Al Zarafa Travel & Manpower Consultants (P) Ltd Vs ACIT (ITAT Cochin)
Satisfaction Note Date Controls – Tribunal Applies First Proviso to 153C- Cochin ITAT Quashes 144 Assessment – AO Should Have Invoked Section 153C
Assessee, engaged in manpower recruitment & supply, faced a search on 27.03.2015. Subsequently, assessment was framed u/s 144 r.w.s 153C assessing total income at over ₹428 crore. In earlier appellate rounds, relief was partly granted, and eventually assessment was reduced to ₹5.19 crore. The dispute persisted regarding jurisdiction: whether assessment should have been u/s 153A (as Assessee claimed it was the searched person) or u/s 153C (as a “person other than searched person”).
In the impugned order dated 05.03.2024, AO completed assessment u/s 144, leading Assessee to argue that the assessment was bad in law as AY 2015-16 fell within the six years covered by satisfaction note dated 17.10.2016, and hence it should have been assessed u/s 153C read with 153A. Assessee relied on SC & HC rulings including Manish Maheswari, Calcutta Knitwears, RRJ Securities & CBDT Circular 24/2015. CIT(A) dismissed appeal holding mention of s.153C in AO’s order was a typographical error cured by s.292B.
Tribunal noted that since AO of searched person & Assessee was the same, satisfaction note recorded on 17.10.2016 had to be taken as the “date of search” for purposes of first proviso to s.153C. Thus, AY 2015-16 fell within six preceding years relevant to previous year 2016-17. Accordingly, assessment ought to have been framed u/s 153C, not u/s 144. Tribunal held the assumption of jurisdiction u/s 144 invalid, quashed the assessment order dated 05.03.2024, & partly allowed Assessee’s appeal. Additional ground 1.1 was allowed, while other contradictory grounds were dismissed as infructuous.
