2023 (8) TMI 161 - HC - Income Tax

Assessment u/s 153A - period of limitation - HELD THAT - As limitation to proceed under Section 153A as provided in Section 153B is a period of 21 months from the end of the financial year in which the last of the authorization for search u/s 132 or requisition under Section 132A was executed. In the present case there is no dispute as to the first and last requisition having been made on 06.06.2017 in the assessment year 2018-19 corresponding to financial year 2017-18. The last of the relevant assessment year in which the requisition was made would be 31.03.2018 and the period of limitation would expire on 31.12.2020. No assessment was initiated on or before the said date under Section 153A. The assessments were initiated that too under Section 148 for the assessment years 2013-14 to 2018-19 on 31.03.2021 long after the assessment period had expired. Section 153A was introduced in the Act notwithstanding the provisions inter alia of Sections 147 and Section 148. Hence when no proceedings were taken under Section 153A after the requisition made under Section 132 the Assessing Authority is disabled from proceeding for any assessment. Insofar as assessments pending and abated under Section 153A after the expiry of 21 months limitation period under Section 153B there can be no proceeding taken under the Act either for regular assessment under Section 143 or under Section 153A or reassessment under Section 147 read with 148. WP allowed.

Summary

Issues Involved:
1. Release of seized cash.
2. Limitation period for issuing notices under Section 148.
3. Validity of assessments under Section 153A and 153B.

Summary:

Issue 1: Release of Seized Cash
Two writ petitions were filed against proceedings under Section 132 of the Income Tax Act, 1961. CWJC No. 1965 of 2021 sought the release of Rs. 98,50,000/- seized by the Income Tax Department on 02.06.2017. The petitioner argued that withholding the cash without any demand violated Section 132B(3) of the Act and claimed interest on the withheld amount. The court directed the Department to refund the seized cash with interest as per Section 132B(4).

Issue 2: Limitation Period for Issuing Notices under Section 148
CWJC No. 17372 of 2021 sought a writ of certiorari against notices issued under Section 148 for assessment years 2013-14 to 2018-19, based on the same seized cash. The petitioner contended that the limitation period of 21 months as prescribed under Section 153B(a) had expired. The court found that the last requisition was made on 06.06.2017, and the limitation period expired on 31.12.2020. Since no assessment was initiated under Section 153A within this period, the notices issued under Section 148 on 31.03.2021 were invalid.

Issue 3: Validity of Assessments under Section 153A and 153B
The court discussed the interplay between Sections 132, 132A, 132B, 153A, and 153B. It referred to the Supreme Court's decisions in Commissioner of Income Tax v. Kabul Chawla and Principal Commissioner of Income Tax v. Abhisar Buildwell P. Ltd., emphasizing that assessments under Section 153A can only proceed if incriminating material is found during the search. In the absence of such material, the Assessing Officer cannot proceed under Section 153A or reassess under Section 147 read with 148. The court concluded that since no proceedings were initiated under Section 153A within the limitation period, the Assessing Authority was disabled from proceeding with any assessment.

Conclusion:
The writ petitions were allowed. The court directed the refund of the seized cash with interest and set aside the proceedings under Sections 147 and 148. The parties were left to bear their respective costs.