Income Tax: ITAT quashes Sec.153C Assessment for want of Notice and Satisfaction Note [Read Order]

ITAT - Sec.153C Assessment - Notice - Satisfaction Note - Taxscan

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that the non-compliance of mandatory Provisions of the Income Tax Act, 1961 while proceeding against the Assessee under Section153C of the Act will vitiate the entire proceedings.

The Tribunal was hearing an appeal was filed by an individual challenging the additions made by Assessing Officer on account of long term capital gains and under section 68 of the Income Tax Act, 1961 and raising additional grounds pertaining to error in assuming the year of search.  Earlier, , a search was conducted by the department in the premise of M/s. Krrish Realty Nirman Pvt. Ltd. in November 2011 and the documents pertaining to appellant were sent to the AO of the Central circle on 29.08.2013. Accordingly, the appellant submitted that the search year in the said case is Assessment Year 2014-15, but was wrongly assumed to be Assessment Year 2012-13. It was also urged on behalf of the appellant that consequent to the error in assuming the year of search, assessment order was passed under section 143(3) of the I.T. Act, 1961 instead of passing the Order under section 153C of the I.T. Act, 1961.

After hearing arguments from both sides, the Tribunal observed that Identical issue pertaining to the same appellant was adjudged in his favour by following the decision of Delhi High Court in BNB Investment & Properties Ltd., vs., DCIT. Taking into consideration the said fact and the mandate of Section 153C of the Income Tax Act, the bench comprising Shri Bhavnesh Sain and Shri N.K. Billaiya held that “The A.O. passed the assessment order for the assessment year under appeal i.e., 2013-2014 under section 143(3) considering the preceding A.Y. 2012-2013 to the year of the search. However, the First proviso to Section 153C of the I.T. Act provides that six assessment years for which assessments or re-assessments could be made under section 153C of the I.T. Act would also have to be construed with reference to the date of handing-over of the assets or documents to the A.O. of the assessee. Therefore, the six assessment years under section 153C in the case of the assessee would be A.Ys. 2008-2009 to 2013-2014 [under appeal]. Thus the A.O. shall have to pass the assessment order under section 153C of the I.T. Act instead of passing the assessment order under section 143(3) of the I.T. Act.”

The Tribunal also found that the Assessing Officer had failed to record satisfaction and to issue notice to the appellant as required by law. The Tribunal therefore vitiated the additions made on ground of non-compliance of requirements under Section153C of the Income Tax Act.

Subscribe Taxscan Premium to view the Judgment

Support our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in

taxscan-loader