ACIT vs JSP Constructions

ORDER

“1.

Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law in annulling the assessment under section 153C by treating alleged deficiencies in the satisfaction note as fatal to jurisdiction, without appreciating that the statute requires recording of satisfaction in substance and does not prescribe any particular form or degree of elaboration.

2.

Whether the Ld. CIT(A) erred in law in concluding that no incriminating material existed for the purposes of section l53C by evaluating the seized digital material on parameters relevant for final adjudication, rather than examining whether such material prima facie pertained to or related to the assessee and had a bearing on the determination of income, as contemplated under the Act.

3.

Whether the Ld. CIT(A) erred in law in importing strict evidentiary requirements of the Indian Evidence Act. including section 65B. at the stage of assumption of jurisdiction under the Income tax Act, ignoring the settled legal position that income-tax proceedings are civil in nature and governed by the principle of preponderance of probabilities.

4.

Whether the Ld. CIT(A) erred in law and on facts in holding the assessment to be barred by limitation under section 153C solely on account of uncertainty regarding the chronology of recording of satisfaction, without appreciating that such uncertainty was fact-dependent and required verification or clarification rather than warranting outright annulment of the assessment.

5.

Whether the Ld. CIT(A) exceeded appellate jurisdiction by annulling the assessment in entirety on debatable and fact-dependent jurisdictional grounds, without calling for a remand report, without seeking clarification from the Assessing Officer, and without considering whether the alleged defects, even if assumed, were curable in nature'

6.

Whether the Ld. CIT(A) erred in law in annulling a high-value assessment without adjudicating the additions on merits or examining whether the seized material, taken cumulatively, disclosed issues requiring examination during assessment proceedings.”

“It is evident on a plain interpretation of Section 153C (1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153C was enacted. The revenue argued that the proviso [to Section 153(c)(l)] is confined in its application to the question of abatement. It is quite plausible that the AO seized of the materials….would take his own time to forward the papers and materials belonging to the third party, to the concerned AO. In that event if the date would virtually ‘relate back’ as is sought to be contended by the revenue, (to the date of seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is disproportionate.”

“First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten-year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation Ltd v. Dy.CIT (2012) 346 ITR 177 ( Delhi)( HC) and CIT v. RRJ Securities Ltd 2015 SCC Online Del 13085 as well as the decision of the Supreme Court in CIT v Jasjit Singh 2023 SCC Online SC1265. The aforesaid legal position also stood reiterated by the Supreme Court in ITO v. Vikram Sujitkumar Bhatia 2023 SCC Online SC 370. The submission of the revenue, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. The reckoning of the six AYs’ would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs’ would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A.”