9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (11) TMI 34 - HC - Income TaxAssessment u/s 153A - possession of the seized materials or not? - period of limitation - assessee pointed out that the seized materials purportedly relating to the petitioner were handed over to the AO only on 20.11.2021, whereas the notices u/s 153A were issued prior thereto on 04.08.2021. Whether the assessment orders are barred by limitation? - contention was advanced on the ground that the seized materials were handed over to the jurisdictional assessing officer of the petitioner about eight months after expiry of the 60 day period prescribed in section 132(9A) - HELD THAT - The text of sub-section (9A) uses the mandatory word shall with reference to the obligation of the authorized officer to hand over the seized assets to the assessing officer having jurisdiction over the person. Sub-section (9A) further provides that the assessing officer shall exercise powers exercisable under sub-sections (8) and (9) upon receipt of the seized materials. Subsection (9A) does not, however, stipulate or prescribe any consequences for non-adherence to the time limit of 60 days. There is also nothing in the text such as not later than 60 days or 60 days but not thereafter - to indicate that this 60 day limit is a long-stop date that cannot be extended. In this context, it is necessary to turn to other relevant provisions pertaining to an assessment or reassessment u/s 153C to consider the implications of non- adherence to the time limit u/s 132(9A). Last authorisation for search was executed in this case on 02.01.2021, which falls within financial year 2021-22. Since financial year 2021-22 is after the financial year commencing on 01.04.2019, the limitation period prescribed in the third proviso to sub-section (1), which is emphasised above in bold font, becomes applicable. As regards the person referred to in section 153C, the period of limitation is 12 months from the end of the financial year in which the last of the authorizations for search under section 132 was executed or 12 months from the end of the financial year in which the seized assets were handed over to the assessing officer having jurisdiction over the person concerned, whichever is later. Conspicuous by its absence in section 153B is any reference to the time limit prescribed in section 132(9A). The admitted factual position is that the seized materials were handed over to the assessing officer on 20.11.2021. Consequently, the end of the financial year in which the seized materials were handed over would be 31.03.2022. As per the second limb of clause (ii) of the 3rd proviso to section 153B(1), the time limit of 12 months would run from 31.03.2022 to 31.03.2023. The assessment orders were admittedly issued on 30.03.2023 or 31.03.2023. Therefore, the said assessment orders were issued within the period of limitation. Validity of satisfaction notes u/s 153C - This is a clear indication that, except to the extent expressly modified in section 153C, all the provisions of section 153A, including the block assessment and abatement of pending assessments, apply to the assessment or reassessment of persons referred to in section 153C subject to the caveat that the three conditions set out above in paragraph 31 are fulfilled. Whether all three conditions and, in particular, the third was satisfied warrants examination next. In the cases at hand, separate satisfaction notes were recorded in respect of each assessment year.These satisfaction notes were recorded on 24.02.2023 after the seized materials were received by the assessing officer of the petitioner. The satisfaction notes disclose that the assessing officer concluded that the seized materials pertain to the assessee and that they would have a bearing on the determination of her total income for assessment years 2018-19 to 2021-22 and other earlier years. Reference is made in the satisfaction notes to seizure of books of account, electronic devices and incriminatory materials in the premises of GOPL, AMN Earth Movers and Mr. Ram Prasath Reddy. The satisfaction notes expressly record that the materials will have a bearing as regards assessment years 2018-19 to 2021-22 but use the expression and other earlier years with regard to earlier periods. The inventory provided with the panchnamas mention the seizure of electronic devices, including data storage devices. Credits in the petitioner's bank accounts formed the basis for additions made in three financial years. By taking into account the satisfaction threshold, context and the block assessment scheme, including the abatement of pending assessments, on balance, conclude that there is no basis to hold that the seized materials had no bearing on the determination of the total income of the assessee or on the assessments. The satisfaction notes satisfy the requirements of section 153C(1). In this connection, except where there is patent inadequacy, also concur with the contention of learned senior standing counsel, who relied on Chandran Somasundaram 2022 (11) TMI 547 - MADRAS HIGH COURT , that the sufficiency of reasons recorded in the satisfaction notes would not ordinarily be a basis for interference under Article 226. Legality of the transfer order u/s 