Computation Of 6 Assessment Years For Search Assessments U/S 153C Starts From Date Of Receiving Seized Documents: ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the computation of six assessment years for search assessments under Section 153C of the Income Tax Act starts from the date of receiving seized documents.

The bench of Saktijit Dey (Vice President) and Naveen Chandra (Accountant Member) has relied on the decision of the Supreme Court in the case of CIT vs. Jasjit Singh, in which it was held that under Section 153C, a third party would only have to furnish income tax returns for the preceding six years, starting from the date when the Assessing Officer assigns the third party's documents to the concerned Assessing Officer and not from the date of the original search.

The bench noted that, as per provisions of Section 153C of the Act, the commencement date for computation of the six assessment years is deemed to be the date of receipt of books of account, materials, or assets belonging to or pertaining to a non-searched person by the jurisdictional AO of the non-searched person. In other words, the date of recording satisfaction in the case of the searched person becomes the date of search in the case of the non-searched person (assessee).

The original return of income was filed by the appellant/assessee, declaring an income of Rs. 60,74,365. A search and seizure action was conducted in M/s Bhushan Steel Group cases on March 3, 2010. In the search, documents belonging to the assessee were found and seized. A notice under Section 153C was issued on November 23, 2010, after a recording of satisfaction under Section 153C. The assessment was made by making an addition on account of unexplained credits and Rs. 45,186 under Section 14A on account of dividend income.

The assessee went on appeal before the CIT (A), who allowed the grievance relating to an unexplained cash credit. However, the ld. CIT(A) dismissed the ground pertaining to disallowance under Section 14A of the Income Tax Act.

The assessee stated that the assumption of jurisdiction under Section 153C for the AY 2004–05 on the basis of satisfaction recorded on November 23, 2010 is contrary to the decision of the Supreme Court in the case of CIT vs. . Jagjit Singh.

The assessee argued that as the satisfaction was recorded on November 23, 2010, the assessment year relevant to the previous year in which a search was conducted or a requisition was made becomes FY 2011–12. The six assessment years immediately preceding the assessment year relevant to the previous year in which a search is conducted or a requisition is made begin in AY 2005–06. The A.Y. 2004–05 is therefore out of the block of six assessment years for which assessments could be made. As the satisfaction under Section 153C was recorded on November 23, 2010, the last of the six AYs for which the Assessing Officer can assume jurisdiction is AY 2005–06. Therefore, out of a block of six assessment years, the assessing officer cannot assume jurisdiction for making assessments.

The tribunal held that the FY 2004–05 would therefore fall beyond the period of six assessment years as reckoned with reference to the date of recording satisfaction by the assessing officer of the searched person.

The tribunal quashed the assessment order made without jurisdiction.

Counsel For Appellant: Amit Goel

Counsel For Respondent: T. James Singson

Case Title: M/s Esha Securities Pvt Ltd Versus Dy. CIT

Case No.: ITA No. 3095/DEL/2013

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