2024 (9) TMI 1201 - HC - Income Tax

Section 153C proceedings apply to pre-June 2015 searches; Tribunal erred applying provisions to regular assessments

The Principal Commissioner of Income Tax (Central), Ahmedabad Versus Soniz Procon P. Ltd.

Gujarat HC held that Section 153C proceedings apply to searches conducted prior to 1st June 2015, following SC precedent in Vikram Sujitkumar Bhatia. The ... Application of Section 153C proceedings to the search conducted prior to 1st June 2015 - HELD THAT:- As in view of the decision of Hon’ble Supreme Court in the case of Vikram Sujitkumar Bhatia [2023 (4) TMI 296 - SUPREME COURT we answer the question (a) raised in all the appeals with regard to applicability of Section 153C of the Act even to the search is conducted prior to 1st June 2015 as valid and the appeals stand allowed in favour of the appellant – Revenue and against the respondent – assessee. So far as the Assessment Year 2015-16 is concerned, question (b) is also answered in favour of the appellant - Revenue and against the respondent – assessee as it is not dispute that the Assessing Officer has passed the impugned assessment order under Section 143 (3) of the Act and the Tribunal has committed an error by applying the provisions of Section 153C of the Act even for the Assessment Year 2015-16 while passing the common judgement and order. We however remand the matters back to the Tribunal by reviving appeals of the appellant – Revenue as well as the cross-objections filed by the respondent – assessee so as to enable the Tribunal to decide the appeals and the cross-objections on merits of each case. These Tax Appeals stand disposed of accordingly with no order as to cost. Issues:- Applicability of Section 153C of the Income Tax Act to searches conducted before 1st June 2015.- Jurisdiction of the Tribunal in quashing assessments made under Section 153C.- Error in applying provisions of Section 153C to an assessment made under Section 143(3) for the Assessment Year 2015-16.Analysis:1. Applicability of Section 153C: The High Court addressed the issue of whether Section 153C of the Income Tax Act applies to searches conducted before 1st June 2015. The appellant, Revenue, challenged the Tribunal's decision based on a previous court ruling. The Tribunal had dismissed the appellant's appeals, citing non-applicability of Section 153C to searches conducted before the specified date. However, the Supreme Court's decision in the case of Income Tax Officer vs. Vikram Sujitkumar Bhatia clarified that the amendment to Section 153C by the Finance Act, 2015 is applicable even to searches conducted prior to 1st June 2015. Consequently, the High Court held in favor of the Revenue, allowing the appeals and setting aside the Tribunal's decision.2. Jurisdiction of the Tribunal: The Tribunal's decision to quash assessments made under Section 153C was based on the non-applicability of the section to searches conducted before 1st June 2015. However, with the clarification from the Supreme Court, the Tribunal's decision was deemed unsustainable. The High Court noted that the Tribunal did not consider the case on its merits but solely on the issue of jurisdiction. Therefore, the High Court remanded the matters back to the Tribunal, reviving the appeals and cross-objections to be decided on their merits.3. Error in Applying Section 153C to Assessment under Section 143(3): Regarding the Assessment Year 2015-16, the Tribunal mistakenly treated an assessment made under Section 143(3) as falling under Section 153C. The High Court acknowledged this error and ruled in favor of the Revenue, stating that the Tribunal should not have applied the provisions of Section 153C to the assessment under Section 143(3). The matters were remanded back to the Tribunal for a proper consideration of the appeals and cross-objections on their individual merits.In conclusion, the High Court's judgment clarified the applicability of Section 153C to searches conducted before 1st June 2015, addressed the jurisdictional issues of the Tribunal, and corrected the error in applying Section 153C to an assessment made under Section 143(3) for the Assessment Year 2015-16. The matters were remanded back to the Tribunal for a fresh consideration based on the Supreme Court's ruling and the merits of each case.