2019 (1) TMI 99 - AT - Income Tax

Validity of proceedings u/s 153C - income in these appeals has been assessed to tax in the hands of FIIT JEE Ltd - Held that - We set aside the orders of the lower authorities and remand the matter back to the file of the Assessing Officer for verification whether the income assessed in the hands of the assessee has been assessed in the hands of FIIT JEE Ltd. and due tax has been collected by the department. If the Assessing Officer finds on verification that the income has been assessed in the hands of FIIT JEE Ltd. and due tax has been collected then he should delete the income in the hands of the assessee. Thus, the grounds of appeal of the assessees in all the years are allowed for statistical purposes.

Summary

Issues Involved:
1. Jurisdictional validity of proceedings under section 153C.
2. Validity of satisfaction notes under section 153C.
3. Presence of incriminating material for additions.
4. Verification of income assessment in the hands of FIIT JEE Ltd.

Detailed Analysis:

1. Jurisdictional Validity of Proceedings under Section 153C:
The assessee argued that the proceedings under section 153C were void ab initio for various assessment years (2007-08 to 2013-14). The primary contention was that, according to the proviso to section 153C, six years should be reckoned from the date of recording the satisfaction note (10.03.2014), which falls in FY 2013-14 (AY 2014-15). Thus, the preceding six years (AY 2008-09 to 2013-14) could only be assessed under section 153C, making the assessment for AY 2007-08 time-barred, illegal, and void ab initio.

2. Validity of Satisfaction Notes under Section 153C:
The assessee contended that the satisfaction note recorded on 10.03.2014 did not meet the mandatory criteria stipulated under section 153C of the Act. Consequently, the notices issued, orders passed under section 153C, and subsequent orders by the CIT-A were all challenged for lack of jurisdiction and were argued to be quashed.

3. Presence of Incriminating Material for Additions:
The assessee argued that the additions made by the AO in the assessment orders were without appreciating the mandatory jurisdictional requirement of the presence of incriminating material. It was contended that the additions were mechanically confirmed by the CIT-A without linking them to any search-based incriminating material. The assessee maintained that the documents purportedly seized did not give rise to any undisclosed income and were duly disclosed during the assessment. Therefore, the additions were arbitrary, invalid, and unsustainable in the eyes of the law.

4. Verification of Income Assessment in the Hands of FIIT JEE Ltd.:
The Authorized Representative of the assessee submitted that the income assessed in the hands of the assessee had already been assessed in the hands of FIIT JEE Ltd., and due tax had been collected by the department. The bench inquired whether the assessment order for FIIT JEE Ltd. was available, to which the counsel responded negatively. Consequently, it was suggested that the matter be restored to the Assessing Officer for verification. The Departmental Representative had no objection to this submission.

Order:
In light of the above contentions and submissions, the tribunal set aside the orders of the lower authorities and remanded the matter back to the file of the Assessing Officer. The AO was directed to verify whether the income assessed in the hands of the assessee had been assessed in the hands of FIIT JEE Ltd. and whether due tax had been collected. If confirmed, the AO was instructed to delete the income in the hands of the assessee. Thus, the grounds of appeal for all the years were allowed for statistical purposes.

Final Result:
All the appeals were allowed for statistical purposes, with the order pronounced on 19th December 2018 at New Delhi.