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2022 (1) TMI 820 - AT - Income TaxValidity of assessment made under Section 143(1) instead of section 153C - whether the assessment under section 143(3) of the Act is void ab initio and as such bad in law as the appellant is covered under the first proviso of section 153C of the Act and the assessment ought to have been completed applying the provisions of section 153C r.w.s. 153A ? - HELD THAT - In the search year regular assessment has to be made under section 143(3) of the Act. Whereas, for the six immediately preceding years, proceedings have to be initiated under section 153C of the Act. In the facts of the present appeal, undisputedly, the books of account/documents/assets found during the search and seizure operation were received by the AO having jurisdiction over the assessee on 21.08.2013 i.e. in the previous year 2013-14 relevant to the assessment year 2014-15. Thus, as per the provision contained under section 153C r.w.s. 153A of the Act, for assessment year 2014-15 regular assessment has to be made under section 143(3) of the Act. Whereas, in respect of the preceding six assessment years viz. assessment years 2008-09 to 2013-14 assessment proceedings have to be initiated under section 153C of the Act. Undisputedly, in case of the present assessee, assessment for assessment year 2013-14 i.e. impugned assessment year, has been completed under section 143(3) of the Act. Neither the AO has recorded any satisfaction nor issued any notice as contemplated under section 153C The impugned assessment order passed under section 143(3) of the Act is invalid. No contrary decision of a higher Court has been brought to our notice by learned Departmental Representative for enabling us to deviate from the view expressed in the aforesaid decision of JASJIT SINGH VERSUS ACIT, CENTRAL CIRCLE-11, NEW DELHI AND VICE-VERSA 2014 (11) TMI 1012 - ITAT DELHI . In view of the aforesaid, we hold that the AO having wrongly assumed jurisdiction under section 143(3) of the Act to complete the assessment, the impugned assessment order is invalid, hence, deserves to be quashed. Decided in favour of assessee.
Issues Involved:
1. Validity of assessment under section 143(3) versus section 153C. 2. Validity of notice under section 153C. 3. Validity of addition based on incriminating material. 4. Satisfaction of the Joint Commissioner under section 153D. Detailed Analysis: 1. Validity of Assessment under Section 143(3) versus Section 153C: The primary issue is whether the Assessing Officer (AO) validly assumed jurisdiction for completing the assessment under section 143(3) of the Income Tax Act, 1961, instead of section 153C. The assessee argued that since the documents and assets were transferred to the AO on 21.08.2013, the assessments for the preceding six years should have been completed under section 153C. The Tribunal noted that the search and seizure operation conducted on 08.11.2012 in the case of M/s Gold Sukh Safety Tools Ltd. led to the discovery of a locker belonging to the assessee. The AO received the seized documents on 21.08.2013, and the satisfaction note for initiating proceedings under section 153C was recorded on 26.11.2013 for assessment years 2007-08 to 2012-13. The Tribunal held that for the assessment year 2013-14, proceedings should have been initiated under section 153C, not under section 143(3), making the assessment order invalid. 2. Validity of Notice under Section 153C: The assessee contended that the notice under section 153C was invalid as the requisite satisfaction was not recorded by the AO of the person searched before initiating proceedings. The Tribunal observed that the satisfaction note for initiating proceedings under section 153C was recorded on 26.11.2013. However, the assessment for the year 2013-14 was completed under section 143(3) without issuing a notice under section 153C, which was deemed invalid. 3. Validity of Addition Based on Incriminating Material: The assessee argued that the addition made by the AO was not based on any incriminating material found during the search. The Tribunal did not delve into this issue in detail as it quashed the assessment order on jurisdictional grounds, rendering this argument moot. 4. Satisfaction of the Joint Commissioner under Section 153D: The assessee claimed that the assessment was invalid as there was no satisfaction recorded by the Joint Commissioner as required under section 153D. The Tribunal did not specifically address this issue, as the primary ground for quashing the assessment was the improper assumption of jurisdiction under section 143(3) instead of section 153C. Conclusion: The Tribunal concluded that the AO wrongly assumed jurisdiction under section 143(3) instead of section 153C, rendering the assessment order invalid. Consequently, the appeal was allowed, and the assessment order was quashed. The other grounds raised by the assessee, including the merits of the addition, were dismissed as infructuous. The decision was pronounced in open court on 18th November 2021.
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