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Facts
A search and seizure action was conducted on the assessee, followed by notices under Section 153A of the Income Tax Act. The assessments were completed beyond the stipulated time limit.
Held
The Tribunal held that the assessments framed were barred by limitation as they were completed after the prescribed period. Therefore, the assessment orders were deemed null and void.
Key Issues
Whether the assessment proceedings were completed within the statutory time limit as prescribed under Section 153B of the Income Tax Act, considering the date of search and issuance of notice.
Sections Cited
132, 133A, 153A, 143(3), 153B, 142(1), 143(2), 90, 90A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman
Sl. A.Y . IT A N os . Appellant Re sp on den t Orde r pa ss e d ag ai ns t Pro ce e di ngs N o. u/ s 1- 2 201 2- 13 & 580 9 & ACIT Mete n a re C IT(A) -3 0, N ew D elhi 143 ( 3) /153 A 201 3- 14 581 0/ Del /2 01 7 G lob al Lt d. In c as e N os . 202/ 1 6- 1 7/ 2 8 65 & 203/ 1 6- 1 7/ 2 8 66 Date d 30 .0 6.2 0 17 3- 4 201 3- 14 & 581 1 & ACIT Am ar De vi C IT(A) -3 0, N ew D elhi 143 ( 3) /153 A 201 4- 15 581 2/ Del /2 01 7 F amily In c as e N os . 205/ 1 6- We l f a re T rus t 1 7/ 2 8 68 & 206/ 1 6- 1 7/ 2 8 69 Date d 30 .0 6.2 0 17 5- 6 201 0- 11 & 524 5 & 5 246 Ama r D ev i ACIT C IT( A)- 2 7, N ew D elhi 143 ( 3) /153 A 201 1- 12 / D el/2 0 18 Fam ily In c as e N os . 4 95 & Wel fa re 4 96/ 1 6- 1 7 T rus t Date d 18 .0 5.2 0 18 7 201 2- 17 3 805 5/ D el/ 2 01 8 Ama r D ev i ACIT C IT( A)- 3 0, N ew D elhi 143 ( 3) /153 A Fam ily In c as e N os . 204/ 1 6- Wel fa re 1 7/ 2 8 67 T rus t Date d 22 .1 1.2 0 18
Heard both these assessees as well as department at length. Case files perused.
Both the learned representatives very fairly inform us that M/s Amar Devi Family Welfare Trust and M/s Metenare Global Ltd., have been “substantively” and “protectively” assessed by the lower authorities in furtherance to the search action carried out in the former’s case on 27.12.2013. And that the first and foremost substantive issue which arise for our apt adjudication is that of limitation in framing the corresponding impugned & 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. assessments framed u/s 143(3) r.w.s. 153A of the Act; all dated 30.12.2016.
It transpires in this factual backdrop that the learned CIT(A) identical findings; and more particularly, in the “lead” assessment year 2013-14, involving the Revenue’s appeal has decided the instant issue as under:
“6.2 Findings:- The finding are as under: 6.3 I have carefully considered assessment order, written submission/objections, case laws relied upon and oral arguments of Ld.AR. The objections/arguments of the appellant are discussed as under:- (i) In the case of the assessee, search and seizure action was carried out u/s 132/133A of the Act, on 27.12.2013 and the last warrant of search was executed on 19.02.2014 (however, the A.O. has wrongly mentioned on 24.01.2014), where bank locker was operated. (ii) Subsequently, notice u/s 153A of the Act, was issued on 14.10.2014 and in response to this notice, return of income was filed on 25.08.2015, declaring total income at Rs. 90,54,359/-. The statutory notices u/s 143(2) of the Act was issued on 24.9.2015, and subsequently, notice u/s 142(1) of the Act, along with questionnaire was issued on 29.10.2015. Finally, the assessment u/s 153A/143(3) of the Act, was completed on 30.12.2016. (iii) In the appellate proceedings, the appellant has submitted that the last warrant of search was executed on 19.02.2014 and the Panchnama was also drawn on 19.02.2014. It is further submitted by the AR that the limitation for completing the assessment u/s 153 A/l 43(3) of the Act, will be determined by the provisions of section 153B of the Act. Therefore, assessment has to be completed within 2 years from the end of the year, in which last warrant of search was executed. Accordingly, it is submitted by the AR that in the case & 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. of the appellant, the assessment u/s 153 A/143(3) of the Act, has to be completed on or before 31.3.2016. However, in the case of the appellant, the A.O. has completed assessment u/s 153A/143(3) of the Act, on 30.12.2016. In this regard, AR has submitted that by mistake in the ground of appeal the date of limitation for completing the assessment was wrongly mentioned as 31.12.2015, as against the correct date of 31.3.2016. Accordingly, it is submitted that the correct date is to be considered in our arguments. (iv) In the appellate proceedings the appellant has further submitted that in case, the time limit is extended beyond 31.3.2016, then the A.O. is obliged to inform the reasons of the same, during the assessment proceedings and also in the assessment order, under which clause of explanation to section 153B of the Act, is applicable, in order to increase the time limitation beyond 31.3.2016, for completion of assessment u/s 153A/143(3) of the Act