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TMI Blog2021 (8) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4. On the facts and in toe 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 accepted by the department and SLP against the same has been filed before Hon'ble Supreme Court. 5. On the facts and in toe 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 end in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in adopting a restrictive and pedantic interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the appellantduring the course of search by the AO of the searched person to the AO of the appellant. Admittedly, the search took place on 30.10.2012 and the documents relating to the appellant were handed over to its AO on 22.12.2014 which is also the date of recording of the satisfaction note. In absence of any specific date of handing over of material in the satisfaction note, the date of recording of satisfaction will be assumed to be the date of handing over the material. Satisfaction notesare appended at page no. 22A to 22D of the appellant's Paper Book. 7. According to the appellant, once the documents are handed over, six preceding assessment years from the date of handing over of the documents, lay open for assessment under section 153C read with section 153A of the Act. Thus, six preceding assessment years, from the date of the handing over of the documents, i.e. 22.12.2014, are beginning from A.Y. 2009-10 to 2014-15. The appellant contended that the impugned assessment related to A.Y. 2007-08 could not have been reopened for action under section 153C since first of the six preceding assessment years was A.Y. 2009-10 and not A.Y. 2007-08. Hence, according to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded. (Copy of satisfaction note recorded by the AO of searched person is attached at page no. 22A-22B and copy of note recorded by the AO of the assessee is at page no. 22C-22D of the paper book) 6. The vide letter dated 04.03.2015 filed detailed objections against the initiation of proceedings under section 153C of the Act. Refer page no. 23-24 of the paper book. 7. The Ld. AO also issued notices under section 142(1) along with questionnaire to the assessee and asked for the various details including details of Share capital issued by the assessee company during the year under consideration which were duly complied with by the assessee company. 8. The company has initially issued 10,000 shares of Rs. 1,00,000 subscribed in its memorandum of association and further during the year under consideration had allotted 99400 equity shares @ 500/- per share to the 8 allottees details of which including their name, address, PAN, no. of shares applied etc. Details are attached at page no. 44-45 of the paper book. 9. In spite of the various explanations and documentary evidences submitted before the Ld. AO in respect of the share capital issued by the assessee, the Ld. AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment 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, 22.12.2014 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 be A.Y. 2009- 10 to A.Y. 2014-15. 4. The relevant assessment year i.e, A.Y. 2007-08 is therefore barred by limitation. 5. Consequently, the notice under Section 153C (1) could have been issued for AYs 2009-10 to A.Y. 2014-15. 6. It is a settled legal position that prior to the amendment by Finance Act, 2017 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. 7. Issuance of notice for the relevant assessment year is invalid and without jurisdiction. 8. To support its contentions the assessee relies upon the following judgements of the variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears to be that whereas in the case of a searched person 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. 10. On the other hand, the Department also filed written submissions in the matter which are reproduced as under: "Sub: Written Submission in the above cases - reg. With respect to the ground that the initiation of proceedings u/s 153 was barred by limitation. In this regard the following may kindly be considered: It is important t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the search is conducted or requisition is made. The assessee, on receipt of the notice from the Assessing Officer, shall furnish the returns of income and thereafter the Assessing Officer is empowered to assess or re- assess the total income in respect of different assessment year falling within six assessment years. Now, a question may arise as to what would happen to the regular returns, if any, filed by the searched assessee for any of the six assessment years which are pending on the date on which the search was initiate. The answer is given by the second proviso to Section 153A, which says that if any of those returns is or are pending, the assessment or reassessment relating to those returns shall abate. The object obviously is to avoid multiplicity of assessment or reassessment proceedings in respect of the same assessment year or years. Once Section 153A is found to be applicable, there will be only one assessment in respect of each of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted, in which the "totalincome" of the assessee will be assessed or reassessed. It s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such date. It needs to be appreciated that the satisfaction that is required to be reached by the ao having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in Section 153C(1) that the ao should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income." It is evident that the reference of Proviso 1of Section 153C is only in relation to the 2 nd proviso to subsection 1 of section 153A which speaks about the abatement of the pending proceedings of six assessment years and not regarding the assessment of the preceding six assessment year which will be the same as in section 153A as well as in section 153C." 11. Before the Ld. Commissioner of Income-tax (Appeals), the same contentions were made as much as it was sought to be contended that the assessment for A.Y. 2007-08 could not be made under section 153C of the Act as the same was barred by limitation. 12. The ratio of the order of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n period of 6 years from the reference date of 2242.2014. Accordingly, ground No, 3, is hereby allowed. 13. We have carefully considered the above submissions and having gone through the facts of the case and applicable law, we would tend to agree with the appellant. The terminal date for determination of six preceding assessment years that would lay upon under section 153C read with section 153A of the Act would decidedly be the date of handing over of the documents. Here the satisfaction note recorded by the A.O, of M/s Prakash Industries Ltd. is 22.12.2014, as well as by the A.O. of the appellant is on 22.12.2014, which is to be taken as the date of handing over of documents and date. Six preceding assessment years begin with A.Y. 2009-10 and end with A.Y. 2014-15. It would be the date of handing over the documents or date of recording of satisfaction will be the date for determining the date for calculating the preceeding six assessment years is well settled by the judgement of Hon'ble Delhi High Court in the case of RRJ Securities (380 ITR 612) relevant portion of which is reproduced below:- Held: "In terms of proviso to Section 153C of the Act, a reference to the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 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." 14 This judgement has been followed in Hon'ble Delhi High Court in the case of: i) 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 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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