9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (10) TMI 972 - AT - Income TaxAdditions made during the course of assessment proceedings u/s.153A - Additional depreciation - Held that - Section 153A of the Act, uses the expressing pending assessment or reassessment . When a return is filed and acknowledgement or intimation issued u/s.143(1), the proceedings initiated by filing the return are closed, unless a notice u/s 143(2) of the Act is issued. In the present case, the period for issuing the notice u/s 143(2) elapsed. Therefore the process has attained the finality which can only be assailed u/s 148 or 263 of the Act. It can thus be concluded that making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed under section 143(1) of the Act, thereby resulting in non-abatement of such assessment in terms of the Second Proviso to section 153A(1) of the Act. Additional depreciation could not and ought not to have been examined by the AO in the assessment proceedings u/s.153A of the Act as the said issue stood concluded with the assessee s return of income being accepted u/s.143(1) of the Act prior to the date of search and no notice having been issued u/s.143(2) of the Act within the time limit laid down in that section which time limit as per the law prevailing on the date when the Assessee filed return of income i.e., 30.10.2007, would expire on 31.12.2008. Such assessment u/s.143(1) of the Act did not abate on the date of search which took place on 15.1.2009. In respect of assessments completed prior to the date of search that have not abated, the scope of proceedings u/s.153A of the Act has to be confined only to material found in the course of search. Since no material whatsoever was found in the course of search, the question of allowing additional depreciation or not could not have been subject matter of proceedings u/s 153A of the Act. Consequently, the CIT in exercise of his powers u/s.263 of the Act ought not to have or could not have directed examination of the said issue afresh by the AO. - Decided in favour of assessee.
Issues Involved:
1. Legality of the order passed by the CIT under Section 263 of the Income Tax Act. 2. Whether the CIT failed to appreciate that no incriminating material was found during the search. 3. The CIT’s direction to the Assessing Officer (AO) to examine the applicability of Section 147. Detailed Analysis: 1. Legality of the Order Passed by the CIT under Section 263: The appeal was filed by the assessee against the order of the CIT under Section 263 of the Income Tax Act, 1961, which was passed on 21/03/2013. The CIT had revised the AO’s order dated 31/12/2010, which allowed additional depreciation claimed by the assessee. The CIT held that the AO’s order was erroneous and prejudicial to the interests of the Revenue, as the assessee was not engaged in manufacturing or production activities, and thus, not entitled to additional depreciation under Section 32(1)(iia) of the Act. The Tribunal found that the CIT’s exercise of revisional jurisdiction under Section 263 was not justified because the issue of additional depreciation could not be revisited in the absence of incriminating material found during the search. Thus, the Tribunal quashed the CIT's order under Section 263. 2. Whether the CIT Failed to Appreciate that No Incriminating Material was Found During the Search: The Tribunal noted that the original return filed by the assessee was accepted under Section 143(1) and no notice under Section 143(2) was issued within the prescribed time. Consequently, the assessment for the year 2007-08 was concluded and did not abate upon the search conducted on 15/01/2009. The Tribunal emphasized that for assessments concluded prior to the date of search, the scope of proceedings under Section 153A should be confined to material found during the search. Since no incriminating material was found, the AO could not have revisited the issue of additional depreciation in the assessment under Section 153A. Therefore, the Tribunal held that the CIT failed to appreciate this aspect and incorrectly directed the AO to re-examine the issue of additional depreciation. 3. The CIT’s Direction to the AO to Examine the Applicability of Section 147: The Tribunal observed that the CIT directed the AO to examine the applicability of Section 147, which pertains to reassessment. However, the Tribunal held that since the issue of additional depreciation could not be revisited in the absence of incriminating material found during the search, the CIT’s direction to the AO under Section 263 was not warranted. The Tribunal concluded that the CIT’s order was erroneous and prejudicial to the interests of the assessee, and thus, quashed the proceedings under Section 263. Conclusion: The Tribunal allowed the appeal of the assessee, holding that the CIT’s order under Section 263 was not justified as the AO could not revisit the issue of additional depreciation in the absence of incriminating material found during the search. The Tribunal quashed the CIT’s order and concluded that the proceedings under Section 263 were invalid.
|
