PLAZA FINCAP (P) LTD,SAKET, NEW DELHI V. DCIT, CENTRAL CIRCLE -16, DELHI, DELHI

ITA 36/DEL/2024

AI Insights

The case involves Plaza Fincap (P) Ltd., the appellant, contesting an assessment order for the assessment year 2012-13 under section 153C of the Income Tax Act, 1961. The assessment was based on documents seized during a search operation in the Rakesh Jain Group and Prahlad Kumar Agrawal. The primary legal contention was whether the assessment for AY 2012-13 was within the permissible time limit under section 153C, considering the date of handover of documents by the AO of the searched person to the AO of the appellant. The Tribunal examined the applicability of the six-year and ten-year blocks for assessment following the amendments by the Finance Act, 2017, and relevant judicial precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314393 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Other Referred Cases: Pr. CIT vs. Ojjus Medicare Pvt. Ltd. & Ors., CIT vs. Jagjit Singh, Rakesh Bansal vs. ACIT, MG Fincap P Ltd. vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P N BARNWAL; RAJESH KUMAR
• Assessee Lawyers: RAKESH GUPTA; S DEEPESH GARG; SHREY JAIN; ADVOCATES; WAY OF ADDITIONAL GROUND OF APPEAL; GROUND NO.
• Keywords: Document seized; Documents seized; Validity of assessment
• Section: 143(3); 132; 153A

