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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
सुनवाई की तारीख/Date of Hearing : 21.07.2022 घोषणा की तारीख /Date of Pronouncement : 03.08.2022 आदेश / O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: These three appeals of Revenue and three cross objections by different assessee’s are arising out of three different orders of Commissioner of Income Tax (Appeals)-18, Chennai in Appeal No. 155, 157 & 310/19-20/CIT(A)-18 all even dated 29.11.2021. Assessments were framed by the ACIT, Central Circle -1(3) u/s. 153A r.w.s. 143(3) of the Income-tax Act, 1961 (herein after referred to as ‘the Act’) for all the three assessee’s, for the AY 2008-09, vide three different orders and all of even date 27.12.2019. : 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 3 - 2. The only common issue for these three appeals of Revenue is as regards to the order of the CIT(A) holding that the AO has no jurisdiction to issue notice u/s. 153A of the Act for AY 2008-09, since search on these three assessees was conducted on 05.10.2017 and hence the assessment framed u/s. 153A r.w.s. 143(3) of the Act dated 27.12.2019 in all the cases is bad and illegal. The facts and circumstances are exactly identical in all the three appeals of Revenue despite the fact that three different assessees, and the grounds raised and issue on jurisdiction are exactly identical. Hence, will take the facts and grounds from Shri. V. Durai and will decide the issue which is also applied to other two appeals. The relevant grounds raised in the appeal of Shri. V. Durai reads as under: “2.1. The ld. CIT(A) erred in holding that no notice u/s.153A could be issued for the asst. year 2008-09, since, the search was conducted on 05.10.2017, relying upor the Hon'ble Madras High Court decision inthe case of A.R. Saifulla v. ACIT, Centra Circle-1, Trichy [WP (MD) No.4327 of 2021 dated 24.03.2021]. 2.2. The ld. CIT(A) failed to appreciate that para 80 of the Explanatory notes to the Finance Act, 2017 (Circular No.2/2018 dated 15.02.2018) reads thus :
80. Rationalisation of provisions of the Income Declaration Scheme, 2016 and consequential amendment to section 153A and 153C. 80.4. However, in order to protect the interest of the revenue in case; where tangible evidence(s) are found during a search or seizur operation (including section 132A cases) and the same is represente in the form of undisclosed investment in any asset, section 153A of th Income-tax act relating to search assessments has been amended t provide that notice under the said section can be issued for a, assessment year or years beyond the six assessment year a/read provided up to the tenth assessment year if-- : 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 4 - (i) the Assessing Officer has in his possession books c accounts or other documents or evidence which reveal that th income which has escaped assessment amounts to or is likely t amount to fifty lakh rupees or more in one year or in aggregate i, the relevant four assessment years (falling beyond the sixt year); (ii) such income escaping assessment is represented in the form of asset ; (iii) the income escaping assessment or part thereof relates to such year or years. 2.3. The ld. CIT(A) ought to seen from the Explanatory Notes, that the intention of the amendment is only to reopen those four years preceding the six years "already provided in section 153A". 2.4. The ld. CIT(A) failed to note that going by the Circular; where income escaping assessment in the form of an asset exceeding Rs.50 lakh is found, notice u/s 153A can be issued for 6 years (prior to the assessment year relevant to search year) and 4 years prior to that and in effect, a total of 11 years will be covered by this amendment viz., (i) Assessment year relevant to the financial year in which search was conducted - covered by issue of notice u/s 143(2) and not covered by section 153A, (ii) Six years immediately preceding the asst. year relevant to search year. (iii) Four years preceding the six years already covered by 153A. 2.5. The Id. CIT(A) ought to have appreciated that the intention of the amendment specified in the Explanatory Notes may also be seen from the fact that the departmental portal, ITBA, allows issue of notice u/s 153A in the manner described in the Explanatory Notes (Circular No.2/2018 dated 15.02.2018).”
