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2024 (7) TMI 823 - AT - Income TaxAssessment u/s 153A - Period of limitation - assumption of jurisdiction by the Ld. AO for the AY 2008-09 - yardstick for the computation of six years and computation of Ten years - HELD THAT - In the case on hand search operation u/s 132 of the Act was conducted on 15/ 09/ 2017, falling in the AY 2018-19. On the computation of ten years AO has assumed jurisdiction for the AY 2008-09, which is beyond the period of limitation prescribed by statute. We are of the considered view and we deem it fit to quash the assessment order passed by the AO since the AO has no jurisdiction over the impugned assessment year. It is ordered accordingly. The decisions relied on by the Ld. DR are with respect to reopening of unabated assessment without any incriminating material therefore the case laws are of no help to the Revenue in the instant case.
Issues Involved:
1. Validity of the addition made by the Assessing Officer (AO) in the absence of incriminating material. 2. Jurisdiction of the AO under Section 153A for the assessment year (AY) 2008-09. 3. Applicability of the fourth proviso to Section 153A of the Income Tax Act, 1961. 4. Time limits for issuing a notice under Section 153A as per the Finance Act, 2017. Issue-wise Detailed Analysis: 1. Validity of the Addition Made by the AO in the Absence of Incriminating Material: The AO made an addition of Rs. 9,27,50,000/- under Section 68 of the Income Tax Act, treating the entire share capital as unexplained cash credit. This was based on the observation that shares issued at a premium were later transferred at face value, raising questions about the genuineness of the share capital. However, the Commissioner of Income Tax (Appeals) [CIT(A)] concluded that in the absence of any incriminating material found during the search, no additions could be made for unabated assessments. The Revenue argued that the AO had incriminating material in the form of share applications and subsequent enquiries revealing bogus share applicants. The assessee contended that the AO made additions only based on enquiries and not on any incriminating materials found during the search. 2. Jurisdiction of the AO under Section 153A for the AY 2008-09: The key issue was whether the AO had jurisdiction to make the assessment for AY 2008-09 under Section 153A. The search was conducted on 15/09/2017, falling in AY 2018-19. According to the fourth proviso to Section 153A and Explanation 1, the AO can assess or reassess the total income for six years immediately preceding the assessment year relevant to the previous year in which the search is conducted. The statute also allows for assessment up to ten years if the income represented in the form of an asset has escaped assessment amounting to Rs. 50 lakhs or more. The Tribunal noted that the relevant assessment year in this case should be calculated from AY 2018-19, making the tenth assessment year AY 2009-10. Therefore, the AO did not have jurisdiction for AY 2008-09, as it was beyond the ten-year limit. 3. Applicability of the Fourth Proviso to Section 153A: The fourth proviso to Section 153A stipulates that no notice for assessment or reassessment shall be issued unless the AO has evidence revealing that the income represented in the form of an asset, which has escaped assessment, amounts to Rs. 50 lakhs or more. The Tribunal found that the AO had no jurisdiction beyond AY 2009-10, making the notice issued under Section 153A for AY 2008-09 void ab initio. 4. Time Limits for Issuing a Notice under Section 153A as per the Finance Act, 2017: The Finance Act, 2017 revised the time limits for issuing a notice under Section 153A. The Tribunal observed that the impugned assessment year (AY 2008-09) was beyond the six-year period immediately preceding the assessment year relevant to the previous year in which the search was conducted. The time limit for issuing a notice under Section 153A had expired before the Finance Act, 2017 came into force, making the notice issued by the AO impermissible. Conclusion: The Tribunal quashed the assessment order for AY 2008-09, ruling that the AO had no jurisdiction to invoke the provisions of Section 153A(1)(b) for the impugned assessment year. Consequently, the appeal of the Revenue was dismissed, and the petition filed by the assessee under Rule 27 was allowed. The Tribunal emphasized that the AO's jurisdiction was limited to AY 2009-10 and subsequent years, making any assessment for AY 2008-09 invalid.
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