and the same is clear from the assessment order as no such reasons have been mentioned by the AO in the assessment order. (v) During the appellate proceedings, the appellant has received the copy of the reference letter dated 24.02.2016, a copy of which has been filed by the appellant, in the appellant proceedings. The A.O. has requested some information, through the Indian competent authority, from the competent authority of UAE. In this regard, the AR has submitted objection to such reference, as under: The information has been sought in the case of the appellant for F.Y. 2011- 12 to F.Y. 2012-13, in the above referred letter dated 24.02.2016. In part 2 of the Performa, at S. No. 9, the information sought is "Time Period or taxable event from which or in relation to which the information is sought:", is mentioned as F.Y. 2009-10 to F.Y. 2013-14. According to the information exchange manual issued by the CBDT the reference should have been made at least 3 months before the case is getting time barred. The transactions of advance was from 2. NRI/individual namely, Ms. Ayesha Dinesh Sarna and Shri Rajeev Kumar, who have advanced an & 5812/Del/2017 ITA Nos. 5245, 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. amount of Rs. 3,92,07,826/- and Rs. 14,50,00,000/-, respectively in F.Y. 2011-12, against purchase of property. There is no other transaction with these persons or any other person from UAE or any other country, in subsequent financial year or in earlier years. In view of the above, it is submitted by the AR that at the most, reference can be considered only for F.Y. 2011-12, relating to A.Y. 2012-13 only. The alleged reference for F.Y. 2009-10, F.Y. 2010-11, F.Y. 2012-13 and F.Y. 2013-14, is a vague, since there is no transaction with any of the foreign entities during this period. Accordingly, it is submitted by the AR that since the reference for the year under consideration, cannot be made and no reasons existed for making any reference for other assessment year(s), in absence of any transaction with foreign entity or any other information available in possession of the A.O. to show such alleged transactions. Therefore, reference made by the department, is void ab-initio. In these facts, it is submitted by the AR that extension of time is not available in A.Y. 2013-14, as per Explanation to Section 153B(1) of the Act, of period beyond 31.3.2016, in absence of any transaction with any foreign person. From the above, following facts emerged:- Search and seizure action u/s 132 of the Act, was carried out on 27.12.2013 and the last warrant was executed on 19.02.2014 for operating bank locker, The notice u/s 153A of the Act, was issued on 14.10.2014 and therefore, as per provision of Section 153B(1) of the Act, the assessment has to be completed on or before 31.3.2016, since same has to be completed within 2 years from the end of the year, in which last warrant of authorization u/s 132 of the Act, was executed, There is no transaction from foreign person during the period under consideration as per books of account and also in the record of the A.O., for making a valid reference for seeking the information u/s 90/90A of the Act, and The fact of having made reference does not emerge from assessment order itself.
& 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. From the above, it is clear that the clause (viii) of Explanation to section 153B of the Act, is not applicable, as no transaction with foreign persons, have been entered during the year under consideration. In these facts, the assessment u/s 153 A of the Act, was required to be completed, on or before 31.3.2016, as per time limit prescribed u/s 153Bofthe Act. In view of the above, I am of the considered opinion that the assessment order passed by the A.O. u/s 153A of the Act, on 30.12.2016, is barred by limitation, as the assessment proceedings, were to be completed on or before 31.3.2016. Accordingly, I agree with the arguments of the appellant and therefore, I hold that the assessment completed u/s 153A of the Act, is null and void, as same has been completed after limitation period expiring on 31.3.2016 and therefore same is cancelled. Accordingly, ground No. 3 and 4, are hereby allowed.” 4.1 This is what leaves the Revenue aggrieved who has raised the following grounds in it’s lead appeal ITA No. 5811/Del/2017 for A.Y. 2013-14:
1) That the Commissioner of Income Tax (Appeals) erred on facts and in law in holding that the assessment proceedings were barred by limitation of time on 31.03.2016. 2) that the Commissioner of Income Tax (Appeals) erred in law and facts while did not appreciating the fact that the AO had sought information under the Medium of Exchange of Information from the Foreign Authorities in respect of certain transaction for the year under consideration also and, therefore, the assessment was made by the AO within the time prescribed as per Explanation (3)(ix) to Section 153B(3). 3) (a) The order of the CIT(A) is erroneous and not tenable in law and on facts.
