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TMI Blog2023 (6) TMI 1460X X X X Extracts X X X X X X X X Extracts X X X X ..... has been reopened u/s 153C of the Act vide notice dated 18.10.2016 on the allegation that certain documents/papers belonging to the appellant were found during the course of search u/s 132 at the premises of Appu Ghar Group of cases on 10.03.2015. Admittedly, no documents/papers belonging to the appellant pertaining to this year was found in the course of search. In the course of assessment proceedings, the Ld. AO asked the assessee to file necessary evidences regarding various amounts, aggregating to Rs. 12,60,33,832/- received by it from various persons as appearing in bank statement issued by Kotak Mahindra Bank. In response to the same, the appellant filed its reply dated 27.12.2017 along with all relevant evidences i.e. bank statement along with confirmation, confirmations from the parties and copy the ITR of the related parties. Thereafter, the AO randomly selected 20 parties and issued summons to them u/s 131 of the Act on 27. 12.2017 through his inspector. According to his report, none of them were found at the given address. Hence, addition of Rs. 12,60,33,832 /- was made by him vide order dated 30.12.2017. 2.1 In appeal before Ld FAA, it held; "4.2 The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the I. T. Act, 1961 for the A.Y. 2010-11 in view of the amendment u/s 153C and quashing the assessment order passed by assessing officer u/s 153C r.w.s. 143(3) of the Act. 3. That on facts and circumstances of the case, the Ld. CIT (A) has erred in holding that the assessing officer could not issue notice u/s 153C of the I. T. Act, 1961 for the A.Y. 2009-10 in view of the amendment u/s 153C even when the amendment to section 153C was made by Finance Act, 2017 which is effective from 01.04.2017, whereas the notice u/s 153C was issued on 18.10.2016, that is prior to the amendment in the provisions u/s 153C. 4. That on facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 12,60,33,832/- made by the assessing officer on account of unexplained cash credit u/s 68 of the I.T. Act, 1961. 5. The appellant craves for leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal. 4. Heard and perused the record. On behalf of the revenue it was submitted that the ld. CIT (A) has fallen in error in allowing the appeal by following judgment of Hon'ble Delhi High Court in CIT (A) vs. RRJ Securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on the judgment of Co-ordinate Bench in ITA No. 204/Del/2021 M/s. Karina Airlines International Limited vs. ACIT dated 28.02.2022 in which Hon'ble President was also in the coram and where in para no. 9 onwards to para no. 13 following relevant findings were given :- "9. Thus, as could be seen from the aforesaid dates and events, the search and seizure operation under section 132 of the Act had taken place on 07.04.2016. On a reading of section 153A of the Act, it is very much clear that in case of searched person, the Assessing Officer has power to assess or re-assessee the income in respect of each assessment year falling within the period of six assessment years immediately preceding the assessment year in which the search and seizure was conducted. However, section 153C of the Act, which lays down the procedure of assessment in case of a person other than the searched person, contemplates that the date of search for a case falling under this provision would be reckoned from the date of recording of satisfaction by the Assessing Officer of the searched person and handing over of the seized material. 10. By Finance Act, 2017, amendment was made to section 153A as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amounts to or is likely to amount to fifty lakh rupees or more in one year or in aggregate in the relevant four assessment years(falling beyond the sixth year); (ii) such income escaping assessment is represented in the form of asset; (iii) the income escaping assessment or part thereof relates to such year or years. 80.5 Applicability: The amended provisions of section 153A of the Income-tax Act shall apply where search under section 132 of the Income-tax Act is initiated or requisition under section 132A of the Income-tax Act is made on or after the 1st day of April, 2017. 80.6 Section 153C of the Income-tax Act has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A of the Income-tax Act. 80.7 Applicability: These amendments take effect from 1st April, 2017." 12. In the aforesaid Explanatory Notes, the CBDT has not only clarified that such amendment would be effective from 1st April, 2017 but also made it clear that amended provisions would apply where search under section 132 of the Act is initiated or requisition under section 132A of Act was made on or after 1st April, 2017. Thus, the crucial dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the date of satisfaction recorded by the learned Assessing Officer of the assessee on 15/5/2019 falls in the assessment year 2020-21 in which case the immediately preceding 6 assessment years would be the assessment years from 2014- 15 to 2019-20. 