Judgement Text

" आयकर अपीलीय अिधकरण िदʟी पीठ “एफ”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी अवधेश क ुमार िमŵा, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER आअसं.36/िदʟी/2024 (िन.व. 2012-13) ITA No .36/DEL/2024 (A.Y.2012-13) Plaza Fincap (P) Ltd., E-9, Ground Floor, (Front Portion), Saket, New Delhi-110017 PAN: AAACP-4466-C ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income-Tax, Central Circle-16, New Delhi 110055 ..... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by : Dr. Rakesh Gupta, S/Shri Deepesh Garg & Shrey Jain, Advocates ŮितवादीȪारा/Respondent by : S/Shri P N Barnwal, CIT(DR) & Rajesh Kumar, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 07/02/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : : 07/05/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-26 dated 12.12.2023 (hereinafter referred to as ‘the CIT(A)’), for assessment year 2012-13. 2. The assessee in appeal has assailed the order of CIT(A) by raising as many as nine grounds of appeal challenging findings of CIT(A) on merits as well as on legal issues. The assessee has also raised an additional ground of appeal vide 2 ITA NO.36/DEL/2024 (A.Y.2012-13) application dated 08.04.2024. The additional ground of appeal raised by the assessee reads as under:- “1. That having regard to the facts and circumstances of the case, impugned assessment order dated 27.12.2022 is bad in law in view of the latest Judgement of Jurisdictional High Court i.e. Hon'ble High Court of Delhi in the case of Pr. CIT vs. Ojjus Medicare Pvt. Ltd. & Ors., ITA No. 52/2024 & Ors., dated 03.04.2024 in which Hon'ble court have held that preceding ten years for reopening the case would be seen from the end of the assessment year in which books of account etc. pertaining to the assessee company were handed over to the AO of assessee company. Since, admittedly in the instant case books of account were handed over to the AO of assessee Company in AY 2022-23, hence, ten years period would not cover the year under consideration.” The aforesaid additional ground of appeal is purely legal in nature and is an extension of the legal grounds raised in ground of appeal no. 1, 2, 7 & 8 challenging validity of assessment order and in particular ground no. 8 of appeal wherein validity of assessment order on the account of limitation is assailed. The additional ground of appeal being purely legal in nature is admitted for adjudication along with grounds of appeal. 3. Dr. Rakesh Gupta, appearing on behalf of the assessee submits that the assessment in the case of assessee is made u/s. 153C r.w.s. 143(3) of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’). A search action u/s. 132 of the Act was carried out in the case of Rakesh Jain Group on 02.11.2017, one Prahlad Kumar Agrawal was also covered under search operation. It is alleged that during the course of assessment proceedings in the case of Prahlad Kumar Agrawal and on examination of seized documents in the case of Rakesh Jain Group certain documents were found pertaining to the assessee. The Assessing Officer (AO) of 3 ITA NO.36/DEL/2024 (A.Y.2012-13) searched person recorded his satisfaction on 29.06.2021 and handed over seized material to the AO of assessee. The ld. Counsel for the assessee asserted that in accordance with proviso to section 153C(1) of the Act, the deemed date of search in the case of other person (assessee) is the date of handing over of documents by the AO of searched person to the AO of other person. Therefore, in the case of assessee date of search would be 29.06.2021. In the instant case, assessment for AY 2012-13 was made u/s. 153C of the Act and addition of Rs.34 lakhs was made u/s. 69A of the Act. As per the provisions of section 153C of the Act, the AO can examine only upto six assessment years immediately preceding to assessment year in which search was conducted. In the instant case, assessment year 2012-13 falls beyond the period of six years, therefore, the AO could not have made assessment for AY 2012-13 u/s. 153C of the Act. 3.1. The ld. Counsel for the assessee further submits that the case of the assessee does not fall within 10 assessment years even if enlarged period of 10 years from search, introduced by virtue of amendment made by the Finance Act, 2017 is reckoned. Placing reliance on the decision rendered by the Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicate Pvt. Ltd. 161 taxmann.com 160 (Delhi), the ld. Counsel submitted that the period of 10 years has to be reckoned from 31st day of March of the assessment year relevant to the year of search. In the instant case, year of search is Financial Year 2020-21 relevant AY 2022-23. Therefore, 10 years have to be reckoned from 31st March 2023. Going backwards 10 years would end with assessment year 2013-14. Therefore, the assessment made u/s. 153C of the Act in the case of assessee for the impugned assessment year is barred by limitation. 4 ITA NO.36/DEL/2024 (A.Y.2012-13) 3.2. The ld. Counsel for the assessee in support of his submissions further placed reliance on following decisions: i. CIT vs. Jagjit Singh, 155 taxmann.com 155 (SC); ii. Rakesh Bansal vs. ACIT, 159 taxmann.com 1630 (Delhi Trib.); and iii. MG Fincap P Ltd. vs. DCIT, ITA No. 38/Del/2024 for AY 2012-13 decided on 26.07.2024. 4. Shri P N Barnwal, representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. DR reiterated the findings of the CIT(A) to controvert the submissions of the assessee. 5. Both sides heard, orders of the authorities below examined and the decisions on which the ld. Counsel for the assessee has placed reliance considered. The assessee by way of additional ground of appeal and ground no. 8 of appeal has assailed validity of assessment order as the same is stated to be barred by limitation. 6. In the case of assessee assessment for AY 2012-13 was completed under section 153C r.w.s 143(3) of the Act. The AO assumed jurisdiction u/s. 153C of the Act for AY 2012-13 on the basis of reasons recorded by the AO of the person search i.e. Prahlad Kumar Agrawal on 29.06.2021. A search action u/s. 132 of the Act was carried out in the case of Rakesh Jain Group on 02.11.2017, Prahlad Kumar Agrawal was also covered under the search. During the course of assessment proceedings u/s. 153A of the Act in the case of Prahlad Kumar Agrawal and on the perusal of seized material in the case of Rakesh Jain Group, certain documents pertaining to assessee were found. The AO of the searched 5 ITA NO.36/DEL/2024 (A.Y.2012-13) person recorded the satisfaction on 29.06.2021 and handed over the seized material to the AO of assessee. Thereafter, the Assessing Officer of assessee recorded reasons and issued notice u/s. 153C of the Act to the assessee on 26.08.2021. The AO completed assessment vide order dated 27.12.2022 u/s. 153C r.w.s. 143(3) of the Act, assessing total income of the assessee at Rs.31,91,698/- . The contention of the assessee is that the said assessment order is barred by limitation. 