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TMI Blog2024 (12) TMI 1478X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and in law, the Ld. Commissioner of Income-tax (Appeals) (CIT(A)) has erred in confirming the order of the Ld. Assessing Officer (AO) passed under section 153C read with section 143(3) of the Income-tax Act, 1961 (Act) of the Act, for AY 2011-12 as the same is time-barred hence the assessment order may be quashed as void ab initio. 2. Without prejudice to the above, on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the order of the Ld. AO passed under section 153C read with section 143(3) of the Income-tax Act, 1961 without a satisfaction note which is the mandate of the law. 3. Without prejudice to the above, on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming an addition of Rs. 77,50,000/- under section 69A of the Act as on-money when the assessee has not made any cash payments and the consideration made by the appellant is more than the stamp duty value assessed by the registering authority 4. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming an addition of Rs. 77,50,000/- under section 69A of the Act as on-money when the provisions of section 69A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income of the assessee for the year under consideration at Rs. 3,98,57,530/-. While doing so, the AO made addition of Rs. 1,33,00,000/- towards unexplained money u/s.69A & Rs. 2,45,83,280/- towards unexplained cash credits u/s 68 of the act u/s. 143(3) r.w.s. 153C of the Act. 5.1 Before the ld.CIT(A),the ld.AR of the assessee has, in support of the additional ground relating to validity of assessment order on the issue of time limitation, submitted that initially the assessment was reopened u/s. 147 of the I.T. Act. on 29.03.2018 on the basis of information received by the A.O. regarding the availing of accommodation entries of bogus long term capital gains. During the pendency of this assessment proceedings u/s. 147, an information was received on 31.03.2018 from the office of DCIT CC-1(2) Ahmedabad that Search and seizure action was carried out u/s 132 in the case of Shri Anil H Shah, Sanket J Shah and Sarthav Infrastructure Pvt Ltd & Others on 4.12.2014 and in this search incriminating documents pertaining to the appellant were found. On the basis of this information, notice u/s 153C of the I.T. Act was issued on 04.04.2018. Apparently proceedings initiated u/s. 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld.CIT(DR) has supported the appellate order of the ld.CIT(A) reiterating that it is deemed that the date of search invoking provisions of section 153C in the case of non searched person is the date of receipt of seized materials by the AO of such non searched person. In this case, the relevant date being 31.03.2018, all the requisite conditions stand fulfilled. Thus the ground of the assessee on assessment being time barred deserved to be dismissed. 7. We have carefully pondered over all the relevant facts of the case, position of law in this regard as also various judicial decisions on the issue involved. We find that in the recent past, in various decisions of courts have deeply analysed the issue in hand at length. It is worthwhile to mention some of such important decisions. In Co-ordinate Bench of Ahmedabad Tribunal had an occasion to decide an issue involving almost identical facts where also the assessment order was claimed to be time barred in terms of section 153C/143(3) of the Act. Relevant parts of the said order passed in the case of DCIT Vs Suraj Limited (ITAT Ahmedabad) Appeal Number : I.T (SS).A. No. 398/Ahd/2019 are reproduced as under for the sake of clarity: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceeding is initiated u/s 153A of the Act. In case of non-searched person, proceeding is initiated u/s 153C of the Act and not u/s 153A of the Act. as no warrant of authorization was issued in the name of the assessee, even though the search was conducted in the group, we have to find out the reference point for considering the preceding six years in this case, u/s 153C of the Act. 12. As per provision of Section 153C of the Act, if the AO of the searched person is satisfied that any books of accounts or documents or assets belong or pertain to other than the searched person (other person), then such books of accounts or documents or assets shall be handed over by the AO of the searched person to the AO of the other person. In the present case the AO of the searched person and the AO of the other person was same. Therefore, there was no requirement of actual handing over of the seized documents belonging to the assessee to any other AO. Nevertheless, in order to assume jurisdiction on the case of the other person it is necessary for the common AO to record his satisfaction that the seized document pertains/belongs to the other person. Until and unless he records such satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... searched person and the other person is the same, there can be one satisfaction note prepared by the Assessing Officer, as he himself is the Assessing Officer of the searched person and also the Assessing Officer of the other person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the Assessing Officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. (Emphasis supplied.) 15. Thus, the recording of satisfaction by the AO of the searched person is a mandatory requirement for initiation of proceeding under Section 153C of the Act. It is only by recording the satisfaction that the common AO assumes the jurisdiction to issue notice u/s 153C of the Act in respect of the other person. Further, it is only on the date of recording of satisfaction that the AO of the other person will assume the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 above proviso makes it crystal clear that the date of initiation of search as referred in 2nd Proviso of Section 153A of the Act shall be construed as reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the AO having jurisdiction over such other person. Thus, the date of receiving of the books of accounts by the AO of the other person shall be treated / deemed as date of search and six years preceding to that year will be construed as the relevant years for which proceedings under Section 153C of the Act can be initiated in respect of such other person. 