Assessment framed under section 143(3) lacked jurisdiction; notice dated 27/06/2016 triggered reassessment under section 153C for AYs within six-year window

ITAT DELHI-AT held the assessment concluded u/s 143(3) was without jurisdiction and should have been framed u/s 153C. Applying settled law, the search/reacquisition date is to be construed from initiation of search or receipt of seized material; absent a recorded handing-over date, jurisdiction arose from the notice u/s 153C issued on 27/06/2016. The search assessment year for the assessee is AY 2017-18, so AY 2015-16 fell within the six-year window linked to the search and required reassessment u/s 153C.

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ISSUES PRESENTED AND CONSIDERED

1. Whether an assessment framed under section 143(3) is vitiated for want of jurisdiction where search-related proceedings pertaining to the assessee's material could only legitimately have been framed under section 153C because the deemed search-year for the assessee is later than the assessment year under challenge.

2. Whether, in absence of a recorded date of handing over/receipt of seized material or a satisfaction note in the assessment record, the date relevant for computing the period under the first proviso to section 153C must be treated as the date on which notices under section 153C were issued (or when jurisdictional AO actually received the seized material), thereby affecting the years open to assessment.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of assessment framed under section 143(3) where search-related jurisdiction under section 153C is implicated

Legal framework: The Act distinguishes assessments under regular provisions (e.g., section 143(3)) and assessments arising from search and seizure material derived from another person under section 153C; the temporal scope for assessments under section 153C is governed by the first proviso to section 153C, which ties the assessment years to the search year and the immediately preceding six years (subject to when the books/accounts/documents/assets are received by the AO of the person).

Precedent treatment: The Tribunal relied on the Supreme Court decision in Jasjit Singh and on the Delhi High Court decision in Ojjus Medicare P. Ltd., treating them as authoritative statements that the period for reopening under section 153C runs from the date on which the assessing officer of the person in whose case assessment is to be framed actually receives books/accounts/documents/assets seized in the search of another person, and where date of handing over is not recorded, the date of issuance of the satisfaction note can be pertinent.

Interpretation and reasoning: The Court analyzed the assessment record and found the impugned assessment under section 143(3) referred to assumption of jurisdiction based on search proceedings of 17/11/2014 and centralization by order under section 127 dated 21/08/2015, and a notice under section 143(2) dated 01/08/2016. The AO's file did not disclose a satisfaction note or a clear date of handing over/receipt of seized material to the assessee's AO. Notices under section 153C for AYs 2009-10 to 2014-15 were shown as issued on 27/06/2016. Applying the principles in Jasjit Singh and Ojjus Medicare, the Tribunal held that, in absence of a recorded handing-over date, the jurisdictional date must be presumed to arise from the issuance of notices/assumption of jurisdiction on 27/06/2016, and therefore the search-year for the assessee should be treated as later (AY 2017-18) than the AY under challenge (2015-16).

Ratio vs. Obiter: Ratio - An assessment framed under section 143(3) is illegal where the assessment years fall within the period that, under section 153C read with its proviso and established precedent, should have been covered by section 153C because the date on which the jurisdictional AO received seized material (or, where not recorded, the date reflecting assumption of jurisdiction such as issuance of notices) places the search-year after the assessment year under challenge. Obiter - Observations about centralization under section 127 and ancillary references to specific dates in other assessments that were on record.

Conclusion: The Tribunal allowed the ground that the impugned assessment under section 143(3) was without jurisdiction and unsustainable; the assessment should have been framed under section 153C given the construed search-year, and consequently the appeal was allowed on this issue.

Issue 2: Effect of absence of recorded date of handing over/receipt of seized material and proper date to be used for determining the period under section 153C's first proviso

Legal framework: Section 153C's first proviso makes the temporal ambit of assessments in the case of a person other than the one searched dependent on the date on which books/accounts/documents/assets seized in a search are received by the assessing officer of that other person; ascertainment of that date is therefore critical to determine which assessment years may be reopened or assessed under section 153C.

Precedent treatment: The Tribunal expressly followed Jasjit Singh and Ojjus Medicare P. Ltd., holding that the period for reopening must be computed from the date of initiation of the search or reacquisition to the date of receipt of the seized material by the jurisdictional AO of the person concerned, and where a handing-over date is not available, the satisfaction note issuance date or akin administrative action may be pertinent.

Interpretation and reasoning: The Tribunal noted absence of a recorded satisfaction/handing-over date in the assessment record and failure of the assessee to procure the record via RTI (record declared old/unavailable). Given notices under section 153C for earlier years were issued on 27/06/2016, the Tribunal accepted the assessee's contention that the relevant date for vesting jurisdiction should be assumed as the date when notices were issued/when AO effectively assumed jurisdiction. Applying precedent, the Tribunal construed the search-year for the assessee as AY 2017-18 and held that AY 2015-16 falls within the six preceding years and thus assessments for AY 2015-16 should have been proceeded under section 153C rather than under section 143(3).

Ratio vs. Obiter: Ratio - In absence of a recorded handing-over/receipt date, the date of issuance of notices/assumption of jurisdiction (or the date of the satisfaction note if available) is the operative date for computing the period under the proviso to section 153C; such construction may render assessments improperly framed under other sections void for want of jurisdiction. Obiter - Comment on inability to produce records under RTI as evidentiary background in the present facts.

Conclusion: The Tribunal concluded that, because the record lacked a tangible date of receipt of seized material and notices under section 153C were dated 27/06/2016, the appropriate legal construction is to treat the jurisdiction as having vested on that date (or equivalent administrative action), thereby bringing the impugned assessment year within the ambit of section 153C and rendering the section 143(3) assessment unsustainable.

Cross-reference and final determination

The Tribunal explicitly rejected the First Appellate Authority's reasoning that the appeal arose only from an order under section 143(3) and therefore authorities on section 153C were inapplicable; applying authoritative precedents, the Tribunal held that the legal question of proper jurisdiction and year-computation under section 153C was squarely relevant and determinative, and on that basis allowed the additional ground and set aside the assessment framed under section 143(3).

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