2021 (7) TMI 1121 - AT - Income Tax

Validity of Assessment u/s 153A - Assessment as barred by limitation - Calculation of six preceding assessment years - HELD THAT - A terminal date for determining of six preceding assessment years for the purpose of Section 153C r.w.s. 153A would be the date of handing over the documents or the dated of recording of the satisfaction. Admittedly, the six preceding assessment years in the case of the assessee is from Assessment Year 2009-10 and ending on 2014-15. Accordingly, we hold that ld. CIT (A) was correct in law that no assessment u/s.153C was made in respect of Assessment Year 2007-08 and is barred by limitation. Appeals of the Revenue are dismissed

Issues Involved:
1. Deletion of additions made under Section 68 on account of unexplained cash credits.
2. Validity of initiation of action under Section 153C for assessments under Section 153C/153A being barred by limitation.
3. Interpretation of 'total income' under Section 153C/153A.
4. Restrictive interpretation of the scope of assessment under Section 153C/153A.

Issue-Wise Detailed Analysis:

1. Deletion of Additions Made Under Section 68 on Account of Unexplained Cash Credits:
The Revenue challenged the deletion of additions made under Section 68 of the Income Tax Act for unexplained cash credits amounting to ?3.75 crores and ?5.98 crores on a protective basis for the Assessment Years (AY) 2007-08 and 2008-09, respectively. The Commissioner of Income Tax (Appeals) [CIT(A)] had directed the Assessing Officer (AO) to delete these additions. The Tribunal upheld the CIT(A)’s decision, noting that the AO’s jurisdiction for making these assessments was barred by limitation.

2. Validity of Initiation of Action Under Section 153C for Assessments Under Section 153C/153A Being Barred by Limitation:
The primary contention was whether the initiation of action under Section 153C for completing assessments under Section 153C/153A was barred by limitation. The CIT(A) held that the assessments were void ab initio as the AO had no jurisdiction for making the assessments for AY 2007-08 and 2008-09, being beyond the period of six years. The Tribunal upheld this view, citing the decision in CIT vs. RRJ Securities Ltd., which stated that the reference date for initiation of action under Section 153C is the date of handing over the documents, not the date of the search. In this case, the documents were handed over on 19.09.2014, making the relevant assessment years 2009-10 to 2014-15, thus excluding AY 2007-08 and 2008-09.

3. Interpretation of 'Total Income' Under Section 153C/153A:
The Revenue argued that the CIT(A) erred in concluding that the term 'total income' as used in Section 153C/153A would only mean undisclosed income discovered from seized/incriminating material. The Tribunal upheld the CIT(A)’s interpretation, which was supported by the jurisdictional High Court’s decision in the case of Sh. Kabul Chawla. The Tribunal noted that the CIT(A) correctly adopted this interpretation, which was consistent with the legal precedent.

4. Restrictive Interpretation of the Scope of Assessment Under Section 153C/153A:
The Revenue contended that the CIT(A) adopted a restrictive and pedantic interpretation of the scope of assessment under Section 153C/153A. The Tribunal, however, found that the CIT(A)’s interpretation was in line with the judicial precedents and correctly applied the law by limiting the scope of assessment to the undisclosed income discovered from seized/incriminating material.

Conclusion:
The Tribunal upheld the CIT(A)’s orders, confirming that the assessments for AY 2007-08 and 2008-09 were barred by limitation and that the additions made under Section 68 were rightly deleted. The Tribunal also affirmed the interpretation that the term 'total income' under Section 153C/153A pertains only to the undisclosed income discovered from seized/incriminating material, and the CIT(A)’s approach was neither restrictive nor pedantic but rather in accordance with established legal principles. Consequently, both appeals by the Revenue were dismissed.

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