notice under section 153C was not required. The absence of such notice rendered the assessment void and ab-initio, leading to the quashing of the assessment order.

3. Issue of Notice under Section 153C of the Act:
It was noted that no notice under section 153C of the Act was issued for the assessment year 2016-17. While the Assessing Officer issued a notice under section 142(1) of the Act and completed the assessment under section 143(3) r.w.s. 153C, it was deemed invalid as the specific notice under section 153C was not served for the year in question.

4. Quashing of Assessment Order:
In light of the absence of a notice under section 153C for the relevant assessment year, the Tribunal held that the assessment order passed under section 143(3) r.w.s. 153C in December 2017 was void and ab-initio. Consequently, the Tribunal quashed the assessment order, thereby allowing the appeal filed by the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, quashing the assessment order for the assessment year 2016-17 due to the absence of a valid notice under section 153C of the Income-tax Act. The delay in filing the appeal was condoned considering the impact of the Covid-19 lockdown on the proceedings.