Assessment order under section 153C quashed due to limitation period calculated from receipt of books not search date

The ITAT Chennai quashed an assessment order passed under section 143(3) read with section 153C of the Income Tax Act on grounds of limitation. Following the SC decision in CIT vs Jasjit Singh, the tribunal held that for proceedings under section 153C against other persons, the limitation period should be calculated from the date of receiving books of accounts by the AO having jurisdiction over such other person, not from the search date. Since the assessment year in question fell beyond the stipulated six assessment years and four relevant assessment years from December 31, 2021, the notice and subsequent assessment order were time-barred and invalid.

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Issues Involved:
1. Validity of reopening assessment under Section 153C.
2. Legality of the assessment period beyond the stipulated period.
3. Validity of additions made under Section 68 for unexplained cash credit.
4. Consideration of additional evidence under Rule 46A.
5. Levy of interest under Section 234B.

Detailed Analysis:

1. Validity of reopening assessment under Section 153C:
The assessee challenged the reopening of the assessment under Section 153C of the Income Tax Act, claiming it was void ab initio due to being barred by limitation. The search operation conducted on 25.02.2020 led to the seizure of documents related to the assessee. The Assessing Officer (AO) recorded a satisfaction note on 31.12.2021, leading to the issuance of a notice under Section 153C. The Tribunal noted that the AO of the searched person and the AO of the other person were the same, and thus, the date of search should be considered for calculating the assessment years. The Tribunal found no infirmity in the AO's action in initiating proceedings under Section 153C for the impugned assessment year.

2. Legality of the assessment period beyond the stipulated period:
The assessee argued that the assessment year 2010-11 fell beyond the stipulated six assessment years and four relevant assessment years, considering the satisfaction note recorded on 31.12.2021. The Tribunal observed that the date of search should be reckoned for arriving at the assessment years under Section 153C. The Tribunal cited the amendment by the Finance Act 2017, effective from 01.04.2017, clarifying that the six assessment years under Sections 153A and 153C are the same. Thus, the AO correctly included the assessment year 2010-11 within the ten assessment years.

3. Validity of additions made under Section 68 for unexplained cash credit:
The AO added Rs. 63,90,24,100 towards share premium as unexplained cash credit under Section 68, citing the assessee's failure to furnish details of shareholders and the genuineness of the transactions. The Tribunal upheld the AO's findings, noting that the assessee could not satisfactorily explain the identity, creditworthiness, and genuineness of the transactions. The Tribunal referenced several judicial precedents, including the Hon'ble Supreme Court's decision in PCIT vs NRA Iron & Steel (P.) Ltd., supporting the addition under Section 68 for unexplained share capital/premium.

4. Consideration of additional evidence under Rule 46A:
The assessee contended that the CIT(A) erred in not considering the balance sheets of investor companies filed through an Additional Evidence Petition under Rule 46A. The Tribunal found that the assessee failed to produce necessary documents during the assessment proceedings and that the additional evidence did not substantiate the identity, creditworthiness, and genuineness of the transactions. The Tribunal upheld the CIT(A)'s decision to reject the additional evidence.

5. Levy of interest under Section 234B:
The assessee challenged the levy of interest under Section 234B. The Tribunal did not specifically address this issue in detail, as the primary focus was on the validity of the assessment and the additions made under Section 68. However, the Tribunal's decision to uphold the assessment implicitly supports the levy of interest under Section 234B.

Conclusion:
The Tribunal quashed the assessment order passed under Section 143(3) r.w.s. 153C, dated 31.03.2022, on the preliminary issue of jurisdiction, finding it barred by limitation. Consequently, other grounds on the merits of the additions and the levy of interest were dismissed as infructuous. The appeal filed by the assessee was allowed.

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