Section 143(1) Assessment Challenge Upheld as No Interference Warranted Under Section 153C: Delhi HC
Case Law Details
CIT-14 Vs Shree Jasjit Singh (Delhi High Court)
Section 143(1) Assessment Challenge Upheld as No Interference Warranted Under Section 153C: Delhi HC
The Revenue filed an appeal under Section 260A of the Income Tax Act, 1961 against the Income Tax Appellate Tribunal’s order dated 05.11.2014 in ITA No. 1436/Del/2012 for Assessment Year (AY) 2009-10.
A search and seizure operation was conducted in the case of M/s Koutons Group on 19.02.2009, during which certain documents allegedly belonging to the respondent assessee were found. Consequently, the assessee’s assessment was centralised to the ACIT, Central Circle XI on 16.06.2009, and jurisdiction was transferred from Ward 25(3) to ACIT, Central Circle XI. The Assessing Officer completed the assessment for AY 2009-10 under Section 143(3), treating AY 2009-10 as the year of search, and reopened the assessments for AYs 2003-04 to 2008-09.
Before the ITAT, the issue concerned the first proviso to Section 153C(1). The ITAT relied on the Delhi High Court’s judgment in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which held that, in the case of a person other than the searched person, the relevant date is the date on which the Assessing Officer having jurisdiction over such other person receives the seized books of account, documents or assets. The question of pendency and abatement of assessment or reassessment proceedings for the six assessment years is to be examined with reference to that date.
The High Court noted that although the ITAT had also referred to its decision in DSL Properties Pvt. Ltd., which was pending consideration before the High Court, the judgment in SSP Aviation Ltd. put the issue beyond doubt. The Court also referred to the CBDT Circular dated 31.03.2014, particularly paragraph 2.5, which states that the Assessing Officer of the other person assumes jurisdiction under Section 153C upon receipt of the relevant seized material from the Assessing Officer of the searched person and advises recording the receipt of the seized material and the satisfaction note.
The Court further noted that the satisfaction note in the present case had been prepared by the Assessing Officer on 25.02.2010. It held that the ITAT’s finding that the assessment made under Section 143(1) for AY 2009-10 was not valid called for no interference. Holding that no substantial question of law arose in the facts and circumstances of the case, the High Court dismissed the Revenue’s appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (‘Act’) is directed against the order dated 5th November 2014 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 1436/Del/2012 for the Assessment Year (‘AY’) 2009-10.
2. A search and seizure operation was conducted in the case of M/s Koutons Group on 19th February 2009. Allegedly certain documents belonging to the Respondent Assessee were found. As a result, the assessment of the Assessee was centralized to the ACIT, Central Circle XI on 16th June 2009.
The jurisdiction of the Assessee was transferred from Ward 25(3) to ACIT, Central Circle XI. The Assessing Officer („AO‟) completed the assessment for the AY 2009-10 under Section 143(3) by treating the AY 2009-10 as the year of search and reopened the assessments for the AYs 2003-04 to 200809.
3. The question raised before the ITAT was with reference to the first proviso to Section 153C (1). The ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under Section 132 or the requisition under Section 132A, in the case of the other person (like the Assessee in the present case) “such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date”.
4. Although, the ITAT has also referred to its own decision in the case of DSL Properties Pvt. Ltd., which decision is pending consideration in ITA No. 585 of 2013 in this Court, in which a question of law has been framed, the decision in SSP Aviation Ltd. (supra) puts the matter beyond all doubt. In addition, the Court has been shown by learned counsel for the Respondent a circular dated 31st March 2014 issued by the CBDT, containing the guidelines regarding Section 153C of the Act. Para 2.5 of the said circular clarifies as under:
“The AO of the other person assumes jurisdiction under Section 153C with the receipt of the relevant seized material from the AO of the searched person. Also, a copy of the satisfaction received from the AO of the searched person in this regard would enable him to proceed further in the case of the other person under Section 153C. Though there is no statutory requirement for the AO of such other person to record any satisfaction/reason before issuing notice under Section 153C and proceeding further, considering the above aspects, it is advisable for maintaining institutional memory that the AO records receipt of the seized material and the satisfaction from the AO of the searched person and such recording/noting may be kept in the assessment folder of such other person. In case, the AO of the searched person exercises jurisdiction over the other person also, appropriate referencing should be made in the relevant assessment records of such other person.
5. It may be noted that in the present case satisfaction note was prepared by the AO on 25th February 2010. Consequently, the finding of the ITAT in the present case that the assessment made under Section 143(1) of the Act for the AY 2009-10 was not valid, calls for no interference . No substantial question of law arises in the facts and circumstances of the present case.
6. Accordingly, the appeal is dismissed.
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