2024 (11) TMI 360 - AT - Income Tax

Assessment u/s 153C v/s 143 - Additions u/s 45 - under reporting of sale consideration of immovable property while framing the Assessment Order un/s 143(3) - whether the Assessment Order passed by the AO u/s 143(3) of the Act is illegal and not maintainable in view of the specific provisions of Section 153C? HELD THAT - As observed from case records, a search action under Section 132 of the Act was carried out at the premises of Praveen K. Jain Group (searched person) on 06.01.2022. Pursuant to search, document seized from the premises of Praveen K. Jain was received by the AO of the assessee on 03.10.2022. The Assessing Officer has also recorded 'Satisfaction Note' under Section 153C. In view of express satisfaction note recorded u/s 153C of the Act for different Assessment Years including Assessment Year 2021-22 in question, the proceedings initiated under Section 143(2) of the Act for regular assessment requires to be abated and give way to the special provisions of Section 153C of the Act. Similar issue came up for adjudication in Akansha Gupta 2024 (7) TMI 1133 - ITAT DELHI wherein the assessment framed under Section 143(3) of the Act were quashed. Thus, having regard to the scheme of the Act for assessment of person other than searched person codified under Section 153C of the Act, we find substantial force in the plea of the assessee. Assessment Order passed u/s 143(3) of the Act for A.Y. 2021-22 in question giving rise to the present appeal stands quashed. Decided in favour of assessee.

Summary

Issues:
Challenge to additions made by AO under Section 45 for underreporting of sale consideration of immovable property; Additional grounds raised under Rule 11 regarding assessment year and notice under Section 153C; Jurisdiction of AO under Section 153C; Validity of Assessment Order under Section 143(3) in light of Section 153C; Admissibility of additional grounds; Interpretation of satisfaction note under Section 153C; Comparison of provisions of Section 143(3) and Section 153C.

Analysis:
The appeal was filed against the Assessment Order dated 30.12.2022 by the AO under Section 143(3) concerning AY 2021-22, challenging additions under Section 45 for underreporting of sale consideration. The assessee raised additional grounds under Rule 11, questioning the assessment year and absence of notice under Section 153C. The AO admitted the legal nature of additional grounds, allowing their adjudication.

The crux of the matter revolved around whether the Assessment Order should have been passed under Section 153C instead of Section 143(3). The assessee argued that the prerequisites for invoking Section 153C existed, based on a search action and satisfaction notes, making the assessment under Section 143(3) impermissible. The Revenue contended that the AO had the power to frame a regular assessment under Section 143(3) despite the provisions of Section 153C.

The satisfaction note under Section 153C, dated 03.10.2022, indicated the connection of seized assets to the assessee, mandating proceedings under Section 153C for various AYs, including 2021-22. Citing judicial precedents, the Tribunal found merit in the assessee's argument, quashing the Assessment Order under Section 143(3) and allowing the appeal. Consequently, the additions under challenge were not considered for adjudication, and other grounds raised by the assessee were deemed unnecessary.

In conclusion, the Tribunal allowed the appeal, pronouncing the order on 11.10.2024, based on the invalidity of the Assessment Order under Section 143(3) in light of Section 153C, as per the satisfaction note and judicial interpretations of the relevant provisions.