9911796707
TMI Blog2021 (7) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi, pertaining to A.Y.2007-08 and 2008-09, wherein the assessments have been quashed on the ground that they are barred by limitation. 2. The grounds of appeal taken by the Department before us are reproduced under: ITA No.4051/Del/2017 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing the A.O to delete the addition made u/s 68 of the I T. Act on account of unexplained cash credits amounting to ₹ 3,75,00,000/- on protective basis. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in holding that the initiation of action u/s 153C of the Act, for completing assessment u/s 153C/153A of the Act, is barred by limitation by relying on the decision in the case of CIT vs. RRJ Securities Ltd. by the jurisdictional High Court which has not been accepted by the department and SLP against the same has been filed before Hon ble Supreme Court. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts by relying on the decision in the case of Sh. Kabul Chawla by the jurisdictional High Court which has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sh. Kabul Chawla by the jurisdictional High Court which has not been accepted by the department and SLP against the same has been filed before Hon'ble Supreme Court. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words total income as used in Section 153C/153A would only mean undisclosed income discovered from seized / incriminating material. 6 On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in adopting a restrictive and pedantic interpretation of the scope of assessment u/s 153C/153A of the Act. 7. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words total income as used in section 153C/153A would only mean income unearthed during search when the decision of the Hon ble High Court of Karnataka in the case of Canara Housing Development Company Vs. DCIT dated 09.08.2014 has held that total income includes income unearthed during search and any other income. 8 That the grounds of appeal are without prejudice to each other. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi in the case of CIT-7 vs. M/s RRJ Securities Ltd. [2016] 380 1TR 612 (Delhi), where it has been held that the date of handing over of material, will be construed as the reference date for initiation of action u/s 153C of the Act, as against date of initiation of search, construed the reference date for initiation of action u/s 153A of the Act. From the above, following facts emerged: the satisfaction note recorded by the A.O. of M/s Prakash Industries Ltd., in the case of appellant, is undated, satisfaction recorded by the A.O. of the appellant is on 19,9,2014, which is to be taken as the date of handing over of documents, as per proviso to section 153C (I) of the Act, the reference date for laking action u/s I53C, will be as 19,9.2014, in the case of appellant, instead of date of search on 30.10.2012, which is required for taking action u/s 153 A of the Act, and the 6 preceding A.Ys., will be from A.Y. 2009-10 to A.Y. 2014-15 only. From the above, it is clear that A.O, has wrongly issued notices u/s 153C of the Act, for A.Y. 2007-08 and A.Y. 2008-09, since the documents were handed over on 19.9.2014, Therefore, the notice issued by the A.O., is be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment relates to A.Y. 2007-08. This assessment could not have been reopened for action under section 153C since first of the six preceding assessment year is A.Y. 2009-10 and not A.Y. 2007-08. Hence, according to the appellant, A.Y. 2007-08 does not come into the purview of the six preceding assessment years as envisaged under section 153C of the Act. 9. In support, the AR had filed detailed submissions in this regard and also relied upon the judgement of the Hon'ble Delhi High Court in the case of RRJ Securities (380 ITR 612), ARN Infrastructure India Ltd. (81 taxmann.com 260), Raj Buildworth Pvt. Ltd. (113 taxmann.com 600), Sarwar Agency Pvt. Ltd. (85 taxmann.com 269). Besides this other judgements of this Tribunal was filed, like, R.L. Allied Services (54 taxmann.com 222), Inlay Marketing Private Ltd. (60 taxmann.com 431, Lairy Distributors Pvt. Ltd. (74 taxmann.com 122), Champak NiketanPvt. Ltd. (ITA No. 5692/Del/2016), DSL Properties (P.) Ltd. v. Dy. CIT [2013] 60 SOT 88/33 taxmann.com 420 (Delhi - Trib.) Thus, he submitted that in view of the principle laid down in these judgments its clear that the action of the Assessing Officer to rope in AY 2007-08 is beyond 6 yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stock in trade and the investments made in M/s Prakash Industries Ltd. 8. In response to the notices issued by the Ld. AO the assessee furnished the details as required by the Ld. AO from time to time. 9. In spite of the various explanations and documentary evidences submitted before the Ld. AO, the Ld. AO had completed the assessment u/s 153C of the Act on 31.03.2015 without passing the speaking order disposing off the objections raised by the assessee company against the initiation of proceedings under section 153C of the Act. The Ld. AO made following additions to the returned income: a. Unexplained investment in M/s Prakash Industries Ltd. of ₹ 3.75 crores on protective basis. - Refer page no. 23 of the Assessment Order. 10. Aggrieved by the order of Ld. AO the assessee had preferred an appeal before the learned. The assessee put forth his arguments and filed detailed submissions against the initiation of proceedings under section 153C of the Act and on merits before the Ld. CIT(A)Commissioner of Income Tax (Appeals) 30 ( Ld. CIT (A) ). Copy of submissions dated 11.03.2017 and 21.02.2017 filed before the Ld. CIT(A) is attached at page no. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant assessment year is invalid and without jurisdiction. 