2019 (11) TMI 1228 - AT - Income Tax

Assessment framed u/s 153C r.w. Sec.143 - absence of return filled - HELD THAT - Once, it is clear that neither any return of income has ever been filed in response to notice u/s 153C of the Act nor the assessee has claimed that his earlier return may be treated in response to notice u/s 153C of the Act and therefore, the assessment order passed u/s 153C r.w.s 143(3) of the Acct is unsustainable and against the spirit of law. We are also in agreement with the observation of the CIT(A) to the effect that in the absence of valid return in response to notice u/s 153C of the Act, the assessment was to be framed u/s 144 of the Act but not otherwise, as also held in the case of Eastern Engineering Venture vs. Income Tax Officer 2019 (7) TMI 697 - ITAT CUTTACK . As per our considered view, it is not res-integra that in the absence of return, assessment is required to be framed u/s 144 of the Act only, which in the instant case has not been framed and therefore entailed quashing. On the basis of aforesaid analyzation, in our consider view the order under challenge does not suffer from any perversity, illegality or impropriety, hence, does not require any interference and liable to be affirmed. Consequently the appeal filed by the Revenue Department is liable to be dismissed. In the result, the appeal of the Revenue Department stands dismissed.

Summary

Issues Involved:
1. Legality of the assessment framed under Section 153C read with Section 143(3) of the Income Tax Act, 1961.
2. Validity of the notice under Section 153C and the subsequent return filing.
3. Requirement of framing assessment under Section 144 in the absence of a valid return.

Issue-wise Detailed Analysis:

1. Legality of the assessment framed under Section 153C read with Section 143(3) of the Income Tax Act, 1961:
The judgment addresses the legality of the assessment order passed under Section 153C read with Section 143(3). The assessee argued that the assessment framed was illegal and bad in law since neither notice under Section 153C was received nor any return in response to notice under Section 153C was filed. The CIT(A) held the assessment framed under Section 153C read with Section 143(3) as illegal and bad in law, stating that in the absence of a valid return, the assessment should have been framed under Section 144 of the Act. The Tribunal upheld this view, agreeing that the assessment order dated 31.12.2016 was invalid and void ab initio.

2. Validity of the notice under Section 153C and the subsequent return filing:
The Revenue Department contended that the CIT(A) erred in holding that no valid return was filed in response to the notice under Section 153C, and thus, no notice under Section 143(2) could be issued. The CIT(A) observed that the assessment record showed no return was filed by the assessee on 17.11.2016, as claimed by the Assessing Officer. The Tribunal agreed that in the absence of a valid return, no notice under Section 143(2) could be issued, and the assessment order under Section 153C read with Section 143(3) was invalid.

3. Requirement of framing assessment under Section 144 in the absence of a valid return:
The Tribunal concurred with the CIT(A) that in the absence of a valid return in response to the notice under Section 153C, the assessment should have been framed under Section 144. The Tribunal cited the case of Eastern Engineering Venture vs. Income Tax Officer, where it was held that in the absence of a return, the assessment is required to be framed under Section 144. The Tribunal concluded that the assessment order under Section 153C read with Section 143(3) was unsustainable and against the spirit of law.

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue Department, affirming the CIT(A)'s decision that the assessment framed under Section 153C read with Section 143(3) was illegal and bad in law. The Tribunal emphasized that in the absence of a valid return, the assessment should have been framed under Section 144, not under Section 153C read with Section 143(3). The judgment was pronounced in the open Court on 29/10/2019.