9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (9) TMI 104 - AT - Income TaxValidity of Assessment u/s 153C r.w.s. 153A - issue notice for assessing or reassessing the total income for six assessment years - Period of limitation - notice for assessment year falling within six assessment years immediately preceding the assessment year - HELD THAT - In the present case, the satisfaction note (as placed by revenue on record) has been recorded by Ld. AO on 24.09.2013 which falls in previous year 2013-14, the relevant assessment year for which is AY 2014-15. The year before us is AY 2007-08. Clearly, this year would be out of the purview of proceedings u/s 153C as per statutory mandate. This being so, the Ld. AO, in our considered opinion, had no jurisdiction to proceed u/s 153C and therefore, the consequential assessment as framed by Ld. AO could not be sustained in the eyes of law. Issuance of notice u/s 153C could not be sustained in the eyes of law for the year under consideration since the jurisdictional conditions to issue the same was not fulfilled and it was barred by limitation. Resultantly, the consequential assessment framed by Ld. AO would have no legs to stand.- Decided in favour of assessee.
Issues Involved
1. Jurisdiction of the Assessing Officer (AO) under Section 153C. 2. Validity of the assessment framed under Section 153C read with Section 143(3). 3. Classification of the Joint Development Agreement (JDA) as a transfer of capital assets or stock in trade. 4. Timing and recognition of income arising from the JDA. Detailed Analysis Issue 1: Jurisdiction of the Assessing Officer (AO) under Section 153C The primary legal issue contested was whether the AO had the jurisdiction to frame the assessment under Section 153C. The assessee argued that the assessment year 2007-08 fell outside the permissible six assessment years for which notice could be issued under Section 153C. The Tribunal noted that the satisfaction note initiating proceedings under Section 153C was recorded on 24.09.2013, making the relevant assessment year 2014-15. Therefore, the permissible six assessment years would be from 2008-09 to 2013-14. Since the year under consideration (2007-08) fell outside this period, the Tribunal concluded that the AO had no jurisdiction to proceed under Section 153C. Issue 2: Validity of the Assessment Framed under Section 153C read with Section 143(3) Given the jurisdictional issue, the Tribunal held that the assessment framed under Section 153C read with Section 143(3) could not be sustained. The Tribunal referenced the case of CIT V/s RRJ Securities Ltd. (380 ITR 612), which supported the view that the six assessment years should be reckoned from the date of recording satisfaction, not the date of search. Consequently, the assessment for the year 2007-08 was outside the scope of Section 153C and thus invalid. Issue 3: Classification of the Joint Development Agreement (JDA) as a Transfer of Capital Assets or Stock in Trade The assessee contended that the JDA pertained to stock in trade, not capital assets, arguing that they were dealers in real estate development. However, the AO and CIT(A) classified the JDA as a transfer of capital assets, noting that the land was shown as a capital asset in the assessee's records. The Tribunal did not delve into this issue in detail, as the jurisdictional issue rendered the assessment invalid. Issue 4: Timing and Recognition of Income Arising from the JDA The AO computed the income arising from the JDA by noting that the landowner was entitled to 30% of the super built-up area, which was considered as sale consideration. The AO held that the transfer was completed on the date of the JDA (31.03.2007), thus recognizing the income in that year. The assessee opposed this, arguing that the income should be recognized in the years when the flats were actually sold. However, the Tribunal did not address this issue substantively, as the assessment was invalidated on jurisdictional grounds. Conclusion The Tribunal allowed the appeal, concluding that the AO had no jurisdiction to issue notice under Section 153C for the assessment year 2007-08, rendering the assessment invalid. Consequently, the Tribunal did not find it necessary to adjudicate on the merits of the case, such as the classification of the JDA and the timing of income recognition. The appeal was allowed, and the assessment was quashed.
|
