2024 (8) TMI 1421 - AT - Income Tax

Validity of proceedings u/s. 153C - assessment period beyond the stipulated period/Period of limitation - additions towards share premium u/s. 68 - As argued assessment year falls beyond stipulated six assessment years and four relevant assessment years, considering the satisfaction note recorded by the Assessing Officer of the searched person u/s. 132 and AO of the other persons as required u/s. 153C HELD THAT - As following the decision of Hon ble Supreme Court in the case of CIT vs Jasjit Singh 2023 (10) TMI 572 - SUPREME COURT we are of the considered view that for the purpose of proviso to section 153C(1) of the Act, in case of such other person, the reference to the date of initiation of search u/s 132 of the Act in the second proviso to section 153A(1) of the Act, shall be construed as reference to the date of receiving the books of accounts or other documents by the AO having jurisdiction over such other person and said date is considered in the present case i.e. on 31.12.2021. The assessment year before us is beyond stipulated six assessment years and four relevant assessment years and thus, notice issued by the AO u/s. 153C of the Act, dated 31.12.2021 and consequent assessment order passed u/s. 143(3) r.w.s. 153 of the Act, dated 31.03.2022 is barred by limitation and liable to be quashed. Thus, we quash assessment order passed by the AO u/s. 143(3) r.w.s. 153C of the Act, dated 31.03.2022. Decided in favour of assessee.

Issues Involved:
1. Validity of reopening assessment under Section 153C.
2. Legality of the assessment period beyond the stipulated period.
3. Validity of additions made under Section 68 for unexplained cash credit.
4. Consideration of additional evidence under Rule 46A.
5. Levy of interest under Section 234B.

Detailed Analysis:

1. Validity of reopening assessment under Section 153C:
The assessee challenged the reopening of the assessment under Section 153C of the Income Tax Act, claiming it was void ab initio due to being barred by limitation. The search operation conducted on 25.02.2020 led to the seizure of documents related to the assessee. The Assessing Officer (AO) recorded a satisfaction note on 31.12.2021, leading to the issuance of a notice under Section 153C. The Tribunal noted that the AO of the searched person and the AO of the other person were the same, and thus, the date of search should be considered for calculating the assessment years. The Tribunal found no infirmity in the AO's action in initiating proceedings under Section 153C for the impugned assessment year.

2. Legality of the assessment period beyond the stipulated period:
The assessee argued that the assessment year 2010-11 fell beyond the stipulated six assessment years and four relevant assessment years, considering the satisfaction note recorded on 31.12.2021. The Tribunal observed that the date of search should be reckoned for arriving at the assessment years under Section 153C. The Tribunal cited the amendment by the Finance Act 2017, effective from 01.04.2017, clarifying that the six assessment years under Sections 153A and 153C are the same. Thus, the AO correctly included the assessment year 2010-11 within the ten assessment years.

3. Validity of additions made under Section 68 for unexplained cash credit:
The AO added Rs. 63,90,24,100 towards share premium as unexplained cash credit under Section 68, citing the assessee's failure to furnish details of shareholders and the genuineness of the transactions. The Tribunal upheld the AO's findings, noting that the assessee could not satisfactorily explain the identity, creditworthiness, and genuineness of the transactions. The Tribunal referenced several judicial precedents, including the Hon'ble Supreme Court's decision in PCIT vs NRA Iron & Steel (P.) Ltd., supporting the addition under Section 68 for unexplained share capital/premium.

4. Consideration of additional evidence under Rule 46A:
The assessee contended that the CIT(A) erred in not considering the balance sheets of investor companies filed through an Additional Evidence Petition under Rule 46A. The Tribunal found that the assessee failed to produce necessary documents during the assessment proceedings and that the additional evidence did not substantiate the identity, creditworthiness, and genuineness of the transactions. The Tribunal upheld the CIT(A)'s decision to reject the additional evidence.

5. Levy of interest under Section 234B:
The assessee challenged the levy of interest under Section 234B. The Tribunal did not specifically address this issue in detail, as the primary focus was on the validity of the assessment and the additions made under Section 68. However, the Tribunal's decision to uphold the assessment implicitly supports the levy of interest under Section 234B.

Conclusion:
The Tribunal quashed the assessment order passed under Section 143(3) r.w.s. 153C, dated 31.03.2022, on the preliminary issue of jurisdiction, finding it barred by limitation. Consequently, other grounds on the merits of the additions and the levy of interest were dismissed as infructuous. The appeal filed by the assessee was allowed.

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