2023 (1) TMI 972 - AT - Income Tax

Assessments framed u/s 153C - Computation of limitation period under Section 153C of the Act for the purposes of issuance of notice and assessment thereon - HELD THAT - As per Section 153A of the Act (in the case of searched persons), the limitation of preceding six years starts from the financial year in which search was conducted. However, in the case of Section 153C of the Act (person other hand searched person), the limitation of preceding six years starts from the date of receipt of seized assets or documents from the Assessing Officer of the person searched as per the erstwhile proviso to Section 153C. We notice here that the reasons for issue of notice under Section 153C r.w. Section 153A of the Act were recorded by the AO of the searched person on 05.03.2014. The satisfaction note was handed over to the AO of the assessee on 21.03.2014. As a corollary, the books of accounts, documents seized etc. were handed over to the Assessing Officer of the assessee. Therefore, the limitation for preceding six years starts from the aforesaid date, i.e., 21.03.2014. Consequently, the Assessment Years 2006-07 and 2007-08 are clearly outside the sweep of exercise of jurisdiction under Section 153C of the Act. The jurisdiction of issue notice under Section 153C are ousted insofar as Assessment Year 2006-07 and 2007-08 are concerned when the date of handing over of satisfaction note dated 05.03.2014 to the Assessing Officer of the assessee on 21.03.2014 is reckoned. Similar view has been expressed in the case of Pr.CIT vs. Sarwar Agency P. Ltd., 2017 (8) TMI 733 - DELHI HIGH COURT - We thus find merit in the plea of the assessee that respective notices issued to the assessee under Section 153C of the Act for assessment years in question, i.e., Assessment Years 2006-07 and 2007-08 are without jurisdiction as these assessment years are beyond the purview of six assessment years in terms of pre-amended provisions of Section 153C of the Act. As a corollary, the assessments passed under Section 153C of the Act as a sequel to invalid notices are also liable to be quashed. In terms of these observations, the respective assessment years for Assessment Years 2006-07 and 2007-08 are set aside and quashed. Appeals of the assessee are allowed.

Summary

Issues: Jurisdiction of Assessing Officer under Section 153C of the Income Tax Act for Assessment Years 2006-07 and 2007-08

Jurisdiction of Assessing Officer under Section 153C:
The appeals were filed against the orders of the Commissioner of Income Tax concerning Assessment Years 2006-07 and 2007-08 under Section 153C of the Income Tax Act. The Assessee challenged the assessments on the grounds of lack of jurisdiction and void ab initio. The Assessing Officer initiated the notice under Section 153C after the satisfaction towards escapement was recorded, leading to a dispute regarding the calculation of the limitation period. The controversy revolved around the commencement of the limitation period under Section 153C in contrast to Section 153A of the Act concerning searched persons. The date of receipt of seized assets or documents was crucial for determining the start of the limitation period under Section 153C.

Calculation of Limitation Period:
The Assessing Officer of the searched person recorded the satisfaction note on 05.03.2014, which was handed over to the Assessing Officer of the assessee on 21.03.2014, along with the seized documents. Consequently, the limitation period for the preceding six years started from 21.03.2014, rendering the assessments for the years 2006-07 and 2007-08 outside the jurisdiction under Section 153C. This interpretation was supported by a similar view expressed by the Hon'ble Delhi High Court in a related case. The assessment orders passed under Section 153C based on invalid notices were deemed void, leading to the quashing of the assessments for the mentioned years.

Conclusion:
The Tribunal found merit in the Assessee's plea regarding the lack of jurisdiction under Section 153C for the Assessment Years 2006-07 and 2007-08 due to the limitation period calculation based on the date of receipt of seized assets. As a result, both appeals of the Assessee were allowed, setting aside and quashing the assessments for the mentioned years. Other grounds of appeal were not considered in light of the jurisdictional issue resolved in favor of the Assessee.

Judgment Outcome:
The Tribunal pronounced the order in favor of the Assessee, highlighting the incorrect initiation of the notice under Section 153C due to the miscalculation of the limitation period. The assessments for the years 2006-07 and 2007-08 were declared void and quashed, emphasizing the importance of adhering to the statutory provisions regarding jurisdiction under the Income Tax Act.