Immediately before the year in which the search is done, six years are covered by the section 153C process
Fact and issue of the case
These three cross appeals are filed by the assessee and the Revenue for assessment years 2009-10 and 2010-11 against the common order of the ld. Commissioner of Income Tax (Appeals)-23, New Delhi, dated 30.12.2018.
I.T.A. Nos. 1557 & 1558/DEL/2019 (A.Y 2009- 10 and 2010-11):-
The assessee has raised the following common ground of appeal:-
“1. That the direction issued under section 150 of the Income Tax Act, 1961 by the ld. CIT (Appeals) in para 4.7 of his order, is illegal being outside the scope of the aforesaid provisions in view of the various judicial decisions and therefore needs to be quashed.”
I.T.A. No. 12829/DEL/2019 :-
The Revenue has raised the following substantive grounds of appeal :-
“1. The order of Ld. CIT(A) is not correct in law and facts.
That on facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the assessing officer could not issue notice u/s 153C of the I. T. Act, 1961 for the A.Y. 2009-10 in view of the amendment U/s 1 53C and quashing the assessment order passed by assessing officer u/s 153C r. w. s. 143(3) of the Act.
That on facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the assessing officer could not issue notice U/S 153C of the I. T. Act, 1961 for the A.Y. 2009-10 in view of the amendment u/s 153Ceven when the amendment to section 1 53C was made by Finance Act, 2017 which is effective from 01.04.2017, whereas the notice u/s 1 53C was issued on 18.10.2016, that is prior to the amendment in the provisions U/S 153C.
That on facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,60,00,0001- made by the assessing officer on account of unexplained cash credit u/s 68 of the I.T. Act, 1961.”
Brief facts of the case are that the assessee filed return of income at Rs. 37,746/- and the case was processed u/s 143(1) of the Income Tax Act, 1961 (Act for short)resulting Nil demand for AY 2009-10. A search and seizure operation was carried on Appu Ghar Group of cases u/s 132 of the Act on 10.03.2015. During the course of search and seizure operation, certain documents/ papers were found and seized which was belonged to assessee. The assessment u/s 153C read with section 153A of the Act came to be passed by making an addition of Rs. 1,60,00,000/- by treating the same as income from ‘undisclosed source’ on account of ‘unexplained credits’ and the same has been added to the total income of the assessee u/s 68 of the Act.
Observation of the court
In the present case the date of search being 10.03.20 15 (previous year 2014-15) and the assessment year being 2015-16 the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made are the AY 2014-15, 2013- 14, 2012-13, 2011-12, 2010-11, 2009-10. The year under consideration being 2009-10 indeed falls within the purview of law in view of the amendments inserted in Section 153C vide Finance Act, 2014.
The ld CIT(A) while quashing the assessment order relied on the following judgments:-
a. RRJ Securities Ltd Vs. Cit-7 dated 30.10.20 15
b. Sarwar Agency (P) Ltd Vs. Pr. CIT Dated 17.08.20 17 85 com 269
c. ARN Infrastructure Indian Ltd Vs. ACIT (2017) 394 ITR 569.
All the above judgments are distinguishable since in all the above cases the date of search was prior to 01.10.2014 (on which date the Finance Act, 2014 amending the Section 153A and 153C came into effect). In the present case, date of search is post- amendment of Section 1 53A and 1 53C i.e. on 10.03.2015 therefore, the above case laws relied upon by the ld CIT(A) are not applicable to the case in hand. Therefore, in our considered opinion, the ld CIT(A) has committed an error in quashing the assessment order. Since, the ld CIT(A) has not decided the issues involved in the appeal on merit, we deem it fit to direct the ld CIT(A) to decide the appeal on merit. Accordingly, by upholding the validity of proceedings u/s 153C of the Act on the legal issue and we direct the ld CIT(A) to decide the appeal filed by the assessee on merit after hearing the assessee.
In the result, appeal filed by the Revenue in ITA No. 2829/Del/2019 is allowed for statistical purposes.
ITA NO. 1557-1558/Del/2019
In both the above appeals the assessee has challenged the legality or otherwise the order of the ld CIT(A) in issuing directions u/s 150(1) of the Act to the AO to examined the case u/s 147/148 independently for AY 2009-10 and 2010-11.
Since, we have already upheld the validity of invoking Section 153C of the Act in the assessment proceedings on the legal issue and remanded the matter to the file of ld CIT(A) for de novo consideration, the present appeal challenging direction issued u/s 150(1) of the Act deserves to be allowed and the direction given by the ld CIT(A) in quashed and further directed to decide the appeal filed by the assessee on merits.
In the result, the appeals filed in ITA No. 1557 and 1558/Del/2019 by the assessee for are allowed and the appeal filed by the Revenue is dismissed.
Order pronounced in the Open Court on : 23.03.2022.
Conclusion
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
Read the full order from here
Opal-Buildwell-Pvt-Ltd-Vs-ACIT-ITAT-Delhi
