VASAMSETTY VEERA VENKATA SATYANARAYANA,HYDERABAD vs. INCOME TAX OFFICER, WARD-4(1), HYDERABAD

By order dated 23/03/2023, both the appeals and stay applications were disposed of, but subsequently, while allowing MA No. 47/Hyd/2023 in 14/09/2023, the order dated 23/03/2023 insofar as it relates to and the stay application are recalled for hearing on the legal question.

Such a question argued in this appeal is whether the date referred under proviso to section 153(1) of the Income Tax Act, 1961 (for short “the Act”) is relatable to the second proviso to section 153A of the Act only as far as it concerns abatement. In other words, whether the previous year relevant for the six assessment years immediately preceding as referred to under section 153C of the Act, should be the year of the search in the case of the person searched, or the year in which the assessment officer records satisfaction that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of the other person?

Facts giving raise to this question are that the assessee filed the return of income for the year under consideration and it was processed under section 143(1) of the Act. Subsequently, there was a search and seizure operation on 28/02/2017 in the residential premises of one Mr. D. Srinivas Reddy, and in such search, some documents were found relating to M/s. SRD Exports of which the assessee is the proprietor. Satisfaction note was recorded on 15/03/2019 for the assessment year 2017-18 and notice under section 153C of the Act was issued.

Assessment under section 144 read with section 153C of the Act was completed by orders dated 27/12/2019. In appeal, learned CIT(A) granted relief in part. Assessee, however, filed the appeal, challenging the impugned order now contending that inasmuch as the search took place on 28/02/2017 in the case of Mr. D. Srinivas Reddy, in terms of section 153C of the Act, the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted shall be the six years commencing from 2016-17 and, therefore, the assessment order for the assessment year 2017-18 consequent to the notice issued under section 153C of the Act is bad under law. According to him, assessment for the assessment year 2017-18 should have been under section 143(3) of the Act only.

At the outset, learned DR submitted that this issue has squarely been covered by the decision of the Hon’ble Apex Court in the case of CIT vs. Jasjit Singh (2023) 155 taxmann.com 155 (SC) wherein the Hon’ble Apex Court dealt with the question of interpretation of section 153C(1) of the Act and the Parliamentary intent to enact the proviso, and held that it was to cater not merely to the question of abatement, but also with regard to the date from which the six years period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under section 153C of the Act was enacted), and that such a period has to be reckoned from the date the materials were forwarded to the learned Assessing Officer of the party, whose premises are not searched.

Respectfully following the above decision, we do not find any merit in the contentions raised by the learned AR and consequently, we dismiss the said contention.

In the result, appeal of the assessee stands dismissed. So also, the Stay Application. Order pronounced in the open court on this the 27th day of October, 2023.