8. To support its contentions the assessee relies upon the following judgements of the various High Courts and Tribunals: a. Hon ble High Court of Delhi in the case of RRJ Securities (380 ITR 612) has held that: - dated 30.10.2015 Held: In terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. Further proceedings, by virtue of Section 153C(1) of the Act, would have to be in accordance with Section 153A of the Act and the reference to the date of search would have to be construed as the reference to the date of recording of satisfaction. It would follow that the six assessment years for which assessments/reassessments could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Securities Ltd. (supra) is categorical that under Section 153C of the Act, the period of six years as regards the person other than the searched person would commence only from the year in which the satisfaction not is prepared by the AO of the searched person and a notice is issued pursuant thereto. The date of the Satisfaction Note is 21st July, 2014 and the notice under Section 153C of the Act was issued on 23rd July 2014. The previous six AYs would therefore be from AY 2009-10 to AY 2014-15. This would therefore not include AYs 2007-08 and 2008-09. The decision in RRJ Securities Ltd. (supra) is also an authority for the proposition that for the proceedings under Section 153C to be valid, there had to be a satisfaction note recorded by the AO of the searched person. The Court also stated that - This position again stands settled by the decision in RRJ Securities Ltd (supra). The fact that the Revenue's SLP against the said decision is pending in the Supreme Court does not make a difference sine the operation of the said decision has not been stayed. c. Hon ble High Court of Delhi in the case of Raj BuildworthPvt. Ltd. (113 taxmann.com 600) has held that: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 153C (1) was issued and served upon the Assessee. Consequently, this Court finds no legal error in the conclusion of the ITAT that notice under Section 153C (1) could not have been issued for AYs 2001-02 and 2002- 03. f. Hon ble ITAT Delhi in the case of Inlay Marketing Private Ltd. (60 taxmann.com 431) has held that: Held: view of above decision and as per letter and spirit of s. 153(1) of the Act, we are inclined to hold that since in this case satisfaction was recorded on 5th July, 2010 and notice under s. 153C was issued on 6th July, 2010, the only conclusion that can be drawn is that the AO of such other person other than searched has taken over the possession of the seized document on 5th July, 2010. Accordingly, as per s. 153A(1) of the Act, the AO can issue a notice under s. 153A of the Act for the previous year in which the search is conducted and for the purpose of s. 153C of the Act on the date on which the document is handed over to the AO of the person other than the searched person for six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition or han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Jurisdictional High Court, therefore, in absence of any contrary material brought to our notice, we do not find any infirmity in the order of the ld. CIT(A) holding the assessment as void ab-initio. Accordingly, the order of ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed. i. DSL Properties (P.) Ltd. v. Dy. CIT [2013] 60 SOT 88/33 taxmann.com 420 (Delhi - Trib.) As per proviso to Section 153C, the date of search is to be substituted by the date of receiving the books of account or documents or assets seized by the Assessing Officer having jurisdiction over such other person. Learned DR has stated that since the Assessing Officer of the person searched and the Assessing Officer of such other person was the same, no handing over or taking over of the document was required. That Section 153C(1) and its proviso have to be read together in a harmonious manner. While interpreting Section 153C, we have already held that for initiating valid jurisdiction under Section 153C, even if the Assessing Officer of the person searched and the Assessing Officer of such other person is the same, he has to first record the satisfaction in the file of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. The position of law is very clear and there is no ambiguity in the Act. This is further clarified by the jurisdictional Hon ble Delhi High Court in the case of SSP Aviation Ltd. Vs. DCIT in W.P.C. No. 309/2011 dated 29.03.2012 in Para No. 13, 14 15 which are as under:- 13. Sections 153A to 153D are placed in Chapter XIV of the Act, which is titled procedure for assessment Section 153A provides for the assessment in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the manner contemplated by the provisions of Section 153A. Now a question may arise as to the applicability of the second proviso to Section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be calculated from this date. Prior to the amendment by Finance Act, 2017, in terms of the proviso to Section 153C (1) of the Act, the date of receipt of the books and accounts by the AO of the Assessee is deemed to be the date of search. In the present case in absence of any specific date of handing over of material, the date of recording satisfaction i.e, 19.09.2014 is to be treated as the date of handing over of material and therefore the six AYs preceding the year of the search, for which the assessment was proposed to be reopened, should beA.Y. 2009-10 to A.Y. 2014-15. 12. Consequently the notice u/s. 153C(1) could have been issued for Assessment Years 2009-10 to 2014-15. Prior to the amendment brought by the Finance Act, 2017 the date on which the Assessing Officer of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. 13. In the following judgments, the Hon ble Delhi High Court have clearly held that the provisions of six years would have to be counted from the year in which satisfaction note is prepared. a. Hon'ble High Court of Delhi in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the AO of the searched person assumes possession of seized assets/documents on search of the Assessee: the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year. b. Hon'ble High Court of Delhi in the case of ARN Infrastructure India Ltd. (81 taxmann.com 260) has held that: Held: The decision in RRJ Securities Ltd. (supra) is categorical that under Section 153C of the Act, the period of six years as regards the person other than the searched person would commence only from the year in which the satisfaction not is prepared by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
