2024 (7) TMI 843 - AT - Income Tax

Validity of the assessment orders u/s 153C - period of limitation - identifying the relevant assessment year for the purposes of computing the ten year block - HELD THAT - Additions made in the impugned order dated 26.12.2022 for assessment year 2011-12 and 2012-13 in pursuance to satisfaction note dated 24.9.2021 are barred by time. The impugned orders are beyond jurisdiction and illegal, also for the reason that such addition could not have been made since no incriminating material has been found as a result of search. Appeals of the assessee are allowed.

Summary

Issues Involved:
1. Legality of the assessment orders under Section 153C for AYs 2011-12 and 2012-13.
2. Timeliness and jurisdiction of the satisfaction note and subsequent notices.
3. Applicability of the ten-year block period for assessment under Section 153C.

Issue-Wise Detailed Analysis:

1. Legality of the assessment orders under Section 153C for AYs 2011-12 and 2012-13:
The assessee's appeals challenge the orders dated 19.3.2024 by the Learned CIT(A) which dismissed the appeals arising from assessment orders dated 26.12.2022 by the Learned AO. These orders assessed the incomes for AYs 2011-12 and 2012-13 at Rs. 1,86,78,520/- and Rs. 2,93,49,503/- respectively. The assessments were conducted following a search under section 132 of the Income Tax Act on 2.11.2017 in the case of Rakesh Jain Group, during which documents pertaining to the assessee were found. The AO recorded satisfaction on 24.3.2022 that the information in the seized documents pertained to the assessee and had a bearing on the determination of the assessee's income. Consequently, a notice under section 153C was issued on 29.3.2022.

2. Timeliness and jurisdiction of the satisfaction note and subsequent notices:
The assessee contended that the assessment years 2011-12 and 2012-13 could not be taken up for assessment under section 153C as the satisfaction note dated 24.09.2021 and the subsequent handover of documents were beyond the period of ten years. The assessee referred to the judgment dated 3.4.2024 of the Hon’ble Court of Delhi in ITA No. 52/2024 (Principal Commissioner of Income Tax Central-1 vs. Ojjus Medicare Pvt. Ltd.), which clarified that the block of six or ten assessment years should be reckoned from the date of receipt of the seized documents by the jurisdictional AO of the non-searched person.

3. Applicability of the ten-year block period for assessment under Section 153C:
The Hon’ble High Court of Delhi in ITA 52/2024 elucidated that the relevant date for reckoning the six or ten AYs is the date of receipt of books of account or documents by the jurisdictional AO of the non-searched person. For the period 01 April 2021 to 31 March 2022, the relevant AY would be 2022-23, making the six preceding AYs 2016-17 to 2021-22 and the ten preceding AYs 2013-14 to 2022-23. Consequently, AYs 2011-12 and 2012-13 fall outside this ten-year block period and cannot be reopened under Section 153C read with Section 153A of the Act.

Conclusion:
The Tribunal concluded that the additions made in the impugned order dated 26.12.2022 for AYs 2011-12 and 2012-13, based on the satisfaction note dated 24.9.2021, are barred by time. The impugned orders are beyond jurisdiction and illegal, also because no incriminating material was found as a result of the search. Therefore, the appeals of the assessee are allowed.

Order Pronouncement:
The order was pronounced in the open court on 12th July 2024.