KEWAL KUMAR JAIN,,PUNE vs. ASSISTANT COMMISSIONER OF INCOME-TAX,, PUNE

This bunch of three appeals relating to same assessee on similar issues were heard together and are being disposed of by this consolidated order for the sake of convenience.

The assessee has raised several grounds of appeal but we are first adjudicating the jurisdictional issue raised by the assessee by way of ground of appeal No.4, which reads as under:- “Assessment is Time Barred 4. failed to appreciate that six years prior to the assessment year in which documents were received by the jurisdictional Assessing Officer of the Appellant, which can be reassessed to tax, start from AY 2002-03 and hence reassessment made for AY 1999-00 is time barred;”

Briefly, in the facts of the case, the assessee had originally filed return of income on 31.08.2009. Search and seizure operation under section 132 of the Act was carried out at the premises of Shri Shreeram H. Soni on 29.07.2003. During the course of search operation, documents relating to the assessee were found and seized. The said documents were forwarded to the Assessing Officer, Incharge of assessee vide letter dated 30.05.2007. On receipt of the documents, the Assessing Officer issued notice under section 153C of the Act for assessment years 1998-99 to 2004-05. We are concerned with the appeals relating to assessment years 1999-2000 to 2001-02. The Assessing Officer made certain additions in the hands of assessee vide order passed under section 143(3) r.w.s. 153C of the Act.

Before the CIT(A), the assessee challenged the validity of initiation and also the conduct of proceedings under section 153C of the Act. The challenge was that no proceedings could be initiated for the captioned assessment years

The assessee is in appeal before us both on jurisdictional issue and issue raised on merits. We are proceeding to decide the jurisdictional issue first.

The learned Authorized Representative for the assessee strongly objected to the assessment proceedings conducted for the captioned assessment years being beyond the period of six years starting from assessment year 2008-09 since the information was received by the Assessing Officer, Incharge of assessee on 15.06.2007.

The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of Assessing Officer and CIT(A).

We have heard the rival contentions and perused the record. Briefly, in the facts of the case, search under section 132 of the Act was carried out at the premises of Shri Shreeram H. Soni on 29.07.2003, wherein certain documents relating to the assessee were found and seized. The said information was received by the Assessing Officer, Incharge of assessee on 15.06.2007, which is clearly mentioned in the assessment order at page 5 of the said order. In other words, information was received in assessment year 2008-09. Under the pre-

In view of proviso to section 153C of the Act, in the case of such ‘other person’, reference to the date of initiation of search under section 132 of the Act shall be construed as reference to the date of receiving books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. Further, under section 153A of the Act, the Assessing Officer is empowered to assess or re-assess the total income in respect of each assessment year falling within such six assessment years. In other words, period of assessment or re-assessment has to be within a period of six years from the year of receipt of information by the Assessing Officer, Incharge of such other person. In the case of assessee, the year of receipt of information is assessment year 2008-09 and in case the period of six years is counted from that year, then it would be up to assessment year 2002-03; whereas the assessee is in appeal before us for the assessment completed relating to assessment years 1999-2000 to 2001-02. The learned Authorized

We find that the Hon’ble High Court of Delhi has adjudicated the said issue in detail i.e. assessment or re-assessment of ‘other person’ under sub- section (1) of section 153C of the Act in accordance with the provisions of section 153A of the Act. The Hon’ble High Court referred to the said provisions and observed as under:- “4. Sub-section (1) of Section 153C provides that the assessment or re- assessment of the income of the 'other person' would be in accordance with the provisions of Section 153A. The first proviso to sub-section (1) of Section 153 C further states that, in case of such other person, the reference to the date of initiation of search in the second proviso to Section 153 A(1) "shall be construed as reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person."

Thereafter, elaborating on the case of assessee, it was observed as under:- “5. In terms of Section 153 A(1) (b) of the Act, the AO shall assess or re- assess the total income of six AYs immediately preceding the AY relevant to the previous year in which the search was conducted. The second proviso to sub- section (1) of Section 153 A of the Act, states that assessment or reassessment relating to any AY falling within the period of six AYs referred to in the said sub- section pending on the date of initiation of the search under Section 132, would abate. 6. The case of the Revenue is that the first proviso to Section 153 C refers only to the second proviso to Section 153 A(1) of the Act, which only indicates that any assessment relating to any AY falling within the period of six AYs which is pending as of the initiation of search shall abate. Therefore, the second proviso to Section 153 C is also concerned only with the aspect of abatement of pending assessments. According to the Revenue, this makes no difference to the computation of the block of six years preceding the AY relevant to the previous year /in which the search was conducted. In other words, according to the Revenue, the block period for both the searched person and the 'other person' would remain the same notwithstanding that there may be some delay in transmitting the documents recovered during the search which belong or pertain to the 'other person' to the AO of such other person.

The Hon’ble High Court also considered the amendment to section 153C of the Act by Finance Act, 2017 and held that the said amendment in effect stated that block period for searched person as well as other person would be the same six years immediately preceding year of search. It was further held by the Hon’ble High Court that the said amendment was prospective. The Hon’ble High Court also noted the fact that the Revenue had not challenged the decision of the Hon’ble High Court of Delhi in CIT Vs. RRJ Securities Ltd. (2015) 62 taxmann.com 391 (Del) before the Hon'ble Supreme Court and also noted that recent amendment to section 153C(1) of the Act stated for the first time for both the searched person and other person, the period of re-assessment would be six years preceding the year of search. It was reiterated that the said amendment was prospective and the appeal of Revenue in that case was dismissed.

The issue arising in the present appeal before us is squarely covered by the ratio laid down by the Hon’ble High Court of Delhi (supra) and following the same parity of reasoning, we hold that assessment proceedings initiated for assessment years 1999-2000 to 2001-02 are beyond the period of available under the proviso to section 153C read with proviso to section 153A of the Act and hence, the Assessing Officer had no jurisdiction to take up proceedings for the captioned assessment years. We hold that initiation and completion of proceedings against the assessee, who is ‘other person’ than searched person, is both invalid and bad in law. The jurisdictional issue raised by the assessee by

In the result, all the appeals of assessee are allowed.