2021 (8) TMI 57 - AT - Income Tax

ITAT upholds CIT(A)'s decision, quashing assessment for A.Y. 2008-09 as time-barred. Clarifies 'total income' interpretation.

ACIT, Central Circle-30, New Delhi. Versus M/s. Sanskriti Tie Up Pvt. Ltd.

The ITAT upheld the CIT(A)'s decision to quash the assessment for A.Y. 2008-09 as time-barred under Section 153C. Consequently, all additions made in 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 - unexplained cash credits - HELD THAT:- Having gone through the facts of the case and applicable law, we would tend to agree with the appellant. 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 19.9.2014 as well as by the A.O. of the appellant is on 19.9.2014 which is to be taken as the date of handing over of documents and date. Six preceding assessment years begin with A.Y. 2009-10 and end with A.Y. 2014-15. 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. Validity of the assessment under Section 153C of the Income Tax Act for A.Y. 2008-09.2. Deletion of additions made under Section 68 for unexplained cash credits.3. Deletion of additions made for unexplained expenditure on account of brokerage.4. Interpretation of 'total income' under Section 153C/153A.5. Applicability of the decision in CIT vs. RRJ Securities Ltd. and Sh. Kabul Chawla.6. Scope of assessment under Section 153C/153A.7. Jurisdictional and procedural compliance in the issuance of notice under Section 153C.Detailed Analysis:1. Validity of the Assessment under Section 153C for A.Y. 2008-09:The primary issue was whether the assessment for A.Y. 2008-09 was barred by limitation under Section 153C. The search was conducted on 30.10.2012, and the satisfaction note was recorded on 19.09.2014, which was also the assumed date of handing over of documents. According to the appellant, the six preceding assessment years from the date of handing over of the documents should be from A.Y. 2009-10 to 2014-15, thereby excluding A.Y. 2008-09. The ITAT upheld this view, referencing the Delhi High Court's decision in RRJ Securities Ltd., which stated that the six assessment years for which assessments/reassessments could be made under Section 153C should be construed with reference to the date of handing over of assets/documents. Consequently, the assessment for A.Y. 2008-09 was deemed void ab initio and barred by limitation.2. Deletion of Additions Made under Section 68 for Unexplained Cash Credits:The Department contested the deletion of additions amounting to Rs. 24,68,00,000/- made under Section 68 for unexplained cash credits. However, since the assessment itself was quashed for being time-barred, this ground became moot and was not further addressed in the judgment.3. Deletion of Additions Made for Unexplained Expenditure on Account of Brokerage:Similarly, the Department's challenge to the deletion of Rs. 12,34,000/- as unexplained expenditure on account of brokerage was rendered irrelevant due to the annulment of the assessment on jurisdictional grounds.4. Interpretation of 'Total Income' under Section 153C/153A:The Department argued that the term 'total income' should include both the income unearthed during the search and any other income. However, the ITAT upheld the CIT(A)'s interpretation that 'total income' under Section 153C/153A would only mean undisclosed income discovered from seized/incriminating material, aligning with the jurisdictional High Court's interpretation.5. Applicability of the Decision in CIT vs. RRJ Securities Ltd. and Sh. Kabul Chawla:The Department contended that the decisions in CIT vs. RRJ Securities Ltd. and Sh. Kabul Chawla should not be followed as SLPs against these decisions were pending before the Supreme Court. However, the ITAT noted that these decisions had not been stayed and thus were binding. The ITAT followed these precedents, affirming that the assessment for A.Y. 2008-09 was beyond the permissible period.6. Scope of Assessment under Section 153C/153A:The Department's argument that the CIT(A) adopted a restrictive interpretation of the scope of assessment under Section 153C/153A was dismissed. The ITAT agreed with the CIT(A)'s interpretation that the scope of assessment should be limited to undisclosed income discovered from seized material.7. Jurisdictional and Procedural Compliance in the Issuance of Notice under Section 153C:The ITAT found that the AO's issuance of notice under Section 153C for A.Y. 2008-09 was beyond the limitation period. The satisfaction note recorded on 19.09.2014 was taken as the date of handing over of documents, making A.Y. 2009-10 to 2014-15 the relevant assessment years. Therefore, the notice for A.Y. 2008-09 was invalid and without jurisdiction.Conclusion:The ITAT upheld the CIT(A)'s order quashing the assessment for A.Y. 2008-09 as barred by limitation. Consequently, all additions made in the assessment were deleted, and the Department's grounds of appeal were dismissed. The judgment reaffirmed the interpretation of 'total income' under Section 153C/153A and the binding nature of the Delhi High Court's decisions in RRJ Securities Ltd. and Sh. Kabul Chawla.