2025 (9) TMI 886 - AT - Income Tax

Rule 27 plea allowed; assessment under s.153A for AY 2008-09 quashed as time-barred after Dilip Kumar

ITAT, AT allowed the Rule 27 plea and held AY 2008-09 was outside the permissible limitation block. Counting six prescribed years and the expanded 'for ... Assessment u/s 153A - Period of limitation - determination of six years - Assessee preferred an application under Rule 27 that the assessment year 2008-09 herein could not have been included for the purposes of framing assessment u/s 153A HELD THAT:- When we count the prescribed six assessment years as well as those covered under the statutory amendment “for the relevant assessment year or years” having maximum time span of ten assessment years, as immediately preceding assessment years relevant to the previous year of the search, such assessment year comes to AY 2018-19, and, therefore, the impugned assessment year 2008-09 falls out of the said block. We accordingly adopt stricter interpretation in light of CIT vs. Dilip Kumar And Co. & Ors. [2018 (7) TMI 1826 - SUPREME COURT (LB)] to accept the assessee’s legal ground raised in the instant Rule 27 application to quash the assessment itself forming subject matter of adjudication. We further quote to the Rule 27 hereinabove as well as B.R. Bamasi [1970 (2) TMI 45 - BOMBAY HIGH COURT] to conclude that once the law is well settled that the maximum relief which could be granted in such an application is that of upholding the corresponding lower appellate order under challenge only, the learned CIT(A)’s findings on all other issues herein are upheld in very terms. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessment year falling in 2008-09 could be validly included within the block of assessment years to be assessed or reassessed under section 153A(1)(b) of the Income-tax Act, 1961 consequent to a search conducted on 28.11.2017. 2. Whether the respondent (assessee) could be permitted, by way of an application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963, to support the order below and raise the point that the impugned assessment year falls outside the statutory block under section 153A, notwithstanding that the respondent had not appealed to the Tribunal. 3. Whether the Tribunal should apply settled authority concerning the temporal scope of section 153A (including post-amendment expansion to 'relevant assessment year or years') and the limits of relief that can be granted on a Rule 27 application. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of including AY 2008-09 in assessment/re-assessment block under section 153A(1)(b) Legal framework: Section 153A(1)(b) permits assessment or reassessment of the total income of the assessee for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted; an amendment also permits inclusion of the 'relevant assessment year or years' (commonly interpreted to expand the block up to ten assessment years in certain circumstances). Precedent treatment: The Tribunal applied the strict counting approach endorsed by higher judicial authority which interprets the statutory six-year block (and any expanded 'relevant assessment year or years') strictly with reference to the assessment year immediately preceding the previous year in which the search is conducted. Interpretation and reasoning: The Tribunal counted the prescribed six assessment years (and the possible extended block) immediately preceding the previous year of the search dated 28.11.2017 and concluded that the maximum span of years covered ends at AY 2018-19. By this calculation AY 2008-09 falls outside the block of years that the Assessing Officer is empowered to assess or reassess under section 153A. The Tribunal adopted a stricter interpretation of temporal applicability consistent with the controlling precedent. Ratio vs. Obiter: Ratio - the assessment year 2008-09 is outside the block assessable under section 153A(1)(b) for the search dated 28.11.2017; the Tribunal's strict temporal counting approach forms the binding reasoning for the outcome. Obiter - ancillary observations about policy or broader implications of the statutory scheme not necessary for the immediate disposition are not pronounced as central ratio. Conclusion: The assessment framed for AY 2008-09 under section 153A is quashed as not falling within the statutorily prescribed block of years for the search in question. Issue 2: Admissibility and effect of a Rule 27 application by the respondent to support the order below Legal framework: Rule 27 of the ITAT Rules allows a respondent, though he may not have appealed, to support the order appealed against or any of the grounds decided against him; the relief available on such an application is constrained by settled practice and precedent. Precedent treatment: The Tribunal relied on established authority that permits admission of a Rule 27 application to support a lower order but circumscribes the maximum relief to upholding the corresponding findings of the lower appellate authority; such applications are to be admitted where conditions are satisfied and where a legal issue decided against the respondent below is relevant to the appeal. Interpretation and reasoning: The Tribunal observed that the respondent had raised the identical ground before the lower appellate authority (CIT(A)) which decided it against the respondent. Given that the CIT(A)'s order contained an adverse decision on the temporal scope issue, the Tribunal found the Rule 27 application fulfilled the Rule's conditions and admission was appropriate. The Tribunal emphasized that the primary relief attainable via Rule 27 is the upholding of the lower appellate order on the point raised. Ratio vs. Obiter: Ratio - a Rule 27 application admitting the respondent to support the order below is properly entertained where the respondent had already urged the same ground before the lower appellate authority and the lower authority decided against him; admission may lead to upholding the lower authority's findings to the extent permitted. Obiter - characterizations of delay or 'gross misuse' by the Revenue in opposing the application are addressed but not treated as determinative legal principles beyond the case facts. Conclusion: The Tribunal admitted the respondent's Rule 27 application and proceeded to decide the legal issue (temporal scope of section 153A) in favour of the respondent insofar as it led to quashing the impugned assessment year. Issue 3: Application of settled authorities and scope of relief on Rule 27 admission Legal framework: Where Rule 27 is invoked to support a lower order, the Tribunal may grant only such relief as upholds the lower appellate order on the ground urged; existing judicial pronouncements guide both the interpretation of section 153A's temporal ambit and the procedural limits of Rule 27 relief. Precedent treatment: The Tribunal followed controlling jurisprudence interpreting the temporal ambit of section 153A and authority delineating the maximal relief on a Rule 27 application. Interpretation and reasoning: Applying the cited authorities, the Tribunal concluded that the respondent was entitled to the relief of quashing the assessment for the year outside the statutory block. At the same time, it explicitly preserved and upheld all other findings of the lower appellate authority which were not altered by the admitted application because Rule 27's relief is circumscribed. Ratio vs. Obiter: Ratio - application of precedent required quashing of assessments for years outside the section 153A block and limits relief on Rule 27 to upholding lower appellate findings. Obiter - any broader commentary on the propriety of late-stage jurisdictional objections or tactical considerations in appellate strategy is incidental. Conclusion: The Tribunal, following settled authorities, granted the limited relief available on a Rule 27 admission - quashing the assessment for the year outside the block under section 153A while otherwise upholding the lower appellate authority's determinations; consequently, the appeals were dismissed in the terms adjudicated.