Case Law Details
Opal Buildwell Pvt Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi held that as per amendment to section 153C of the Income Tax Act the six assessment years immediately preceding the AY relevant to the previous year in which search is conducted or requisition is made will come into the purview of block assessment years.
Facts- The assessee filed return of income at Rs. 37,746/- and the case was processed u/s 143(1) of the Income Tax Act, 1961 (Act for short) resulting Nil demand for AY 2009-10. A search and seizure operation was carried on Appu Ghar Group of cases u/s 132 of the Act on 10.03.2015. During the course of search and seizure operation, certain documents/ papers were found and seized which was belonged to assessee. The assessment u/s 153C read with section 153A of the Act came to be passed by making an addition of Rs. 1,60,00,000/- by treating the same as income from ‘undisclosed source’ on account of ‘unexplained credits’ and the same has been added to the total income of the assessee u/s 68 of the Act.
Aggrieved by the assessment order dated 30.12.20 17, the assessee preferred an appeal before the ld CIT(A). The ld CIT(A) found that date of writing satisfaction note/ handing over of the relevant material being 10.20 16, the assessment year in which the date of handing over of the relevant material falls would be AY 20 17-18, therefore, the block period for issuing notice u/s 153C read with section 153A would be form AY 2011-12 to AY 2016-17 (6 AYs immediately preceding year 2017-18). Consequently, held that the notices issued u/s 153C for AY 2009-10 and 2010-11 were beyond mandate of the law and quashed the assessment order.
Being aggrieved, revenue has preferred the present appeal.
Conclusion- By combined reading the section 153C along with Section 153A of the Act, which was introduced by Finance Act, 2014 w.e.f. 01.10.2014, the six assessment years immediately preceding the AY relevant to the previous year in which search is conducted or requisition is made will come into the purview of block assessment years.
In the present case the date of search being 10.03.20 15 (previous year 2014-15) and the assessment year being 2015-16 the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made are the AY 2014-15, 2013- 14, 2012-13, 2011-12, 2010-11, 2009-10. The year under consideration being 2009-10 indeed falls within the purview of law in view of the amendments inserted in Section 153C vide Finance Act, 2014.
FULL TEXT OF THE ORDER OF ITAT DELHI
These three cross appeals are filed by the assessee and the Revenue for assessment years 2009-10 and 2010-11 against the common order of the ld. Commissioner of Income Tax (Appeals)-23, New Delhi, dated 30.12.2018.
I.T.A. Nos. 1557 & 1558/DEL/2019 (A.Y 2009- 10 and 2010-11):-
2. The assessee has raised the following common ground of appeal:-
“1. That the direction issued under section 150 of the Income Tax Act, 1961 by the ld. CIT (Appeals) in para 4.7 of his order, is illegal being outside the scope of the aforesaid provisions in view of the various judicial decisions and therefore needs to be quashed.”
I.T.A. No. 12829/DEL/2019 :-
3. The Revenue has raised the following substantive grounds of appeal :-
“1. The order of Ld. CIT(A) is not correct in law and facts.
2. That on facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the assessing officer could not issue notice u/s 153C of the I. T. Act, 1961 for the A.Y. 2009-10 in view of the amendment U/s 153C and quashing the assessment order passed by assessing officer u/s 153C r. w. s. 143(3) of the Act.
3. That on facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the assessing officer could not issue notice U/S 153C of the I. T. Act, 1961 for the A.Y. 2009-10 in view of the amendment u/s 153Ceven when the amendment to section 1 53C was made by Finance Act, 2017 which is effective from 01.04.2017, whereas the notice u/s 153C was issued on 18.10.2016, that is prior to the amendment in the provisions U/S 153C.
4. That on facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,60,00,0001- made by the assessing officer on account of unexplained cash credit u/s 68 of the I.T. Act, 1961.”
