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2016 (6) TMI 1131 - AT - Income TaxValidity of assessment u/s 153A - Held that - When we examine the facts of the present case, we find that like in the case of Kabul Chawla, 2015 (9) TMI 80 - DELHI HIGH COURT in the present case return of income originally filed was processed under section 143(1) of the Act, undisputedly, no notice under sec. 143(2) was issued within the prescribed time limit and thus processing of original return of income under sec. 143(1) of the Act had acquired the status of assessment. On the date of search undisputedly no assessment was pending for the abatement and it is also an undisputed fact of the present case that no incriminating material was found during the course of search. On fulfillment of these two conditions i.e. no incriminating material was found during the course of search and no assessment was pending on the date of search, framing of assessment under sec. 153A in the present case thus cannot be justified as valid. We thus respectfully following the ratios laid down in the above cited decision in the case of Kabul Chawla hold that the assessment in question was not valid and it was void ab initio. The same is quashed as such. - Decided in favour of the assessee.
Issues:
1. Validity of assessment order under sec. 153A/143(3) without incriminating material found. 2. Disallowance under sec. 40A(3) without incriminating material. 3. Charging of interest under 234B of the Income-tax Act, 1961. Issue 1: Validity of assessment order under sec. 153A/143(3) without incriminating material found: The appellant challenged the first appellate order, arguing that the assessment order under sec. 153A/143(3) was invalid as it lacked jurisdiction and approval, especially with no incriminating material discovered post-search. The appellant contended that the return of income was filed on 14.11.2007, and no assessment was pending during the search, rendering the assessment under sec. 153A baseless. The appellant cited precedents like CIT v. Kabul Chawla and CIT v. Anil Kumar Bhatia to support their position. The appellant's argument was supported by the fact that no incriminating material was found during the search, leading to the conclusion that the assessment under sec. 153A was not valid. The Tribunal, following the decision in Kabul Chawla, held the assessment void ab initio and quashed it, thereby allowing the appeal on this ground. Issue 2: Disallowance under sec. 40A(3) without incriminating material: The appellant contended that the disallowance under sec. 40A(3) was unjustified as it was made without any incriminating material found during the search. The appellant argued that since no assessment was pending during the search and no incriminating material was discovered, the disallowance could not be sustained. Following the decision in Kabul Chawla, the Tribunal held the assessment void ab initio, rendering the grounds questioning the disallowance under sec. 40A(3) infructuous and disposed of them accordingly. Issue 3: Charging of interest under 234B of the Income-tax Act, 1961: The appellant raised concerns regarding the charging of interest under section 234B of the Income-tax Act, 1961. However, the judgment did not provide detailed analysis or resolution on this specific issue. In conclusion, the Tribunal found the assessment order under sec. 153A/143(3) invalid due to the absence of incriminating material post-search, thereby allowing the appeal. The disallowance under sec. 40A(3) was also deemed unsustainable for the same reason, leading to its disposal. The judgment did not delve into the issue of interest charged under section 234B.
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