2020 (8) TMI 946 - AT - Income Tax

Validity of assessment u/s 153A r.w.s. 153C - disallowance of freight charges u/s 37(1) - as pointed assessment year in question was not abated as per Section 153A and the regular assessment had already been completed u/s 143(3) - HELD THAT - As the regular assessment has already been completed u/s 143(3) the assessment has not been abated the addition has not been made based on any incriminating material unearthed during the course of search or requisition of document or undisclosed income pertaining to the assessee found out during the search seizure operation and in view of judgments in the case of CIT Vs Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and CIT Vs Kurele Paper Mills Pvt. Ltd. 2015 (9) TMI 115 - DELHI HIGH COURT wherein it was held that the completed assessments cannot be interfered with by the AO while making the assessment u/s 153C in the absence of any incriminating material the addition made by the AO is directed to be deleted. Assessee appeal allowed.

Summary

Issues involved: Appeal against order of CIT(A) u/s 153A r.w.s. 153C, disallowance of freight charges u/s 37(1), adequacy of opportunity given in passing the order.

Issue 1: Jurisdiction u/s 153A r.w.s. 153C

The appeal was filed against the order of the ld. CIT(A) confirming the action of the ld. AO in assuming jurisdiction and issuing notice u/s 153A r.w.s. 153C. The notice was challenged as being issued in the name of a non-existing entity. The Tribunal noted that the assessment year in question was not abated as per Section 153A and the regular assessment had already been completed u/s 143(3). Citing precedents, the Tribunal held that without any incriminating material, completed assessments cannot be interfered with u/s 153C. Consequently, the Tribunal directed the deletion of the addition made by the AO.

Issue 2: Disallowance of Freight Charges u/s 37(1)

The ld. CIT(A) confirmed the action of the AO in making a disallowance of freight charges under u/s 37(1) during the proceedings u/s 153C. The AO's basis for the disallowance was the non-production of bills and transactions within group companies. However, the Tribunal, considering the absence of incriminating material and the completion of the regular assessment u/s 143(3), ruled in favor of the assessee and ordered the deletion of the addition.

Issue 3: Adequate Opportunity for Hearing

The assessee contended that the ld. CIT(A) erred in confirming the action of the AO without providing adequate opportunity to be heard. The Tribunal did not delve into this issue specifically in its judgment, as the decision primarily focused on the lack of jurisdiction u/s 153A r.w.s. 153C and the disallowance of freight charges u/s 37(1).

In conclusion, the Appellate Tribunal ITAT Delhi allowed the appeal of the assessee, directing the deletion of the addition made by the AO in relation to the disallowance of freight charges. The Tribunal emphasized the importance of incriminating material in assessments u/s 153C and upheld the completed assessments in the absence of such material.