IN THE INCOME TAX APPELLATE TRIBUNAL
`F' : NEW DELHI
DELHI BENCH `F
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
SUDHIR, JUDICIAL MEMBER
SHRI I.C. SUDHIR,
Nos.567/Del/2011 & 568/Del/2011
ITA Nos
Years : 2001-
Assessment Years 2002-03
2001-02 & 2002-
M/s R.L. Allied Industries, Vs. Income Tax Officer,
50-
50-F, Kohlapur Road, Ward-20(1),
Ward-
Kamla Nagar, New Delhi.
Delhi 110 007.
PAN : AAAFR5507P.
(Appellant) (Respondent)
Nos.4812/Del/2012 to 4816/Del/2012
ITA Nos.4812/Del/2012
Years : 2000-
Assessment Years 2001-02, 2001-
2000-01, 2001- 2002-03 & 2002-
2001-02, 2002- 2002-03
M/s R.L. Allied Industries, Vs. Income Tax Officer,
50-
50-F, Kohlapur Road, Ward-20(1),
Ward-
Kamla Nagar, New Delhi.
Delhi 110 007.
PAN : AAAFR5507P.
(Appellant) (Respondent)
Appellant by : Shri K.R. Manjani, Advocate.
Respondent by : Shri M.B. Reddy, CIT-DR.
ORDER
PER BENCH :
:-
ITA Nos.567/Del/2011 & 568/Del/2011 :-
These appeals by the assessee are directed against the order of
learned CIT(A)-XXII, New Delhi dated 18th November, 2010 for the AY
2001-02 & 2002-03.
2. Ground No.1 of the assessee's appeals in both the years reads as
under:-
"The ld A.O. as well as CIT(A) have erred in not
declaring the assessment barred by limitation, the
2 ITA-567/D/2011 &
others
search having been conducted in 13th Dec, 05 and
assessment having been completed in Dec, 07, the ld
A.O. had correctly requested in 1st week of Feb, 08 to
the A.O. having jurisdiction over M/s R.L. Industries for
taking the records which consisted in only 4 files. Even
A.O.'s Addl. Commissioner wrote to him on 4th March,
08 to take the record and necessary action but no
action was taken till March, 09 without indicating the
reason for not taking the action for more than one year
inspite of the facts that limitation is involved. Since
intimation for taking record was received in Feb, 08,
limitation for completion for 153C proceeding was Dec,
08. Therefore, both the authorities erred on facts as
well as in law in not declaring the assessment barred by
limitation."
3. The facts of the case are that assessment for AY 2001-02 and
2002-03, which is under consideration, has been completed under
Section 143(3) read with Section 153C of the Income-tax Act, 1961. As
per assessment order, the search and seizure action under Section 132
was carried out on R.L. Group on 13th December, 2005. During the
course of such search, various documents were found and seized out
of which certain documents are claimed to be belonging to M/s R.L.
Allied Industries i.e., the assessee. As per paragraph 2 of the
assessment order, the seized material pertaining to the assessee was
received on 12th March, 2009 from ACIT, Circle-17, accordingly, notice
under Section 153C was issued and served upon the assessee on 24th
March, 2009. The learned counsel for the assessee has claimed that
as per Section 153C proviso, the date of receiving the books of account
or documents is deemed to be the date of search under Section 153A.
He also referred to Section 153A and pointed out that the notice can
be issued under Section 153C for six years preceding to the year of
search. He, therefore, submitted that as per the proviso to Section
153C, the date of receiving the books of account would be the date of
search and, therefore, the notice under Section 153C could not have
been issued for AY 2001-02 and 2002-03. Accordingly, the issue of
3 ITA-567/D/2011 &
others
notice under Section 153C was barred by limitation and consequently,
the assessment for these two years is non-est and void ab-initio.
4. Learned DR, on the other hand, relied upon the orders of
authorities below and submitted that the notice has been validly issued
on the basis of search which took place in the year 2005. He,
therefore, submitted that the orders of authorities below should be
sustained and this ground of the assessee's appeals should be
rejected.
5. We have heard the arguments of both the sides and perused
relevant material placed before us. The relevant facts as mentioned
by the Assessing Officer in paragraph 1 and 2 of the assessment order
read as under:-
"Search & seizure action u/s 132 of the Income Tax Act
was carried out on R.L. Group on 13/12/2005. This
operation was carried out at Premises No. B-265,
Derawala Nagar, Delhi. This premises belongs to Sh.
Ram Lal Bhatia Partner of M/s R.L. Allied Industries. At
this premises certain documents were found and
seized. Out of this, Pages of Annexure A-1 to A-3, A-7
to A-9, A-15 to A-18 and A-21 to A-24 belongs to M/s R L
Allied Industries.
2. In this case the seized material pertaining to M/s
R.L. Allied Industries was received on 12/03/2009 from
ACIT Central Circle-17. Accordingly notice under
section 153C was issued and served upon assessee on
24/03/2009, requesting to file return within 15 days of
service of notice. In response to this notice a letter was
filed by the advocate of the assessee requesting for the
inspection of the material. On 22/05/2009 Sh Tarun
Aswani, advocate was allowed the inspection of the
file."
