2021 (8) TMI 56 - AT - Income Tax

Tribunal quashes assessment for A.Y. 2008-09 due to limitation, annuls additions under sections 68, supports 'total income' interpretation.

ACIT, Central Circle-30, New Delhi. Versus Sarvottam Commodities Pvt. Ltd.

The Tribunal upheld the CIT(A)'s decision to quash the assessment for A.Y. 2008-09 as it was barred by limitation. Consequently, all additions made by the ... Validity of assessment u/s 153A - addition made under section 153C as barred by limitation - Calculation of six preceding assessment years - Addition u/s 68 - HELD THAT:- The determining date for determination of six preceding assessment years that would lay upon under section 153C read with section 153A of the Act would decidedly be the date of handing over of the documents. Here the satisfaction note recorded by the A.O, of M/s Prakash Industries Ltd. is 12.12.2015, as well as by the A.O. of the appellant is on 12.12.2015, which is to be taken as the date of handing over of documents and date. Six preceding assessment years begin with A.Y. 2010-11 and end with A.Y. 2015-16. It would be the date of handing over the documents or date of recording of satisfaction will be the date for determining the date for calculating the preceeding six assessment years is well settled by the judgement of Hon’ble Delhi High Court in the case of RRJ Securities [2015 (11) TMI 19 - DELHI HIGH COURT] We have to hold that no assessment under section 153C could have been made in respect of A.Y. 2008-09. It was clearly barred by limitation. Hence, there is no option but to annul the assessment and all consequent additions made in the assessment also stand deleted. - Decided in favour of assessee. Issues Involved:1. Whether the assessment under section 153C for A.Y. 2008-09 is barred by limitation.2. Validity of additions made under section 68 of the Act for unexplained cash credits.3. Validity of additions made for unexplained expenditure on account of brokerage.4. Interpretation of the term 'total income' in the context of section 153C/153A.5. Scope of assessment under section 153C/153A.Issue-wise Detailed Analysis:1. Whether the assessment under section 153C for A.Y. 2008-09 is barred by limitation:The primary issue was whether the assessment for A.Y. 2008-09 under section 153C was barred by limitation. The search on M/s Prakash Industries Ltd. occurred on 30.10.2012, and the documents were handed over to the Assessing Officer (AO) of the appellant on 12.02.2015. The appellant argued that the six preceding assessment years from the date of handing over the documents should be from A.Y. 2009-10 to 2014-15, thus excluding A.Y. 2008-09. The Tribunal upheld this view, citing the Delhi High Court's decision in RRJ Securities Ltd. (380 ITR 612), which established that the date of recording satisfaction is deemed as the date of the search for the purposes of section 153C. Consequently, the assessment for A.Y. 2008-09 was annulled as it was beyond the six-year limitation period.2. Validity of additions made under section 68 of the Act for unexplained cash credits:The AO had made an addition of Rs. 23,68,50,000 under section 68 for unexplained cash credits. However, since the assessment for A.Y. 2008-09 was found to be barred by limitation, this addition was also annulled. The Tribunal did not delve into the merits of this addition due to the primary finding on the limitation issue.3. Validity of additions made for unexplained expenditure on account of brokerage:Similarly, the AO had made an addition of Rs. 11,84,250 for unexplained expenditure on account of brokerage. This addition was also annulled on the ground that the assessment itself was barred by limitation. The Tribunal did not address the substantive merits of this addition.4. Interpretation of the term 'total income' in the context of section 153C/153A:The Tribunal addressed the department's argument that the term 'total income' in sections 153C/153A should include all income, not just undisclosed income discovered from seized/incriminating material. The Tribunal, however, upheld the interpretation that 'total income' refers specifically to undisclosed income discovered during the search, aligning with the jurisdictional High Court's decision in the case of Sh. Kabul Chawla.5. Scope of assessment under section 153C/153A:The department contended that the CIT(A) had adopted a restrictive interpretation of the scope of assessment under section 153C/153A. The Tribunal, however, supported the CIT(A)'s interpretation, which was consistent with the legal precedent set by the Delhi High Court. The Tribunal emphasized that the scope of assessment under section 153C/153A is limited to the undisclosed income unearthed during the search.Conclusion:The Tribunal upheld the CIT(A)'s decision to quash the assessment for A.Y. 2008-09 as it was barred by limitation. Consequently, all additions made by the AO under sections 68 and for unexplained expenditure on account of brokerage were annulled. The Tribunal also supported the interpretation that 'total income' in the context of section 153C/153A refers to undisclosed income discovered during the search. The department's grounds of appeal were dismissed, and the order of the CIT(A) was upheld.