2016 (8) TMI 1239 - HC - Income Tax

Assessment u/s 153A - Held that - Notice under section 153A was issued on November 3 2006 and in response thereto the assessee filed its return on December 11 2006 with a total income of 46, 91, 241 (rupees forty-six lakhs ninety-one thousand two hundred and forty-one only). Subsequently on December 28 2007 assessment was framed under section 153A read with section 143(3) on a total income of 51, 86, 410 (rupees fifty-one lakhs eighty-six thousand four hundred and ten only). Though this development took place during the pendency of the appeal filed by the Revenue before the Tribunal when the Tribunal passed the impugned order on March 12 2009 these developments were not brought to the notice of the Tribunal nor has the Tribunal considered the impact of these developments or section 153A of the Act on the proceedings. According to us for non-consideration of these developments that took place during the pendency of the appeal and also the impact of section 153A on the proceedings the order passed by the Tribunal needs to be set aside and the matter has to be remitted to the Tribunal for fresh consideration.

Summary

Issues:
1. Appeal against the order passed by the Income-tax Appellate Tribunal.
2. Challenge of the order before the Commissioner of Income-tax (Appeals).
3. Questions of law framed related to the Tribunal's decision.
4. Search conducted under section 132 of the Income-tax Act during the pendency of the appeal.
5. Assessment framed under section 153A read with section 143(3) after the search.
6. Impact of section 153A on the proceedings before the Tribunal.

Analysis:
The appeal before the High Court was filed by the assessee against the order passed by the Income-tax Appellate Tribunal, Cochin Bench, pertaining to the assessment year 2002-03. The assessee, engaged in the business of building residential flats and independent bungalows, initially filed returns with a total income of ?58,79,863. Subsequently, a revised return was filed following a survey, showing a total income of ?46,91,241. However, the assessment was completed, and an order was passed on a total income of ?1,48,57,690, rejecting the books of account.

The assessee challenged this order before the Commissioner of Income-tax (Appeals), who allowed the appeal. Subsequently, the Revenue filed an appeal before the Tribunal, which, by the impugned order, allowed the Revenue's appeal and restored the assessment order. The High Court considered the questions of law framed, including the correctness of the Tribunal's decision in adjudicating the appeal filed by the Revenue and reversing the Commissioner of Income-tax (Appeals) order.

During the pendency of the appeal before the Tribunal, a search was conducted under section 132 of the Income-tax Act at the assessee's premises. This led to the issuance of a notice under section 153A, with the assessee filing a return showing a total income of ?46,91,241. Subsequently, an assessment was framed under section 153A read with section 143(3) on a total income of ?51,86,410. The High Court noted that these developments were not brought to the Tribunal's notice, and the impact of section 153A on the proceedings was not considered by the Tribunal.

Due to the non-consideration of these developments and the impact of section 153A, the High Court set aside the Tribunal's order and remitted the matter back to the Tribunal for fresh consideration with notice to the parties and in accordance with the law. The appeal was disposed of accordingly.