2024 (6) TMI 209 - AT - Income Tax

Assessment u/s 153A or 153C - Addition u/s 69A - credits in saving accounts and difference in undisclosed profit calculated @ 8% on the gross receipts in the CC Account - HELD THAT - In the case of ANAND KUMAR JAIN (HUF), SATISH DEV JAIN, SAJAN KUMAR JAIN 2021 (3) TMI 8 - DELHI HIGH COURT held that the AO has used this statement on oath recorded in the course of search conducted in the case of a third party (i.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed u/s 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross-examine the said witness, but that apart, the mandatory procedure u/s 153C has not been followed. No perversity in the view taken by the ITAT. In the present case, assessment proceedings must be initiated u/s 153C rather than Section 153A of the Act, only after the satisfaction was being arrived in the assessment proceedings of M/S Golden Tulip Hospitality Pvt. that the material found and seized during search pertain to appellant. We hold that the assessment order passed u/s 153A is without jurisdiction and as such, quashed. Appeal filed by the assessee is allowed.

Summary

Issues:
1. Addition of undisclosed income under various heads
2. Condonation of delay in filing appeal
3. Jurisdiction of assessment under Section 153A vs. Section 153C

Analysis:
1. The appellant contested the addition of Rs. 21,03,912/- made by the CIT(A) under different heads of undisclosed income. The grounds of appeal included challenges to the confirmation of additions under Section 69A for credits in saving accounts and difference in undisclosed profit, as well as the increase in net profit rate and reduction in declared gross income under the head PGBP. The appellant also argued against the denial of benefits related to contra entries and CC bank interest. The Tribunal assessed each ground and found in favor of the appellant on the basis of legal and factual arguments presented.

2. The appeal was filed 432 days late, and the appellant sought condonation of delay citing exceptional circumstances related to medical issues. The Tribunal granted the condonation of delay based on the appellant's explanation and reference to relevant case law supporting such a decision. This allowed the appeal to be admitted for hearing on the merits of the case.

3. The appellant raised additional grounds challenging the jurisdiction of the assessment under Section 153A, contending that it should have been framed under Section 153C due to the material seized from another company's premises. The Tribunal considered the arguments presented by both parties and referenced case law to determine that the assessment order under Section 153A was without jurisdiction. The Tribunal quashed the assessment order, highlighting the importance of following the correct procedural requirements for initiating assessment proceedings based on seized materials.

In conclusion, the Tribunal allowed the appeal, quashing the assessment order under Section 153A due to lack of jurisdiction and providing relief to the appellant on legal grounds. The decision was based on a thorough analysis of the issues raised by the appellant and the procedural requirements for conducting assessments under the Income Tax Act.