2024 (9) TMI 1625 - AT - Income Tax

Legality of the order u/s.143(3) - validity of action of the AO as the same has been passed u/s 143(3) of the Act as against the specific provisions u/s 153C - HELD THAT - On perusal of the satisfaction note it reveals that same was recorded on 10-10-2022 by the AO after giving the findings that the seized assets and documents /digital data and information relates to assessee and it is a fit case for initiating proceedings u/s 153C r.w.s 153A of the Act for the A.Y. 2015-16 to 2020-21. The AO has issued the notice u/s.143(2) of the Act. On the similar facts, the coordinate Bench of the Tribunal in the case of Jasjit Singh 2014 (11) TMI 1012 - ITAT DELHI it was held that the date of receiving of the seizes documents would become the date of search and six years period would be reckoned from this date The date of recording of the satisfaction will be the deemed date for the possession of the seized documents which is 03-10-2022 and six years would be reckoned from this date. The submission made by Ld AR is tenable that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and six years immediately preceding the assessment year relevant for u/s 153C of the Act will be AY 2018-19 to 2022-23. The assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act. There fore the assessment order dated 29-12-22 passed u/s 143(3) of the Act is bad in law and liable to be quashed and quashed accordingly. The additional grounds filed by the assessee are allowed.

Summary

Issues Involved:
1. Jurisdiction and legality of the assessment order under section 143(3) vs. section 153C.
2. Violation of CBDT Circular No. 19/2019 regarding mandatory DIN.
3. Legality of the search and seizure operation.
4. Compliance with the provisions of section 153D.
5. Addition of Rs. 1,05,50,000/- under section 69 read with section 115BBE.
6. Reliability of evidence based on WhatsApp chats.
7. Validity of unsigned documents as evidence.

Issue-wise Detailed Analysis:

1. Jurisdiction and Legality of the Assessment Order under Section 143(3) vs. Section 153C:
The assessee argued that the assessment for A.Y. 2021-22 was wrongly framed under section 143(3) instead of section 153C. The Tribunal noted that the satisfaction note for initiating proceedings under section 153C was recorded on 03-10-2022, and the notice under section 143(2) was issued on 30-06-2022. It was held that the assessment year relevant to the previous year in which the search was conducted should be A.Y. 2023-24, and the six preceding assessment years should be from A.Y. 2018-19 to 2022-23. Therefore, the assessment for A.Y. 2021-22 should have been framed under section 153C, not section 143(3). The Tribunal quashed the assessment order dated 29-12-2022 as void and bad in law.

2. Violation of CBDT Circular No. 19/2019 Regarding Mandatory DIN:
The assessee contended that the assessment order was null and void as it violated the CBDT Circular No. 19/2019, which mandates the inclusion of a Document Identification Number (DIN) in the assessment order. However, this specific issue was not separately adjudicated upon by the Tribunal, as the primary ground of jurisdiction under section 153C was sufficient to quash the assessment order.

3. Legality of the Search and Seizure Operation:
The assessee argued that the search itself was unlawful and invalid. The Tribunal did not specifically address the legality of the search operation, as the assessment order was already quashed on the ground of jurisdiction under section 153C.

4. Compliance with the Provisions of Section 153D:
The assessee claimed that the proceedings initiated and the assessment framed under section 143(3) violated the mandatory provisions of section 153D, rendering the purported approval under section 153D illegal and without application of mind. This issue was also not separately addressed by the Tribunal due to the quashing of the assessment order on jurisdictional grounds.

5. Addition of Rs. 1,05,50,000/- under Section 69 Read with Section 115BBE:
The assessee challenged the addition of Rs. 1,05,50,000/- made by the AO on account of unexplained investment in property. The Tribunal did not specifically address this issue, as the assessment order was quashed on jurisdictional grounds.

6. Reliability of Evidence Based on WhatsApp Chats:
The assessee argued that the addition was based on an image extracted from WhatsApp chats between third parties, which were not related to the assessee. The Tribunal did not specifically address this issue due to the quashing of the assessment order on jurisdictional grounds.

7. Validity of Unsigned Documents as Evidence:
The assessee contended that the document relied upon by the AO did not contain a signature and should not be relied upon. This issue was not separately adjudicated upon by the Tribunal, as the assessment order was quashed on jurisdictional grounds.

Conclusion:
The Tribunal quashed the assessment order dated 29-12-2022 passed under section 143(3) as void and bad in law, primarily on the ground that the assessment should have been framed under section 153C. The additional grounds filed by the assessee were allowed, and the appeal was decided in favor of the assessee. The Tribunal's decision was pronounced in the open court on 26.09.2024.