Pr. Commissioner of Income Tax-12 v. R.L Allied Industries

1. These appeals by the Revenue under Section 260A of the Income Tax Act, 1961 ('Act') are directed against the common order dated 28''^ November 2014 passed by the Income Tax Appellate Tribunal('ITAT')in ITA Nos. 567-568/Del/2011 and 4812-4816/Del/2012 for the Assessm.ent Years('AYs')2000-01 to 2002-03.

2. The question sought to be urged by the Revenue is whether the ITAT erred in accepting the plea of the Assessee that the assessments for the aforementioned AYs were barred by limitation in terms of the proviso to Section 153C ofthe Act.

3. A search and seizure action under Section 132 ofthe Act was carried out on the RL Group on 13 December 2005. In the course of search, several documents were seized.It was claimed that some ofthe documents belonged to the Respondentherein,i.e.,M/sR.L.Allied Industries(the Assessee).The seized material pertaining to the Assessee was received by the Assessing Officer('AO')ofthe searched entity from the Assistant Commissioner of Income Tax('ACIT')Circle -17 on 12^'' March 2009. Thereafter they were handed over to the AO ofthe Assessee and the notice under Section 153C th was issued and served uponto the Assessee on 24 March 2009.

4. The contention ofthe Assessee,which found favour with the ITAT,is that ITA Nos.370,401.402,390,391&494/2015 Page3of? lo in terms ofthe proviso to Section 153C(1)ofthe Act,the date ofreceipt of the books and accounts by the AO ofthe Assessee is deemed to be the date of search as far as the Assessee is concerned. The six AYs preceding the year ofthe search,for which the assessment was proposed to be reopened, related as far back as 2003-04. Consequently, it was held by the ITAT that the reopening ofthe assessment for AYs 2001-02to 2002-03 was barred by limitation.

5. It is sought to be urged by the learned counsel for the Revenue that the decision ofthis Court in SSP Aviation Ltd. v. DCIT(2012)346ITR 177 and the subsequent decision in CIT v. RRJ Securities Ltd. (2015) 62 taxmann.com 391(Del.) perhaps did not discuss the first proviso to Section 153B(1)ofthe Act. The further contention is that in any eventthe effect of a combined reading of the first proviso to Section 153B (1) and the first proviso to Section 153C (1) of the Act would only be that regular assessments which may have been pending for any ofthe six AYs preceding the year of search would abate but that the period for completion of assessments would begin to run from the later date i.e. the date ofhanding over ofthe accounts and documents etc to the AO ofthe 'other person'. In effect, learned Counsel for the Revenue doubted the correctness of the decisions in SSPAviation (supra)and RRJSecurities(supra)and sought a reference ofthe case to a larger Bench.

6. Having considered the relevant provisions and the decisions referred to, this Court is not persuaded to accept the above plea. The decision of this Court in RRJ Securities {supra), apart from discussing the provisions in ITA Nos.370,401,402,390,391&494/2015 Page4of[7] question also adverted to the earlier decision in SSP Aviation(supra) and concluded as under: "24. As discussed hereinbefore,in terms ofproviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A ofthe Acthas to be construed as the date of handing over ofassets/documents belonging to the Assessee(being the person otherthanthe one searched)to the AO havingjurisdiction to assessthe said Assessee.Further proceedings,by virtue ofSection 153C(1) of the Act, would have to be in accordance with Section 153A ofthe Act and the reference to the date ofsearch would have to be construed as the reference to the date of recording of satisfaction. It would follow that the six assessment years for which assessments/reassessments could be made under Section 153C ofthe Act would also have to be construed with reference to the date of handing over ofassets/documents to the AO ofthe Assessee.In this case, it would be the date of the recording of satisfaction under Section 153C ofthe Act,i.e.,8th September,2010.In this view,the assessments made in respect ofassessment year 2003-04 and 2004- 05 would be beyond the period ofsix assessment years as reckoned with reference to the date ofrecording ofsatisfaction by the AO of the searched person.It is contended by the Revenue thatthe relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted.Ifthis interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case ofa person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case ofany other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period ofsix years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date ofthe search. This, in our view, would be contrary to the scheme of Section 153C(1)ofthe Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date ofthe search on the Assessee. The rationale appears to be that whereas in the case ofa searched person ITA Nos.370,401,402,390,391 &494/2015 Page5of[7] r the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person otherthan asearched person come into possession ofthe AO ofthat person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus,the date on which the AO of the person otherthan the one searched assumesthe possession ofthe seized assets would be the relevant date for applying the provisions ofSection 153A ofthe Act. We,therefore,acceptthe contention that in any view ofthe matter,assessmentfor AY 2003-04 and AY 2004- 05 were outside the scope of Section 153C ofthe Act and the AO had nojurisdiction to make an assessment ofthe Assessee's income forthat year."

7. This Court reiterates the view already expressed by it in RRJSecurities (supra) when it comes to reopening ofassessments ofa person other than the searched person,in terms ofthe first proviso to Section 153C(1).In such event the date ofsearch would get postponed to the date ofreceipt ofthe books ofaccounts or documents seized by the AO havingjurisdiction over such 'other person' and the six earlier AYs would have to be reckoned with reference to such postponed date ofsearch. The first proviso to Section 153 B(1)does not support the case sought to be canvassed by the Revenue. It refers to and acknowledges that the date ofsearch qua the'other person',in terms ofthe first proviso to Section 153 C(1), gets postponed tothe date on which documents are handed over to the AO of the 'other person'. Consequently,the question ofreferring the case to a larger Bench does not arise.

8. In the present case,there is no doubtthat it was only on 24^''March 2009 that the AO of the Assessee received the documents seized and it was on ITA Nos.370,401,402,390,391&494/2015 Page6of[7] r that date a notice under Section 153C(1)was issued and served upon the Assessee. Consequently,this Courtfinds no legal error in the conclusion of the ITAT that notice under Section 153C(1)could not have been issued for AYs 2001-02 and 2002-03.

9. No substantial question oflaw arises for consideration. The appeals are dismissed.

S.MURALIDHAR,J VIBHUBAKHRU,J JANUARY 28,2016 mg