Time Barred Notice Issued U/s 153C And Consequent Assessment Order Passed U/s 143(3) R/w/s 153C Is Void Ab Initio: Chennai ITAT
The Chennai ITAT held that since the notice issued by AO for subject assessment year falls beyond the stipulated six assessment years and four relevant assessment years, considering the satisfaction note, the notice issued by AO u/s 153C of Income tax Act for initiation of proceeding against assessee and consequent assessment order passed u/s.143(3) r/w/s 153C is barred by limitation,...
The Chennai ITAT held that since the notice issued by AO for subject assessment year falls beyond the stipulated six assessment years and four relevant assessment years, considering the satisfaction note, the notice issued by AO u/s 153C of Income tax Act for initiation of proceeding against assessee and consequent assessment order passed u/s.143(3) r/w/s 153C is barred by limitation, void ab initio and liable to be quashed.
The Bench of Manjunatha. G (Accountant Member) and Manomohan Das (Judicial Member) observed that “Since, the Assessing Officer of the searched person cannot hand over the books of accounts and other documents to the Assessing Officer having jurisdiction over any other person, unless he records the satisfaction for proceedings u/s. 153C of the Act, in our considered view, for the purpose of second proviso to section 153A(1) of the Act, the date of receiving the books of accounts or other documents by the Assessing Officer having jurisdiction over such other person should be considered”. (Para 14)
As per the brief facts of the case, a search operation was conducted in the case of M/s. Jain Metal Rolling Mills, M/s. Jain FGL Metal Indsutries, Kamlesh Jain, Shantilal Jain, Geetha Jain and Sanchit Jain, wherein loose sheets was seized which has information relating to the assessee. The AO of searched person has recorded satisfaction note for proceedings u/s. 153C and observed that, the seized material found during the course of search has bearing on assessee's total income. Since the assessee has not filed its return in response to notice u/s. 153C, the case was selected for scrutiny. The AO found that share premium received by the assessee has been invested in unquoted equity shares and loans and advances as shown in the balance sheet. Since the assessee failed to produce necessary details including, the name and address of shareholders from whom the share premium was received and share holding pattern etc, the AO made additions of Rs. 63,90,24,100/- towards share premium u/s. 68 as unexplained cash credit.
The Bench found from a combined reading of section 153A and second proviso coupled with provisions of section 153C(1) and proviso provided therein, that in a case where search is conducted u/s 132, any incriminating material found relates to any other person and has a bearing on total income of such other person, then the AO of the searched person should record satisfaction as required u/s. 153C of the Act and hand over books of accounts and other documents to the Assessing Officer having jurisdiction over any other person.
The Bench clarified that the AO of the searched person should satisfy that document found during the course of search u/s. 132 is having information and has bearing on total income of any other person, and hand over books of accounts and documents to the Assessing Officer of any other person.
Unless, he records satisfaction having regard to material found during the course of search, he cannot hand over books of accounts or other documents to the Assessing Officer of any other person, added the Bench.
Thereafter, the Bench explained that the Assessing Officer of searched person should record satisfaction u/s. 153C of the Act for initiation of proceedings u/s. 153C of the Act, having regard to books of accounts and other documents received from the Assessing Officer of the searched person before issuing notice u/s. 153C of the Act.
“In the present case, the Assessing Officer of the searched person has recorded satisfaction note for proceeding u/s. 153C of the Act with reference to books of accounts seized during the course of search proceedings, in the case of M/s. Jain Metal Rolling Mills and others”, added the Bench.
The ITAT therefore concluded that for the purpose of proviso to section 153C(1), in case of such other person, the reference to the date of initiation of search u/s. 132 in the second proviso to section 153A(1), shall be construed as reference to the date of receiving the books of accounts or other documents by the Assessing Officer having jurisdiction over such other person.
Counsel for Appellant/ Assessee: B. Rama Krishnan and Shrenik Chordia
Counsel for Respondent/ Revenue: R. Clement Ramesh Kumar
Case Title: M/s. KSJ Infrastructure Pvt. Ltd. Verses DCIT
Case Number: ITA No.: 1110/Chny/2023