The appellant, Commissioner of Income Tax- Central-1, filed an appeal in the backdrop of search and seizure in the case of Harvansh Chawla. Pursuant to the search that was so initiated a Satisfaction Note as contemplated under Section 153A of the Income Tax Act, 19612 came to be recorded by the Assessing Officer with respect to the searched individual on 29 March 2019.
The respondent (assessee), Karina Airlines International Ltd. was a non searched entity. Assessment officer made additions of INR 32,19,052/- in respect of receipts of foreign inward remittances, INR 2,50,000/- on account of non-deduction of TDS and INR 2,58,30,576/- in respect of debts written off pursuant to assessment made in accordance with Section 153C of the Act.
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Aggrieved by this the respondent filed an appeal before Commissioner of Income Tax which in its order 9th June 2021 deleted the addition of INR 32,91,052/- and confirmed addition of INR 2,50,000/. With respect to the addition of INR 2,58,30,576/-, and allowed relief to the extent of INR 2,51,30,576/ and pegged the addition to the extent of INR 7,00,000/, consequently the income of assessee (respondent) was enhanced by INR 2,23,25,000/-.
Second appeal was filed before the tribunal which has struck down the initiation of reassessment proceedings under Section 153C on the ground of limitation.
The division bench of Justice Yashwant Varma and Justice Ravinder Dudega observed that the Clause (b) of Section 153A(1) provided for the identification of the six AYs’ with reference to the search conducted in previous year and the block of six AYs’ were to be identified commencing from the AY immediately preceding the assessment year relevant to the previous year in which the search may have been conducted.
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The Finance Act 2017 stretched the search amendment to an additional 4 AY’s with the introduction of the concept of “relevant assessment year.” The constitution of a block of ten AYs’ in Section 153A was contemporaneously added and introduced in Section 153C. Post Finance Act, 2017.
The constitution of a block of ten AYs’ in Section 153A was contemporaneously added and introduced in Section 153C. Post Finance Act, 2017, an assessment triggered by a search could thus hypothetically extend to a block period of ten years both in the case of a searched as well as a non-searched entity. In the court’s opinion, the amendments introduced in Section 153C, and on which reliance was placed by Mr. Mann, were essentially intended to place both Sections 153A and 153C at par and for both statutory provisions being available to be invoked for the purposes of assessment covering a block of ten AYs’.
Section 153C is applicable even to non searched entities. The counsel for the appellant,Adv. Mann,
made submissions that would amount to court carving out an exception in respect of those cases where the jurisdictional AO of the searched and non-searched entity were the same. This would also lead and constrain the Court to restrict the application of the First Proviso to Section 153C (1) of the Act only to those cases where the AO of the non-searched entity be one different from that of the searched person.Thus amounting to a reconstruction of Section 153C and creating an exception which the Legislature chose not to introduce. Hence AY is relevant for action depending on date of recording satisfaction, not date of Search u/s 153C of Income Tax Act.
Therefore the appeal was dismissed.
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