17. The Hon'ble Delhi Court has categorically held in the case of PCIT vs. Ojjus Medicare (P.) Ltd.[2024] 161 com 160 (Delhi) that in case of a search assessment undertaken under Section 153C of the Act, the previous year of search would stand substituted by the date or the year in which the books of accounts / documents and assets seized are handed ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts as available in the assessment order itself, we have already held that the AO had no jurisdiction to initiate proceedings under Section 153C of the Act for the A.Y. 2008-09, as it was beyond the permissible period of six years from the date of recording of satisfaction of the common AO and deemed handing over of the seized documents pertaining /belonging to the assessee. Therefore, the assessment order passed u/s 153C of the Act for the A.Y. 2008-09 is quashed due of the lack of jurisdiction of the AO to initiate the proceeding u/s 153C for this year. 29. Since, the assessment order is quashed due to AO's lack of jurisdiction to initiate proceeding u/s 153C of the Act for the Y.2008-09, we do not deem it necessary to adjudicate the grounds taken by the Revenue as well as by the assessee." 7.1 In another case, the Co-ordinate bench of ITAT,Delhi has dealt with identical issue on the issue of applicability of section 153C of the Act and held that the assessment order was barred by time limitation. In CIT Vs Opal Buildwell P. Ltd. (ITAT Delhi) Appeal Number : ITA No. 2899/Del/2019 ITAT Delhi held that issuance of notice u/s 153C of the Income Tax beyond six Assessment Yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch. The ld. ITAT ignored the fact that the 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 I53C 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. ................... 3. ................. 4. On the aspect of limitation for initiation of proceedings under Section 153C of the Act, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced in Section 153C and the concept of relevant assessment years adopted therein. However, it becomes pertinent to note that the Second Proviso to Section 153A (1) of the Act made the reopening of ten assessment years subject to three conditions which stand embodied therein. Section 153A of the Act is reproduced hereunder: - "153-A. Assessment in case of search or requisition.-- [(1)] Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021], the Assessing Officer shall-- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-- For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.]" 9. As is manifest from the above, clause (c) of that Proviso clearly stipulates that no notice for assessment or reassessment for the relevant assessment year or years could be issued if a search had been made prior to 01 April 2017. This is evident from the Second Proviso stipulating that the amended block period provision would get attracted only if the search had been initiated or requisition made on or after the first day of April 2017. Undisputedly in the facts of the present case the search was conducted on 07 April 2016. 10. We note that the Tribunal has firstly faulted the appellants on the ground of the search itself having been conducted on 07 April 2016 and thus the extended period of ten years not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessment triggered by a search could thus hypothetically extend to a block period of ten years both in the case of a searched as well as a non-searched entity. In our opinion, the amendments introduced in Section 153C, and on which reliance was placed by Mr. Mann, were essentially intended to place both Sections 153A and 153C at par and for both statutory provisions being available to be invoked for the purposes of assessment covering a block of ten AYs'. 16. It however becomes relevant to note that Section 153C applies equally to all non-searched entities and neither carves out an exception nor does it create a separate regime pertaining to a contingency where the AO of the searched and the non-searched entity are one and the same. If the submission of Mr. Mann were to be accepted, it would amount to the Court carving out an exception in respect of those cases where the jurisdictional AO of the searched and non-searched entity were the same. This would also lead and constrain the Court to restrict the application of the First Proviso to Section 153C (1) of the Act only to those cases where the AO of the non-searched entity be one different from that of the searched per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual or physical act of transmission of documents is merely a step in aid of formation of opinion whether an assessment under Section 153C is liable to be initiated. It is in that sense merely a machinery provision put in place to enable the AO of the non-searched person to examine whether an assessment is liable to be commenced under Section 153C of the Act. Thus, even in a case where the AO of the searched and the non-searched party be one and the same, it would be the formation of an opinion that the material is likely to "have a bearing on the determination of the total income.." which would constitute the core and the heart of Section 153C. 7.3 The ld.Counsel, in the light of decision in the case of Hon'ble Delhi High Court in the case of PCIT V. Karina Airlines International Ltd.(supra) has submitted a tabular chart demonstrating the identical facts of the case as below: Similarities between the Assessee's case and Katrina Airlines (Supra) Particulars Assessee's case Katrina Airlines (Supra) Assessment Year 2011-12 2012-13 Status Non-searched party Non-searched party Proceedings initiated Section 153C of the Act Section 153C of the Act Date of search December 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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