ACIT Vs Mapsa Tapes (P) Ltd. (ITAT Delhi)
The issue under consideration is whether Assessment year in respect of proceedings u/s 153C of the Act to be same 6 years in the case of other person, for which the proceedings u/s 153A is initiated in the case of connected searched person?
ITAT states that, it is not in dispute that search was conducted on 20.01.2014 in the cases of M/s Mapsa Logistics Pvt. Ltd. & Ors. and satisfaction u/s 153C was recorded on 23.02.2016 that the documents pertaining to assessee have been seized during the course of search. The AO, accordingly, issued notice u/s 153C on 23.02.2016. The issue is, therefore, covered by judgment of Hon’ble Delhi High Court in the case of RRJ Securities Ltd. (supra) as is considered by the Ld. CIT(A) in the impugned order. The six assessment years for which assessments/reassessments could be made u/s 153C of the Act would also have to be construed with reference to the date of handing over of the assets/documents to the AO of the assessee i.e. 23.02.2016. Therefore, the relevant assessment years for initiating proceedings u/s 153C would be assessment years 2010-11 to 2015-16. Therefore, the assessment years under appeal i.e. 2008-09 8: 2009-10 would be beyond the period of six years.
FULL TEXT OF THE ITAT JUDGEMENT
1. Both the appeals by Revenue are directed against the order of Ld.CIT(Appeals)-28, New Delhi dated 15.12.2016 for AYs 2008-09 and 2009-10 on the following grounds:
1) “That the Ld. CIT(A) erred in law and on facts in annulling order passed by the Assessing Officer and is held to be null and void, without property appreciating the facts and circumstances of the case.
2) Assessment year in respect of proceedings u/s 153C of the Act to be same 6 years in the case of other person, for which the proceedings u/s 153A is initiated in the case of connected searched person.
3) (a) the order of the CIT(A) is erroneous and not tenable in law and on facts.
(b) the appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
2. In this case, search and seizure action u/s 132 of the Act was carried out on 20.01.2014 in the case of M/s Mapsa Logistics Pvt. Ltd., M/s Mapsa Infra Pvt. Ltd. and in case of Shri Pyare Lal Gupta, Mrs. Veena Gupta at D28, Model Town, Delhi. During the course of search operation at the above said premises certain documents/hard disk pertaining to the assessee were found and seized. Accordingly, notice u/s 153C of the Act was issued and in compliance return was filed declaring income of Rs. 41,13,310/- and Rs. 55,47,180/- for both the years respectively. Assessments u/s 153C/143(3) were completed on 31.03.2016 by making additions on account of share capital/premium and commission.
3. Assessee challenged the addition as well as assessment order to the illegal and without jurisdiction. It was submitted that AO had no jurisdiction to make assessment u/s 153C of the Act as no relevant material belonging to the assessee was found during the course of search. In absence of any incriminating material, proceedings u/s 153C of the Act could not be initiated. In addition, it was submitted that even otherwise, the proceedings in respect of assessment years 2008-09 & 2009-10 were beyond the period of six years from the end of financial year preceding the year in which seized material in question pertaining to assessee was handed over to the AO of the assessee from the AO of the searched person and, thus, outside the scope of section 153C of the Act. It was submitted that since satisfaction was recorded u/s 153C on 23.02.2016, therefore, relevant assessment year for initiating proceedings u/s 153C would be assessment years 2010-11 to 2015-16 and, as such, no assessments would be framed u/s 153C of the Act for assessee under appeals. The assessee relied upon the judgment of Delhi High Court in the case of CIT Vs. RRJ Securities Ltd. 380 ITR 612.
4. The Ld. CIT(A) considering the explanation of the assessee in the light of the above judgment, quash the proceedings u/s 153C of the Act. The findings of Ld. CIT(A) in para 3 to 3.4 are reproduced as under:
“3. I have carefully considered the fact of the case and the submission of the Ld. AR. In the case under consideration the Assessing Officer of M/s Mapsa Logistics Pvt. Ltd., M/s Mapsa Infra Pvt. Ltd. Sri Pyare Lal Gupta and Mrs. Veena Gupta recorder his satisfaction on 23.02.2016 that certain document pertaining to the assessee M/s Mapsa Tapes Pvt. Ltd. has been seized during the search and seizure operation carried out in the premises of M/s Mapsa Logistics Pvt. Ltd., M/s Mapsa Infra Pvt. Ltd. at C1-3 Netaji Subhash Place, Pritampura, Delhi, and in the case of Shri Pyare Lal Gupta, Mrs. Veena Gupta at D-28, Model Town, Delhi. Subsequently, the Assessing Officer of the appellant M/s Mapsa Tapes Pvt. Ltd. also recorded his satisfaction note on 23.02.2016 for initiating proceeding u/s 153C r.w.s. 153A of the Act and, accordingly, notice u/s 153C dated 23.02.2016 was issued.
