The Income Tax Act's Section 153C requires clear incriminating material linking to assessment years for valid jurisdiction to reassess income, which was lacking, rendering the proceedings void.

ORDER

PER ABY T. VARKEY, JM:

These appeals preferred by the assessee and the Revenue are against the orders of the Learned Commissioner of Income Tax (Appeals)- 19, (hereinafter referred to as ‘Ld.CIT(A)‘), Chennai, all dated 21.02.2025 for the Assessment Years(hereinafter referred to as ‘AY‘) 2014-15 to 2017-18 u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘).

2. Before we advert to the grounds taken in these appeals, it would first be relevant to cull out the basic facts of the case and effect of law in brief in respect of these AYs. Briefly stated, the facts of the case are that, the assessee is a private limited company which is engaged in the business of manufacturing and sale of Indian made foreign liquor. Search u/s 132 of the Act was conducted against SNJ Group on 06.08.2019, i.e., AY 2020-21. As a sequel to this search, the business premises of one M/s. Crystal Bottles located at Coimbatore was also subjected to search. According to the Revenue, the seized material which was found in the course of search at M/s Crystal Bottles contained information relating to the assessee viz., M/s. Crystal Bottles had facilitated inflation of expenses of the assessee by raising bogus invoices for supplying old empty bottles and that the payments received by M/s. Crystal Bottles against such bogus invoices was returned back to the assessee in cash after deducting their commission @ 6% on the bogus bill value. The seized material was handed over to the AO of the assessee on 18-06-2021 and then the satisfaction note was recorded by the AO on 24-06-2021 i.e., AY 2022- 23; and on the same date, notice(s) u/s 153C of the Act was issued upon the assessee for AYs 2014-15 to 2019-20. According to the AO, ordinarily having regard to the date of search i.e. 06-08-2019, he was within his jurisdiction to issue notices u/s 153C of the Act in respect of six assessment years preceding the assessment year of search i.e. in the present case search took place, so, ordinarily the AO was empowered u/s. 153C of the Act to reopen six preceding assessment years preceding the searched assessment year and those AY's were AYs2014-15 to 2019-20. It is not in dispute that, the income-tax assessments of the assessee for the impugned AYs 2014-15 to 2017-18 were either completed u/s 143(1)/143(3) of the Act and/or the time limit for issue of notice u/s 143(2) of the Act had expired. Accordingly, the income-tax assessments for AYs 2014-15 to 2017-18 weren’t pending before AO on the date of search, therefore, those years didn’t abate consequent to the search. Post the issue of notice u/s 153C of the Act for these unabated AYs 2014-15 to 2017-18, the AO is noted to have completed all the income-tax assessments u/s.153C/143(3) of the Act by orders dated 28.03.2023 after making addition(s) on account of bogus purchases. Apart from the foregoing, the AO is also noted to have made addition(s)/disallowance(s) on account of deduction(s) claimed u/s 80G / 80GGB, disallowance u/s 14A of the Act and disallowance of certain items of expenses.

3. Aggrieved by the above order(s) of the AO, the assessee preferred appeal before the Ld. CIT(A). The assessee is noted to have challenged the validity of the notices issued u/s 153C of the Act on several fronts. Taking into account the submissions put forth by the assessee, the Ld. CIT(A) observed that, the satisfaction note recorded by the AO for these AYs only contained reference to existence of incriminating material relating to the AY(s) 2018-19 & 2019-20 and that the satisfaction note didn’t contain any mention about the existence of any incriminating material in relation to AY(s) 2014-15 to 2017-18. Relying upon the decision of the Hon’ble Apex Court in the case of Sinhgad Technical Education Society (397 ITR 344), the Ld. CIT(A) therefore held that, there was evidently no nexus made out by the AO between the incriminating material found as a result of search with the AYs 2014-15 to 2017-18 prior to issu