2024 (2) TMI 543 - AT - Income Tax

Validity of assessment made u/s 153C r.w.s. 153A - Period of limitation - reckoning of date of satisfaction note - HELD THAT - The date of handing over of the materials was not mentioned in the satisfaction note and, therefore, in the absence of mentioning the date of handing over of the materials the date of satisfaction note shall be reckoned as the date of handing over of the materials and consequently the time limit of calculating the six years has to be calculated from this date i.e. 02.02.2016. In this scenario the assessment year 2008-09 is beyond the period of six assessment years and, therefore, we hold that the assessment made for the AY 2008-09 is barred by limitation. Grounds raised in the cross objection of the assessee on this issue are allowed. Since, we have held that the assessment made u/s 153C r.w.s. 153A is time barred. As argued absence of any seized incriminating documents/materials the addition cannot be made in the assessment completed u/s 153C r.w.s. 153A - In the case of PCIT Vs. Abhisar Buildwell Pvt. Limited 2023 (4) TMI 1056 - SUPREME COURT held that in respect of completed or unabated assessment no addition can be made by the AO in the absence of any incriminating material having been found during the course of search u/s 132 or requisition u/s 132A of the Act. On perusal of the assessment order, we noticed that there is no reference to any seized documents or materials based on which the addition was made by the AO. AO in the course of assessment proceedings issued show-cause notice to establish the genuineness of the transaction and creditworthiness of the parties on the basis of the submission of the assessee that it had taken various unsecured loans in the assessment year under consideration. Therefore, it is very much clear that the addition made u/s 68 of the Act is not based on any seized documents or materials impounded in the course of search or requisition. AO could not have made any addition while framing the assessment u/s 153C r.w.s. 153A of the Act - cross objection filed by the assessee is allowed.

Summary

Issues Involved:
1. Jurisdiction of the Assessing Officer for AY 2008-09 under Section 153C.
2. Validity of additions made for AY 2013-14 in the absence of seized incriminating documents/materials.

Summary:

Issue 1: Jurisdiction of the Assessing Officer for AY 2008-09 under Section 153C

In the cross objection for AY 2008-09, the Assessee challenged the jurisdiction of the Assessing Officer (AO) in passing the assessment order, arguing that the initiation of proceedings under Section 153C on 02.02.2016 was beyond the permissible period. The Assessee contended that the AO recorded the satisfaction note on 02.02.2016, and since there was no specific date of handing over the documents, the date of satisfaction note should be considered as the date of handing over. The Assessee argued that AY 2008-09 falls beyond the six preceding assessment years from the date of recording satisfaction, making the assessment invalid.

The Tribunal observed that the coordinate bench in similar cases, such as ACIT vs. M/s Ankit Nivesh & Management Pvt. Limited, held that the date of satisfaction note is to be reckoned as the date of handing over the material. Following this precedent, the Tribunal concluded that the assessment for AY 2008-09 was beyond the six-year limit and thus barred by limitation. Consequently, the cross objection of the Assessee was allowed, and the Revenue's appeal on the merits of the addition/disallowance became infructuous.

Issue 2: Validity of additions made for AY 2013-14 in the absence of seized incriminating documents/materials

For AY 2013-14, the Assessee challenged the AO's order on the ground that no addition could be made in the absence of seized incriminating documents/materials. The Assessee relied on the Supreme Court decision in PCIT Vs. Abhisar Buildwell and the Delhi High Court decision in CIT Vs. Kabul Chawla. The Tribunal noted that the AO made additions under Section 68 based on show-cause notices and submissions regarding unsecured loans, without any reference to seized documents or materials.

The Tribunal applied the Supreme Court's ruling in PCIT Vs. Abhisar Buildwell, which held that no addition can be made in completed or unabated assessments without incriminating material found during the search. Therefore, the Tribunal concluded that the AO could not make any addition under Section 153C r.w.s. 153A in the absence of incriminating material. The cross objection of the Assessee was allowed, rendering the Revenue's appeal on the deletion of addition/disallowance infructuous.

Conclusion:

The appeals filed by the Revenue for AY 2008-09 and 2013-14 were dismissed as infructuous, and the cross objections filed by the Assessee were allowed. The order was pronounced in the open court on 08/02/2024.