2019 (2) TMI 639 - AT - Income Tax

Assessment u/s 153A (1)(b) - whether papers were found from the residence of the Directors of the company? - Held that - It has been recorded that certain papers were found and seized from the residence of the assessee (which is a company). No where it is stated that papers were found from the residence of the Directors of the company at Shalimar Bagh or during the search of the premises at B- 44 and that these papers belong to the assessee company justifying the initiation of proceedings under section 153C. It can safely be assumed that the reference to section 153C, is an afterthought in the event of the failure to explain the assessment under section 153A read with section 143(3) of the Act. Furthermore, it is clear that the prescribed procedure has not been followed for initiation of the proceedings under section 153C. Finally, it is seen that the assessee has raised the issue of validity of notice under section 153A(1)(a) the very first instance while filing the return . Hence, such defect cannot even be cured by the provisions of section 292B of the Act. In the circumstances, after considering the facts of the case and the relevant case laws on the subject, thus constrained to hold that the assessment under section 153A(1)(b) read with section 143(3) of the Act is void ah initio. Requirement of issuance of notice under section 143 (2) within period of limitation - Jurisdiction to pass the assessment order u/s 143(3) vide notice u/s 143(2) - the first notice u/s 143(2) was not issued within the time period as per section 143(2) - Held that - Limitation for issuance of notice under section 143 (2) has to be reckoned from date of filing of original return of income, for year under consideration being 21/09/11 and notice under section 143 (2) has been issued on 06/03/13, which is beyond limitation period. There are plethora of decisions by Hon ble Supreme Court in case of ACIT vs Hotel blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA which opines settled legal position that, requirement of issuance of notice under section 143 (2) within period of limitation is mandatory for completing assessment under section 143(3) of the Act. - Decided in favour of assessee

Summary

Issues:
1. Jurisdictional challenge under section 153A for Assessment Year 2007-08.
2. Validity of assessment order under section 143(3) for Assessment Year 2011-12.

Jurisdictional Challenge under Section 153A for Assessment Year 2007-08:
The appeal involved a challenge to the jurisdiction of the Assessing Officer (AO) in framing an assessment under section 153A (1) (b) of the Income Tax Act, 1961. The key contention was whether a search warrant was issued in the name of the assessee and if the search was conducted in the premises of the assessee. The appellant argued that no search warrant was issued in the name of the assessee, and the search was initiated in the business and residential premises of the assessee. The CIT (A) called for a remand report from the AO to confirm the search details. The CIT (A) concluded that since there was no warrant of authorization in the name of the assessee company, the assessment under section 153A (1) (b) was void ab initio. The Tribunal upheld the CIT (A)'s decision, stating that the jurisdictional issue was correctly decided, and the assessment was quashed and set aside.

Validity of Assessment Order under Section 143(3) for Assessment Year 2011-12:
The appeal for the assessment year 2011-12 raised a challenge to the assumption of jurisdiction under section 143(2) of the Income Tax Act. The appellant argued that the notice under section 143(2) was issued beyond the prescribed period of limitation. The appellant contended that the notice was issued after the filing of the original return of income, which was not in compliance with the statutory timeline. The Tribunal referred to previous decisions and highlighted the mandatory nature of issuing the notice under section 143(2) within the specified timeframe. As the notice in this case was issued beyond the limitation period, the assessment order under section 143(3) was deemed illegal and bad in law. Consequently, the Tribunal allowed the legal ground raised by the assessee, quashed the assessment order, and set it aside. The grounds challenging the additions confirmed by the CIT (A) were considered academic and not adjudicated upon.

This detailed analysis of the legal judgment from the Appellate Tribunal ITAT Delhi for the mentioned assessment years provides a comprehensive understanding of the issues, arguments presented, and the Tribunal's decisions on the jurisdictional challenges and validity of the assessment orders.