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2022 (5) TMI 1297 - AT - Income Tax


Issues Involved:

1. Whether the issuance of notice under Section 143(2) is mandatory for making an assessment under Section 153A.
2. Whether the scope of assessment under Section 153A is limited to incriminating material found during the search.
3. Whether the deletion of the addition by the CIT(A) was justified or if the matter should be restored to the Assessing Officer for fresh consideration.

Issue-wise Detailed Analysis:

1. Issuance of Notice under Section 143(2) for Assessment under Section 153A:

The Tribunal examined whether the issuance of notice under Section 143(2) is a mandatory jurisdictional requirement for making an assessment under Section 153A. The Tribunal concluded that the issuance of notice under Section 143(2) is not mandatory for assessments under Section 153A. The Tribunal relied on several High Court decisions, including the Delhi High Court in Ashok Chaddha v. ITO and the Punjab & Haryana High Court in Tarsem Singla v. DCIT, which held that the issuance of notice under Section 143(2) is not required for assessments under Section 153A. The Tribunal also noted the distinction between the provisions of Section 158BC, which explicitly requires notice under Section 143(2), and Section 153A, which does not.

2. Scope of Assessment under Section 153A:

The Tribunal addressed whether the scope of assessment under Section 153A is limited to incriminating material found during the search. The Tribunal acknowledged the differing views of various High Courts on this issue. The Delhi High Court in CIT v. Kabul Chawla and the Bombay High Court in CIT v. Continental Warehousing Corporation held that completed assessments can only be interfered with based on incriminating material found during the search. However, the jurisdictional Allahabad High Court in CIT v. Rajesh Kumar Arora and CIT v. Kesarwani Zarda Bhandar held that the scope of assessment under Section 153A is not limited to incriminating material found during the search. The Tribunal, bound by the jurisdictional High Court's decisions, concluded that the Assessing Officer can assess or reassess the total income, including both disclosed and undisclosed income, under Section 153A.

3. Deletion of Addition by CIT(A) or Restoration to Assessing Officer:

The Tribunal considered whether the CIT(A) was justified in deleting the addition or if the matter should be restored to the Assessing Officer for fresh consideration. The Tribunal noted that the CIT(A) deleted the addition based on legal grounds without examining the merits of the addition. The Tribunal found that the CIT(A) should have restored the matter to the Assessing Officer for fresh adjudication. The Tribunal emphasized that the Assessing Officer should be given an opportunity to examine the evidence and explanations provided by the assessee regarding the addition of Rs. 2.50 crore under Section 68.

Conclusion:

The Tribunal, in accordance with the majority view, concluded that the issuance of notice under Section 143(2) is not mandatory for assessments under Section 153A. The scope of assessment under Section 153A is not limited to incriminating material found during the search, as per the jurisdictional High Court's decisions. The Tribunal also held that the CIT(A) should have restored the matter to the Assessing Officer for fresh consideration rather than deleting the addition. The appeal of the Revenue was partly allowed for statistical purposes, and the Cross Objection filed by the assessee was dismissed.

 

 

 

 

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