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2017 (12) TMI 49 - AT - Income TaxValidity of assessment u/s 153A - Issue beyond the scope of assessment framed u/s 143(3) - Inclusion of AY in which search was conducted into the period of 6 assessment years - recording of satisfaction during the next year - Held that - In such a situation, assessment for assessment year 2008-09 should have been completed in terms of section 153C read with 153A and not as a regular assessment under section 143(3). The reason being entire concept of abated; unabated as laid down in 2nd proviso to section 153A(1) and other issue of limitation as contained section 153 B has to be seen with reference to such reference date which has different consequences. Like for instance in section 153 B the period of limitation for completion of regular assessment for the year of search and for the assessment falling in each of the six assessment years are different. Thus, in our humble opinion, assessment for assessment year 2008-09 should have been completed under section 153A read with 153C and not as regular assessment under section 143(3), by treating the A.Y. 2008-09 as year of search. Here in this case, return was filed on 27/9/2008 and time limit in terms of proviso to section 143(2) was on or before 30/9/2009, up to which notice under section 143(2) was mandatorily required to be served upon the assessee, in case the Assessing Officer wanted to vary the returned of income filed under section 139. It is trite proposition of law that if no notice has been issued in accordance to provisions of section 143(2), then no addition over and above the returned income can be made and this law has been well settled by various judgments including that of Hon ble Supreme Court in the case of ACIT vs. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA . We hold that addition made by the Assessing Officer in the impugned order is unsustainable being beyond the scope of assessment framed under section 143(3). Thus, on legal grounds, the appeal of the assessee is allowed
Issues Involved:
1. Validity of assessment under section 143(3) versus section 153C read with section 153A. 2. Timeliness and validity of notice under section 143(2). 3. Addition of ?3,52,50,000 on account of alleged cash payment for property acquisition. 4. Admission of additional evidence under rule 46A. Issue-wise Detailed Analysis: 1. Validity of Assessment under Section 143(3) versus Section 153C read with Section 153A: The assessee challenged the validity of the assessment order passed under section 143(3) for the assessment year 2008-09, arguing that it should have been passed under section 153C read with section 153A. The search and seizure action conducted on 19/2/2008 on M/s B.L. Kashyap & Sons revealed unaccounted cash payments linked to the assessee-company. The Assessing Officer issued a notice under section 153C on 20/11/2009 after recording "satisfaction". The Tribunal observed that the assessment year 2008-09 should be considered within the six assessment years preceding the year of search, and thus, the assessment should have been framed under section 153C read with section 153A. The Tribunal relied on the judgment of the Hon'ble Delhi High Court in CIT vs. RRJ Securities Ltd., which held that the reference date for "other persons" under section 153C is the date of recording of satisfaction. Therefore, the assessment for 2008-09 could not be a regular assessment under section 143(3). 2. Timeliness and Validity of Notice under Section 143(2): The assessee argued that the notice under section 143(2) was not served within the statutory time limit. The return of income was filed on 27/9/2008, and the last date for serving the notice under section 143(2) was 30/9/2009. However, the notice was issued on 1/12/2009. The Tribunal held that the issuance and service of the notice were beyond the statutory time limit, rendering the assessment order invalid. The Tribunal emphasized that without a valid notice under section 143(2), the assessment could not be sustained, citing the Supreme Court's decision in ACIT vs. Hotel Blue Moon. 3. Addition of ?3,52,50,000 on Account of Alleged Cash Payment for Property Acquisition: The assessee challenged the addition made by the Assessing Officer on account of alleged cash payment for property acquisition. However, since the Tribunal found the assessment itself invalid on legal grounds, the merits of this addition were not addressed, rendering this issue infructuous. 4. Admission of Additional Evidence under Rule 46A: The assessee contended that the CIT(A) erred in not admitting additional evidence filed under rule 46A. However, this issue also became infructuous due to the Tribunal's decision on the invalidity of the assessment order. Conclusion: The Tribunal allowed the appeal of the assessee on legal grounds, holding that the assessment should have been framed under section 153C read with section 153A and that the notice under section 143(2) was not served within the statutory time limit. Consequently, the other grounds raised on merits were treated as dismissed. The order was pronounced on 28th November 2017.
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