2023 (3) TMI 511 - AT - Income Tax

Validity of initiation of proceedings u/s 153C - assessment u/s 153C or u/s 153A - document seized in premises of third party - HELD THAT - We fail to understand how the document seized in the premises of Mahaveer Medicare and how same pertains to the assessee. It is not disputed by the parties that Annexure A is nothing but narration of what had happened in premises of assessee during the course of search As admittedly there is warrant of authorisation to conduct search in the premises of the assessee and the cash was found in the premises of the assessee. The impugned addition in the case of the assessee is made on the basis of cash found and statement recorded from the assessee during the course of search in his residential premises. Therefore, the assessment in our view ought to have been completed under Section 153A r.w.s. 143(3) of the Act and not under Section 153C of the Act. We are also unable to appreciate the contention of the learned D.R. that both Sections 153A 153C are mentioned in the order and therefore there is no infirmity. From the notices issued and satisfaction recorded it is clear that the AO has completed the assessment under Section 153C and not under Section 153A of the Act. Since the assessment has been completed under Section 153C of the Act, we are of the view that the assessment framed suffers from infirmity and it is an incurable defect. Hence, we quash the impugned assessment order. Decided in favour of assessee.

Summary

Issues:
Assessment under Section 153C r.w.s 153A r.w.s 143(3) of the Income Tax Act, 1961 for AY 2014-15.

Analysis:
The appeal was against the CIT(A)'s order for AY 2014-15 where the assessee's income was determined at Rs.1,02,88,470 instead of Rs.2,88,470 declared. The AO added Rs.1,00,00,000 as the assessee offered this income during search proceedings. The CIT(A) rejected the assessee's grounds, leading to the present appeal before the Tribunal. The primary contention was that the assessment under Section 153C of the Act was improper, as the assessment should have been under Section 153A. The assessee relied on a Delhi Tribunal decision to support this argument.

The material on record showed that cash was found during a search in the assessee's premises, leading to the disclosure of additional income. The assessment was completed under Section 153C r.w.s 153A r.w.s 143(3) for AY 2014-15. The Tribunal found that the assessment should have been under Section 153A and not 153C. The AO's mention of both sections in the order did not cure this defect. Referring to relevant case law, the Tribunal held that the assessment under Section 153C was flawed, leading to the quashing of the assessment order.

The Tribunal emphasized that the assessment should have been under Section 153A, given the circumstances of the search and the cash found. Citing previous judgments, the Tribunal highlighted the importance of proper jurisdiction in such cases. As the assessment order for AY 2014-15 was quashed, other legal grounds and merits were left open for future consideration. Ultimately, the appeal was partly allowed, and the assessment order was quashed for AY 2014-15.