We next come to the basis relevant facts. There could be hardly any dispute that the departmental authorities had & 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. carried out a search action dated 27.12.2013 in the assessee’s case(s). And that the prescribed limitation for framing section 153A r.w.s. 143(3) assessments therein was admittedly upto 31.03.2016 as duly agreed upon by both the parties before us. The Revenue’s case before us quotes section 153B Explanation (viii); as it read at the relevant point of time, given the fact that the prescribed authority had made statutory reference u/s 90(1)(c) of the Act, to the “UAE” authorities; and, therefore, the CIT(A) herein has erred in law and on facts in holding the impugned assessment as a time barred one.
Mr. Dinodia, on the other hand, inter alia submits that the Revenue’s above reference was totally an invalid one since lacking basic application of mind by the prescribed authority, violative of Indo-UAE DTAA notification dated 12.04.2013 since pertaining to the earlier assessment years than the same and that the assessment before us framed on 30.12.2016 based thereupon has been rightly held as a non-est one in the lower appellate discussion. He further takes us to the “UAE” authorities final reply dated 09.08.2017 forming part of the case file reading as under:
& 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. “ reference Number UAE : IN-2016-149 Date: 9 August 2017 Government of India Ministry of Finanace Foreign Tax & Tax research Division Mr. Rajat Bansal Joint Secretary (FT & TR-II) and Competent Authority RE: Response to Exchange of Information upon Request INDIA – United Arab Emirates Tax Convention Reference Number(s): F.No.504/218/2016-FT&TR- IV/750 Dear Mr. Rajat Bansal, With reference to your request for information dated 4t h February 2016 that we received on 15 t h February 2016, we wish to kinldy inform you that now we have obtained the requested information as per the attached document(s) in the CD-DRIVE. That attached CD Drive is titled IN-2016-149 and is password protected. The password is sent through a separate e-mail on 9t h August 2016. Moreover, kinldy ackknowedge the receipt of our response and update us about the status of the request through our e-mail address TAXINFO@mof.gov.ae. Should you have any further queries regarding to this matter, please do not hesitate to contac the UAE EOI unit at our provided e-mail address.”
The assessee’s case before us is that even as per the above communication between India and UAE authorities, it is clear that all the relevant information had already been supplied by the latter to the former on 09.08.2016; and, therefore, going by first proviso to the above statutory explanation, the Assessing Officer ought to have framed his assessment within the maximum extendable period from 60 days from 09.08.2016 whereas he finalized the same on 30.12.2016 thereby making it as a time barred case. Our & 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. attention is further invited to hon’ble jurisdictional high court’s recent decision PCIT Vs. Smt. Sneh Lata Sawhney (2025) 174 taxmann.com 593 (Del.) upholding the tribunal’s order dated 01.06.2021 holding the corresponding reference itself made by the indian authorities to the “Swiss” government, as an invalid one. It is in this factual backdrop that the assessee seeks to buttress the point that going by the very analogy as it was in the said case, the indian tax authorities herein could not be travelled prior to the period of notification dated 12.04.2013 which renders the same as not sustainable in law. Mr. Dinodia accordingly prays that we ought to uphold the learned CIT(A)’s impugned findings holding the Assessing Officer’s assessment dated 30.12.2016 as a time barred one.
We have given our thoughtful consideration to the above rival submissions and find merit in the Revenue’s stand. There would be hardly any dispute that any time period from the date of such a reference to the information “last” received by Principal Commissioner or Commissioner, in framing of an assessment or a period of one year (whichever is less), is duly excluded u/s 153D Explanation (viii) of the Act. This is further followed by the 1st proviso thereto that maximum time period available thereafter is to the extent of 60 days only. Coming to & 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. the relevant facts herein, case record duly revealed that as per the “UAE” authorities’ “last” correspondence, the indian tax authorities had made a reference to them on 04.02.2016 which was received on 15.02.2016. This followed by a password protected CD drive coming from the former’s side on 09.08.2016 as per it’s “last” correspondence dated 09.08.2017. This being the clinching factual position, we are of the considered view that the Assessing Officer’s assessment framed on 30.12.2016 has been wrongly held as a time barred one since falling within a period of “one year” of the reference under the above statutory provision. So far as the assessee’s challenge to the Indian tax authorities reference made to the “UAE” Government in light of hon’ble jurisdictional high court is concerned, we note that the relevant facts in both these cases stand on altogether different footing as it was duly stipulated in the Indo-Swiss DTAA notification that the relevant information ought to relate to a fiscal year beginning “on or after 01.04.2011” whereas the assessment years therein were from A.Y. 2006-07 to A.Y. 2011-12 only. Meaning thereby that the said assessment years were out of the purview of the notification dated 27.12.2011 and the Swiss authorities had also refused to answer the same.
