2011 (7) TMI 1148 - AT - Income Tax

Summary

Issues Involved:
1. Validity of search conducted under Section 132 of the Income Tax Act.
2. Validity of notice issued under Section 153A and subsequent assessment proceedings.
3. Transfer of jurisdiction under Section 127.
4. Requirement of notice under Section 143(2).
5. Genuineness of gifts received by the assessee.

Issue-Wise Detailed Analysis:

1. Validity of Search Conducted Under Section 132:
The assessee challenged the legality and validity of the search and seizure proceedings under Section 132. The Tribunal referred to multiple judicial precedents, including the Delhi High Court in M.B. Lal vs. CIT, which held that the validity of search proceedings cannot be examined in appeal before the Tribunal. The Tribunal noted that the assessee had already challenged the search's validity through a writ petition before the Allahabad High Court, which was pending adjudication. Consequently, the Tribunal concluded that it was not within its jurisdiction to decide on the validity of the search action under Section 132, thus rejecting the assessee's grounds on this issue.

2. Validity of Notice Issued Under Section 153A and Subsequent Assessment Proceedings:
The assessee raised multiple objections against the validity of the notice issued under Section 153A and the subsequent assessment proceedings. The Tribunal observed that these issues had not been adjudicated by the CIT(A) and thus remitted the matter back to the CIT(A) for a fresh decision. The Tribunal instructed the CIT(A) to consider all facts, circumstances, and contentions raised by both parties, and to provide a reasonable opportunity of being heard to the assessee and the AO.

3. Transfer of Jurisdiction Under Section 127:
The assessee contended that the transfer of jurisdiction was invalid due to the lack of communication and opportunity to object. The Tribunal referred to Section 127(3), which states that no opportunity needs to be given when the transfer is within the same city, locality, or place. The Tribunal held that the transfer from Ward 2(2), Meerut to ACIT, Central Circle, Meerut, was valid and did not require prior communication to the assessee. It further noted that the assessee had not shown any prejudice caused by the non-communication of the transfer order before the assessment proceedings. Thus, the Tribunal rejected the assessee's objections regarding the transfer of jurisdiction.

4. Requirement of Notice Under Section 143(2):
The assessee argued that the assessment was invalid due to the lack of a valid notice under Section 143(2). The Tribunal examined the provisions of Section 143(2) and noted that the AO had issued a notice under Section 143(2) within the prescribed period after the assessee filed the return in response to the notice under Section 153A. The Tribunal found that the notice issued by the AO satisfied the conditions of Section 143(2)(ii) and thus upheld the validity of the assessment proceedings. The Tribunal rejected the assessee's objections on this ground.

5. Genuineness of Gifts Received by the Assessee:
The revenue disputed the deletion of additions made by the AO on account of unexplained gifts. The Tribunal noted that the CIT(A) had deleted the additions based on the documents submitted by the assessee, such as gift deeds, affidavits, and income-tax particulars of the donors. However, the Tribunal observed that the CIT(A) had not thoroughly examined or verified these documents. The Tribunal set aside the CIT(A)'s order and remitted the matter back for a fresh decision, instructing the CIT(A) to verify the documents and provide an opportunity for both parties to present their cases. The Tribunal emphasized the need to establish the identity, creditworthiness, and genuineness of the gifts, considering human probabilities, relationship, and occasion of the gifts.

Conclusion:
The Tribunal remitted the issues regarding the validity of notice under Section 153A, assessment proceedings, and genuineness of gifts back to the CIT(A) for a fresh decision. It upheld the validity of the search action under Section 132 and the transfer of jurisdiction under Section 127. The Tribunal also confirmed that the notice issued under Section 143(2) was valid, thus rejecting the assessee's objections on these grounds.