The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the assessment for Assessment Year(AY) 2009-10 due to a jurisdictional error under Section 153C of the Income Tax Act,1961.
Kamal Sharma,appellant-assessee, challenged the appeal against the order dated 27.02.2023 passed by Commissioner of Income Tax(Appeals)[CIT(A)] for the AY 2009-10.
The counsel for the assessee mentioned that a search had been conducted in the case of Sunstar Group on 19.12.2013, and a notice under section 153C was issued on 20.01.2016 based on the materials found. He explained that the deemed search for the purpose of section 153C was for AY 2016-17.
Notices under section 153C were issued for the six assessment years prior to the search year, covering AYs 2010-11 to 2015-16. Since the assessment for AY 2009-10 was outside this period, the counsel argued that it was beyond jurisdiction, citing several ITAT decisions to support this claim.
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Section 153C of the Act allows the Assessing Officer (AO) to issue a notice for the assessment of a person (other than the one searched) if materials related to them are found during a search. The notice can cover up to six years prior to the search year. The AO must receive the seized material and a satisfaction note from the AO of the searched person to proceed.
The two member bench comprising Sudhir Pareek(Judicial Member) and S.Rifaur Rahman(Accountant Member) reviewed the submissions and material presented. It noted that a search in the case of Sunstar Group was conducted on 19.12.2013, and a notice under section 153C was issued on 20.01.2016. As the satisfaction note was recorded before the notice was issued, the relevant assessment year was determined to be AY 2016-17.
The tribunal observed that the six-year period covered by section 153C applied to AYs 2010-11 to 2015-16. Since the notice for AY 2009-10 was beyond jurisdiction, it followed prior rulings and set aside the assessment for AY 2009-10.
In short,the appeal filed by the assessee was allowed.
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