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2018 (8) TMI 597 - AT - Income TaxAssessment u/s 153A(1) (a r.w.s 153C - failure to issue notice u/s 153C - Additional ground of appeals on question of law - filing of return in pursuance of notice and then revising the return of income (ITR) - Held that - the additional grounds are legal in nature and no new facts shall have to be considered. The additional grounds go to the validity of the assessment proceedings under section 153C of the I.T. Act, therefore, the same should be admitted for deciding the appeal. The First Proviso to Section 153C of the I.T. Act provides that the 06 assessment years for which assessments or re-assessments could be made under section 153C of the I.T. Act, would also have to be construed with reference to the date of handing-over of the assets or documents to the A.O. of the assessee. Therefore, the 06 assessment years under section 153C of I.T. Act in the case of assessee would be A.Y. 2008-2009 to 2013-2014. The A.O, therefore, shall have to pass the assessment order under section 153C of the I.T. Act. However, A.O. has not issued any notice under section 153C of the I.T. Act before initiating the proceedings against the assessee which is also admitted by the A.O. in reply to the assessee under RTI Act. The issue of notice u/s 153C is mandatory and a condition precedent for taking action against the assessee under section 153C of the I.T. Act. The assessment order, therefore, vitiate, void, illegal and bad in law and cannot be sustained. Decided in favor of assessee.
Issues Involved:
1. Validity of proceedings under section 153C of the I.T. Act. 2. Addition of ?3 crores to the assessee's income. 3. Admission of additional legal grounds by the assessee. Issue-Wise Detailed Analysis: 1. Validity of Proceedings under Section 153C of the I.T. Act: The assessee challenged the validity of the proceedings under section 153C of the I.T. Act. The search on M/s Krrish Group of cases occurred on 09.11.2011, and documents were received by the A.O. on 29.08.2013. The satisfaction note was recorded on 03.10.2013. The assessee argued that no notice under section 153C was issued for the assessment year 2012-2013, as confirmed by the A.O. in an RTI reply. The A.O. passed the assessment order under section 153B(1)(b) considering it a search year. However, the First Proviso to Section 153C indicates that the six assessment years should be reckoned from the date of receiving the documents, making A.Y. 2014-2015 the search year. The Tribunal found that the A.O. should have issued a notice under section 153C and framed the assessment accordingly, making the assessment order void, illegal, and unsustainable in law. 2. Addition of ?3 Crores to the Assessee's Income: The assessee declared a total income of ?2,22,43,593/- in the revised return, but the assessment was framed at ?5,22,43,593/- by adding ?3 crores as a surrendered amount not incorporated in the return. Since the Tribunal quashed the assessment order on legal grounds, the addition of ?3 crores was also deleted. The Tribunal did not delve into the merits of the addition, as it became an academic discussion only after setting aside the assessment order. 3. Admission of Additional Legal Grounds by the Assessee: The assessee raised additional legal grounds, arguing that the jurisdiction for framing the assessment was wrongly assumed in the absence of issuance and service of notice under section 153C r.w.s. 153A. The Tribunal admitted these additional grounds, noting that they were legal in nature and did not require new facts to be considered. The Tribunal referred to the Hon'ble Supreme Court's decision in National Thermal Power Co. Ltd. and other relevant judgments, emphasizing that the Tribunal could decide on grounds not initially taken if they were purely legal. Consequently, the additional grounds were admitted, and the assessment order was quashed based on these grounds. Conclusion: The Tribunal allowed both appeals of the assessee, quashing the assessment orders and deleting all additions. The decisions were based on the improper issuance of notices under section 153C and the legal grounds raised by the assessee. The judgments referenced, including those of the Hon'ble Delhi High Court and ITAT, supported the Tribunal's conclusions, ensuring that the assessment proceedings complied with the statutory requirements.
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