Assessment under Section 153C time-barred for AY 2008-09 due to six-year limitation period breach

The ITAT Delhi held that an assessment under section 153C read with section 153A for AY 2008-09 was time-barred. The satisfaction note dated 02.02.2016 did not specify when materials were handed over, so this date was considered the handover date. Since AY 2008-09 fell beyond the six-year limitation period calculated from this date, the assessment was invalid. Additionally, following the SC decision in PCIT vs. Abhisar Buildwell Pvt. Limited, the tribunal ruled that additions under section 68 cannot be made without incriminating materials seized during search operations. The assessee's cross-objection was allowed.

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Issues Involved:
1. Jurisdiction of the Assessing Officer for AY 2008-09 under Section 153C.
2. Validity of additions made for AY 2013-14 in the absence of seized incriminating documents/materials.

Summary:

Issue 1: Jurisdiction of the Assessing Officer for AY 2008-09 under Section 153C

In the cross objection for AY 2008-09, the Assessee challenged the jurisdiction of the Assessing Officer (AO) in passing the assessment order, arguing that the initiation of proceedings under Section 153C on 02.02.2016 was beyond the permissible period. The Assessee contended that the AO recorded the satisfaction note on 02.02.2016, and since there was no specific date of handing over the documents, the date of satisfaction note should be considered as the date of handing over. The Assessee argued that AY 2008-09 falls beyond the six preceding assessment years from the date of recording satisfaction, making the assessment invalid.

The Tribunal observed that the coordinate bench in similar cases, such as ACIT vs. M/s Ankit Nivesh & Management Pvt. Limited, held that the date of satisfaction note is to be reckoned as the date of handing over the material. Following this precedent, the Tribunal concluded that the assessment for AY 2008-09 was beyond the six-year limit and thus barred by limitation. Consequently, the cross objection of the Assessee was allowed, and the Revenue's appeal on the merits of the addition/disallowance became infructuous.

Issue 2: Validity of additions made for AY 2013-14 in the absence of seized incriminating documents/materials

For AY 2013-14, the Assessee challenged the AO's order on the ground that no addition could be made in the absence of seized incriminating documents/materials. The Assessee relied on the Supreme Court decision in PCIT Vs. Abhisar Buildwell and the Delhi High Court decision in CIT Vs. Kabul Chawla. The Tribunal noted that the AO made additions under Section 68 based on show-cause notices and submissions regarding unsecured loans, without any reference to seized documents or materials.

The Tribunal applied the Supreme Court's ruling in PCIT Vs. Abhisar Buildwell, which held that no addition can be made in completed or unabated assessments without incriminating material found during the search. Therefore, the Tribunal concluded that the AO could not make any addition under Section 153C r.w.s. 153A in the absence of incriminating material. The cross objection of the Assessee was allowed, rendering the Revenue's appeal on the deletion of addition/disallowance infructuous.

Conclusion:

The appeals filed by the Revenue for AY 2008-09 and 2013-14 were dismissed as infructuous, and the cross objections filed by the Assessee were allowed. The order was pronounced in the open court on 08/02/2024.

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