Nalli Trust Vs DCIT (ITAT Chennai)
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) disposed of five appeals filed by the assessee for Assessment Years (AYs.) 2017-18 to 2021-22 against separate orders of the Commissioner of Income Tax (Appeals). The appeals for AYs. 2017-18 to 2020-21 involved a common legal issue concerning the validity of assessments completed under Section 153C of the Income Tax Act, while the appeal for AY 2021-22 challenged an addition made on merits.
For AYs. 2017-18 to 2020-21, the assessee raised an additional legal ground contending that the Assessing Officer lacked jurisdiction to initiate proceedings under Section 153C because the seized material was received and satisfaction was recorded only on 07.03.2023, after the amendment effective from 01.04.2021. The Revenue opposed admission of the additional ground. The Tribunal admitted the additional ground, holding that it was purely legal and required no further factual verification. Referring to the first proviso to Section 153C(1), Section 153C(3), and the decisions of the Madras High Court in Harigovind v. ACIT and the Delhi High Court in PCIT v. Ojjus Medicare Pvt. Ltd., the Tribunal held that, for the assessee, the date of initiation of search is the date on which the Assessing Officer having jurisdiction receives the seized material and records satisfaction. Since that date fell after 01.04.2021, Section 153C(3) rendered the provisions of Section 153C inapplicable. Consequently, the notices issued under Section 153C and the assessment orders for AYs. 2017-18 to 2020-21 were held to be without jurisdiction and were quashed.