3.1 There is no ambiguity that for initiation of proceedings u/s 153C of the Act, the AO of the searched person to be satisfied that the assets or documents seized belong to other person (being a person other than the searched person) and accordingly the same has to be handed over to the AO of the other person. Subsequently, the AO of the other person, on receiving the documents and the assets seized, would have jurisdiction to commence proceedings u/s 153C of the Act. Section 153C(1) of the Act clearly postulates that once the AO of a person, other than the one searched, has received the assets or the documents, he is to issue a notice to assess/re-assess the income of such person – that is, the assessee other than the person searched – in accordance with provisions of Section 153A of the Act.
3.2 The proviso to Section 153C(1) of the At expressly indicates that reference to the date of initiation of search for the purposes of second proviso to section 153A shall be construed as a reference to the date on which valuable assets or documents are received by the Assessing Officer of an assessee (other than a searched person). Hon’ble Jurisdictional High Court in the case of CIT vs. RRJ Securitis Ltd. 380 ITR 612 (Del) has held that the date in terms of proviso to section 153C of the Act, a reference to the date of the search under the second proviso to section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assesee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. Further the reference to the date of handing over of assets/documents and accordingly the date of search would have to be construed as the reference to the date of recording of satisfaction by the Assessing Officer of the searched person. Further the relevant assessment years for issue of notice u/s 153C has to be reckoned with reference to the date of recording of satisfaction by the AO of the searched person.
3.3 In the case under consideration the date of the recording of satisfaction u/s 153C of the Act, is 23rd February, 2016. It would follow that the six assessment years for which assessments/reassessments could be made u/s 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 i.e. 23.02.2016. In this case, the documents seized pursuant to the search were deemed to be handed over to the AO of the assessee on 23rd February, 2016, being the date of recording of satisfaction and, therefore, six years which could be assessed u/s 153C of the Act were the preceding previous years from 1st April, 2009 to 31st March, 2015 being relevant to AYs 2010-11 to 2015-16. In this view, the assessments made in respect of AY 2008-09 would be beyond the period of six years. In view of the above, assessment for AY 2008-09 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 the year in question. Hence, respectively following the decision of the jurisdiction High court, it is held that the order in question passed by the AO is not in accordance with the provision of the Income Tax Act, 1961. Accordingly, the order passed by the Assessing Officer is held to be null and void and, accordingly, it is annulled.
3.4 Since the order under consideration has been held to be null and void, the other ground taken by the appellant become academic. In result, the appeal is allowed.”
5. Ld. DR relied upon the order of the AO and submitted that view of the CIT(A) have not been accepted by the Department. On the other hand, Ld. Counsel for assessee reiterated the submissions made before authorities below.
6. We have considered the rival submissions. It is not in dispute that search was conducted on 20.01.2014 in the cases of M/s Mapsa Logistics Pvt. Ltd. & Ors. and satisfaction u/s 153C was recorded on 23.02.2016 that the documents pertaining to assessee have been seized during the course of search. The AO, accordingly, issued notice u/s 153C on 23.02.2016. The issue is, therefore, covered by judgment of Hon’ble Delhi High Court in the case of RRJ Securities Ltd. (supra) as is considered by the Ld. CIT(A) in the impugned order. The six assessment years for which assessments/reassessments could be made u/s 153C of the Act would also have to be construed with reference to the date of handing over of the assets/documents to the AO of the assessee i.e. 23.02.2016. Therefore, the relevant assessment years for initiating proceedings u/s 153C would be assessment years 2010-11 to 2015-16. Therefore, the assessment years under appeal i.e. 2008-09 8: 2009-10 would be beyond the period of six years. The same view is considered by ITAT Delhi ‘A’ Bench in the case of M/s BNB Investment 8: Properties Vs. DCIT 8: Ors. reported in 68 ITR 567 (Del.) following the judgment of Delhi High Court in the case of RRJ Securities Ltd. and Pr. CIT Vs. Server Agency Pvt. Ltd. 8: Ors. 397 ITR 400. The findings of the Tribunal are reproduced as under:
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES “A” : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
ITA.No.504/Del./2015
Assessment Year 2012-2013
