2012 (10) TMI 1090 - AT - Income Tax

Assessment u/s 153A - Deduction u/s 80IA and 80IB - Held that - Instead of complying with the requirements of section 153A of the Act the A.O. proceeded with the pending assessment proceeding for the A.Y.and passed the impugned assessment order during the pendency of the assessment u/s 153A of the Act which is a nullity and as such the assessment order dtd. 27-12-2006 passed u/s 143(3) of the Act is illegal arbitrary wholly without jurisdiction and hence the same is quashed. As regards the plea of the ld. D.R. that in the assessment order passed u/s 153A of the Act the A.O. has made the additions/disallowances on the basis of the impugned assessment order passed u/s 143(3) of the Act therefore on equitable ground the said additions may remain to be considered as made in the assessment order passed u/s 153A of the Act we find that it is a settled law that where there is no ambiguity and the intention of the legislature is clearly conveyed there is no scope for the court to undertake any exercise to read something into the provisions which the legislature in its wisdom concisely omitted. Such an exercise is undertaken by the court may amount to amending or altering statutory provisions. The courts have to decide what the law is and not what it should be.

Issues Involved:
1. Disallowance of depreciation.
2. Disallowance of distribution expenses.
3. Disallowance of professional charges.
4. Disallowance of foreign travel expenses.
5. Disallowance of deduction under Sections 80IA and 80IB.
6. Validity of assessment order under Section 143(3) post-search under Section 132.

Issue-wise Detailed Analysis:

1. Disallowance of Depreciation:
The Assessing Officer (A.O.) made a disallowance of Rs. 95,094/- on depreciation. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed this disallowance. The assessee contested this confirmation, but the Tribunal did not provide a detailed discussion on this specific issue in the final judgment.

2. Disallowance of Distribution Expenses:
The A.O. disallowed Rs. 93,38,903/- out of distribution expenses. The CIT(A) partly deleted this disallowance. The Revenue challenged the relief allowed by the CIT(A), while the assessee contested the sustenance of the disallowance. The Tribunal did not delve into the merits of this issue due to the quashing of the assessment order on legal grounds.

3. Disallowance of Professional Charges:
The A.O. disallowed Rs. 45,73,390/- out of professional charges. The CIT(A) deleted this disallowance. The Revenue challenged this relief. However, the Tribunal did not address this issue on merits due to the quashing of the assessment order.

4. Disallowance of Foreign Travel Expenses:
The A.O. disallowed Rs. 55,83,927/- out of foreign travel expenses. The CIT(A) partly deleted this disallowance. Both the assessee and the Revenue contested the CIT(A)'s decision. The Tribunal did not discuss the merits of this issue due to the quashing of the assessment order.

5. Disallowance of Deduction under Sections 80IA and 80IB:
The A.O. disallowed the deduction under Sections 80IA and 80IB. The CIT(A) confirmed the disallowance under Section 80IA but partly deleted the disallowance under Section 80IB. Both the assessee and the Revenue challenged the CIT(A)'s decisions. The Tribunal did not address the merits of this issue due to the quashing of the assessment order.

6. Validity of Assessment Order under Section 143(3) Post-Search under Section 132:
The assessee raised an additional ground challenging the validity of the assessment order under Section 143(3), arguing that it was passed after a search under Section 132, which caused the pending assessment to abate under the second proviso to Section 153A. The Tribunal admitted this additional ground, noting that it was a pure question of law arising from the facts on record.

The Tribunal found that the search action under Section 132 took place on 30-11-2006, and the assessment for A.Y. 2004-05 was pending at that time. The assessment order under Section 143(3) was passed on 27-12-2006, post-search. Citing various judicial precedents and CBDT Circular No. 7 of 2003, the Tribunal held that the pending assessment abated due to the search, making the subsequent assessment order under Section 143(3) a nullity.

The Tribunal quashed the assessment order dated 27-12-2006 passed under Section 143(3) as illegal, arbitrary, and without jurisdiction. Consequently, the Tribunal did not address the other grounds on their merits.

Conclusion:
The Tribunal quashed the assessment order under Section 143(3) for A.Y. 2004-05 due to the abatement of pending assessment post-search under Section 132, rendering the other grounds moot. The assessee's appeal was partly allowed, and the Revenue's appeal was dismissed.

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