Malik Network & Computer P.Ltd, Delhi V. ITO, Ward-16(2), New Delhi

ITA 7561/DEL/2017

AI Insights

The case involves Malik Network & Computer P. Ltd., the appellant, contesting the validity of assessment orders issued by the Income Tax Officer (ITO) under Section 153C of the Income Tax Act, 1961, for the assessment years 2006-07 and 2007-08. The primary contention was that the assessments were initiated beyond the permissible time limit, as the relevant satisfaction note and seized documents were not handed over until 2014, well beyond the statutory period for these assessment years. The Tribunal examined the procedural adherence to Section 153C, particularly the timing of the notice issuance in relation to the search and seizure operations conducted on a third party.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121618 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-12-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 17-12-2017
• Other Referred Cases: Pr.CIT vs. Sarwar Agency P. Ltd. (2017) 85 taxmann.com 269 (Del)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 132; 15; 153A; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER I.T.As No.7560 & 7561/DEL/2017 Assessment Years 2006-07 & 2007-08 Malik Network & Computer P. Ltd., B-4/71 A, Lawrance Road, Delhi. v. ITO, Ward-16(2), New Delhi. TAN/PAN: AACCM2552Q (Appellant) (Respondent) Appellant by: Ms. Sumangla Saxena, Adv. Shri Rajiv Saxena, Adv. Respondent by: Ms. Sarita Kumari, CIT-DR Date of hearing: 21 12 2022 Date of pronouncement: 23 01 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeals have been filed at the instance of the Assessee against the respective orders of the Commissioner of Income Tax (Appeals)-XXXII I , New Delhi [‘CIT( A) ’ in short] both dated 31.03.2017 arising from the assessment orders both dated 30.03.2015 passed by t he Assessing Officer (AO) under Section 153C of the Income Tax Act, 1961 (the Act) concerning AYs 2006-07 & 2007-08. 2. As per the grounds of appeal, the assessee has inter alia challenged the assessments fra med under Section 153C of the Act on the ground that the i mpugned assess ment orders passed by the Assessing Officer are without jurisdiction and void ab I.T.As No.7560 & 7561/Del/2017 2 initio and thus liable to be quashed. 3. At the ti me of hearing, the ld. counsel for the assessee, Ms. Su mangla S axena pointed out at the outset that the captioned appeals concerning Assess ment Years 20 06-07 and 2007-08 are liable to be quashed at the threshold as the Assessing Officer could not have validly initiated notice under Section 153C of the Act for fra ming assess ment owing to e mbargo of limita tion placed under Section 153C of the Act. It was submitted that the date of search in the case of the searched person (other than assessee) is 25.08.2011. However, satisfaction towards escapement in the hands of the assessee herein by the As sessing Officer of the searched person was recorded on 05.03.2014. This satisfaction note dated 05.03.2014 was handed over to the Assessing Office r of the a ssessee on 21.03.2014. The Assessing Officer of the assessee in turn recorded satisfaction note on 22.09.2014. There is no reference to the date of r eceiving docu me nt seized by the Assessing Officer having jurisdiction on the assessee. The notice under Section 153C was eventually issued on 22.09.2014. It was next contended that no search operation under Section 132 of the Act carried out in the case of the assessee. As per the proviso to Section 153C of the Act, the date of handing over books or recording of date of satisfaction under Section 153C of the Act should be treated as date of initiation of search for deter mination of six assessment yea rs as provided under Section 153A(1)(b) of the Act. In view of t he aforesaid position, it was contended that if period of six year s is calculated from the date of 21.03.2014, the Assess ments Yea rs 2006-07 and 2007-08 are I.T.As No.7560 & 7561/Del/2017 3 manifestl y barred by li mitation and thus would be out of purview of Section 153C r.w. Section 153A of the Act. Therefore, the notice issued under Section 153C of the Act for both the assessment years in question are incompet ent in law and hence the assess ment orders passed under Section 153C of the Act concerning Assess ment Yea rs 2006-07 and 2007-08 are liable to be quashed in limine. 4. The ld. DR relied upon the orders of the lower authorities. 5. We have heard the rival submissions on the issue. One of the controversies in the present case arises towards co mputation of limitation period under Section 153C of the Act for the purposes of issuance of notice and assessment thereon. As per Section 153A of the Act (in the case of searched persons), the li mitation of preceding six years star ts from the financial yea r in which search was conducted. However, in the case of Section 153C of the Act (person other hand searched person), the li mitation of preceding six years st arts fro m the date of receipt of seized assets or docu ments fro m the Assessing Officer of the person searched as per the erstwhile proviso to Section 153C of the Act which states as under: “ p ro v i d e d t h a t i n t h e c a s e o f su c h o t h e r p e rs o n re fe r e n c e t o t h e d a t e o f i n i t i a t i o n o f t h e s e a r c h u n d e r S e c t i o n 1 3 2 o r m a k i n g o f re q u i s i t i o n u n d e r S e c t i o n 1 3 2 A , i n t h e se c o n d p ro v is o t o su b S e c t i o n (1 ) o f S e c t i o n 1 5 3 A sh a l l b e c o n st ru e d a s re f e re n c e s t o t h e d a t e o f re c e i v i n g t h e b o o k s o f a c c o u n t o r d o c u me n t s o r a s s e t s se i z e d o r r e q u i si t i o n e d b y t h e A s se s si n g O f fi c e r h a v i n g j u ri sd i c t i o n o v e r s u c h o t h e r p e r so n ” 6. We notice here that the reasons for issue of notice under Section 153C r.w. Section 153A of the Act were r ecor ded by the I.T.As No.7560 & 7561/Del/2017 4 Assessing Officer of the searched person on 05.03.2014. The satisfaction note was handed over to the Assessing Officer of the assessee on 21.03.2014. As a corollary, the books of accounts, documents seized etc. were handed over to the Assessing Officer of the assessee. Therefore, the li mitation for preceding six years starts fro m the aforesaid date, i.e., 21.03.2014. Consequently, the Assess ment Years 20 06-07 and 2007-08 are clearly outside the sweep of exercise of jurisdiction under Section 153C of the Act. The jurisdiction of issue notice under Section 153C are ousted insofar as Assessment Year 2006-07 and 2007-08 are concerned when the date of handing over of satisfaction note dated 05.03.2014 to the Assessing Officer of the assessee on 21.03.2014 is reckoned. Similar view has been expressed by the Hon ’ble Delhi High Court in the case of Pr.CI T vs . Sarwar Agency P. Ltd. (2017) 85 taxmann.com 269 (Del). We thus f ind merit in the plea of the assessee that respective notices issued to the assessee under Section 153C of the Act for assessment years in question, i.e., Assessment Years 2006-07 and 2007-08 are without jurisdiction as these assessment years are be yond the purview of six assessment years in ter ms of pre-a mended provisions of Section 153C of the Act. As a corollary, the assess ments passed under Section 153C of the Act as a sequel to invalid notices are also liable to be quashed. In terms of these o bservations, the respective assessment years f or Assess ment Ye ars 2006-07 and 2007-08 are set aside and quashed. 7. In view of the observations made h ereinabove, we do not consider it expedient to dwell upon other grounds of appeal I.T.As No.7560 & 7561/Del/2017 5 agitated on behalf of the assessee. 8. In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on 23/01/2023. Sd/- Sd/- [NARENDER KUMAR CHOUDHRY] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /01/2023 Prabhat