& 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd.
Coming to the India-UAE DTAA and the facts before us, learned counsel written submissions are very fair in making it clear that as per Article 28 therein, the notification No. 29 of 2013 dated 12.04.2013 nowhere contained any such stipulation of time period. We further wish to reiterate the fact that the “UAE” authorities herein had sent their “last” information to the indian authorities on 09.08.2017 duly honouring the same. We therefore hold that the assessee’s reliance placed on hon’ble jurisdictional high court decision as well as the alleged non- application of mind by the learned lower authorities does not deserve to be accepted. Learned CIT-DR at this stage highlights the fact that the indian tax authorities had made the above statutory reference for Financial Years 2009-10 to 2013- 14 in the assessee’s case. Faced with this situation, we wish to quote Union of India and Anr. Vs. Azadi Bachao Andolan and Anr. (2003) 263 ITR 706 (SC) and Linklaters LLP vs. ITO (2010) 9 ITR (Trib.) 217 (Mum) that tax treaties between two sovereigns could not be literally interpreted as literal meanings of the terms incorporated therein are not really conclusive factors in interpretation of a tax treaty which ought to be interpreted in “good faith” on the “basis of general expectation of the parties……………………”. We thus conclude that the assessee’s vehement contentions supporting the CIT(A)’s & 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. findings holding the impugned assessment dated 30.12.2016 as time barred deserve to be rejected in very terms. We thus conclude that be it u/s 153B Explanation or proviso, the impugned assessment has been framed in a period of “less than a year” of making reference which has to be held as a valid one.
Now come all other remaining issues on merits between the parties. It transpires that the learned CIT(A)’s has not adjudicated the same in light of the fact that he has quashed the impugned assessment itself as a time barred one. That being the case, we direct the learned CIT(A) to decide the assessee’s lower appeal afresh; preferably within three effective opportunities of hearing at it’s own risk and responsibility to plead and prove all the relevant facts in consequential proceedings. Ordered accordingly. The Revenue’s instant sole substantive ground in it’s “lead” appeal as well as the main case succeeds in very terms.
Both the learned representatives next inform us that the remaining four appeals involving M/s Amar Family Welfare Trust arising from the substantive assessments and the department’s twin appeals & 5810/Del/2017 in & 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. case of Metenare Global Ltd., are directed against the corresponding “protective” assessments, respectively, raising identical issue. We thus adopt judicial consistency to allow the Revenue’s appeal ITA No. 5812/Del/2017 for A.Y. 2014-15 in case of M/s Amar Family Welfare Trust and it’s remaining twin cases ITA Nos. 5809 & 5810/Del/2017 involving M/s Metenare Global Ltd., in very terms.
Mr. Dinodia at this stage seeks to highlight the fact that since all the issues on merits in these remaining cases are identical; and, therefore, larger interest would be served in case the learned CIT(A) is directed to re-decide the same contiguously so as to avoid mutually contradictory findings. We appreciate the assessee’s this fair stand and restore M/s Amar Family Welfare Trust remaining appeal 5426 & 8055/Del/2018 back to the CIT(A) for his afresh appropriate adjudication in very terms. It is made clear before parting these twin assessees shall be at liberty to raise all factual and legal arguments in consequential proceedings which shall be dealt with by the learned CIT(A) as per law. These assessee’s last three appeals 5246 & 8055/Del/2018 are allowed for statistical purposes.
& 5812/Del/2017 5246 & 8055/Del/2018 Amar Devi Family Welfare Trust ITA Nos. 5809 & 5810/Del/2017 Metenare Global ltd. 13. To sum up, these Revenue’s four appeals ITA Nos. 5809 to 5812/Del/2017 are allowed and the assessee’s three appeals ITA Nos. 5245, 5246 & 8055/Del/2018 are allowed for statistical purposes, in above terms. A copy of this common order be placed in the respective case files.