7. Before proceeding further it would be imperative to refer to the first proviso to section 153C(1) of the Act which specifies as to when in the case of a person other than the searched person, the AO of other person shall assume jurisdiction and what would be crucial date of deemed search. For the sake ready reference, the same is reproduced herein below:- “Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to [sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person”. 8. A bare perusal of aforesaid proviso would make it unambiguously clear that the AO of the assessee assumed jurisdiction on the date when the AO of the searched person handed over books of account or documents or assets seized (in short ‘incriminating material’) to the AO of the assessee. In the present case, the said date is undisputedly 29.06.2021. Thus, in the case of assessee the year of search would be 2021-22 relevant to AY 2022-23. As per the provisions of section 153C(1) of the Act, the AO if satisfied that books of accounts for the document 6 ITA NO.36/DEL/2024 (A.Y.2012-13) seized or requisitioned have a bearing on the determination of the total income of other person for six assessment years immediately preceding assessment year relevant to previous year in which search is conducted or requisition is made, he can proceed to open assessments for such six assessment years immediately preceding assessment year. Since, the date of search is 29.06.2021 i.e. relevant to assessment year 2022-23, the six years would be: i. 2016-17 ii 2017-18 iii. 2018-19 iv. 2019-20 v. 2020-21 vi. 2021-22 The assessment year 2012-13 clearly falls beyond the period of six years. Hence, assessment is barred by limitation. 9. Even, if period of 10 years is to be reckoned in accordance with the amendment by the Finance Act, 2017, the impugned assessment year falls beyond the period of ten years. We find that coordinate Bench in the case of MG Fincap (P) Ltd. vs. DCIT (supra) in an identical case wherein assessment was made for AY 2012-13 u/s. 153C of the Act on the basis of information received consequent to search in the case of Rakesh Jain Group and Prahlad Kumar Agrawal, following the decision rendered in the case of Pr. CIT vs. Ojjus Medicare Pvt. Ltd. & Ors. (supra) held that the assessment year 2012-13 falls beyond the relevant assessment year and held the assessment made in 2012-13 u/s. 153C of the Act beyond limitation. 7 ITA NO.36/DEL/2024 (A.Y.2012-13) 10. The Hon’ble High Court in the case of Ojjus Medicare Pvt. Ltd. (supra) has explained the method for computation of 6 years/10 years block under the provisions of section 153C of the Act. The relevant excerpts from the judgment are as under: “87. Assuming, therefore, that the handover of material gathered in the course of the search and pertaining to the non-searched person occurred between 01 April 2021 to 31 March 2022, the same would essentially constitute FY 2021-22 as being the previous year of search for the purposes of the non-searched entity. As a necessary corollary, the relevant AY would become AY 2022-23. AY 2022-23 would thus constitute the starting point for the purposes of identifying the six years which are spoken of in Section 153C. The six AYs' are envisaged to be those which immediately precede the AY so identified with reference to the previous year of search. It would thus lead us to conclude that it would be the six AYs' immediately preceding AY 2022-23 which could have formed the basis for initiation of action under Section 153C Consequently, and reckoned backward, the six relevant AYs' would be:- Computation of the six-year block period as provided under Section 153C of the Act No. of Years AY 2021-22 1 AY 2020-21 2 AY 2019-20 3 AY 2018-19 4 AY 2017-18 5 AY 2016-17 6 8 ITA NO.36/DEL/2024 (A.Y.2012-13) Consequently, AY 2021-22 would become the first of the six preceding AY’s and would as per the table set out hereinabove terminate at AY 2016-17. 88. x x x x 89. That takes us then to the issue of identifying the \"relevant assessment year\" for the purposes of computing the ten year block. Explanation 1 to Section 153A specifies the manner in which the entire ten AY period is to be computed. While the computation of six AYs' follows the position as enunciated and identified above, Explanation 1 prescribes that the ten AYs' would have to be computed from the end of the AY relevant to the FY in which the search was conducted or requisition made. The ten AY period consequently is to be reckoned from the end of the AY pertaining to the previous year in which the search was conducted as distinct from the preceding year which is spoken of in the case of the six relevant AYs'. 90. Viewed in that light, and while keeping the period of 01 April 2021 to 31 March 2022 as the constant, the relevant AY would be AY 2022-23. The ten AYs' would have to be computed from 31 March 2023 with the said date indubitably constituting the end of the AY relevant to the previous year of search. Viewed in light of the above, the block period of 10 AYs' would be as follows:- Computation of the six- year block period as provided under Section 153C of the Act No. of Years 9 ITA NO.36/DEL/2024 (A.Y.2012-13) AY 2022-23 1 AY 2021-22 2 AY 2020-21 3 AY 2019-20 4 AY 2018-19 5 AY 2017-18 6 AY 2016-17 7 AY 2015-16 8 AY 2014-15 9 AY 2013-14 10 11. The Hon’ble High Court after elaborate discussion and detailed findings summed up the law with regard to limitation for assumption of jurisdiction u/s. 153C of the Act as under:- “E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs' hinges upon the phrase \"immediately preceding the assessment year relevant to the previous year\" of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, 10 ITA NO.36/DEL/2024 (A.Y.2012-13) since undisputedly, Explanation 1 of Section 153A requires us to reckon it \"from the end of the assessment year\". This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology \"immediately preceding\" when it be in relation to the six year period and employing the expression \"from the end of the assessment year\" while speaking of the ten year block.” 12. Thus, in facts of the case and the decisions discussed above, we find merit in the legal issue raised by the assessee in additional ground of appeal and ground no. 8 of appeal. Therefore, the assessee succeeds on the jurisdiction issue. The assessment order dated 27.12.2022 is held to be beyond limitation, hence, quashed. 13. Since, the assessee gets relief on jurisdictional issue, the grounds raised by assessee assailing addition on merits have become academic, hence, not deliberated. 14. In the result, appeal of the assessee is allowed. Order pronounced in the open court on Wednesday the 07th day of May, 2025. Sd/- Sd/- (AVDHESH KUMAR MISHRA) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी / Delhi, ᳰदनांक/Dated 07/05/2025 NV/- 11 ITA NO.36/DEL/2024 (A.Y.2012-13) ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, DELHI "