2024 (5) TMI 1437 - AT - Income Tax

Validity of initiation of proceedings u/s 153C(1) instead of 143(3) - HELD THAT - The validity of issuance notice u/s 153C, the said proposition has been reiterated several times by the Hon'ble Apex Court and Hon ble High Court and assessee has relied on plethora of decisions/order to support this proposition that initiation of Section 153C is on date of receiving the books of account or documents or assets seized by the AO having jurisdiction over such other person. On a specific query from the Bench, DR has not controverted the date 16-03-2021 related assessment year 2021-22 for handing over the impugned documents to AO of the assessee as there is no other incriminating documents with the revenue. The initiation of proceedings u/s 153C(1) is fully related to AY 2021-22. So, the ld. AO without jurisdiction had started proceeding u/s 143(2) of the Act by contravening the Section 153C(1) of the Act for AY 2020-21. Keeping in view on the orders of Jasjit Singh 2023 (10) TMI 572 - SUPREME COURT and RRJ Securities Ltd 2015 (11) TMI 19 - DELHI HIGH COURT we have no hesitation in holding that the impugned assessment order is invalid and shall be deemed to have never been issued. Accordingly, we quash the impugned assessment order. As a natural corollary, the appeal order is set aside.

Issues Involved:

1. Validity of assessment order under section 143(3) instead of section 153C.
2. Legitimacy of the addition of Rs. 29,00,000 under section 69A.
3. Admissibility of Call Detail Records (CDR) as evidence.
4. Allegation of double taxation.
5. Validity of the assessment order due to lack of DIN number.
6. Validity of notice issued under section 143(2).
7. Legality of manual scrutiny selection for AY 2020-21.

Detailed Analysis:

1. Validity of Assessment Order under Section 143(3) Instead of Section 153C:

The core issue was whether the assessment for AY 2020-21 should have been conducted under section 153C rather than section 143(3). The Tribunal noted that the documents related to the assessee were handed over to the AO on 16.03.2021, making AY 2021-22 the relevant assessment year for section 153C proceedings. The Tribunal relied on the Supreme Court's judgment in Commissioner of Income-tax-14 v. Jasjit Singh and the Delhi High Court's decision in CIT v. RRJ Securities Ltd., which clarified that the six-year period for section 153C should be reckoned from the date the documents are handed over. The Tribunal concluded that the AO lacked jurisdiction to frame the assessment under section 143(3) for AY 2020-21, rendering the assessment order invalid and quashed.

2. Legitimacy of the Addition of Rs. 29,00,000 under Section 69A:

The AO added Rs. 29,00,000 as unexplained cash under section 69A, relying on discrepancies in the assessee's statements and Call Detail Records (CDR). The Tribunal found that the AO did not point out any defects in the books of accounts or other supporting evidence provided by the assessee. The Tribunal emphasized that mere discrepancies in statements without corroborative evidence do not justify such an addition. However, this issue was rendered academic as the assessment order itself was quashed.

3. Admissibility of Call Detail Records (CDR) as Evidence:

The assessee argued that CDRs are circumstantial evidence and cannot be relied upon without a certificate under section 65B(4) of the Indian Evidence Act, 1872. The Tribunal noted that the AO's reliance on CDRs without such a certificate was improper. However, this issue also became academic due to the quashing of the assessment order.

4. Allegation of Double Taxation:

The assessee contended that the addition resulted in double taxation of business receipts. The Tribunal did not specifically address this issue since the primary ground of jurisdiction was upheld, rendering other grounds academic.

5. Validity of the Assessment Order Due to Lack of DIN Number:

The assessee claimed the assessment order was null and void as it lacked a Document Identification Number (DIN) as required by Circular No. 19/2019 by the CBDT. This issue was not pressed during the hearing and thus was not adjudicated by the Tribunal.

6. Validity of Notice Issued under Section 143(2):

The assessee argued that the notice issued under section 143(2) was invalid due to an illegal transfer of jurisdiction. This issue was also not pressed during the hearing and was not adjudicated.

7. Legality of Manual Scrutiny Selection for AY 2020-21:

The assessee contended that the case was illegally selected for manual scrutiny in contravention of CBDT guidelines. The Tribunal did not address this issue separately as the primary ground of jurisdiction was upheld.

Conclusion:

The Tribunal quashed the assessment order for AY 2020-21 as it was framed under section 143(3) instead of section 153C, which was deemed invalid. Consequently, the appeal was allowed, and other grounds were rendered academic and not adjudicated. The decision underscores the importance of adhering to procedural requirements in tax assessments.

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