2022 (12) TMI 1124 - AT - Income Tax

Assessment u/s 153C - Period of limitation - 6 years for the purpose of 153A and 153C - HELD THAT - As in this case, there was a search conducted on 07.04.2016. AO s satisfaction for starting 153C proceedings against the present assessee was recorded on 29.03.2019. Taking this into account, six preceding assessment years are 2014-15 to 2019-20 which excludes AYs 2012-13 2013-14. This is as per the ratio laid down in the case of CIT vs. RRJ Securities Ltd.. 2015 (11) TMI 19 - DELHI HIGH COURT and in Karina Airlines International Ltd. 2021 (6) TMI 368 - ITAT DELHI had held that the amendment brought by the Finance Act, 2017 would not be applicable as it is prospective. It is not the case that Hon ble High Court has reversed the above decision of ITAT, Hence, following the precedence, we reject the pleadings and submission of the ld. CIT DR for the Revenue. In the present cases, since the date of search was 07.04.2016 the amendment brought by the Finance Act, 2017 would not be applicable. Accordingly, respectfully following the precedent as above, we do not find any infirmity in the order of the ld. CIT (A). Hence we uphold the same. Appeals filed by the Revenue are dismissed.

Summary

Issues:
1. Jurisdiction assumed by the AO under section 153C of the Income Tax Act.
2. Applicability of the six-year limitation period for section 153C proceedings.
3. Validity of additions made by the AO under section 153C.
4. Interpretation of the amendment brought by the Finance Act, 2017.
5. Comparison of decisions by ITAT Delhi and Hon'ble Delhi High Court.

Issue 1: Jurisdiction assumed by the AO under section 153C of the Income Tax Act:
The appeals by the Revenue were directed against the orders of the ld. CIT (Appeals) for the assessment years 2012-13 & 2013-14. The AO made additions under section 153C of the Act based on a search and seizure action in the case of Shri Harvansh Chawla. The seized material was handed over to the AO of M/s. H.N. Properties Pvt. Ltd., resulting in the additions challenged by the assessee.

Issue 2: Applicability of the six-year limitation period for section 153C proceedings:
The assessee contended that the assessment years 2012-13 & 2013-14 were beyond six years from the date of recording of satisfaction and hence not subject to section 153C proceedings. The ld. CIT (A) accepted this contention, citing relevant case laws and holding that the proceedings for these years were outside the purview of section 153C of the Act.

Issue 3: Validity of additions made by the AO under section 153C:
The ld. CIT (A) quashed the proceedings for AY 2012-13 based on the limitation period and deleted the additions. A similar order was passed for AY 2013-14. The Revenue appealed these orders, arguing against the applicability of the limitation period and relying on the AO's order. However, the Tribunal upheld the ld. CIT (A)'s decision, following the precedent set by relevant case laws.

Issue 4: Interpretation of the amendment brought by the Finance Act, 2017:
The Tribunal noted that the amendment brought by the Finance Act, 2017 would not be applicable in this case as it is prospective. The date of search being 07.04.2016, the Tribunal held that the six preceding assessment years covered under section 153C would be 2014-15 to 2019-20, excluding AYs 2012-13 & 2013-14.

Issue 5: Comparison of decisions by ITAT Delhi and Hon'ble Delhi High Court:
The Tribunal compared the decisions of ITAT Delhi and the Hon'ble Delhi High Court, particularly in the case of CIT vs. RRJ Securities Ltd., to determine the applicability of the limitation period for section 153C proceedings. Following the precedents set by these decisions, the Tribunal dismissed the Revenue's appeals and upheld the orders of the ld. CIT (A) for both assessment years.

In conclusion, the Tribunal dismissed the appeals filed by the Revenue, upholding the orders of the ld. CIT (A) based on the interpretation of the limitation period for section 153C proceedings and the precedents set by relevant case laws and judgments.