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Facts
A search and seizure operation was conducted on the assessee, a partnership firm engaged in real estate and construction, on 26/09/2012. Incriminating material indicated unaccounted income from a BOT project and sale of Indian Made Foreign Liquor (IMFL). The assessee declared income of Rs. 9,77,74,968 and agricultural income of Rs. 89,756. The AO completed the assessment at Rs. 22,54,40,726 with additions on account of IMFL, food, beverages, and tenancy rights.
Held
The CIT(A) quashed the assessment order holding it to be barred by limitation. The Tribunal, however, found that the assessment was completed within the time limit prescribed under Section 153 of the Income Tax Act, 1961, which is two years from the end of the relevant assessment year. Therefore, the CIT(A)'s order was deemed illegal.
Key Issues
Whether the assessment order was barred by limitation, and whether the CIT(A) erred in quashing the assessment on this ground.
Sections Cited
132, 153, 153B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
C.O.No. 05/COCH/2023 ( M/s. K.K. Builders) O R D E R Per: Inturi Rama Rao, AM This appeal by the Revenue and the cross objection by the assessee are directed against the order of Ld. Commissioner of Income Tax (Appeals), Kochi-3 [CIT(A)] dated 16/06/2023 for the Assessment Year (AY) 2013-14.
Brief facts of the case are that assessee is a partnership firm engaged in the business of real estate, civil contract & construction and also running bar & restaurants. The search & seizure operations u/sec. 132 of the Income Tax Act, 1961 (for short, ‘the Act’) were conducted on 26/09/2012 at the business premises of the assessee. During the course of such search and seizure operations, certain incriminating material was stated to have been found and seized. The incriminating material, so seized, revealed that assessee has earned huge unaccounted income from the Kannur Municipal Bus Stand constructed under BOT arrangement and also earned unaccounted income from the business of sale and purchase of Indian made foreign liquor (IMFL). The return of income for the year under consideration was filed on 05/08/2013 declaring income of Rs.9,77,74,968 and agricultural income of Rs. 89,756/-. Against the said return of income, assessment was completed by Dy.Commissioner of Income Tax, Central Circle-II, Kozhikode (for short, ‘AO') at a total income of Rs. 22,54,40,726/- after making several additions on account of income from sale of IMFL, food, beverages and also income from tenancy rights etc. based on the seized material.
C.O.No. 05/COCH/2023 ( M/s. K.K. Builders) 3. Being aggrieved, assessee filed appeal before the Ld. CIT(A), who vide impugned order quashed the assessment by holding that assessment order passed is barred by limitation. Aggrieved by the order of Ld. CIT(A), the revenue is in appeal and assessee is in cross objection before this Tribunal.
It is contended by the ld. CIT-DR that the findings of the Ld. CIT(A) that assessment framed was barred by limitation is illegal as the assessment has been completed well within the time limit prescribed in 153(1) of the Act. The assessment is not governed by limitation prescribed u/sec. 153B(b) of the Act. It is further contended that Ld. CIT(A) ought not to have admitted the additional grounds of appeal
filed by the assessee.
5. On the other hand, ld. counsel for the assessee has submitted that the order of the Ld. CIT(A) is based on sec. 153B(b) of the Act and requested no interference.
6. We have heard rival submissions and perused the material on record.
7. The issue, that arises for our consideration, is whether the findings of Ld. CIT(A) is correct in law in holding that the assessment order is barred by limitation. The undisputed facts of the case are that search and seizure operations were conducted at the business premises of the assessee on 26/09/2012. The assessment year under consideration is AY 2013-14, which does not clearly falls within a period of 06 assessment years relevant to the previous year in which search and seizure operations were conducted, therefore, the time limit for completion of assessment u/sec. 153B are not applicable. The provisions of section 153 are applicable, C.O.No. 05/COCH/2023 ( M/s. K.K. Builders) which provides that the time limit for framing assessment is 02 years from the end of the relevant assessment year. Therefore, the assessment under consideration ends on 31/03/2014 and the time available for making assessment was 31/03/2016 and it cannot be said that assessment order is time barred. The findings of the Ld. CIT(A) is illegal and contrary to the plain provisions of the Income Tact Act, 1961. Accordingly, the order passed by the Ld. CIT(A) is hereby quashed and remand the matter back to the file of Ld. CIT(A) to decide the issues on merits. Thus, the appeal of the Revenue stands allowed for statistical purposes.
8. The cross objection filed by the assessee seeking assessment order is illegal on the ground that approval granted by the JCIT is without application of mind. The ground raised in this cross objection by the assessee does not emanate from the order of the Ld. CIT(A) and in absence of findings of the Ld. CIT(A) on the issues raised in this CO, the same is not maintainable and is accordingly dismissed.
In the result, appeal filed by the Revenue stands allowed for statistical purposes and the cross objection filed by the assessee stands dismissed. Order pronounced on 04th August, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.