Pranav B Prem

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has held that the reopening of assessment under Section 153A of the Income Tax Act, 1961, beyond the normal period of six years, was without jurisdiction as the statutory conditions required under the fourth proviso to the section were not fulfilled. The Bench comprising Anubhav Sharma (Judicial Member) and Krinwant Sahay (Accountant Member) observed that the extended ten-year period under Section 153A can be invoked only when the Assessing Officer possesses evidence of undisclosed income represented in the form of an “asset” valued at ₹50 lakh or more. Since this condition was not met, the assumption of jurisdiction stood vitiated.

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The appeal arose from an order of the Commissioner of Income Tax (Appeals)-3, Gurgaon, dated May 27, 2024, which had upheld an addition of ₹78 lakh towards share capital and share premium received by the assessee-company, Suryavanshi Finlease Pvt. Ltd. The Assessing Officer had framed the assessment under Section 153A read with Section 143(3), pursuant to a search conducted on January 22, 2018, in the Oswal Group, with which the assessee was connected.

Challenging the assessment, the assessee—represented by Advocate Ved Jain along with Chartered Accountants Pawan Garg and Ishika Dua—contended that the notice under Section 153A was issued well beyond the permissible six-year period and that the Assessing Officer could not rely on the extended ten-year period in the absence of the statutory preconditions. It was argued that the addition related to share capital and share premium, which represent liabilities and not assets, and therefore could not be treated as “undisclosed income represented in the form of an asset” for the purpose of the fourth proviso.

Agreeing with these submissions, the Tribunal held that the extended limitation period under Section 153A applies only when the income unearthed during a search is represented by an asset exceeding the monetary threshold of ₹50 lakh, as defined in Explanation 2 to Section 153A. The Bench noted that even in the assessment order, the Assessing Officer had referred to an alleged undisclosed investment of ₹46.8 lakh—below the ₹50 lakh threshold. Consequently, there existed no legal basis for invoking the extended jurisdiction.

The Tribunal also relied on the decision of the Gauhati Bench of ITAT in ACIT v. Goldstone Cements Ltd. (2021), which held that additions relating to liabilities, credits, or share capital do not fall within the ambit of “income represented in the form of an asset.” Thus, the AO’s invocation of extended limitation was inconsistent with the statutory mandate.

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Having found the jurisdictional defect fatal, the ITAT quashed the assessment order for AY 2009–10 in its entirety. The Tribunal concluded that “the assumption of jurisdiction under the fourth proviso to Section 153A stood vitiated,” and accordingly allowed the appeal filed by the assessee.

Appearance

Counsel For  Appellant: Ved Jain, Advocate

Counsel For Respondent: Mahesh Kumar, CIT-DR

Cause Title: Suryavanshi Finlease Private Ltd. Versus ACIT

Case No: ITA No.2900/Del/2024

Coram: Anubhav Sharma (Judicial Member), Krinwant Sahay (Accountant Member)