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TMI Blog2024 (8) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... being concerned merely with the aspect of abatement, which is spoken of in the Second Proviso to Section 153A (1) of the Act, but also to regulate the date from which the six-year period or the relevant assessment year insofar as the non-searched entity is concerned, is to be reckoned. This position has been consistently followed not just by this Court but also by the Supreme Court in Commissioner of Income Tax 14 vs. Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] . The material and documents unearthed in the course of the search have to be independently evaluated before a reassessment exercise can be initiated against a non-searched person. Unless the AO of that other person is satisfied that the material so gathered is likely to have an impact on the determination of the total income of such other person , the mere receipt of documents would not suffice. It thus becomes apparent that it is the satisfaction arrived at under Section 153C which constitutes the cornerstone of that provision and the primary ingredient for Section 153C being set into motion. In our considered opinion, the actual or physical act of transmission of documents is merely a step in aid of formation of op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction was recorded on 15.05.2019 and by the time of the amendment to the section 153C was already into effect (01.04.2017) which clarified that the relevant assessment years have to be calculated according to the date of search? 2.3 Whether the ld. ITAT erred in law by ignoring that the implementation provisions have to be interpreted in consonance with the charging provision and there cannot be any anomalous situation created by the interpretation of the implementation provision. The provision under section 153A and 153C of the Act have to be constructed in such a harmonious way that there will not be any different sets of 6 years for reopening of the assessments in case of the person searched and the other person? 2.4 Whether the ld. ITAT erred in law by ignoring the fact that the assessment was made as per proviso of section 153C of the act in effect on the date of recording the satisfaction and the subject assessment years was covered in sets of 6 years as provide in this section? 2. The appeal arises in the backdrop of a search and seizure action which was initiated on 07 April 2016 in the case of Harvansh Chawla. Pursuant to the search that was so initiated a Satisfact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f. 01/04/2017 cannot be interpreted/meant for extending/enhancing/ revival of already time barred proceedings up to 31/03/2017. This decision was in the context of proceedings u/s 147 of Income Tax Act and not applicable to the present case. As per Act, there is no time limit for issue of notice u/s 153C of Income Tax Act. In view of above discussion, it is held that the Assessing Officer has rightly initiated proceedings u/s 153C of Income Tax Act from AY 2011-12 to 2016 17. Hence, Ground No. 1 is dismissed . In view of amended provisions to section 153C of Income Tax Act and the fact that satisfaction was recorded after amendment w.e.f 01.04.2017, the Assessing Officer has rightly completed assessment u/s 153C for AY 2012-13. Hence, Ground No. 2 is dismissed. 5. This led to the filing of a second appeal before the Tribunal and which has essentially struck down the initiation of reassessment proceedings under Section 153C on the ground of limitation. This become evident from a reading of paragraph 15 of the order impugned before us and which is extracted hereinbelow: 15. In the circumstances, we are of the considered opinion that since the date of search is 07.04.2016, the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made [and of the relevant assessment year or years]: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years [and for the relevant assessment year or years]: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] [referred to in this sub-section] pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate: [Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the search itself having been conducted on 07 April 2016 and thus the extended period of ten years not being applicable at all. The position so taken clearly appears to be unexceptional bearing in mind the plain language in which the Second Proviso to Section 153A (1) stands couched. We also bear in mind the position of an assessment under Section 153C of the Act broadly following the same procedure as envisaged by Section 153A. This is evident from the former Section employing the phrase in accordance with the provisions of Section 153A . The contemporaneous amendments which came to be included in Sections 153A and 153C of the Act would thus have to abide by the conditions which stand embodied in the Second Proviso to Section 153A(1). It is thus manifest that the power to assess the block period of ten years would clearly not be attracted in case of a search which had taken place prior to 01 April 2017. Viewed in the aforesaid light, it becomes apparent that the reassessment for AY 2012-13 and which would necessarily fall beyond six assessment years when computed from the recordal of satisfaction would not sustain. 11. To recapitulate, Mr. Mann, learned counsel for the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (1) of Section 153-A] 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 : ] 13. The second submission which was addressed was in the backdrop of the facts of the present case, and where the Assessing Officer [AO] was common for both the searched as well as the non-searched entity and thus the jurisdictional AO being the same. In such a scenario, Mr. Mann contended that there would be no occasion for an actual handing over of the books of accounts or documents or materials unearthed in the search and consequently the First Proviso to Section 153C (1) of the Act being inapplicable. 14. It becomes pertinent to recall that Section 153A, as it stood prior to 01 April 2017, envisaged a search assessment being undertaken in respect of each assessment year falling within six assessment years referred to in clause (b) thereof. Clause (b) of Section 153A (1) provided for the identification of the six AYs with reference to the previous year in which the search is conducted or requisition is made . The block of six AYs were to be identified com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he six-year period or the relevant assessment year insofar as the non-searched entity is concerned, is to be reckoned. This position has been consistently followed not just by this Court but also by the Supreme Court in Commissioner of Income Tax 14 vs. Jasjit Singh 2023 SCC Online SC 1265. The relevant paragraphs of the said decision are reproduced hereinbelow: - 8. In SSP Aviation (supra) the High Court inter alia reasoned as follows: 14. Now there can be a situation when during the search conducted on one person under Section 132, some documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the Assessing Officer has to first be satisfied under Section 153C, which provides for the assessment of income of any other person, i.e., any other person 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 ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts. 18. Insofar as the present appeal is concerned, on facts we find that while it is true that AO of the searched person as well as that of the respondent assessee was the same, undisputedly while in the case of the former, satisfaction was recorded on 29 March 2019, the AO in the case of the respondent assessee drew up a Satisfaction Note on 15 May 2019. 19. In order to appreciate the essential legislative objective underlying the handover of material and formation of opinion by the AO of the non-searched entity, we would have to bear the following aspects in mind. We firstly take note of the fact that Section 153C would get trigg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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