2022 (9) TMI 70 - AT - Income Tax

Assessment framed u/s.153A - computation of period of 6 years / 10 years in search cases - amendment of provisions of section 1153A(1)(b) - HELD THAT - As decided in A.R. Safiulla 2021 (6) TMI 867 - MADRAS HIGH COURT has considered the amendment of provisions of section 1153A(1)(b) of the Act and noted that the search assessment year, namely, in the present case, AY 2018-19 has to be excluded and Hon'ble High Court has interpreted that the provisions of section 153 talks on this year preceding to search assessment year and similarly the amendment introduced by the Finance Act, 2017 also talks about the issuance of notice u/s. 153A of the Act, with certain conditions it can be issued beyond six assessment years but up to ten assessment years. That means while computing ten assessment years, the starting point has to be the end of the search assessment year. Respectfully following the jurisdictional High Court decision in the case of A.R. Safiulla (supra), we uphold the order of CIT(A) quashing the assessment framed u/s.153A of the Act by the CIT(A). Hence, this issue of the Revenue appeal is dismissed.

Summary

Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) to issue notice under Section 153A of the Income-tax Act, 1961 for Assessment Year (AY) 2008-09.
2. Validity of the assessment framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961.
3. Condonation of delay in filing cross objections by the assessees.
4. Taxability of gains arising from the sale of agricultural land.

Issue-wise Detailed Analysis:

1. Jurisdiction of the AO to Issue Notice under Section 153A for AY 2008-09:
The primary issue was whether the AO had the jurisdiction to issue a notice under Section 153A of the Act for AY 2008-09, given that the search was conducted on 05.10.2017. The CIT(A) had held that the AO did not have such jurisdiction, relying on the decision of the Hon'ble Madras High Court in the case of A.R. Saifulla v. ACIT, Central Circle-1, Trichy. The CIT(A) observed that the 10th assessment year counted from AY 2018-19 (the year relevant to the search) is AY 2009-10. Therefore, the notice for AY 2008-09 was beyond the permissible period and was deemed illegal.

2. Validity of the Assessment Framed under Section 153A r.w.s. 143(3):
The AO had framed the assessment for AY 2008-09 under Section 153A r.w.s. 143(3), bringing to tax the amount received by the assessee from the sale of agricultural land. The AO contended that the assessment was within the ambit of the provisions, as the amendment to Section 153A allowed for reopening up to ten assessment years under specific conditions. However, the CIT(A), relying on the Madras High Court decision, quashed the assessment, stating that the notice for AY 2008-09 was invalid.

3. Condonation of Delay in Filing Cross Objections:
The assessees filed cross objections which were delayed by 15 days. The delay was attributed to personal hardships, including the illness of a family member. The Tribunal condoned the delay, noting that the reasons provided were genuine and uncontroverted by the Revenue.

4. Taxability of Gains from Sale of Agricultural Land:
The cross objections raised by the assessees questioned whether the gains from the sale of agricultural land were taxable. However, since the jurisdictional issue was decided in favor of the assessees, rendering the assessments invalid, the question of taxability became academic. Consequently, the Tribunal dismissed the cross objections on merits as they were no longer relevant.

Conclusion:
The Tribunal upheld the CIT(A)'s decision that the AO had no jurisdiction to issue notice under Section 153A for AY 2008-09, following the precedent set by the Hon'ble Madras High Court. Consequently, the assessments framed for AY 2008-09 were quashed. The Tribunal also condoned the delay in filing cross objections by the assessees but dismissed the cross objections on merits as the primary jurisdictional issue rendered them academic. Thus, the appeals filed by the Revenue and the cross objections filed by the assessees were dismissed.