Brief facts are that Shri. V. Durai is engaged in civil construction and a search action was taken on the assessees group of cases u/s. 132 of the Act by the Income Tax Department on 05.10.2017. Subsequently, assessee filed his return of income in response of notice u/s. 153A of the Act on 22.07.2019. The Assessing Officer while framing the assessment 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 5 - u/s. 153A r.w.s. 143(3) of the Act, noted that the assessee has sold agricultural land situated at Mugalivakkam Village, Chennai for an amount of Rs. 5,33,18,482/-. The AO denied exemption and completed the assessment by bringing this amount to tax being the share of the assessee received on sale of land under the head long term capital gains. The assessee before Assessing Officer raised the issue on jurisdiction vide letter dated 09.12.2019 and the relevant letter is reproduced in the assessment order reads as under: On Jurisdiction: Explanation 1 to 153A is reproduced below: For the purpose of this sub section, the expression" relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which the search is conducted, or requisition is made(Emphasis supplied)" When AO is assessing/re-assessing income for a period beyond SIX years: The year has to be reckoned from "assessment year preceding the assessment year relevant to the previous year in which search is conducted", i.e., in the present case, the search was conducted on 05.10.2017 and hence the relevant assessment year is AY 2018-19. Thus, the assessment year proceeding to the year of search is A Y 2017-18. Hence, the six years has to be reckoned from A Y 2017-18. Note: Section 153A contemplates issue of notice for 6 years preceding the search but not for the year of search or requisition and thus no return is required to be filed for the year of search uls 153A. Only regular return uls 139 is to be filed. When AO is assessing /re-assessing_ income for a period beyond TEN years: The year has to be reckoned from "the end of the assessment year relevant to the previous year in which the search is conducted, or requisition is made". The search was conducted on 05.10.2017 and hence the relevant assessment year in which search was conducted is A Y 2018-19. Counting backwards, we have calculated 10 years as below: : 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 6 - Year Assessment Year 1 2018-19 2 2017-18 3 2016-17 4 2015-16 5 2014-15 6 2013-14 7 2012-13 8 2011-12 9 2010-11 10 2009-10 3.1 The Assessing Officer stated that the assessment framed u/s. 153A r.w.s. 143(3) with regard to this assessment year 2008-09 is well within the ambit of the provisions and he rejected the objections of the assessee by noting in the assessment order as under: “Another objection raised by the assessee is the year of search being 2017-18, notice u/s 153A can be issued only up to AY 2009-10 and not beyond. Before the amendment of the provisions of section 153A, seven assessment years will be covered, one assessment year relevant to the previous year in which search was conducted and six earlier years. After the amendment, 4 years have been added for the purpose of relevant assessment year. In this connection, it is to be noted that the amendment speaks of six plus four more years other than the year of search. In the case of the assessee, the search was conducted during the financial year. 2017-18 relevant to the assessment year 2018-19. Counting backwards, notice can be issued up to the A Y 2008-09 which is well within the ambit of relevant assessment year mentioned in section 153A.”
3.2 Aggrieved, assessee preferred appeal before the CIT(A). The CIT(A) relying on the decision of the Hon’ble Madras High Court in W.P(MD) No. 4327 of 2021 in the case of A.R. Safiulla vs the ACIT, Central Circle-1, Trichy order dated 24.03.2021. Relying on this decision the CIT(A) held that the 10th assessment year counted from this AY 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 7 - 2018-19 is AY 2009-10 and he held that notice issued u/s. 153A of the Act for AY 2008-09 could not have been issued. For this he held in Para 7.5 which is read as under: “7.5 The facts and circumstances of the case in the above writ order squarely applies to the facts and circumstances of assessee's case. The only difference is that in the instant case on hand the date of search is 05.10.2017 and the assessment year is 2008-09 as against the date of search being 10.04.2018 and the assessment year in question is 2009-10 in the writ petition considered by the Hon'ble Jurisdictional High Court. The Hon'ble High Court has considered the position of law, especially Explanation 1 inserted by the Finance Act, 2017 and categorically held that in respect of a search conducted on 10.04.2018, no notice u/s. 153A could be issued since it falls beyond ten assessment years counted from the end of the assessment year relevant to the previous year in which the search was conducted. 7.6 Normally, decisions on writ matters operate only in respect of matters raised therein. However, in this case, the Hon'ble Jurisdictional High Court has dealt with the computation of ten assessment years by going through Section 153A and rendered its decision after analyzing the statute, i.e. on the question of law and hence, the order has binding force on the undersigned as per the provisions of Article 227 of the Constitution. In the instant case, the search was conducted on 05.10.2017 and the assessment year relevant to the previous year in which search is conducted is 2018- 19. The tenth assessment year counted from this assessment year 2018-19, is AY 2009-10. Hence, following the analogy of the decision of the Hon'ble High Court(Supra), no notice u/s 153A could be issued for the AY 2008-09 and accordingly, the ground of the assessee is allowed.”
