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TMI Blog2021 (8) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... es [ 2015 (11) TMI 19 - DELHI HIGH COURT] We have to hold that no assessment under section 153C could have been made in respect of A.Y. 2008-09. It was clearly barred by limitation. Hence, there is no option but to annul the assessment and all consequent additions made in the assessment also stand deleted. - Decided in favour of assessee. - I.T.As. No.4058/DEL/2017 - - - Dated:- 9-7-2021 - Shri Amit Shukla, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Assessee : Shri Ajay Wadhwa, Adv. For the Department : Shri Sushma Singh, CIT-D.R. ORDER PER AMIT SHUKLA, JM : The aforesaid appeal pertaining to A.Y.2008-09 has been filed by the Income-tax Department against the order of Commissioner of Income Tax (Appeals) XXX, New Delhi wherein the assessment has been quashed on the ground that it is barred by limitation. 2. The grounds of appeal taken by the Department before us are reproduced under: 1 . On the facts and in (he circumstances of the case, the Ld. CIT(A) has erred in law and on facts in directing the A 0. to delete the addition made u/s 68 of the I.T. Act on account of unexplained cash credits amounting to ₹ 24,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 153C read with section 153A of the Act was issued on the appellant on 19.09.2014 on the ground that the documents/material belonging to the appellant were found during the course of search on PIL. A satisfaction note before issuance of notice under section 153C of the Act was recorded by the Assessing Officer (AO) in the capacity of the AOsearched person i.e. PIL and also in the capacity of the AO of the appellant and the same was duly communicated to the appellant. The appellant filed detailed objections against the issuance of notice under section 153C of the Act and the satisfaction recorded by the AO. These objections were also considered by the AO and disposed off. 4. The following additions were made by the Ld. AO in the order passed under section 153C dated 31.03.2015: a. Unexplained credit under section 68 of the Act of ₹ 24,68,00,000/- being share capital and security premium received by the assessee. Refer page no. 44 of the Assessment Order b. Unexplained expenditure in the form of brokerage @ .5% i.e, 12,34,000/- 5. The appellant, before the Commissioner of Income Tax (Appeal) took the jurisdictional ground contending inter-alia that the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The assessee company incorporated on 09.10.2007 and was engaged in the business of investment and sale purchase of shares during the relevant assessment year and filed its return of income u/s 139 of the Act on 01.09.2008 declaring income of ₹ 2706/-. Refer page no. 1 of the paper book. 2. The case of the assessee company was reopened under section 153C of the Act by issuing notice on 19.09.2014 consequent to the search and seizure operation u/s 132 of the Act on M/s Prakash Industries group of Companies on 30.10.2012. Copy of notice issued is attached at page no. 12 of the paper book. 3. The assessee filed reply in response to the aforesaid notice vide letter dated 25.02.2015 requested the Ld. AO to provide the copy of satisfaction note recorded by him as well as the Assessing Officer of searched person and also requested to provide the details of search and the material seized and relied upon by the Ld. AO for recording the satisfaction required u/s 153C of the Act. (Refer page no. 14-15 of the PB) 4. The assessee vide letter dated 27.02.2015 again requested to provide the copy of satisfaction note and seized material relied upon by the Ld. AO fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the case in detail passed the order on 31.03.2017 in favour of assessee on the following grounds: i. The assessment completed under section 153C of the Act is void-ab-initio as the AO has no jurisdiction to for making assessment for A.Y. 2008-09, being beyond the period of 6 years. Refer page no. 10-12 of the CIT (A) order. 12. Being aggrieved by the order of Ld. CIT (A), the department had filed an appeal before Your Honours. I. Issuance of notice under section 153C for the relevant assessment year is barred by limitation; notice issued by the AO and the consequential order passed under section 153C deserves to be quashed 1. Your Honours, in the present case the search was conducted at the premises of M/s Prakash Industries Ltd. on 30.10.2012. The searched person is M/s Prakash Industries Ltd. and the assessee is other person in terms of section 153C of the Act. 2. The date of search is 30.10.2012 and the date of recording satisfaction by the Ld. AO is 19.09.2014. In absence of any specific date of handing over of material in the satisfaction note, it was only on 19th September, 2014, the date of recording of satisfaction will be assumed to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this view, the assessments made in respect of assessment years 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C (1) of the Act, which construes the date of receipt of assets and documents by the AO of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 153A] 4 [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 5 [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 amp;amp; 15 which are as under:- 13. Sections 153A to 153D are placed in Chapter XIV of the Act, which is titled amp;quot;procedure for assessment amp;quot;. Section 153A provides for the assessment in case of search or requisition. This section applies to a person in whose case a search is initiated under Section 132 or books of account etc. are requisitioned under Section 132A. The procedure prescribed under Section 153A is that the Assessing Officer shall call upon the assessee who is searched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the ao having jurisdiction over such other person. In the case of the other person, the question of penden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 2008-09, since the documents were handed, over on 19.9.2014. Therefore, the notice issued by the A.O., is beyond the limitation period of 6 years from the reference date, prescribed in the first proviso to section 153C(1) of the Act and 153A( 1) of the Act. From these facts, it is clear that the action initiated u/s. 1.53C of the Act, for A.Y. 2008-09, is beyond the time limitation period prescribed under the Act, as the reference date for taking action u/s 153C of the Act, is 19.9.2014. In view of the above, I am of the considered opinion that the assessment completed u/s 153C/ 153 A of the Act, is. void abinitio, as the A.O. has no jurisdiction for making the assessment for A.Y. 2008-09, being beyond the period of 6 years. Accordingly, 1 agree with the arguments of the appellant and also the facts of the appellant are squarely covered by the ratio laid down by Hon'ble Jurisdictional High Court of Delhi, in the case of CIT-7 Vs. M/s RRJ Securities Ltd., [2016] 380 ITR 612 (Delhi) (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C (1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual matrix, the Assessing Officer could not have been initiated and passed an Assessment Order under Section 153C of the Act for the Assessment Year 2007-08 as the same was beyond the period of six years from the end of the financial year in which the satisfaction note was recorded by the Assessing Officer. c. Hon ble High Court of Delhi in the case of Sarwar Agency Pvt. Ltd. (85 taxmann.com 269) has held that: Held: Mr. Ashok Manchanda, learned Senior Standing counsel for the Appellant, sought to pursue this Court to reconsider its view in RRJ Securities (supra). The Court declines to do so for more than one reason. First, for reasons best known to it, the Revenue has not challenged the decision of this Court in RRJ Securities (supra) in the Supreme Court. The said decision has been consistently followed by the authorities under this Court as well as by this court. Thirdly, the recent amendment to Section 153 C(1) of the Act states for the first time that for both the searched person and the other person the period of reassessment would be six AYs preceding the year of search. The said amendment is prospective. 15. Under these facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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