Assessment u/s 153A required to be framed within 21 months as time stipulated u/s 153B

Brief of the case:

In the above group cases search was conducted and assessments were framed u/s 153A/143 (3). The search was conducted on 21.03.2007 and concluded on 22.03.2007. Hence last of the authorisation of search u/s 132 was executed on 22.03.2007. As per requirement of section 153 B assessment should be completed within 21 month from the end of the financial year in which last of the authorisation of search was executed. Assessment in this case was framed on 24.12.2009. ITAT allowed additional ground of assessee raised before it and held that assessment should be completed before 31.12.2008.

Facts of the case:

• Assessee filed ROI on 31.03.2003 declaring an income of Rs. 12,14,301/- which was processed u/s 143(1) of the Act at the returned income.
• Later on, search & seizure operation was conducted u/s 132 of the Act on 21.03.2007 in Suyra Vinayak Group of cases and the assessee is one of the Group Companies which is headed by Sh. Sanjay Jain and his brother Sh. Rajiv Jain, resident of I-42, Ashok Vihar, PhaseI, New Delhi.
• The main allegation against this group was that they have taken a large number of accommodation entries in various group companies by paying cash to the various entry operators.
• The AO issued the notice u/s 153Aof the Act on 16.01.2008 to the assessee requiring it to file the return of income in the prescribed form which replied by the assessee company that their earlier return should be considered as return in response to notice u/s 153A.
• The AO framed the assessment u/s 153A r.w.s. 143(3) of the Act on 31.12.2009 at an income of Rs. 2,57,89,450/- by making the various additions.
• Part relief was granted by CIT (A) against which both assessee and department went in appeals before ITAT.
• At appellate stage before ITAT assessee raised a pure legal ground that assessments made were barred by limitation which was allowed by ITAT at appellate stage itself.

 Contention of the revenue:

• The Cross Objections were not filed within stipulated time.
• The issue under consideration is not covered by the earlier order dated 30.05.2014 passed by the ITAT in the case of J. H. Finvest Pvt. Ltd. which belongs to the same group to which the assessee belongs and even the Bench is not bound to follow the order of other Bench and that the earlier decision may not be treated as precedence because the facts of each case are to be seen.
• It was contended that in the decision relied by the ld. Counsel for the assessee, the arguments advanced on behalf of the department were not considered and appreciated in right prospective.
• Assessee did not challenge the issue relating to the jurisdiction before the AO and CIT (A), therefore, by way of additional ground it should not be raised before the ITAT.
• The issue relating to the jurisdiction is based on the factual aspect and it is not a legal issue.

 Contention of the assessee:

• The search was conducted at the office premises the case of Surya Vinayak Group of cases and also in the residential premises of the directors. It was submitted that no incriminating material was found as a result of search and the assessment framed u/s 153A without any seized material.
• Search took place 21.03.2007 at 8:45 PM and concluded at 6 AM on 22.03.2007 which clearly shows that whole night search continued.
• Certain jewellary valued on 21.03.2007 belonging to wives of director were seized and order u/s 132(3) of the Act was passed.
• Therefore, the order was required to be passed by the Assessing Officer on or before 31.12.2008 but the assessment order has been passed on 24.12.2009 which is barred by limitation and deserves to be quashed.
• The restraint order passed on 22.03.2007 was only to gain the time because when the said order was revoked and search action took place on 15.05.2007, no material was seized rather the jewellary already seized on 22.03.2007 was released.
• The issue is covered in favour of the assessee vide order dated 30.05.2014 of this Bench of the Tribunal in ITA Nos. 1291 to 1297/Del/2011 and CO Nos. 131 to 137/Del/2011 for the assessment years 2001-02 to 2007-08 in the case of M/s J. H. Finvest Pvt. Ltd. which belongs to the same group to which the assessee belongs.
• It was emphasized that on 15.05.2007 practically no fresh search took place because nothing was seized except one part of jewellary of Smt. Neena Jain which was valued on 21.03.2007 and all other jewellaries which were earlier seized were released. Therefore, practically the search was concluded on 22.03.2007 when the Panchnama was drawn.

 Held by CIT (A):

 The question of time barring assessment was raised first time before ITAT hence there is no findings of CIT (A).

Held by ITAT:

• Keeping in view the ratio laid down by the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs CIT 229 ITR 383 and the decision of the Coordinate Bench in the matter of JH Finvest in CO Nos. 131 to 137/Del/2011, admit the additional ground vide which the assessee contended that the assessment made u/s 153A is barred by limitation as it was required to be completed by 31.12.2008 as per Section 153B.
• The provisions contained in the above second proviso to Section 153B of the Act are applicable to the facts of the present case which clearly provides that the assessment u/s 153A is required to be completed within 21 months from the end of the financial year in which last of the authorization for search u/s 132 of the Act was executed.
• In the present case, the authorization for search was executed on 21.03.2007, the panchnama was drawn on 22.03.2007 after completion of the search, as such the financial year ends on 31.03.2007 and 21 months period ends on 31.12.2008.
• Therefore, the assessment was required to be framed u/s 153A of the Act on or before 31.12.2008. However, in the present case, the assessment has been framed on 24.12.2009, Therefore the assessment framed was barred by limitation and deserves to be quashed as invalid.