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2019 (4) TMI 695 - AT - Income TaxAssessment u/s 143(3) - search and seizure action U/s 132 was taken during pendency of assessment proceedings - CIT(A) quashed assessment on ground of issuance of notice u/s 143(2) by 2nd AO - whether assessment proceeding will be abate? - HELD THAT - There will be only one assessment order in respect of each of six assessment years in which both the disclosed and undisclosed income would be brought to tax. The assessment or reassessment pending on the date of search shall abate and total income for such assessment years will have to be computed by the Assessing Officer as a fresh exercise. In the case in hand when the assessment proceedings were pending on the date of search on 27/8/2017 then the said proceedings initiated U/s 143(3) stood abated by virtue of search U/s 132(2) of the Act and the impugned order passed by the A.O. is nonest. Consequently the order passed by the CIT(A) also becomes infructuous when the assessment proceedings itself got abated and the only course of determination of the total income of the assessee is in the proceedings initiated U/s 153A of the Act. Neither the assessee nor the Assessing Officer has brought this fact to notice of ld. CIT(A) that a search and seizure action U/s 132 was carried out in the case of the assessee during the pendency of the assessment proceedings. The impugned order passed by the Assessing Officer as well as the ld. CIT(A) would otherwise not survive being nonest. Accordingly, the total income of the assessee would be determined in the proceedings initiated U/s 153A of the Act and there would be no consequence of the proceedings before us. Since the order of the ld. CIT(A) is not valid as the assessment proceedings itself stood abated and the question of validity of the assessment for want of notice U/s 143(2) of the Act does not arise. Accordingly, we set aside the order of the ld. CIT(A) as well as the assessment order passed by the Assessing Officer.
Issues Involved:
1. Validity of the assessment order due to jurisdictional issues. 2. Applicability of Section 124(3) regarding objection to jurisdiction. 3. Applicability of Section 292BB regarding waiver of notice objections. 4. Quashing of assessment proceedings on technical grounds. 5. Non-disclosure of search and seizure action by the assessee. 6. Abatement of pending assessment due to search and seizure action. 7. Requirement for CIT(A) to decide on the merits of additions to income. Detailed Analysis: 1. Validity of the assessment order due to jurisdictional issues: The revenue contested the CIT(A)'s decision to quash the assessment order on the grounds that the initial notice under Section 143(2) was issued by ITO, Ward-3, Bhilwara, who had jurisdiction at the time. The case was subsequently transferred to ITO, Ward-4, Bhilwara, who completed the assessment without issuing a fresh notice under Section 143(2). The CIT(A) held that the assessment was invalid due to the lack of notice from the second AO. 2. Applicability of Section 124(3) regarding objection to jurisdiction: The revenue argued that under Section 124(3), the assessee should have raised any jurisdictional objections within one month of the issuance of the notice under Section 143(2). The assessee did not raise such objections and cooperated with both ITOs, thus, the objection to jurisdiction was not valid. 3. Applicability of Section 292BB regarding waiver of notice objections: The revenue also cited Section 292BB, which precludes an assessee from raising objections about the issue of notice if they have appeared and cooperated in the assessment proceedings. The assessee's cooperation in the proceedings was seen as a waiver of any objections regarding the notice. 4. Quashing of assessment proceedings on technical grounds: The revenue contended that the CIT(A) quashed the assessment proceedings on a technical ground without addressing the merits of the case. The CIT(A) focused solely on the procedural lapse of not issuing a fresh notice under Section 143(2) by the second AO. 5. Non-disclosure of search and seizure action by the assessee: The revenue argued that the assessee did not disclose the fact of search and seizure action under Section 132 during the assessment proceedings. This non-disclosure was seen as a lack of clean hands by the assessee. 6. Abatement of pending assessment due to search and seizure action: The tribunal noted that a search and seizure action under Section 132 took place on 27/8/2017, during the pendency of the assessment proceedings for the year under consideration. According to Section 153A, any pending assessment on the date of the search abates, and the AO must assess or reassess the total income for the six preceding assessment years. The tribunal cited various judgments, including CIT Vs. Anil Kumar Bhatia and Jai Steel (India), Jodhpur Vs. ACIT, to support the view that the pending assessment abates and the AO must issue a notice under Section 153A. 7. Requirement for CIT(A) to decide on the merits of additions to income: The tribunal held that since the assessment proceedings abated due to the search and seizure action, the order of the CIT(A) also became infructuous. The total income of the assessee must be determined in the proceedings initiated under Section 153A, not under the quashed assessment proceedings. Conclusion: The tribunal set aside the order of the CIT(A) and the assessment order passed by the AO, stating that the assessment proceedings abated due to the search and seizure action. The total income of the assessee would be determined in the proceedings under Section 153A. The appeal of the revenue was allowed.
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