2023 (6) TMI 553 - AT - Income Tax

Assessment proceedings not valid for AY 2011-12 & 2012-13. Reassessment period clarified. Revenue's appeals dismissed.

Asst. CIT, CC-7 (1), Mumbai Versus Dr. D.Y. Patil Education Society And (Vice-Versa)

The Tribunal held that the assessment proceedings for AY 2011-12 and 2012-13 were not in accordance with the law as the reassessment period under Section ... Assessment u/s 153C - Reckoning of six years for assessment - whether the assessment year for reassessment u/s 153C are to be reckoned as six years prior to the year in which search has taken place or six years prior to the year in which seized material is received by the AO of the other person? - HELD THAT:- We find in the case of CIT v. RRJ Securities [2015 (11) TMI 19 - DELHI HIGH COURT] has held that for the purpose of section 153C six years has to be reckoned as six years prior to the date of receipt of seized material by the AO of the other person. We hold that in the case of the assessee six years for assessment u/s 153C has to be reckoned are assessment year 2013-14 to assessment year 2018-19. Assessment proceedings in these two years completed u/s 153C are not accordance with law and accordingly we quash the assessment proceedings for AY 2011-12 & 2012-13. Decided against revenue. Issues Involved:1. Legality of notice and assessment order under Section 153C.2. Validity of the assessment year selection for reassessment under Section 153C.3. Deletion of addition made on account of capitation fee/donation in cash.Issue-wise Detailed Analysis:1. Legality of Notice and Assessment Order under Section 153C:The assessee contended that the notice issued under Section 153C and the assessment order passed under Section 153C read with Section 143(3) of the Income Tax Act were illegal, without jurisdiction, and barred by time limitation. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the assessment order, but the assessee argued that the addition was not sustainable in a non-abated assessment year without any incriminating document found during the course of the search.2. Validity of the Assessment Year Selection for Reassessment under Section 153C:The core issue was whether the six years for reassessment under Section 153C should be counted from the year in which the search took place or from the year in which the seized material was received by the Assessing Officer of the other person. The CIT(A) upheld that the six assessment years should be from 2011-12 to 2016-17, based on the date of the search. However, the assessee argued that it should be from 2013-14 to 2018-19, based on the date the seized material was handed over (18.09.2018). The Tribunal referred to the Delhi High Court's decision in CIT v. RRJ Securities, which held that the six years should be reckoned from the date of receipt of the seized material by the Assessing Officer of the other person. Consequently, the Tribunal quashed the assessment proceedings for AY 2011-12 and 2012-13, as they were not in accordance with the law.3. Deletion of Addition Made on Account of Capitation Fee/Donation in Cash:The Revenue challenged the CIT(A)'s decision to delete the addition of Rs. 2.00 crores made by the Assessing Officer on the basis of capitation fee/donation in cash for student admissions in a medical college. The CIT(A) had allowed relief on merit, but since the Tribunal quashed the assessment proceedings for the relevant years, the issues raised by the Revenue were rendered academic and dismissed as infructuous.Conclusion:The Tribunal concluded that the assessment proceedings for AY 2011-12 and 2012-13 were not in accordance with the law based on the interpretation that the six years for reassessment under Section 153C should be counted from the date of receipt of the seized material by the Assessing Officer of the other person. Consequently, the appeals of the Revenue were dismissed, and the cross-objections of the assessee were allowed. The order was pronounced in the open Court on 29/09/2022.