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Facts
The Revenue filed an appeal against the CIT(A)'s order for AY 2010-11. The assessee filed a cross-objection with a delay of approximately 5 years, challenging the validity of jurisdiction assumed under Section 153C, arguing that the requisite satisfaction was recorded by the Assessing Officer of a third person, not the searched person, and this ground was not adjudicated by the CIT(A). The assessee cited a recent Supreme Court order regarding the retrospective application of the Section 153C amendment as a reason for filing the delayed cross-objection.
Held
The Tribunal condoned the 5-year delay in filing the cross-objection, acknowledging the peculiar facts and circumstances. Given that the validity of jurisdiction under Section 153C is a fundamental legal issue not adjudicated by the CIT(A), and with both parties agreeing, the Tribunal remitted both the Revenue's appeal and the assessee's cross-objection back to the CIT(A) for fresh adjudication of all issues on merits, in accordance with law and after providing due opportunity to the assessee.
Key Issues
1. Condonation of delay in filing the cross-objection. 2. Validity of jurisdiction assumed under Section 153C where satisfaction was recorded by the Assessing Officer of another person, not the searched person, and its non-adjudication by CIT(A).
Sections Cited
153C of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “A”, NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI YOGESH KUMAR U.S.
(ASSESSMENT YEAR : 2010-11) DCIT, Central Circle 28, vs. M/s. A.P. Metacil Pvt. Ltd., New Delhi. 5/1, Saraswati Road, WEA Karol Bagh, New Delhi – 110 005. (PAN: AAFCA2094L) (APPELLANT) (RESPONDENT) AND C.O. No.60/DEL/2023 (IN (ASSESSMENT YEAR : 2010-11) M/s. A.P. Metacil Pvt. Ltd., vs. DCIT, Central Circle 28, 5/1, Saraswati Road, New Delhi. WEA Karol Bagh, New Delhi – 110 005. (PAN: AAJFA1810F) (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY: Shri Nirbhay Mehta, CA REVENUE BY : Sh. Javed Akhtar, CIT DR Date of Hearing : 14.10.2024 Date of Order : 22.10.2024 O R D E R PER S.RIFAUR RAHMAN,AM:
CO No.60/Del/2023 1. This appeal filed by the Revenue and Cross Objection by the assessee are directed against the order of the ld. Commissioner of Income-tax (Appeals) – 29, New Delhi (hereinafter referred to ‘Ld. CIT (A)’) dated 25.01.2018 pertaining to Assessment Year 2010-11. At the time of hearing, ld. Counsel for the assessee submitted that 2. there was a delay of filing the cross objection of approximately 5 years before the ITAT and in this regard, he has filed the submissions and application for condonation of delay giving the reasons for the delay in filing the same and the relevant portion of the condonation of delay application is reproduced below for the sake of clarity :- “3. That the assessee challenged the validity of jurisdiction assumed u/s 153C of the Act before CIT (A) by raising following argument:- The order passed u/s 153C is void-ab-initio as the requisite satisfaction as contemplated under the scheme of Income Tax Act has not been recorded by the Assessing Officer of the searched person but by the Assessing Officer of the other person and that the alleged seized material did not belong to the assessee.
4. While deciding the appeal the CIT (A) vide Para 5.1 to 5.3 of its order held that since the seized document did not belong to the assessee therefore the addition made on the basis of such document is not sustainable. He also held that since the appeal was being allowed, hence the other grounds of appeal
are not required to be adjudicated.
5. Since the appeal was allowed in its favour, the assessee did not file any cross- objections against the order of CIT (A) for not adjudicating other grounds of appeal.
6. The revenue filed appeal against the order of CIT (A) vide Form No. 36 filed on 02.04.2018.
7. The Hon'ble Supreme Court in Civil Appeal No. 911 of 2022 titled ITO vs. Vikram Sujit Kumar Bhatia vide its order dated 06.04.2023 has recently held that the amendment in Section 153C made w.eJ. 01.06.2015 will also apply to searches prior to the date of amendment CO No.60/Del/2023 and hence the scope of the amendment in Section 153C has been made retrospective. The amendment made in the Act was to the effect the word in section "belongs to" has been widened to the words "relates to/pertains to”.
8. The above referred order of the Hon'ble Supreme Court has necessitated the filing of cross-objections by the assessee since one of the grounds challenging the validity of order passed u/s 153C is specifically that the requisite satisfaction for assumption of jurisdiction has been recorded by the Assessing Officer of the other person whereas it was required to be recorded by the Assessing Officer of the searched person. Thus, in effect there is only one satisfaction note which has been recorded by the Assessing Officer of other person. This ground was not adjudicated by CIT (A) while deciding assessee's appeal.”
Ld. AR for the assessee requested that the delay of around 5 years in filing the C.O. may be condoned in view of the peculiar facts and circumstances of the case as explained in the condonation application.
On the other hand, ld. DR for the Revenue objected to the application of condonation of delay particularly for substantial delay of 5 years.
Considered the submissions of both the parties and material placed on record. After going through the explanation given by the assessee, as reproduced above, we are inclined to condone the delay in filing the cross objection, hence the same is condoned.
At the time of hearing, ld. AR for the assessee submitted with reference to cross objection that ld. CIT (A) has not adjudicated the specific ground raised by the assessee challenging the validity of the order passed u/s 153C of the Income-tax Act, 1961 (for short ‘the Act’) being void ab initio as the requisite satisfaction as contemplated CO No.60/Del/2023 under the Act was not recorded by the Assessing Officer of the searched person. Further, he submitted that during the course of assessment proceedings, only one satisfaction note was recorded by the Assessing Officer of the third person u/s 153C of the Act. Ld. AR for the assessee submitted that this issue goes to the root of the matter and this issue needs to be remanded back to the file of ld. CIT (A) to adjudicate the same.
On the other hand, ld. DR for the Revenue submitted that ld. CIT (A) has decided the issue in favour of the assessee on merit and in case, the Bench finds the argument of the ld. AR for the assessee to remit the issue back to the ld. CIT (A) favourably, he prayed that the whole appeal including the Revenue’s appeal have to be remanded back to the ld. CIT (A) to consider all the issues afresh and he should adjudicate the whole issues based on the material available on record afresh and as per law.
In the rejoinder, ld. AR has no objection to remit all the issues back to the file of ld. CIT(A).
Considered the rival submissions and material placed on record. We observed that the assessee is aggrieved with the fact that ld. CIT (A) has not adjudicated the issue of non-recording of satisfaction in the case of the searched person and only recorded the satisfaction of the CO No.60/Del/2023 other person u/s 153C of the Act. Since this involves legal issue we deem it fit and proper to remit this issue back to the file of ld. CIT (A) to consider the relevant facts and material on record and adjudicate the issues raised by both the parties afresh. Since ld. CIT (A) has already decided the issue on merit against which Revenue is in appeal before us and since both the parties are in agreement to remit the issues back to the file of ld. CIT (A) to adjudicate afresh, therefore, we are inclined to remit both the appeal filed by the Revenue and cross objection filed by the assessee to the file of ld. CIT (A) to adjudicate the issues as per the material available on record and as per law, after giving proper opportunity of being heard to the assessee.
In the result, the appeal filed by the Revenue and cross objection filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on this 22nd day of October, 2024.