Assessment for 2005-06 Invalid: Tribunal Rules in Favor of Assessee

The Tribunal held that the assessment proceedings for the year 2005-06, conducted under section 153C read with section 143(3) of the Income-tax Act, were invalid and beyond the jurisdiction of the Assessing Officer. The assessment was deemed to be bad in law due to exceeding the permissible period for reassessment. Consequently, the appeal of the assessee was allowed, and the assessment for the year 2005-06 was declared invalid by the Tribunal on September 10, 2018.

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Issues Involved:
1. Validity of assessment framed under section 153C read with section 143(3) of the Income-tax Act, 1961.
2. Jurisdictional issue regarding the period of assessment under section 153C.

Detailed Analysis:

1. Validity of Assessment under Section 153C r.w.s. 143(3):
The primary issue in the appeal is the validity of the assessment framed under section 153C read with section 143(3) of the Income-tax Act, 1961. The appellant contended that the assessment for the year 2005-06 is barred by limitation as it falls beyond the permissible six-year period preceding the year of search.

The search and seizure action under section 132 was conducted on 20.04.2010, and the satisfaction note was recorded on 11.07.2012. Consequently, the notice under section 153C was also issued on 11.07.2012, which corresponds to the assessment year 2013-14. According to the pre-amended provisions of section 153C, the assessment for the preceding six years, i.e., from 2007-08 to 2012-13, could be reopened. However, the assessment year 2005-06 is beyond this six-year period, making the assessment invalid.

2. Jurisdictional Issue:
The jurisdictional issue raised by the assessee is whether the assessment for the year 2005-06 falls within the permissible period under section 153C. The Tribunal referred to the decision in Kewal Kumar Jain Vs. ACIT, which applied the ratio laid down by the Hon’ble High Court of Delhi in Pr. CIT Vs. Sarwar Agency (P.) Ltd. The High Court clarified that the six-year period for reassessment under section 153C should be counted from the year the Assessing Officer receives the documents or assets from the AO of the searched person.

In this case, the satisfaction note and notice under section 153C were issued in 2012, making the relevant assessment years 2007-08 to 2012-13. Therefore, the assessment year 2005-06 is outside this period, rendering the assessment invalid and beyond the jurisdiction of the Assessing Officer.

Conclusion:
The Tribunal concluded that the assessment proceedings initiated for the year 2005-06 are beyond the period available under the proviso to section 153C read with section 153A. Therefore, the Assessing Officer had no jurisdiction to initiate or complete the proceedings for the said year. The jurisdictional issue raised by the assessee was allowed, and the assessment was held to be invalid and bad in law. As a result, the Tribunal did not address the merits of the case.

Final Judgment:
The appeal of the assessee was allowed, and the assessment for the year 2005-06 was declared invalid. The order was pronounced on September 10, 2018.

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