2014 (2) TMI 29 - HC - Income Tax

Validity of assessment u/s 153A - Held that - The Tribunal came to a factual finding that no search authorization was produced - This was necessary because the Assessing Officer had made contradictory references to the assessee being subjected to search or not - In absence of a search authorization, the Tribunal correctly held that assessment orders under section 153A could not have been passed - Section 124 pertains to jurisdiction of the Assessing Officers which has no relevance in so far as the inherent jurisdiction for passing an order of assessment under section 153A of the Act is concerned - Decided against Revenue.

Summary

Issues:
Validity of assessment orders under section 153A of the Income Tax Act, 1961 based on search proceedings and jurisdiction of the Assessing Officer.

Analysis:
The judgment dealt with the validity of assessment orders passed by the Assessing Officer under section 153A of the Income Tax Act, 1961. The primary issue revolved around the jurisdiction of the Assessing Officer to pass such orders in the absence of search proceedings against the assessee. The Tribunal observed discrepancies in the Assessing Officer's statements regarding the search conducted, leading to confusion. Despite multiple opportunities, the Revenue failed to produce the search record, prompting the Tribunal to conclude that no search warrant existed against the assessee, rendering the assessment orders invalid.

The Tribunal's decision was based on the provisions of section 153A of the Act, which govern assessments in cases of search or requisition. It mandates the Assessing Officer to issue a notice and assess or reassess the total income of preceding years post a search. The Tribunal cited a precedent from the Orissa High Court, emphasizing the necessity of a search initiation for assessments under section 153A. In this case, the Tribunal's factual finding of the absence of a search authorization justified its decision to invalidate the assessment orders.

Furthermore, the judgment clarified the relevance of section 124 of the Act concerning the territorial jurisdiction of Assessing Officers. It highlighted that objections to jurisdiction could be raised under section 124(2) and foregone beyond specified stages as per section 124(3). However, these provisions were distinct from the authority to pass assessment orders under section 153A without a valid search authorization or requisition under sections 132 and 132A, respectively.

Lastly, the judgment briefly addressed an additional question of limitation raised by the Revenue for the assessment year 2005-06, which was not delved into due to the confirmation of the Tribunal's decision on the primary issue of the assessment's validity under section 153A. Consequently, the Tax Appeals were dismissed, upholding the Tribunal's ruling on the matter.