2016 (12) TMI 1722 - AT - Income Tax

Invalid Assessments under Income Tax Act: Section 153A Limitation

Rajiv Kumar Versus Assistant Commissioner of Income Tax, Central Circle-1 Chandigarh,

Rajiv Kumar Versus Assistant Commissioner of Income Tax, Central Circle-1 Chandigarh, - [2017] 186 TTJ 522 Issues involved:- Validity of assessment framed under Section 153A of the Income Tax Act.- Jurisdiction of the Assessing Officer in framing assessment under Section 153A.- Compliance with provisions of Section 153A for assessment years preceding the search year.- Applicability of assessment under Section 143(3) versus Section 153A.- Interpretation of search year and relevant assessment year for framing assessments.Issue 1: Validity of assessment under Section 153A:The judgment addresses the challenge to the validity of assessments made under Section 153A of the Income Tax Act. The search and seizure operation conducted under Section 132(1) covered the assessee, leading to the issuance of a notice under Section 153A. The assessee contended that the assessment for the relevant year was against the Act's provisions, arguing that assessments under Section 153A could only be initiated for the six years preceding the search year. The CIT(A) upheld the assessment, noting that the AO mentioned both Section 153A and Section 143(3) in the order. However, the Tribunal disagreed, emphasizing that the assessment order explicitly stated it was framed under Section 153A. Citing relevant case laws, the Tribunal concluded that the assessment for the year under consideration was invalid under Section 153A, as it could only be framed for the six preceding assessment years, not the year following the search year.Issue 2: Jurisdiction of the Assessing Officer under Section 153A:The judgment delves into the Assessing Officer's jurisdiction in framing assessments under Section 153A. It highlights that the search conducted on the assessee led to the issuance of a notice under Section 153A, resulting in the assessment for the relevant year. The Tribunal analyzed the provisions of Section 153A, emphasizing that assessments under this section could be made for the six assessment years preceding the search year. The Tribunal concluded that the assessment for the year in question, framed under Section 153A, was invalid as it exceeded the statutory limit of preceding assessment years allowed under Section 153A.Issue 3: Compliance with Section 153A provisions for preceding assessment years:The judgment scrutinizes the compliance with Section 153A provisions regarding the assessment years preceding the search year. It notes that assessments under Section 153A can be initiated for the six assessment years immediately preceding the assessment year relevant to the search period. The Tribunal emphasized that the assessment year following the search year was not eligible for assessment under Section 153A, as it did not fall within the statutory provision's scope. This analysis led to the conclusion that the assessments under Section 153A for the relevant years were invalid and void ab initio.Issue 4: Applicability of assessment under Section 143(3) versus Section 153A:The judgment compares the applicability of assessments under Section 143(3) and Section 153A of the Income Tax Act. It clarifies that the assessment order explicitly stated it was framed under Section 153A, despite mentioning Section 143(3). The Tribunal emphasized that the AO's mention of Section 153A in the assessment order dictated the assessment's nature. This distinction was crucial in determining the validity of the assessments under Section 153A for the relevant years.Issue 5: Interpretation of search year and relevant assessment year for assessments:The judgment interprets the search year and the relevant assessment year for framing assessments under Section 153A. It underscores that assessments under Section 153A can only be made for the six assessment years preceding the search year. By analyzing the statutory provisions, the Tribunal concluded that the assessments for the year following the search year were beyond the scope of Section 153A, rendering them invalid. This interpretation guided the decision to quash the assessments under Section 153A for the relevant years.This detailed analysis of the judgment comprehensively covers the issues involved, providing a nuanced understanding of the legal intricacies and the Tribunal's decision regarding the validity of assessments under Section 153A of the Income Tax Act.