Before us, Ld. CIT(DR) Shri. M. Rajan, argued on Para 80 of the Explanatory notes to the Finance Act, 2017 and explaining the provisions vide Circular No. 2/2018 dated 15.02.2018, wherein it has stated that in order to protect the interest of revenue in cases where tangible 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 8 - evidences are found during the course of search and the same is represented in this form of undisclosed investment in any asset, the provisions of section 153A of the Act relating to search assessment, has amended, to provide that notice u/s. 153A can be issued for an assessment year or years beyond six assessment year already provided up to the tenth assessment year. He explained with certain conditions assessment can be re-opened up to ten assessment years. When the bench put a query to Ld. CIT(D) that this issue has been considered by Hon’ble Madras High Court in the case of A.R. Safiulla, (supra), Ld. CIT(DR) could not controvert the above decision and could not brought to our notice any other adverse judgments on this very issue.
After hearing rival contentions and going through the facts and circumstances of the case, we noted that the relevant AY is 2008-09 and date of search is 05.10.2017 in such situation Hon’ble Madras High Court in A.R. Safiulla (supra) has considered this and the relevant Paras are reproduced as under: "8. In fact, I am prepared to sail along with the learned standing counsel and hold that if there is any ambiguity while construing a provision meant for rooting out or investigating evasion of tax, it must be resolved in favour of the revenue and against the assessee. Jurisprudentially speaking, the very object of law is to lay down norms for general behavior and prescribe sanction to ensure their compliance. Unless sanction is strictly enforced, it will incentivise deviation. Even in criminal law, while when it comes to substantive offences, retrospective application is forbidden, contrary approach is adopted in matters of procedure. I agree with the submission that : 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 9 - Section 153 A of the Income Tax Act is intended to unearth tax evasion. But I can endorse the stand of the respondent as regards computation of the period of ten years only if there is ambiguity or obscurity in Explanation-I. To me, there is absolutely no ambiguity. 9. Explanation-I is clear as to the manner of computation of the ten assessment years. It clearly and firmly fixes the starting point. It is the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. There cannot be any doubt that since search was made in this case on 10.04.2018, the assessment year is 2019-20. The end of the assessment year 2019- 20 is 31.03.2020. The computation of ten years has to run backwards from the said date ie., 31.03.2020. The first year will of course be the search assessment year itself In that event, the ten assessment years will be as follows: 1st year 2019-20 2nd year 2018-19 3rd year 2017-18 4th year 2016-17 5th year 2015-16 6th year 2014-15 7th year 2013-14 8th year 2012-13 9th year 2011-12 10th year 2010-11 The case on hand pertains to A Y 2009-10. It is obviously beyond the ten year outer ceiling limit prescribed by the statute. The terminal point is the tenth year calculated from the end of the assessment year relevant to the previous year in which search is conducted. The long arm of the law can go up to this terminal point and not one day beyond. When the statute is clear and admits of no ambiguity, it has to be strictly construed and there is no scope for looking to the explanatory notes appended to statute or circular issued by the department. 10. In the case on hand, the statute has prescribed one mode of computing the six years and another mode for computing the ten years. Section 153 A(1)(b) states that the assessing officer shall assess or reassess the total income of six years immediately preceding the assessment year relevant to the previous year in which search is conducted. Applying this yardstick, the six years would go up to 2013- 14. The search assessment year, namely, 2019-20 has to be excluded. This is because, the statute talks of the six years preceding the search assessment year. But, while computing the ten assessment years, the starting point has to be the end of the search assessment year. In other words, search assessment year has to be including in the latter case. It is not for me to fathom the wisdom of the parliament. I cannot : 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 10 - assume that the amendment introduced by the Finance Act, 2017 intended to bring in four more years over and above the six years already provided within the scope of the provision. When the law has prescribed a particular length, it is not for the court to stretch it. Plasticity is the new mantra in neuroscience, thanks to the teachings of Norman Doidge. It implies that contrary to settled wisdom, even brain structure can be changed. But not so when it comes to a provision in a taxing statute that is free of ambiguity. Such a provision cannot be elastically construed. 11. One other contention urged by the standing counsel has to be dealt with. It is pointed out that the petitioner has invoked the writ jurisdiction at the notice stage. Since the petitioner has demonstrated that the subject assessment year lies beyond the ambit of the provision, the respondent has no jurisdiction to issue the impugned notice. Once lack of jurisdiction has been established, the maintainability of the writ petition cannot be in doubt. 12. The notice impugned in the writ petition is quashed. The writ petition stands allowed."
