The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, with regard to a search conducted within 6 preceding years of the relevant AY, upheld the Income Tax Proceedings under section 153C.
The aforesaid observation was made by the Delhi ITAT, when three cross appeals were filed before it by the assessee and the Revenue, for assessment years 2009-10 and 2010-11, against the common order of the Commissioner of Income Tax (Appeals)-23, New Delhi, dated 30.12.2018.
The ground of the assessee’s appeal was that the direction issued under section 150 of the Income Tax Act, 1961, by the CIT (Appeals) in his order, is illegal, being outside the scope of the aforesaid provisions in view of the various judicial decisions, the assesee prayed that therefore, the same needs to be quashed.
However, on the other hand, the grounds of the Revenue’s appeal were that at on the facts and circumstances of the case, the CIT(A) has erred in holding that the assessing officer could not issue notice under section 153C of the Income Tax Act, 1961 for the A.Y. 2009-10, in view of the amendment under section 153C, as well as in quashing the assessment order passed by assessing officer under section 153C r.w.s. 143(3) of the Act , and further that on facts and circumstances of the case, the CIT(A) has erred in holding that the assessing officer could not issue notice Under section 153C of the Act, 1961, for the A.Y. 2009-10, in view of the amendment under section 153C ,even when the amendment to section 153C was made by Finance Act, 2017 which is effective from 01.04.2017, whereas the notice under section 153C was issued on 18.10.2016, that is prior to the amendment in the provisions under section 153C.
The brief facts of the case were that the assessee filed return of income at Rs. 37,746/- and the case was processed under section 143(1) of the Income Tax Act, 1961, resulting Nil demand for AY 2009-10. And subsequently, a search and seizure operation were carried on Appu Ghar Group of cases under section 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. And, thereafter, the assessment under section 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 under section 68 of the Act.
Aggrieved by the assessment order dated 30.12.2017, the assessee preferred an appeal before the CIT(A), who found that date of writing satisfaction note/ handing over of the relevant material being 14.10.2016, the assessment year in which the date of handing over of the relevant material falls would be AY 2017-18, and therefore that, the block period for issuing notice under section 153C read with section 153A would be form AY 2011-12 to AY 2016-17 (6 AYs immediately preceding year 2017-18).
Consequently, he held that the notices issued under section 153C for AY 2009-10 and 2010-11 were beyond mandate of the law and quashed the assessment order.
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 above.
The CIT(A), after deleting the assessment order, gave a direction under section 150(1) of the Act to the AO to examined the case under section 147/148 of the Act independently in case the conditions under relevant section are found to be satisfied and further directed the proceeding to be initiated notwithstanding, anything contained in section 149 subject to provision to section 150(2) of the Act.
And it is being aggrieved by the said direction made by the CIT(A) for AY 2009-10 and 2010-11, the assessee has preferred the present appeals, by challenging the direction issued by the CIT(A), issued under section 150(1) of the Act in ITA No. 1557 and 1558/Del/2019 and 2829/Del/2019.
Hearing the opposing contentions of both the sides as was submitted by Shri K. C. Singhal, the Advocate on behalf of the assessee, and by Ms. Sarita Kumari, the CIT– D. R, on the Revenue’s behalf, as well as perusing the materials available on record, the Delhi ITAT observed:
“In the present case the date of search being 10.03.2015 (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.”
“The ld CIT(A) while quashing the assessment order relied on the various judgments. And all those judgments are distinguishable since in all those 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 153A and 153Ci.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 CIT(A) has committed an error in quashing the assessment order”, the ITAT Panel comprising of DR. BRR Kumar, the Accountant Member, along with Yogesh Kumar US, the Judicial Member added.
Thus, allowing the Revenue’s appeal, the Delhi ITAT held:
“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 under section 153C of the Act on the legal issue, we direct the ld CIT(A) to decide the appeal filed by the assessee on merit after hearing the assessee. In the result, appeal filed by the Revenue in ITA No. 2829/Del/2019 is allowed for statistical purposes.
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