Validity of S.153C Proceedings for AY 2006-07 : ITAT Restores Matter to CIT(A) [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Commissioner of Income Tax(Appeals) [ CIT(A) ] for further scrutiny regarding the validity of proceedings under Section 153C of Income Tax Act,1961 for Assessment Year 2006-07.

Technodot Engineers Ltd.,appellant-assessee, was involved in a search operation under Section 132 of the Act, during which several documents and assets were seized. This led to proceedings under Section 153C of the Act, and the main issue raised by the assessee concerned Assessment Year 2006-07.

The assessee contended that proceedings under Section 153C could not be initiated for this assessment year, as it fell outside the six-year limitation for such proceedings. The case records were centralized on November 22, 2012, and notices under Section 153C were issued to the assessee on December 12, 2012.

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The case records were transferred to the Assessing Officer (AO) during the 2012-13 financial year, relevant to Assessment Year 2013-14. Given this timeline, the assessee argued that the six-year period for initiating proceedings under Section 153C had already passed for Assessment Year 2006-07, and therefore, it should not be included.

In response, the AO argued that the proceedings under Section 153C were valid for the relevant years, including Assessment Year 2006-07. The AO pointed out that the search had resulted in the seizure of materials that formed the basis for initiating proceedings. The AO also stated that the investigation spanned multiple assessment years, and the records were transferred in accordance with legal procedures, including the issuance of notices.

The CIT(A), after reviewing the appellant's claim, dismissed the contention regarding the six-year limitation. The CIT(A) held that the notices under Section 153C were validly issued within the prescribed timelines and that the proceedings for Assessment Year 2006-07 were properly initiated.

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The two  member bench comprising Siddhartha Nautiyal(Judicial Member) and Makarand V.Mahadeokar(Accountant Member) noted that the assessee's legal argument regarding the six-year limitation for Assessment Year 2006-07 was raised for the first time. Since the entire assessment process had been restored to the file of the CIT(A) for de novo consideration, decided to refer the matter back to the CIT(A) for further investigation. Specifically, the CIT(A) was directed to examine when the case records were received by the AO and to assess whether the judicial precedents cited by the assessee applied to the particular facts of the case.

As a result, the tribunal restored the legal ground concerning Assessment Year 2006-07 to the file of the CIT(A) for further scrutiny and decision. The decision was made forstatistical purposes.

To Read the full text of the Order CLICK HERE

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