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2020 (10) TMI 1203 - AT - Income TaxAssessment u/s 153A - incriminating material found during search or not - HELD THAT - Without there being a clear finding in respect of their being incriminating material/unaccounted money unearthed during the course of search, validity of assessment order passed under section 153A cannot be ascertained. Hence we feel it proper to remand the issue back to Ld.CIT(A) for fresh consideration on this aspect about validity of invocation of section 153A in the light of decision of CIT vs Sinhagd Technical Education Society 2017 (8) TMI 1298 - SUPREME COURT - In the event assessee succeeds on this aspect then nothing remains to be decided on merits. But if assessee fails on this aspect, then the issue on merits should be decided by Ld.CIT(A) afresh, in accordance with law. CIT(A) remanded certain issues to Ld.AO to consider in accordance with law. In our opinion after the amendment to section 251, Ld.CIT(A) cannot remand any issue to Ld.AO and has to decide it himself. Hence we set aside the orders of Ld.CIT(A) in both the years under consideration and remand entire issues alleged by assessee, with a clear direction that, he should 1st decide the legal ground raised by assessee as indicated hereinabove and thereafter decide the issue on merits if assessee fails in the legal ground.
Issues Involved:
Validity of assessment order under section 153A without incriminating material found during search. Analysis: 1. The appeals and cross-appeals were filed by the assessee and revenue against the orders passed by the Ld.CIT(A)-11, Bangalore under sections 143(3) and 144C, and 153A of the Act for assessment years 2009-10 and 2008-9. 2. The assessee, an infrastructure company, derived income from various sources like contract revenue, management service fees, interest, and profit on disposal of shares and securities. 3. The original assessment was completed by the Ld.AO under section 143(3) for the years under consideration, making additions under section 14A read with Rule 8D. 4. A search was conducted on the premises of the assessee on 11/10/2012. 5. The primary question raised by the assessee was regarding the validity of the assessment order passed under section 153A without any incriminating material found during the search. 6. The assessee argued that no incriminating material was found during the search for any of the assessment years under consideration. 7. The Ld.CIT.DR contended that even without incriminating material leading to undisclosed income, proceedings under section 153A could be initiated based on issues considered in the original assessment. 8. The Tribunal noted that the authorities proceeded on the basis that incriminating material is not a precondition for issuing a notice under section 153A, citing the decision of the Hon'ble Karnataka High Court in Canara Housing Development company vs CIT. 9. After considering the arguments and the cited case law, the Tribunal concluded that the judgment of the Hon'ble Karnataka High Court was not relevant in the absence of incriminating material for the years under unabated assessment. 10. It was observed that the assessment orders were passed under section 143(3) before the date of the search, and various decisions by higher courts were considered in this regard. 11. Referring to a decision by the Hon'ble Supreme Court, the Tribunal emphasized that incriminating material must pertain to the assessment year for making additions in a concluded assessment. 12. Due to the lack of a clear finding on the presence of incriminating material, the Tribunal remanded the issue back to the Ld.CIT(A) for fresh consideration based on the decision of the Hon'ble Supreme Court. 13. The Tribunal set aside the orders of the Ld.CIT(A) and remanded the issues alleged by the assessee, instructing that the legal grounds should be decided first, followed by a decision on the merits if the assessee fails on the legal ground. 14. The appeal filed by both the assessee and revenue was allowed for statistical purposes, and the cross-objection filed by the assessee became infructuous.
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