10. It is, therefore, clear that when we reckon the 6 assessment years with reference to the recording of satisfaction by the learned Assessing Officer of the searched person or with reference to the recording of satisfaction by the learned Assessing Officer of the other person, in either case the assessment year 2012-13 is well beyond such period. So far as this factual position is concerned, it remains unassailable. 11. In respect of the starting point for computation of the block period, the Hon'ble Delhi High Court in the case of Pr. CIT v Sarwar Agency (P.)Ltd. [2017)185 taxmann.com 269 (Delhi) clearly held that in case of other person u/s 153C of the Act, the starting point for computation of the block period would be the date from on which based on the seized documents, notice is issued to the other person. It was further held by the Hon'ble court that the amendment made in section 153C by Finance Act 2017 w.e.f. 1st Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson, 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 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, accent 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. 13. Further, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which assessments/reassessments could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the recordings of satisfaction under Section 153C of the Act, i.e., 8th September, 2010. 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 recordings 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2012-13 to Assessment Year 2018-19. The instant Assessment Year, i.e., Assessment Year 2017-18 ergo would be covered in the earlier six assessment years where the assessments have to be framed u/s. 153C only, whereby the Assessing Officer was required to issue a notice u/s. 153C, and frame the assessment u/s. 153C/143(3). Contra to the law as interpreted by the Hon'ble Jurisdictional High Court, the Id. Assessing Officer had issued notice u/s. 142(1) and resultantly has framed the assessment u/s. 143(3), treating it to be regular assessment for the year of search. The amendment to clarify this position u/s. 153C (1) was brought in the statute by the Finance Act, 2017 w.e.f. 01.04.2017, wherein it has been provided that the six preceding assessment years for the person covered u/s 153C would be same as that of the searched person covered u/s 153A. In other words, in case of 'the other person' (i.e. person covered u/s 153C), six preceding assessment years has to be reckoned from the year of search. This amendment has been held to be prospective by the Hon'ble Jurisdictional High Court in the case of CIT vs. Sarwar Agency P Ltd. as reported in 397 ITR 400, wherein the Hon'ble Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would apply when search or requisition is made after the amendment." 10. Similar amendments have been made from time to time in Section 153C and one of such amendment was in the Finance Act, 2015 brought in the statute from 01.06.2015, whereby the statute extended the scope of Section 153C by holding that not only the specified items 'belonging to other person' would trigger the provision of Section 153C but also any books of account or documents, seized or requisitioned which pertain to, or any information contained therein, which relates to other person would also trigger the provisions of section 153C of the Act. This amendment too has been held to be prospective and applicable only to searches conducted after 01.06.2015. This has been held so as Hon'ble Jurisdictional High Court in various judgments, some of which are as under: i. 399 ITR 202 (Del) Canyon Financial Services Ltd. vs. ITO 5. The search in the Dalmia Group of Companies took place on 20th January, 2012 and the satisfaction note by the AO of the searched person was dated 13th March, 2014. Therefore, Section 153C as it stood prior to the amendment with effect from 1st June, 2015 applied to the case on hand. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al as well. Thus, respectfully following the decision of the coordinate bench in assessee's own case, as referred to above, we hold that the impugned assessment order passed under section 153C of the Act, is wholly without jurisdiction, hence, invalid. Accordingly, we quash the same. Consequently, the order of learned Commissioner (Appeals) is set aside. In view of our decision in ground 1 and 2, the grounds raised on merits having become academic, are not adjudicated." 8. Thus, there is no force in the contention raised on behalf of the Revenue that with reference to Section 153A the relevant assessment year or years for the purpose of Section 153C were required to be ascertained and accordingly the action of Ld. AO in issuing the notices from A.Y. 2009-10 onwards was as per law. The first proviso to Section 153C inserted by Finance Act, 2005 with retrospective effect from 01.06.2003 was applicable and a distinction was created in regard to relevant period of assessment and re-assessment in case of search person and the person other than searched. In regard to later person Section 153A was to be construed as reference to the date of receiving of the books of accounts or document ..... X X X X Extracts X X X X X X X X Extracts X X X X
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