2024 (1) TMI 356 - AT - Income Tax

Validity of assessment u/s 153C - date of recording of satisfaction - HELD THAT - As date of search 22.03.2012 (A.Y. 2012-13) and Date of recording of satisfaction u/s 153C 18.11.2013 (A.Y. 2014-15), thus on going through the judgments of Hon ble jurisdictional High Court and Jasjit Singh 2023 (10) TMI 572 - SUPREME COURT AND RRJ Securities Ltd 2015 (11) TMI 19 - DELHI HIGH COURT we have no hesitation to hold that the Assessments made for A.Y. 2006-07 and A.Y. 2007-08 u/s 153C consequent to the satisfaction note recorded on 18.11.2013 are outside the scope of Section 153C of the Income Tax Act, 1961 and hence, the assessments are treated as void ab initio. Decided against revenue.

Issues Involved:
1. Initiation of proceedings u/s 153C of the Income Tax Act.
2. Determination of the residency status of the assessee company u/s 6(3)(ii) of the I.T. Act.
3. Ignoring underlying assets and sources of revenue.
4. Ignoring substantial evidence of control and management.
5. Applicability of section 9(1) of the I.T. Act.
6. Deletion of addition made by the Assessing Officer.
7. Assumption of jurisdiction by the A.O.
8. Proceedings initiated u/s 153C being barred by limitation.
9. Passing of assessment order without following section 144C.
10. Validity of assessment framed without issuance of statutory notice u/s 143(2).

Summary:

1. Initiation of proceedings u/s 153C of the Income Tax Act:
The Revenue challenged the CIT(A)'s decision on the initiation of proceedings u/s 153C. The Tribunal referred to the judgment of the Hon'ble Delhi High Court in CIT-7 Vs. RRJ Securities Ltd., which emphasized that the first step for initiation of proceedings u/s 153C is the satisfaction of the AO that the seized assets/documents belong to a person other than the searched person. The Tribunal concluded that the assessments made for A.Y. 2006-07 and A.Y. 2007-08 based on the satisfaction note recorded on 18.11.2013 are outside the scope of Section 153C, rendering the assessments void ab initio.

2. Determination of the residency status of the assessee company u/s 6(3)(ii) of the I.T. Act:
The Revenue contended that the assessee company is a resident based on seized documents/emails and statements, indicating that the control and management of the company were situated wholly in India. The Tribunal did not specifically address this issue in the provided text.

3. Ignoring underlying assets and sources of revenue:
The Revenue argued that the CIT(A) ignored the fact that the underlying assets and sources of revenue of all overseas companies were Indian Companies. The Tribunal did not specifically address this issue in the provided text.

4. Ignoring substantial evidence of control and management:
The Revenue claimed that substantial evidence showed that the ultimate control and management of Indian and overseas companies lay with certain individuals, creating corporate veils to avoid taxability in India. The Tribunal did not specifically address this issue in the provided text.

5. Applicability of section 9(1) of the I.T. Act:
The Revenue argued that the CIT(A) ignored the provisions of section 9(1) as the revenue was earned because of underlying assets situated in India. The Tribunal did not specifically address this issue in the provided text.

6. Deletion of addition made by the Assessing Officer:
The Revenue contested the deletion of an addition of Rs. 21,58,61,125/- made by the Assessing Officer. The Tribunal did not specifically address this issue in the provided text.

7. Assumption of jurisdiction by the A.O.:
The assessee argued that the A.O. erred in assuming jurisdiction over the company and proceeding without considering the aspect of jurisdiction u/s 124(4). The Tribunal did not specifically address this issue in the provided text.

8. Proceedings initiated u/s 153C being barred by limitation:
The assessee contended that the proceedings initiated u/s 153C were barred by limitation. The Tribunal, guided by the judgments of higher courts, concluded that the assessments for A.Y. 2006-07 and A.Y. 2007-08 were outside the scope of Section 153C.

9. Passing of assessment order without following section 144C:
The assessee argued that the A.O. erred in passing the assessment order without following section 144C provisions. The Tribunal did not specifically address this issue in the provided text.

10. Validity of assessment framed without issuance of statutory notice u/s 143(2):
The assessee claimed that the assessment framed without issuing statutory notice u/s 143(2) was bad in law. The Tribunal did not specifically address this issue in the provided text.

Conclusion:
The Tribunal allowed the Cross Objections of the assessee, treating the assessments for A.Y. 2006-07 and A.Y. 2007-08 as void ab initio, and consequently dismissed the appeals of the Revenue.

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