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Facts
The assessee preferred an appeal against the order of the Ld. Commissioner of Income-tax (Appeals) which upheld the assessment order passed by the Ld. AO. The assessee raised an additional ground challenging the assessment validity u/s 153C, contending that the assessment order was passed u/s 143(3) instead of u/s 153C of the Act.
Held
The Tribunal held that the assessment order passed u/s 143(3) for AY 2014-2015 was erroneous, as it should have been passed u/s 153C. The period of six years for assessment u/s 153C was to be reckoned from the date of recording the satisfaction note, not the date of search. The amendment regarding retrospective application of section 153C was also considered.
Key Issues
Whether the assessment order passed u/s 143(3) was valid when it should have been passed u/s 153C. Determination of the relevant date for reckoning the six-year period for assessment under Section 153C.
Sections Cited
153C, 143(3), 153A, 254(2)
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Income Tax Appellate Tribunal, DELHI BENCHES : F : NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI KRINWANT SAHAY
ORDER
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the Assessee against the order dated 16.11.2018 of the Ld. Commissioner of Income-tax (Appeals)-28, New Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeal No.140/16-17/2681/23/16-17, filed before him against the order dated 31.03.2016 passed u/s 153C/143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) by the DCIT, Central Circle-19, New Delhi (hereinafter referred to as the Ld. AO, for short).
On hearing both the sides it comes up that the assessee company was in appeal before this Tribunal for two assessment years i.e. AY 2013-2014 and 2014-2015 and 483/D/2019 respectively. During the course of proceedings, the assessee company for AY 2014-2015 raised an additional ground challenging the assessment validity u/s 153C. The ground is reproduced herewith: - “i. That on the facts and circumstances of the case and in law the assessment order passed by the AO is void-ab-initio and nullity since the same has been passed u/s 143(3) of the IT Act whereas the same was required to be passed u/s 153C of the IT Act 1961 ii. That pursuant to the search conducted on 15.02.2014 on the Moin Qureshi Group the AO of the searched person handed over certain documents to the AO of the appellant on 18.01.2016. iii. That as per the first proviso of section 153C the block period for carrying out the assessment u/s 153A will comprise of six years i.e. AY2010-2011 to AY 2015-2016 and u/s 143(3) of the IT Act for the A Y 2016-2017. iv. That the amendment in sub-section (1) of section 153C shall apply w.e.f 01.04.2017 and will be applicable on searches conducted on or after 01.04.2017"
The Co-ordinate Bench passed a common order dated 30.04.2024 in the case of M/s Forum Agro Foods Pvt. Ltd. in and 483/D/2019 for AY 2013-2014 and 2014-2015 respectively and for AY 2014- 2015 the bench applied Mutatis mutandi and accordingly the appeal of the assessee company was set aside. The Bench had inadvertently escaped adjudicating upon the aforesaid additional ground that was raised by the assessee company. Aggrieved by the decision of the assessee company filed Miscellaneous application u/s 254(2) of Act seeking rectification of mistake and thus by order dated 09.05.2025, a coordinate Bench restored the appeal of the assessee for AY 2014-2015 to adjudicate the additional ground raised
by the assessee company. As for the sake of convenience, the operating para of M/A order bearing M/A no. 218/D/2024 dated 09.05.2025 is reproduced herewith: - "
3. We have heard the rival submissions and perused the material available on record. We find that the Tribunal had adjudicated the grounds raised by the assessee for AY 2013-14 and noted that identical grounds raised for Ay 2014- 15 also and accordingly applied the decision rendered for AY 2013-14 mutatis mutandis for AY 2014-15 also. But on perusal of the appeal folder that additional grounds had been indeed raised by the assessee by electronic mail during Covid where virtual hearing were conducted vide email dated 29.09.2021. These additional grounds are indeed available in the appeal folder. Since, these additional grounds were not adjudicated at all by the Tribunal while disposing off the appeal which amounts a mistake apparent on record warranting rectification of the order u/s 254(2) of the Act.
4. Hence, we deem it fit and appropriate to recall the order passed by this Tribunal in dated30.04.2024 for AY 2014-15 only for the limited purpose of adjudication of additional grounds. Registry is directed to fix the main appeal for hearing on 11.06.2025. Since, both the parties are informed in the open court, no fresh notice would follow. 5. In the result, the miscellaneous application of the assessee is allowed".
Now what comes up is that, the impugned Assessment order for AY 2014-2015 was passed u/s 143(3) of the Act, while claim of assesse is that same should have been under section 153C of the Act. It is further submitted that the seized material belongs to person other than the searched person.
In this regard we find that the date of search is 15.02.2014, the date of satisfaction recorded by the Ld. AO is 18.01.2016 and subsequently notice was issued on 21.01.2016 and hence the period of six years has to be reckoned with respect to the date of recording of satisfaction note and not the date of search. That reliance for this principle is placed on decision in Commissioner of Income Tax v RRJ Securities Ltd. [2015] 62 taxmann.com 391 (Delhi) wherein the Hon'ble High Court of Delhi discussed the working and application of section 153C of the Act. Furthermore, it opined that date on which the Assessing officer of the person other than the one searched assumes the possession of the seized assets would be relevant date for applying the provisions of Section 153A of the Act.
In the instant case the date of recording satisfaction is said to be 18.01.2016 and hence from the date of recording satisfaction, relevant date for applying the provisions of section 153C of the Act is to be construed. Hence, six years for carrying out assessment u/s 153C would be from AY 2010-2011 to 2015- 2016 and for AY 2016-2017 assessment would be completed u/s 143(3) of the Act. Thus for the assessment year under consideration i.e. AY 2014-2015, falling in six years eligible for search assessment, the Id. AO has erroneously passed order u/s 143(3) of the Act which is liable to be quashed. The contention of ld. DR about retrospective application of that amendment in sub-section (1) of section 153C of the Act which reads as, "for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made" which was inserted by Finance Act,2017 w.e.f 01.04.2017 has been considered and held against the department in the case of 4