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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 ..... st the order passed by the Learned Commissioner of Income-tax (Appeals) [hereinafter referred to as CIT(A) ] pertaining to assessment order passed u/s. 143(3) r.w.s. 153C of the Income-tax Act, 1961 [hereinafter referred to as Act ] for the Assessment Year [A.Y.] 2011-12.Since both the appeals are inter related, they are being adjudicated vide this composite order for the sake of convenience and brevity. Assessee s appeal as below is taken up first. ITA 4024/M/2024 2. The grounds of appeal are as under: 1. On facts and circumstances of 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessee had shown sale price of the shares of Rs. 2,45,83,280/- and claimed exempt income from LTCG of Rs. 2,44,82,483/- u/s 10(38). Thus, it was observed that the assessee had obtained bogus LTCG of Rs. 2,44,82,483/-.On the basis of this information, the assessment was reopened u/s 147 and notice u/s 148 of the Act was issued on 29.03.2018 and duly served on the appellant. Subsequently, notice u/s 153C was issued on 04.04.2018 and the assessment u/s.143(3) r.w.s.153C of the Act was completed on 28/12/2018, assessing 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 ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment u/s 143(3) to be made for the A.Y. 2018-19 and for six years preceding the AY 2018-19 will be made u/s.153C i.e. (1) AY 2017-18 (2) AY 2016-17 (3) AY 2015-16 (4) AY 2014-15 (5) . . 2013-14 (6) . . 2012-13 (Thus the AY 2011-12 will not form part of block period).In view of the Supreme Court decision(supra) assessment completed for the AY 2011-12 u/s 153C read with section 143(3) on 28/12/2018 is invalid and hence this assessment is liable to be cancelled. 6.1 Per contra, the 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 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no requirement to transfer the seized documents belonging /pertaining to the assessee. Therefore, according to the Revenue, only the date of search needs to be applied in the present case as the reference point to calculate the block period of six years for initiating proceeding under Section 153C of the Act. As per the scheme of the Act, the year of search is considered as the reference point to determine the preceding six years only in respect of the searched person, where 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g such material to the Assessing Officer of the other person is mandatory. However, in the case where the Assessing Officer of the searched person and the other person is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, then the requirement of Section 153C of the Act is fulfilled. In case, where the Assessing Officer of the 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 document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing over of documents by the AO of the searched person to the AO of the other person. 16. It will be relevant to refer to first proviso of Section 153C of the Act which explains the date of initiation of search for the proceedings under Section 153C of the Act as under: 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 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter the order of the AO passed under Section 153C r.w.s. 143(3) of the Act, is found to be beyond jurisdiction and is liable to be quashed. The law as declared by the Hon ble Supreme Court in the case of Jasjit Singh (supra) is binding and we can t shut our eyes to the fact that the proceeding initiated u/s 153C of the Act in this case was not in accordance with the law as laid down by the Hon ble Court in that case. After carefully examining 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarificatory in nature and the intention of the law with regard to the assessment years relevant for action under section 153C was always clear and had to be calculated from the date of the search? 2.2 Whether the Id. ITAT has erred in law by quashing the assessment under section 153C on grounds that the relevant assessment year should be decided based on the date of recording satisfaction and not in accordance with the date of the search. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of the introduction of the concept of relevant assessment year or years . That expression came to be defined by Explanation 1 to Section 153A as extending to the period which falls beyond six assessment years but not later than ten assessment years from the end of the AY relevant to the previous year in which the search was conducted or requisition made. 8. Simultaneous amendments came to be introduced 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under Section 132 is initiated or requisition under Section 132-A is made on or after the 1st day of April, 2017. Explanation 1.-- For the purposes of this sub-section, the expression relevant assessment year shall mean an assessment year preceding the assessment year relevant 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 attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year in which search was conducted. A block period of ten AYs' consequently became liable to assessment in the case of a search post the enactment of Finance Act, 2017. 15. The constitution of a block of ten AYs' in Section 153A was contemporaneously added and introduced in Section 153C. Post Finance Act, 2017, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the mere receipt of documents would not suffice. 20. 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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