2021 (3) TMI 1317 - AT - Income Tax

Validity of assessment u/s 153C - challenged jurisdiction of the AO assumed under section 153C of the Act on the ground that requisite addition contemplated under this section are not available in the present case -HELD THAT - The orders of the CIT(A) in both the cases have attained finality as the appeals of the Revenue were dismissed on account of low tax effect involved in them There is no necessity to record any finding, which otherwise not going to materially affect the assessee. It will be purely an academic issue. There is no tax liability in the hands of the assessee by virtue of taking cognizance under section 153C of the Act. Whatever tax liability fastened in the hands of both the assessee by the AO is concerned, that stands eliminated by virtue of order of the ld.CIT(A), and those orders have attained finality. Some documents ought to have been recovered which belong to the assessee, only thereafter, cognizance can be taken under section 153C. We do not wish to indulge in academic discussion on the issue raised by the assessees in appeals. However, in case, in future some Misc.Application or otherwise, appeals of the Revenue are revived or restored to their original numbers, then both the assessees will be at liberty to raise this preliminary ground in their respective appeals before the Tribunal in shape of cross objection. It is also observed that our non-adjudication and non-consideration of this issue on merit will not cause or prejudice to the assessees or other assessees of this group in their respective appeals. With the above observation, both the appeals are dismissed.

Summary

Issues:

1. Validity of notice issued under section 153C of the Income Tax Act.
2. Jurisdiction of the Assessing Officer under section 153C.
3. Challenge to the assessment orders.
4. Dismissal of appeals by the Revenue due to low tax effect.
5. Academic discussion on the issue raised by the assessees in appeals.

Issue 1: Validity of notice issued under section 153C of the Income Tax Act

The appeals were against separate orders of the ld.CIT(A)-11, Ahmedabad, challenging the notice issued under section 153C. The search under section 132 revealed involvement of other individuals in providing accommodation entries. The action under section 153C was taken against the present assessees based on information gathered from seized material of the searched persons. The assessees contended that the notice was not in accordance with the law.

Issue 2: Jurisdiction of the Assessing Officer under section 153C

Both assessees challenged the jurisdiction of the Assessing Officer under section 153C, arguing that the requisite additions were not available in their cases. The ld.CIT(A) rejected this argument but deleted the additions made on merit. The Revenue's appeals were dismissed due to low tax effect, leading to the finality of the orders of the ld.CIT(A). The assessees reiterated their contentions before the Tribunal, emphasizing that no tax liability existed in their hands after the deletions made by the ld.CIT(A).

Issue 3: Challenge to the assessment orders

The assessees challenged the assessment orders, arguing that no action under section 153C should have been taken as the additions made were deleted on merit by the ld.CIT(A). The Tribunal observed that there was no necessity to record any finding that would materially affect the assessees, as the tax liability had been eliminated by the ld.CIT(A)'s orders. The Tribunal decided not to indulge in academic discussion on the issue raised by the assessees, as it would not cause prejudice to them or other assessees of the group.

Issue 4: Dismissal of appeals by the Revenue due to low tax effect

The Revenue's appeals were dismissed due to the low tax effect resulting from the relief given by the ld.CIT(A). This dismissal led to the finality of the ld.CIT(A)'s orders in both cases. The assessees were allowed to raise the preliminary ground in future appeals if the Revenue's appeals were revived or restored.

Issue 5: Academic discussion on the issue raised by the assessees in appeals

The Tribunal decided not to engage in an academic discussion on the issue raised by the assessees, as the tax implications had been eliminated by the ld.CIT(A)'s orders. The assessees were given the liberty to raise the issue in future appeals if necessary. Both appeals of the assessees were dismissed with this observation.

In conclusion, the Tribunal dismissed the appeals of the assessees, emphasizing that the tax liability had been eliminated by the ld.CIT(A)'s orders, and there was no necessity for further academic discussion on the issues raised.