In a relief to Karina Airlines International, the Income Tax Appellate Tribunal (ITAT), Delhi Bench ruled that the Section 153C Assessment invalid if Revenue fails to discharge Onus to show incriminating material belongs to Assessee.
The assessee, Karina Airlines International Limited is a limited company and is engaged in the business of running helicopter services. They filed their return of income under section 139(1) of the Income Tax Act 1961 on 29 September 2012, declaring an income of INR 2,12,19,096/-. It was processed under section 143(1) of the Act. A search & seizure action under section 132 of the Act was initiated on 7 April 2016 in the case of Sh. Harvansh Chawla. Satisfaction under section 153A of the Act, by the learned Assessing Officer of the searched person (Sh. Harvansh Chawla), was recorded.
The Assessing Officer for the both searched person and the assessee was the same. The Assessing Officer recorded his satisfaction in the case of the assessee and issued a notice under section 153C of the Act. In response to the same, the assessee furnished a return of income vide letter. The Assessing Officer made an addition of Rs. 32,91,052 on account of Receipt of foreign inward remittance, Rs. 2,50,000 on account of non-deduction of TDS and Rs. 2,58,30,576/-on account of debtors written off.
Assessee filed appeal before CIT(A), who out of the above additions, deleted the addition of Rs. 32,91,052/- and confirmed addition of Rs 2,50,000/- and in respect of addition of Rs 2,58,30,576/-, the CIT(A) allowed relief to the extent of Rs 2,51,30,576/- and confirmed addition to the extent of Rs 7,00,000/-. Apart from this, Ld. CIT(A) made an enhancement to income by Rs 2,23,25,000/-.
CA Amit Goel, on behalf of assessee submitted that in case of a “searched person”, provisions of section 153A are applicable, in accordance with which, the assessing officer is to assess or reassess total income of “searched person” for six assessment years immediately preceding the assessment year relevant to the assessment year in which search is conducted or requisition is made; whereas the second proviso to sub-section (i) of section 153A also provides that assessment or reassessment of these six assessment years, if pending on the date of initiation of search u/s 132 or making of requisition u/s 132A, as the case may be, shall abate.
“The assessing officer in his capacity as A.O. of the searched person has recorded satisfaction on 29.03.2019, which establishes that, at the earliest, it is the date of 29.03.2019, when the assessing officer can be presumed to have got the documents in his capacity as assessing officer of the appellant, on the basis of which proceedings u/s 153C has been initiated. Since the date of such recording of satisfaction on 29.03.2019 falls in the previous year 2018-19 relevant to A.Y. 2019-20, the immediately preceding six years are A.Y. 2013-14 to A.Y. 2018-19, and, therefore, the notice u/s 153C for A.Y. 2012-13 could not have been issued by the learned Assessing Officer, as the same is barred by limitation,” the assessee added.
The coram of Accountant Member, Prashant Maharishi, and Judicial Member K.Narasimha Chary opined that since the date of search is 07.04.2016, the amendment brought by the Finance Act, 2017 would not be applicable, and consequently the order of assessment dated 31.12.2019 passed u/s 153C r.w.s. 144 of the Act is bad and is liable to be quashed.
The Tribunal held that the onus was on the Revenue to show that the incriminating material/documents recovered at the time of search ‘belongs’ to the Assessee, in other words, it is not enough for the Revenue to show that the documents either ‘pertain’ to the Assessee or contains information that ‘relates to the Assessee.