2016 (2) TMI 1218 - AT - Income Tax

Assessment u/s 153C - HELD THAT - There can hardly be any dispute that once the search action itself stands quashed, the instant proceedings have no legs to stand. We find that co-ordinate bench has accepted Revenue s submission for alternate remedy to be exercised as per law after providing due opportunity of hearing to assessee. We also grant liberty to the department to proceed in the same terms. The impugned assessment proceedings initiated against the assessee are quashed. The Revenue s pleadings on merits have been rendered infructuous. The assessee s cross objections raising legal ground are accepted. Its other pleadings on merits and consequential action of penalty and interest have become academic.

Summary

Issues Involved:
- Assessment years 2007-08 to 2009-10
- Unexplained investment and money additions
- Validity of section 153C proceedings
- Interest levy and penalty initiation
- Quashing of impugned assessment proceedings

Analysis:

Assessment Year 2007-08:
- Revenue challenged lower appellate order deleting unexplained investment additions and payments.
- Assessee's cross objection questioned the validity of section 153C proceedings, section 69 addition, interest levy, and penalty initiation.
- Tribunal noted the search action in Madhya Pradesh leading to the initiation of section 153C proceedings.
- Citing a previous case where search warrant issuance was quashed, tribunal quashed the impugned assessment proceedings.
- Revenue's appeals were dismissed, and assessee's cross objections were partly allowed.

Assessment Year 2008-09:
- Revenue sought restoration of unexplained investment and money additions deleted in the lower appellate order.
- Assessee's cross objection raised similar grounds as in the previous assessment year.
- Tribunal considered the identical nature of issues and quashed the impugned assessment proceedings.
- Revenue's appeals were dismissed, and assessee's cross objections were partly allowed.

Assessment Year 2009-10:
- Revenue contested the deletion of additions under unexplained investments and money heads.
- Assessee's cross objection aimed to quash the section 153C proceedings.
- Tribunal reviewed the facts and quashed the impugned assessment proceedings based on the search action's invalidity.
- Revenue's appeals were dismissed, and assessee's cross objections were partly allowed.

Conclusion:
- The tribunal upheld the quashing of the impugned assessment proceedings due to the invalidity of the search action.
- Revenue's appeals were dismissed, and assessee's cross objections were partly allowed across all three assessment years.
- The tribunal granted liberty to the department to proceed as per law after providing due opportunity of hearing to the assessee.
- The assessment proceedings initiated against the assessee were quashed, rendering the pleadings on merits and consequential actions of penalty and interest academic.