We noted that Hon’ble High Court has considered the amendment of provisions of section 1153A(1)(b) of the Act and noted that the search assessment year, namely, in the present case, AY 2018-19 has to be excluded and Hon’ble High Court has interpreted that the provisions of section 153 talks on this year preceding to search assessment year and similarly the amendment introduced by the Finance Act, 2017 also talks about the issuance of notice u/s. 153A of the Act, with certain conditions it can be issued beyond six assessment years but up to ten assessment years. That means while computing ten assessment years, the starting point has to be the end of the search assessment year. Respectfully following the jurisdictional High Court decision in the case of A.R. Safiulla (supra), we uphold the order of CIT(A) quashing the assessment framed 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 11 - u/s. 153A of the Act by the CIT(A). Hence, this issue of the Revenue appeal is dismissed.
Similar are the facts in in the case of Shri. D. Gunasekaran and ITA No. 58/Chny/2022 in the case of Shri. D. Gunasekaran (Legal heir of Ms. D. Amsaveni). Since, we have adjudicated the issue of assumption of jurisdiction by the AO in the case of V. Durai in Revenue also exactly on identical findings.
Coming to three cross objections filed by three different assessees in CO No. 9/Chny/2022 in the case of V. Durai, CO No. 10/Chny/2022 in the case of Shri. D. Gunasekaran and CO No. 11/Chny/2022 in the case of Shri. D. Gunasekaran (Legal heir of Ms. D. Amsaveni), it is noted that these cross objections are time barred by 15 days. Assessee has filed condonation petitions stating the reason which reads as under: “3. I wish to state that my father Mr. V. Durai (PAN: AGXPD8930B) was diagnosed for acute IPWMI with RVMI and complete heart block and is still bed-ridden with paramedical support. In view of this, the entire family issues including income tax matters are being solely managed by me after the demise of my mother Amsaveni in November 2019 [PAN: CMUPA5959E]. 4. In this circumstances, there was a delay of 16 days in filing the memorandum of cross-objection in Form No. 36A before the Honourable Income Tax Appellate Tribunal, which was purely unintentional.” 8.1 The Ld. CIT(DR) could not controvert the above facts situation. The reasons being exactly identical in all the three cross objections and delay 56, 57 & 58/Chny/2022 & CO Nos. 9, 10 & 11/Chny/2022 - 12 - being very short of 15 days, we condone the delay and admit the cross objections.
As regards the merits raised by assessee in all these three cross objections, by three different assessees, the issue is whether the land sold by these three assessees was an agricultural land and the gain arising out of the same from such agricultural land is exempt from tax or not. The identical issue is raised in all the three cross objections.
Since, we have adjudicated the jurisdictional issue in Revenue’s appeals and the issue is decided in favour of assessee and against Revenue, the issue raised in these three cross objections on merits has become academic as admitted by Ld. Counsel for the assessee and hence, these three cross objections are dismissed.
In the result, appeals filed by the Revenue and the cross objections filed by three different assessees are dismissed. Order pronounced on 3rd August, 2022. Sd/- Sd/- (मनोज कुमार अ�वाल) (महावीर �सह ) (MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH) लेखा सद�य /ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�ई / Chennai; िदनांक / Dated :03-08 -2022 JPV आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF