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Facts
A search and seizure operation was conducted on Samira Group on 21/03/2013. Pursuant to this, notice u/s 153C of the Income Tax Act was issued to the assessee on 24/09/2014. The assessment years in question are 2007-08 and 2008-09.
Held
The Tribunal held that the notice issued u/s 153C of the Act was beyond the six-year block period, making the assessment order null and void. The Tribunal relied on the Supreme Court's decision in CIT vs. Jasjit Singh.
Key Issues
Whether the notice issued u/s 153C of the Income Tax Act for assessment years 2007-08 and 2008-09 is valid when the issuance date falls outside the six-year block period from the date of seizure.
Sections Cited
144, 153C, 132, 132A, 143(1)
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
Assessee by : Shri Rakesh Joshi, A/R Revenue by : Shri Dr. Kishor Dhule, CIT D/R सुनवाई की तारीख/Date of Hearing : 05/03/2025 घोषणा की तारीख /Date of Pronouncement: 11/03/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: & , are cross appeals by the revenue preferred against the order of the ld. CIT(A) - 54, Mumbai, dated 21/08/2024 pertaining to AYs 2007-08 & 2008-09. The revenue’s appeals are time barred. The delay is condoned. C.O. No. 9/Mum/2025 & C.O. No. 10/Mum/2025 are cross- objections by the assessee preferred against the very same order of the ld. CIT(A). The appeals and the cross-objections were heard together and are disposed off by this common order for the sake of convenience and brevity.
In its cross-objections, the assessee has challenged the validity of the impugned assessment order framed u/s 144 r.w.s. 153C of the Act as null and void as the same is passed in violation of provisions of the I.T.A. No. 5713/Mum/2024 C.O. No. 09/Mum/2025 I.T.A. No. 5712/Mum/2024 C.O. No. 10/Mum/2025 3 Act. Since the cross-objections goes to the root of the matter, they are adjudicated first.
The sole contention of the ld. Counsel for the assessee before us is that the AO erred in issuing notice u/s 153C of the Act which is beyond six years and the impugned two assessment years do not fall in the block of six years to frame the assessment order u/s 153C of the Act.
Representatives were heard at length. Case records carefully perused.
Briefly stated the facts of the case are that a search and seizure operation u/s 132 of the Act was carried out in the case of Samira Group on 21/03/2013. Pursuant to the search, notice u/s 153C of the Act was issued to the assessee on 24/09/2014.
The challenge before us is that this notice issued u/s 153C of the Act is without jurisdiction as the impugned assessment years 2007-08 & 2008-09, are beyond the block of six years in the case of assessee.
We have carefully perused the assessment order. Surprisingly, the assessment order is completely silent on the date on which the incriminating material relating to the “third person” i.e., the assessee was received by the AO nor there is any mention of any satisfaction recorded in respect of those incriminating material. As per the information gathered the notice in the case of the searched person was issued in May, 2013, therefore, it can be safely presumed that the notice in the case of the “other person” i.e., the assessee, must have been issued after the proceedings initiated in the case of searched person. As I.T.A. No. 5713/Mum/2024 C.O. No. 09/Mum/2025 I.T.A. No. 5712/Mum/2024 C.O. No. 10/Mum/2025 4 mentioned elsewhere, the notice in the case of the assessee was issued on 24/09/2014 and the block of six assessment years starts from AY 2009-10 till AY 2014-15. Therefore, in the light of provisions of Section 153C of the Act, the impugned assessment years i.e., 2007-08 and 2008- 09 are beyond the block of six assessment years and, therefore, the assessment framed u/s 153C of the Act has to be treated as null and void. For this proposition, we derive support from the decision of the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh [2023] 155 taxmann.com 155 (SC), wherein the Hon’ble Supreme Court has laid down the following ratio:- “9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year 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 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement.
This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials – of the search party, under section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually "relate back" as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of section 153-C supports the interpretation which this Court adopts.
For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs.” C.O. No. 09/Mum/2 C.O. No. 10/Mum/2025 5
The Hon’ble Supreme Court confirmed the order of the Hon’ble Delhi High Court in CIT vs. Jasjit Singh [2023] 155 taxmann.com 154 (Delhi), wherein the Hon’ble High Court had held as under:- “3. The question raised before the ITAT was with reference to the first proviso to section 153C (1). The ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Dy.CIT [2012] 20 taxmann.com 214/207 Taxman 260/346 ITR 177/252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under section 132 or the requisition under section 132A, in the case of the other person (like the Assessee in the present case) "such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date". 4. Although, the ITAT has also referred to its own decision in the case of DSL Properties Pvt. Ltd., which decision is pending consideration in of 2013 in this Court, in which a question of law has been framed, the decision in SSP Aviation Ltd. (supra) puts the matter beyond all doubt. In addition, the Court has been shown by learned counsel for the Respondent a circular dated 31st March 2014 issued by the CBDT, containing the guidelines regarding Section 153C of the Act. Para 2.5 of the said circular clarifies as under: "The AO of the other person assumes jurisdiction under Section 153C with the receipt of the relevant seized material from the AO of the searched person. Also, a copy of the satisfaction received from the AO of the searched person in this regard would enable him to proceed further in the case of the other person under Section 153C. Though there is no statutory requirement for the AO of such other person to record any satisfaction/reason before issuing notice under Section 153C and proceeding further, considering the above aspects, it is advisable for maintaining institutional memory that the AO records receipt of the seized material and the satisfaction from the AO of the searched person and such recording/noting may be kept in the assessment folder of such other person. In case, the AO of the searched person exercises jurisdiction over the other person also, appropriate referencing should be made in the relevant assessment records of such other person". 5. It may be noted that in the present case satisfaction note was prepared by the AO on 25th February 2010. Consequently, the finding of the ITAT in the present case that the assessment made under Section 143(1) of the Act for the AY 2009-10 was I.T.A. No. 5713/Mum/2024 C.O. No. 09/Mum/2 C.O. No. 10/Mum/2025 6