127 - As petitioner contended that the ACIT, Cuddalore falls within the jurisdiction of CCIT-VI, Chennai and Principal CIT, Pondicherry and contended that the transfer order could not have been issued without the consent of or without consulting the Principal CIT, Pondicherry or CCIT-IV, Chennai - Apart from contending that this issue was not raised in the affidavit or grounds, learned senior standing counsel countered the contention by asserting that the PCIT-III is duly authorised. Even from the above narration, it is evident that mixed questions of fact and law are involved in determining whether the order under section 127 was issued after obtaining the consent of or consulting the persons concerned. Although several judgments were cited by learned counsel for the petitioner, the said judgments do not detract from the principle that mixed questions of fact and law cannot be decided in the absence of pleadings. In the absence of any prior objection in this regard coupled with the absence of pleadings/grounds, we are inclined to examine this objection and record findings. Addition u/s 69 r.w.s. 115BBE - In both Baladin Ram 1968 (8) TMI 4 - SUPREME COURT and Bhaichand Gandhi 1982 (2) TMI 28 - BOMBAY HIGH COURT the courts were dealing with section 68, which only applies to cash credits in the books of an assessee. By contrast, in these cases, section 69 was invoked and this provision applies to unexplained investments that are not recorded in books of account, if any, maintained by an assessee. The use of the expression if any in section 69 indicates that that it would also apply to unexplained investments in cases wherein the assessee does not maintain books of account, as in this case. In view thereof, section 69 read with section 115BBE is applicable in this case and the computation of total income and tax liability on such basis, wherever applicable, is in order.
Issues Involved:
1. Whether the assessment orders are barred by limitation. 2. The validity of satisfaction notes under Section 153C of the Income-Tax Act. 3. The legality of the transfer order under Section 127 of the Income-Tax Act. 4. The applicability of Section 69 and Section 115BBE of the Income-Tax Act to credits in bank accounts. Issue-wise Detailed Analysis: 1. Limitation of Assessment Orders: The petitioner argued that the assessment orders were barred by limitation due to the delayed handover of seized materials to the jurisdictional assessing officer, which occurred eight months after the 60-day period prescribed in Section 132(9A) of the Income-Tax Act. The court noted that the use of the word "shall" in Section 132(9A) imposes a mandatory obligation on the authorized officer to hand over seized materials within 60 days but does not prescribe any consequences for non-compliance. The court concluded that the 60-day period is not a long-stop date and that the subsequent assessment proceedings are not vitiated by non-compliance with this time limit. The assessment orders were issued within the limitation period prescribed by Section 153B, which is 12 months from the end of the financial year in which the seized assets were handed over, i.e., by 31.03.2023. 2. Validity of Satisfaction Notes: The petitioner contended that the jurisdiction under Section 153C is confined to incriminating materials found during the search and that the satisfaction notes did not indicate how the seized materials impacted the determination of income. The court analyzed Section 153C in conjunction with Section 153A, emphasizing that the satisfaction threshold is whether the materials have a bearing on the determination of total income. The court found that the satisfaction notes recorded that the seized materials pertain to the petitioner and would impact her total income for specific assessment years. The court concluded that the satisfaction notes were adequate and met the requirements of Section 153C(1). 3. Legality of Transfer Order under Section 127: The petitioner challenged the transfer of assessment from ACIT, Cuddalore to DCIT, Central Circle-1 (4), Chennai, arguing it was done without proper consent or consultation. The court noted that the assessee did not object to the transfer when notified and that mixed questions of fact and law were involved. In the absence of prior objections and supporting pleadings, the court declined to examine the issue further. 4. Applicability of Section 69 and Section 115BBE: The petitioner argued that Section 69 could not be invoked for credits in bank accounts, as these do not constitute the petitioner's books of account. The court distinguished between Section 68, which applies to cash credits in books, and Section 69, which applies to unexplained investments not recorded in any books of account. The court held that Section 69, read with Section 115BBE, was applicable to the unexplained credits in the petitioner's bank accounts, as the accounts were not considered books of account maintained by the petitioner. Conclusion: The court dismissed the writ petitions, upholding the assessment orders as they were within the period of limitation, and found the satisfaction notes and transfer order to be valid. The application of Section 69 and Section 115BBE to the unexplained credits was deemed appropriate.
|
