2018 (8) TMI 278 - HC - Income Tax

Valadity of assessment u/s 153A - Held that - We are of the opinion that whether there was a satisfaction recorded or not and thereafter proceedings under Section 153C of the Income Tax were initiated or not and whether the learned Tribunal and the departmental representative proceeded further erroneously and /or on erroneous facts, it may firmly be brought to the notice of the learned Tribunal by way of rectification application so that the learned Tribunal may consider the file and the material on record and consider the same whether the learned Tribunal has proceeded on erroneous facts and /or what was considered by it was even submitted by the Deputy Commissioner is borne out from the material on record /file or not, we are not further entering into the merits of the case at this stage and we relegate the department to submit appropriate rectification application /applications before the learned Tribunal pointing out what is stated in the present Tax Appeals with supporting material and if such application /applications are preferred within the period of four weeks from today, we direct the learned Tribunal to decide the same in accordance with law and on its own merits

Summary

Issues:
1. Quashing of proceedings under Section 153C of the Income Tax Act
2. Deletion of addition made by the Assessing Officer

Analysis:
1. The first issue revolves around the quashing of proceedings initiated under Section 153C of the Income Tax Act. The appellant contended that the Assessing Officer had duly recorded satisfaction to initiate proceedings, contrary to the findings of the Tribunal. The appellant argued that the satisfaction was recorded by the Deputy Commissioner of Income Tax, providing details of documents and purchases forming the basis for initiating proceedings. The respondent, on the other hand, highlighted that no data regarding the recording of reasons for action under Section 153C in the case of the assessee was found on record. The respondent pointed out a subsequent change in the department's opinion post the Tribunal's judgment. The Court refrained from delving into the merits of the case at that stage, directing the department to file a rectification application before the Tribunal to address the alleged erroneous facts and considerations. The Court emphasized that the Tribunal should reevaluate the matter based on the rectification application, if submitted within four weeks.

2. The second issue pertains to the deletion of an addition of a specific amount made by the Assessing Officer. The appellant challenged the Tribunal's decision not to reverse the CIT(A)'s order deleting the said addition. However, the Court did not delve into the specifics of this issue in the judgment, as the focus was primarily on the quashing of proceedings under Section 153C. The Court disposed of all Tax Appeals at that stage, without providing detailed analysis on the deletion of the addition.

In conclusion, the High Court of Gujarat directed the department to file a rectification application before the Tribunal regarding the initiation of proceedings under Section 153C of the Income Tax Act. The Court refrained from delving into the merits of the case and instructed the Tribunal to reevaluate the matter based on the rectification application, if submitted within the stipulated timeframe. The judgment primarily focused on addressing the discrepancies related to the recording of satisfaction for initiating proceedings, leaving the issue of the deleted addition unexplored in detail.