6. From the above, it is evident that in the case of the assessee,
assessment has been completed on the basis of notice under Section
153C which was issued on 24th March, 2009 and the seized material
4 ITA-567/D/2011 &
others
pertaining to the assessee was received on 12th March, 2009 from
ACIT, Central Circle-17. In the light of these facts, let us examine the
relevant provisions of the Income-tax Act. Section 153C reads as
under:-
"153C. [(1)] Notwithstanding anything contained in
section 139, section 147, section 148, section 149,
section 151 and section 153, where the Assessing
Officer is satisfied that any money, bullion, jewellery or
other valuable article or thing or books of account or
documents seized or requisitioned belongs or belong a
person other than the person referred to in section
153A, then the books of account or documents or
assets seized or requisitioned shall be handed over to
the Assessing Officer having jurisdiction over such other
person and that Assessing Officer shall proceed against
each such other person and issue such other person
notice and assess or reassess income of such other
person in accordance with the provisions of section
153A:]."
7. As per Section 153C, where the Assessing Officer is satisfied that
where the books of account or documents seized belong to a person
other than the person referred to in Section 153A, then the books of
account or documents shall be handed over to the Assessing Officer
having jurisdiction of such other person and that Assessing Officer shall
proceed against each such other person in accordance with the
provisions of Section 153A. Section 153A reads as under:-
"153A. [(1)] Notwithstanding anything contained in
section 139, section 147, section 148, section 149,
section 151 and section 153, in the case of a person
where a search is initiated under section 132 or books
of account, other documents or any assets are
requisitioned under section 132A after the 31st day of
May, 2003, the Assessing Officer shall
(a) issue notice to such person requiring him to furnish
within such period, as may be specified in the notice,
the return of income in respect of each assessment
year falling within six assessment years referred to in
5 ITA-567/D/2011 &
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clause (b), in the prescribed form and verified in the
prescribed manner and setting forth such other
particulars as may be prescribed and the provisions of
this Act shall, so far as may be, apply accordingly as if
such return were a return required to be furnished
under section 139;
(b) assess or reassess the total income of six
assessment years immediately preceding the
assessment year relevant to the previous year in which
such search is conducted or requisition is made:."
8. Thus, as per Section 153A(1)(b), the Assessing Officer is
empowered to assess or reassess the total income of the six
assessment years immediately preceding the assessment year
relevant to the assessment year in which search is conducted. Thus, in
other words, he has to assess the search year and six preceding years.
As per proviso to Section 153C, for the purpose of Section 153C, the
date of receiving the books of account or documents shall be
considered the date of search. Therefore, with the combined reading
of proviso to Section 153C and Section 153A(1)(b), it is clear that in the
case of the person in whose case action is required under Section
153C, the Assessing Officer is empowered to take action under Section
153C for the year in which the seized document is received by him and
the preceding six years. In the case under appeal before us, as
mentioned by the Assessing Officer in paragraph 2 of his order, the
seized material was received on 12th March, 2009 from ACIT, Central
Circle-17. Thus, the year in which seized material was seized is
previous year 2008-09 relevant to AY 2009-10. The preceding six
years would be AY 2008-09, 2007-08, 2006-07, 2005-06, 2004-05 and
2003-04. Therefore, after considering the facts of the assessee's case
and combined reading of Section 153C as well as Section 153A, in our
opinion, the issue of notice under Section 153C for AY 2001-02 & 2002-
03 is barred by limitation. Accordingly, we quash the same and
consequentially, the assessment order passed in pursuance to the
notice issued under Section 153C is also quashed.
6 ITA-567/D/2011 &
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9. Since we have quashed the assessment order, the other grounds
raised by the assessee in both the years, which are against the merits
of the additions, do not survive for adjudication.
10. ITA Nos.4814/Del/2012 & 4816/Del/2012 are the assessee's
appeals for AY 2001-02 & 2002-03 respectively against the levy of
penalty under Section 271F amounting to `5,000/- each. As we have
quashed the issue of notice under Section 153C, the levy of penalty
upon the assessee for failure to furnish the return in pursuance of such
notice cannot be sustained. The same are also cancelled.
11. ITA Nos.4813/Del/2012 & 4815/Del/2012 are the assessee's
appeals for AY 2001-02 & 2002-03 respectively against the order
passed under Section 154.
12. The Assessing Officer has modified the order passed under
Section 153C for these two years and charged the interest under
Section 234B. However, while disposing of the assessee's appeal in
ITA Nos.567/Del/2011 & 568/Del/2011, we have quashed the
assessment order passed under Section 143(3) read with Section
153C. Once the assessment order has been quashed, the question of
rectification of the same does not arise. Accordingly, the order passed
under Section 154 for AY 2001-02 & 2002-03 is quashed and
consequentially, the assessee's appeals vide ITA Nos.4813/Del/2012 &
4815/Del/2012 are allowed.
13. ITA No.4812/Del/2012 is the assessee's appeal for AY 2000-01
against the levy of penalty of `5,000/- for non-filing of the return in
pursuance to notice under Section 153C. While deciding the
assessee's appeals for AY 2001-02 & 2002-03 in paragraph Nos.5 to 8
above, we have held that the issue of notice prior to AY 2003-04 is
7 ITA-567/D/2011 &
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barred by limitation. Once the notice issued under Section 153C is
barred by limitation, the same is void and the assessee cannot be
penalized for non-filing of the return in response to such notice which
is not valid in law. Accordingly, the penalty levied under Section 271F
for AY 2000-01 is also cancelled.
14. In the result, all the appeals of the assessee are allowed.
Decision pronounced in the open Court on 28th November, 2014.
Sd/- Sd/-
SUDHIR)
(I.C. SUDHIR) AGRAWAL)
(G.D. AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
Dated : 28.11.2014
VK.
Copy forwarded to: -
1. Appellant : M/s R.L. Allied Industries,
50-
50-F, Kohlapur Road,
Kamla Nagar, Delhi 110 007.
2. Respondent : Income Tax Officer,
Ward-
Ward-20(1), New Delhi.
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
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