2025 (12) TMI 659 - AT - Income Tax

Assessment u/s153C for AY 2014-15 held time-barred; six-year block reckoned from date of document receipt

ITAT Delhi-AT held the assessment for AY 2014-15 under s.153C to be invalid and quashed it as barred by limitation. Search and seizure were conducted on a ... Validity of notice issued u/s. 153C as barred by limitation - “relevant assessment year” calculation - block period of 6 years for the purpose of completion of assessments u/s.153C HELD THAT:- In this case search and seizure operations were conducted in Alankit Group on 18.10.2019 and a satisfaction note was drawn by the AO in the case of Alankit Group on 24.06.2022. On the same date certain documents belonging / pertaining to the assessee were transferred to the jurisdictional AO of the assessee by the AO of the searched person on 24.06.2022. Pursuant to these documents notice u/s. 153C was issued on 26.07.2022 and accordingly the assessments were completed for 6 assessment years including A.Y. 2017-18. As in the case of PCIT Vs. Ojjus Medicare Private Limited & others [2024 (4) TMI 268 - DELHI HIGH COURT] held that the period of “relevant assessment year” is to be calculated to the date of receipt of the books of accounts, documents, assets seized by the jurisdictional AO of the non searched person. Applying the ratio of this decision to the case on hand since the documents were received by the jurisdictional AO of the assessee from the AO of the searched person on 24.06.2022, the block period of 6 years for the purpose of completion of assessments u/s. 153C would be from A.Y. 2022-23 and five assessment years backwards i.e. till 2017-18. Thus, the 6th assessment year would be 2017-18 and the assessment year under consideration is A.Y. 2014-15 is out of the block period of assessment years 2020-22 to 2017-18. In the circumstances, the assessment framed for A.Y. 2014-15 u/s. 153C is bad in law and same is hereby quashed. The additional grounds raised by the assessee are allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether additional legal grounds challenging the validity of notice under section 153C as time-barred and without jurisdiction could be admitted at the appellate stage. 1.2 Whether the notice issued and assessment framed under section 153C for the relevant assessment year were barred by limitation in view of the definition of 'relevant assessment year' and the judicial interpretation governing the starting point of the six-year block period under section 153C. 2. ISSUE-WISE DETAILED ANALYSIS 2.1 Admission of additional legal grounds under Rule 11 of the ITAT Rules 2.1.1 Legal framework (as discussed) The Tribunal considered Rule 11 of the ITAT Rules and the principle laid down by the Supreme Court in National Thermal Power Co. Ltd. v. CIT, permitting the raising of pure questions of law before the Tribunal, which do not require investigation into fresh facts. 2.1.2 Interpretation and reasoning The Tribunal noted that the assessee, by way of additional grounds, challenged the very validity of notice issued under section 153C on the ground of limitation and lack of jurisdiction. It was observed that these grounds raised a purely legal issue, turning on interpretation of statutory provisions and dates already on record, without requiring any fresh factual enquiry. Relying on the Supreme Court decision in National Thermal Power Co. Ltd. v. CIT, the Tribunal held that such purely legal grounds, going to the root of the jurisdiction of the assessment, are admissible at the appellate stage. 2.1.3 Conclusions The additional grounds challenging the validity of the notice under section 153C as barred by limitation and without jurisdiction were admitted for adjudication. 2.2 Validity of notice and assessment under section 153C - computation of 'relevant assessment year' and limitation 2.2.1 Legal framework (as discussed) The Tribunal considered section 153C, read with the concept of 'relevant assessment year' and the six-year block period, and applied the ratio of the decision of the jurisdictional High Court in PCIT v. Ojjus Medicare Pvt. Ltd. & Others (465 ITR 101). As per that decision, for a person other than the searched person, the block of 'relevant assessment years' is to be reckoned from the date on which the jurisdictional Assessing Officer of such other person receives the seized books of account, documents or assets from the Assessing Officer of the searched person. 2.2.2 Interpretation and reasoning The facts, as noted by the Tribunal, were that: (a) A search and seizure action was conducted in the case of Alankit Group on 18.10.2019. (b) The Assessing Officer of the searched person recorded satisfaction under section 153C on 24.06.2022. (c) On 24.06.2022, certain documents, stated to be belonging/pertaining to the assessee, were handed over to the jurisdictional Assessing Officer of the assessee. (d) Pursuant thereto, notice under section 153C was issued to the assessee on 26.07.2022, and assessments under section 153C were completed for six assessment years including A.Y. 2017-18. Applying the decision in PCIT v. Ojjus Medicare Pvt. Ltd., the Tribunal held that the starting point for reckoning the six-year block for a person other than the searched person is the date of receipt of seized material by the jurisdictional Assessing Officer of that other person, i.e., 24.06.2022 in the present case. On that basis, the Tribunal computed the six assessment years as A.Y. 2022-23 and the five assessment years immediately preceding it, i.e., up to A.Y. 2017-18. It observed that the assessment year under consideration, A.Y. 2014-15, fell outside this block of six 'relevant assessment years'. Since the jurisdiction under section 153C extends only to the statutorily defined block of relevant assessment years counted from the prescribed starting point, issuance of notice and completion of assessment under section 153C for A.Y. 2014-15, which lies beyond that block, was held to be contrary to law. 2.2.3 Conclusions The six-year block period under section 153C, reckoned from 24.06.2022 (the date of receipt of seized documents by the jurisdictional Assessing Officer of the assessee), extended from A.Y. 2022-23 back to A.Y. 2017-18. As A.Y. 2014-15 lies outside this block, the notice issued under section 153C and the consequent assessment for A.Y. 2014-15 were held to be barred by limitation and without jurisdiction. The assessment framed under section 153C for A.Y. 2014-15 was quashed as bad in law, and the appeal was allowed on this ground. All other grounds on merits did not require adjudication in view of the annulment of the assessment.