4. Brief facts of the case are that the assessee filed return of income at Rs. 37,746/- and the case was processed u/s 143(1) of the Income Tax Act, 1961 (Act for short)resulting Nil demand for AY 2009-10. A search and seizure operation was carried on Appu Ghar Group of cases u/s 132 of the Act on 10.03.2015. During the course of search and seizure operation, certain documents/ papers were found and seized which was belonged to assessee. The assessment u/s 153C read with section 153A of the Act came to be passed by making an addition of Rs. 1,60,00,000/- by treating the same as income from ‘undisclosed source’ on account of ‘unexplained credits’ and the same has been added to the total income of the assessee u/s 68 of the Act.
5. Aggrieved by the assessment order dated 30.12.20 17, the assessee preferred an appeal before the ld CIT(A). The ld CIT(A) found that date of writing satisfaction note/ handing over of the relevant material being 10.20 16, the assessment year in which the date of handing over of the relevant material falls would be AY 20 17-18, therefore, the block period for issuing notice u/s 153C read with section 153A would be form AY 2011-12 to AY 2016-17 (6 AYs immediately preceding year 2017-18). Consequently, held that the notices issued u/s 153C for AY 2009-10 and 2010-11 were beyond mandate of the law and quashed the assessment order.
6. Aggrieved by the order of quashing the assessment order the revenue has preferred an appeal in ITA No. 2829/Del/2019 on the ground mentioned
7. The ld CIT(A) after deleting the assessment order (supra) gave a direction u/s 150(1) of the Act to the AO to examined the case u/s 147/148 of the Act independently in case the conditions under relevant section are found to be satisfied and further directed the proceeding may be initiated notwithstanding, anything contained in section 149 subject to provision to section 150(2) of the Act. Aggrieved by the said direction made by the ld CIT(A) for AY 2009-10 and 2010-11, the assessee has preferred appeals by challenging the direction issued by the ld CIT(A) issued u/s 150(1) of the Act in ITA No. 1557 and 1558/Del/2019 and 2829/Del/2019.
ITA No. 2829/Del/2019 (AY 2009-10) (Revenue)
8. There was of delay of 20 days in filing the appeal by the Revenue. In the application for condonation of delay the revenue pleaded the assessment file was misplaced and has been traced belatedly that ultimately resulted in getting the permission to file the appeal before the Tribunal, therefore, pleaded for condoning the delay. For the reason stated in the application for condonation of delay filed by the revenue, we condone the delay of 20 days in filing the appeal in ITA No. 2829/Del/2019.
9. The sum and substance of the grounds of appeal filed by the revenue is that the ld CIT(A) has committed error in holding that the notice issued u/s 153C of the Act is bad in law for AY 2009-10 in view of the amendment to section 1 53C of the Act, thus, the ld CIT(A) committed error in quashing the assessment order passed u/s 153C read with section 143(3) of the Act. The ld DR further submitted that in view of the amendment to section 1 53C made by the Finance Act, 2017 which is effective from 01.04.2017 and since the notice issued u/s 153C dated 18.10.20 16 which is prior to the amendment in the provision to section 1 53C of the Act, thus, the ld CIT(A) has committed error in deleting addition of Rs. 1,60,00,000/- made by the AO on account of unexplained cash credit u/s 68 of the Act.
10. Ld. Counsel for the assessee submitted that the satisfaction note for initiating the proceeding u/s 153C by the AO having jurisdiction over the case of ‘other person’ (assessee) has been recorded on 14.10.20 16 and relying upon the ratio laid down in the jurisdiction High Court judgment in the case of CIT Vs. Securities Ltd (2016) 380 ITR 612 (DHC) submitted that the block for making assessment u/s 153C would be from 2011-12 to 2016- 17, therefore, the Assessing Officer cannot have jurisdiction on the AY 2009- 10 and 2010-11 and relied on the order of the ld CIT(A).
