2025 (12) TMI 27 - AT - Income Tax

ITAT upholds exclusion of AY 2012-13 from six-year block for section 153C assessment, revenue appeal dismissed

ITAT Delhi dismissed the revenue's challenge to the CIT(A)'s order on the reckoning of six block assessment years under section 153C. Relying on binding ... Reckoning of six block AYs in section 153C - HELD THAT:- As gone through the order of ld. CIT(A) in detail and find that the ld. CIT(A) has passed a reasoned and well-speaking order while deciding the legal issue in favour of the assessee. We find that after relying on various judgments of Hon’ble Delhi High Court and Hon’ble Supreme Court like RRJ Securities [2015 (11) TMI 19 - DELHI HIGH COURT] and Jasjit Singh [2023 (10) TMI 572 - SUPREME COURT] ld. CIT(A), ld. CIT(A) correctly held that AY 2012-13 is not covered within six block AYs in section 153C of the Act and allowed the additional ground of appeal. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether, for a non-searched person, the block of six assessment years under section 153C is to be reckoned from the date of search under section 132 or from the date of recording of satisfaction / handing over of seized material to the Assessing Officer having jurisdiction over such other person. 1.2 Whether, in a case where the search under section 132 was conducted prior to 01.04.2017 but satisfaction under section 153C was recorded after 01.04.2017, the pre-amendment legal position on computation of the six-year block period under section 153C remains applicable. 1.3 Whether the assessment for Assessment Year 2012-13, initiated under section 153C, was without jurisdiction as being beyond the permissible block of six assessment years. 1.4 Whether the appellate authority was justified in quashing the assessment under section 153C and deleting the additions on the above jurisdictional ground. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Reckoning of six-year block period under section 153C and applicability of pre-amendment law where search precedes 01.04.2017 Legal framework (as discussed) 2.1 The Tribunal noted that the appellate authority relied on the interpretation of section 153C (including its proviso) as laid down by the jurisdictional High Court and the Supreme Court, particularly that: (i) in the case of a person other than the searched person, the reference to 'date of search' in the scheme of sections 153A/153C is to be construed as the date of recording satisfaction / handing over of books/documents/assets to the Assessing Officer of such other person; and (ii) the six assessment years under section 153C are to be computed with reference to that date. 2.2 The appellate authority further proceeded on the basis that where the search took place before the amendment to section 153C with effect from 01.04.2017, the law as expounded in the cited decisions of the jurisdictional High Court and the Supreme Court on the then-prevailing provision governs the computation of the six-year block. Interpretation and reasoning 2.3 The appellate authority recorded that search under section 132 was conducted on 22.10.2016 and that satisfaction under section 153C, in respect of the assessee (a person other than the searched person), was recorded on 20.09.2018; notice under section 153C was issued on 24.09.2018. 2.4 Based on the assessee's contention and the cited judgments, the appellate authority held that, in the case of 'other person' proceedings under section 153C, the six-year period is to be reckoned from the assessment year relevant to the financial year in which the satisfaction is recorded / assets or documents are handed over to the Assessing Officer of such other person. 2.5 Referring to the High Court decision in RRJ Securities, the appellate authority adopted the view that: (i) the date of receipt of assets/documents by the Assessing Officer having jurisdiction over the other person is to be treated as the date of search on that person; (ii) the six assessment years for which assessments/reassessments can be made under section 153C are to be counted with reference to that date; and (iii) adopting the Revenue's position of reckoning from the original search date would lead to the anomalous result that proceedings against a non-searched person could cover a longer period than those against the searched person, contrary to the statutory scheme. 2.6 The appellate authority also relied on the Supreme Court decision (citing and approving the reasoning in SSP Aviation as referred therein), holding that: (i) the proviso to section 153C is not confined merely to abatement but also governs the reckoning of the six-year period; (ii) for a person other than the searched person, relevant dates are linked to the date of handing over / satisfaction, not the search date; and (iii) an interpretation that effectively 'relates back' the date to that of the original seizure would create disproportionate prejudice to such third-party assessees, which Parliament could not have intended. 2.7 In light of these authorities, the appellate authority concluded that, since the search was conducted prior to 01.04.2017 (22.10.2016), the pre-amendment jurisprudence on section 153C as laid down by the jurisdictional High Court and the Supreme Court applied, notwithstanding that satisfaction was recorded after 01.04.2017, and that the six-year block must be computed with reference to the date of satisfaction / handing over (20.09.2018). Conclusions 2.8 The Tribunal endorsed the appellate authority's view that, in the facts of the case, the block period of six assessment years under section 153C had to be reckoned from the assessment year relevant to the financial year 2018-19 (i.e., A.Y. 2019-20), being the year in which satisfaction was recorded/ seized material was handed over to the Assessing Officer of the assessee, and not from the year of search. 2.9 The Tribunal rejected the Revenue's contention that the subsequent amendment to section 153C, effective from 01.04.2017, mandated calculation of the six-year block from the date of search for the present case, and upheld that the legal position emerging from the cited pre-amendment judicial precedents governed the computation. Issue 3: Jurisdiction to issue section 153C notice for Assessment Year 2012-13 Interpretation and reasoning 3.1 Applying the above interpretation, the appellate authority treated the date of satisfaction (20.09.2018) in financial year 2018-19 (relevant to A.Y. 2019-20) as the reference point for computing the six assessment years under section 153C. 3.2 On that basis, the six assessment years for which proceedings could validly be initiated under section 153C were held to be A.Y. 2013-14 to A.Y. 2018-19. A.Y. 2012-13 fell outside that block and was thus beyond the jurisdiction conferred by section 153C. Conclusions 3.3 The appellate authority determined that A.Y. 2012-13 was not covered within the six-year block period prescribed under section 153C and that issuance of notice for that year was beyond jurisdiction. 3.4 The Tribunal agreed with this determination and accepted that the assessment for A.Y. 2012-13 under section 153C was without jurisdiction. Issue 4: Validity of quashing the assessment and deletion of additions Interpretation and reasoning 4.1 Having found that the notice under section 153C for A.Y. 2012-13 was issued beyond the permissible six-year block and thus without jurisdiction, the appellate authority allowed the additional legal ground, quashed the assessment framed under section 153C read with section 143(3), and deleted the additions. 4.2 The Tribunal examined the appellate authority's order in detail, characterized it as 'reasoned and well-speaking,' and noted that the decision was founded upon binding judicial precedents of the jurisdictional High Court and the Supreme Court. Conclusions 4.3 The Tribunal upheld the appellate authority's order quashing the assessment for A.Y. 2012-13 under section 153C and consequently sustaining the deletion of the addition. 4.4 The Revenue's appeal was dismissed in entirety.