No assessment u/s 153C if Revenue failed to discharge onus to show incriminating material belonged to assessee

Karina Airlines Intenational Vs ACIT (ITAT Delhi)

Conclusion: Onus was on Revenue to show that the incriminating material/documents recovered at the time of search ‘belongs’ to the Assessee, in other words, it was not enough for the Revenue to show that the documents either ‘pertain’ to the Assessee or contains information that ‘relates to the Assessee. Also, the date of satisfaction recorded by AO of assessee on 15/5/2019 fell 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. It was, therefore, clear that when the 6 assessment years with reference to the recording of satisfaction by AO of the searched person or with reference to the recording of satisfaction by AO of the other person, in either case the assessment year 2012-13 was well beyond such period.  Thus, the very assessment under section 153C itself was bad being barred by limitation.

Held: Search & seizure action under section 132 was initiated on 7 April 2016 in the case of Chawla. Satisfaction under section 153A by AO of searched person was recorded on 29/3/2019. AO for the both, searched person and assessee was same. AO recorded his satisfaction in case of assessee on 15/5/2019 and issued notice under section 153C. In response to the same, assessee furnished return of income vide letter dated 15/12/2019. AO made an addition of Rs. 32,91,052 on account of Receipt of foreign inward remittance, Rs. 2,50,000 on account of non-deduction of TDS and Rs. 2,58,30,576/-on account of debtors written off. On appeal. It was held that the date of search had fallen in the AY 2017-18 which was relevant for the case of the person searched; whereas the satisfaction recorded by AO of the searched person on 29/3/2019 had fallen in the assessment year 2019-20 in which case the immediately preceding 6 assessment years would be assessment years 2013-14 to 2018-19; and the date of satisfaction recorded by AO of assessee on 15/5/2019 fell 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. It was, therefore, clear that when the 6 assessment years with reference to the recording of satisfaction by AO of the searched person or with reference to the recording of satisfaction by AO of the other person, in either case the assessment year 2012-13 was well beyond such period. It remained unassailable. 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 had 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. This amendment had been held to be prospective. Since the date of search was 07.04.2016, the amendment brought by the Finance Act, 2017 would not be applicable and consequently the order of assessment dated 31.12.2019 passed u/s 153C r.w.s. 144 was bad and was liable to be quashed. Thus, the very assessment itself was bad being barred by limitation.

FULL TEXT OF THE ORDER OF ITAT DELHI

Aggrieved the order dated 10.03.2021 passed by the learned Commissioner of Income Tax (Appeals)-24, New Delhi (“Ld. CIT(A)”) for the assessment year 2012-13, Karina Airlines International Limited (“the assessee”) filed this appeal.

Please become a Premium member. If you are already a Premium member, login here to access the full content.