2024 (12) TMI 391 - HC - Income Tax

Assessment notices under section 153C not time-barred when limitation period calculated from material forwarding date

BHAVIN KISHOREBHAI ZINZUWADIA Versus ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (3), AHMEDABAD

BHAVIN KISHOREBHAI ZINZUWADIA Versus ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (3), AHMEDABAD - TMI Issues Involved:1. Whether the impugned notices issued under Section 153C of the Income Tax Act are time-barred.2. Whether the Assessing Officer has jurisdiction for the years for which no incriminating material is found.3. Whether the Assessing Officer has validly assumed jurisdiction by recording satisfaction to initiate assessment proceedings under Section 153C of the Act.Issue-wise Detailed Analysis:1. Time-barred Notices:The petitioner contended that the notices under Section 153C were time-barred, relying on the Supreme Court's decision in CCIT vs. Calcutta Knitwears and CBDT Circular No. 24/2015. The argument was that the satisfaction note must be recorded within the stipulated timeline, either during the search, the assessment proceedings, or immediately after the assessment proceedings of the searched person. The petitioner argued that the satisfaction note was recorded much later, making the notices time-barred. However, the court found that the satisfaction note by the Assessing Officer of the searched person was recorded on the last date permissible for completing the assessment, i.e., 31.03.2018. The court also considered the absence of a statutory time limit for recording satisfaction by the jurisdictional Assessing Officer and concluded that the notices were not time-barred, considering the extended period of ten years applicable under amended provisions.2. Jurisdiction for Years Without Incriminating Material:The petitioner argued that notices could not be issued for assessment years where no incriminating material was found. The court noted that this issue could be raised during the assessment proceedings, as the determination of whether incriminating material exists for specific years is a factual matter to be assessed by the Assessing Officer. The court emphasized that the petitioner has the alternative remedy of appealing against the assessment order if aggrieved.3. Validity of Satisfaction for Jurisdiction:The petitioner claimed that the satisfaction recorded was invalid as it did not specify which documents pertained to the petitioner, thus failing to establish unaccounted income. The court held that the satisfaction note, based on incriminating material seized during the search, was sufficient to initiate proceedings under Section 153C. The court referred to the Delhi High Court's decision in Indian National Congress vs. Dy. Commissioner of Income Tax, which held that the satisfaction note forms the foundation for initiating action and must rest on incriminating material relevant to the assessment years in question.Conclusion:The court concluded that the notices were not time-barred, and the petitioner could raise issues regarding incriminating material and satisfaction during the assessment proceedings. The petition was dismissed, with the court ruling that the notices were valid for the assessment years in question, considering the extended period of ten years applicable under the amended provisions of the Income Tax Act.