K.R. Chawla Consulting Pvt Ltd Vs DCIT (ITAT Delhi)
Conclusion: Since the satisfaction recorded by AO of assessee was only on 18.01.2021 making the search year AY 2021-22, therefore, the assessment proceedings initiated u/s 153C in AYs 2011-12, 2012-13 & 2013-14 were outside the jurisdiction. Accordingly, the assessment of these assessment years were set aside as void ab initio.
Held: Assessee appealed after a search was conducted on the premises of Harvansh Chawla, a third party, in 2016. During the search, certain documents belonging to K.R. Chawla Consulting Pvt. Ltd. were seized. AO subsequently initiated proceedings under section 153C for the AYs 2011-12 to 2016-17 based on this seized material. Assessee argued that the assessment was invalid for the AYs 2011-12 to 2013-14. The company contended that the satisfaction note required to initiate the assessment under section 153C was recorded by AO only on January 18, 2021, making the search year AY 2021-22. Therefore, the assessments for the years 2011-12 to 2013-14, which were completed before this date, were beyond jurisdiction and barred by the limitation period. This argument was supported by judicial precedents such as Pr. CIT vs. Karina Airlines International Ltd. and CIT vs. Jasjit Singh. Revenue agreed that the satisfaction note was recorded on January 18, 2021, but pointed out that a separate satisfaction note was recorded on May 15, 2019, by the AO of the searched person. It was held that since the satisfaction recorded by AO of assessee was only on 18.01.2021, therefore, the assessment proceedings initiated u/s 153C in AYs 2011-12, 2012-13 & 2013-14 were outside the jurisdiction. Accordingly, the assessment of these assessment years were set aside as void ab initio.