11. We have heard the parties and perused the material on record. In the present case, the search u/s 132 of the Act was carried out on Appu Ghar Group of cases on 10.03.2015. The notice u/s 153C of the Act has been issued on 18.10.2016 with respect to AY 2009-10 to 2014-15. The ld CIT(A) while passing the assessment order held that the date of writing of satisfaction note/ handing over the relevant material being 14.10.2016, the AY in which the date of handing over of the relevant material falls would be AY 2017-18. Therefore, the (block) period for issuing notices u/s 153.C (r.w.s. 153A) would be from AY 2011-12 to AY 2016-17 (six AYs immediately preceding the AY 2017-18). Consequently, it was held the notices issued u/s 153C of the Act for AY 2009-10 and 2010-11 were beyond the mandate of the law.
12. To examine the above issue, we have to visit the amendment made to section 153A and 153C of the Act vide Finance Act 2014 w.e.f. 01.10.2014 which reads as under:-
“153A. (1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a 17 where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day person of May, 2003, the Assessing Officer shall-
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, 78so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 1 32A, as the case may be, shall abate
“153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,³
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 1 53A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 1 53A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in subsection (1) of section 153A :”
The provisions of Sec. 153C of the Act, shown in bold letter and underlined as given above were substituted by the Finance (No.2) Act, 2014 w.e.f 1.10.2014 for the following words “and that Assessing Officer shall proceed against each of such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of Section 1 53A”.
13. By combined reading the section 153C along with Section 153A of the Act, which was introduced by Finance Act, 2014 w.e.f. 01.10.2014, the six assessment years immediately preceding the AY relevant to the previous year in which search is conducted or requisition is made will come into the purview of block assessment years.
14. In the present case the date of search being 10.03.20 15 (previous year 2014-15) and the assessment year being 2015-16 the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made are the AY 2014-15, 2013- 14, 2012-13, 2011-12, 2010-11, 2009-10. The year under consideration being 2009-10 indeed falls within the purview of law in view of the amendments inserted in Section 153C vide Finance Act, 2014.
15. The ld CIT(A) while quashing the assessment order relied on the following judgments:-
a. RRJ Securities Ltd Vs. Cit-7 dated 30.10.20 15
b. Sarwar Agency (P) Ltd Vs. Pr. CIT Dated 17.08.20 17 85 com 269
c. ARN Infrastructure Indian Ltd Vs. ACIT (2017) 394 ITR 569.
All the above judgments are distinguishable since in all the above cases the date of search was prior to 01.10.2014 (on which date the Finance Act, 2014 amending the Section 153A and 153C came into effect). In the present case, date of search is post- amendment of Section 1 53A and 1 53C i.e. on 10.03.2015 therefore, the above case laws relied upon by the ld CIT(A) are not applicable to the case in hand. Therefore, in our considered opinion, the ld CIT(A) has committed an error in quashing the assessment order. Since, the ld CIT(A) has not decided the issues involved in the appeal on merit, we deem it fit to direct the ld CIT(A) to decide the appeal on merit. Accordingly, by upholding the validity of proceedings u/s 153C of the Act on the legal issue and we direct the ld CIT(A) to decide the appeal filed by the assessee on merit after hearing the assessee.
16. In the result, appeal filed by the Revenue in ITA No. 2829/Del/2019 is allowed for statistical purposes.
ITA NO. 1557-1558/Del/2019
17. In both the above appeals the assessee has challenged the legality or otherwise the order of the ld CIT(A) in issuing directions u/s 150(1) of the Act to the AO to examined the case u/s 147/148 independently for AY 2009-10 and 2010-11.
18. Since, we have already upheld the validity of invoking Section 153C of the Act in the assessment proceedings on the legal issue and remanded the matter to the file of ld CIT(A) for de novo consideration, the present appeal challenging direction issued u/s 150(1) of the Act deserves to be allowed and the direction given by the ld CIT(A) in quashed and further directed to decide the appeal filed by the assessee on merits.
19. In the result, the appeals filed in ITA No. 1557 and 1558/Del/2019 by the assessee for are allowed and the appeal filed by the Revenue is dismissed.
Order pronounced in the Open Court on : 23.03.2022.
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