2023 (2) TMI 254 - AT - Income Tax

Assessment u/s 153A/153C - Unexplained share application money - HELD THAT - Facts the case in hand show that search and seizure operation u/s 132 of the Act alongwith survey operations u/s 133A of the Act were undertaken at various residential and business premises of Aseem Kumar Gupta and Group and other beneficiary group of cases on 26.03.2010. On the basis of documents seized and impounded at various premises of Aseem Kumar Gupta, notice u/s 153C of the Act was issued for the captioned Assessment Years and assessment in these cases were completed by the Assessing Officer and on these facts, the ld. CIT(A), Central-2, New Delhi by his order treated the impugned assessment as null and void. Jurisdiction u/s 153C for assessing 6 years preceding the year in which search was initiated can be invoked only when impugned documents are seized u/s 132 or requisitioned u/s 132A. It cannot be invoked in the case of impounding of documents u/s 133A. The very foundation for instituting the proceedings u/s 153C is missing. It has been held by ITAT, Chennai in the case of ACIT vs M.N. Rajaraman 2010 (4) TMI 922 - ITAT CHENNAI and Meghmani Organics Ltd. 2013 (7) TMI 228 - GUJARAT HIGH COURT that where the very foundation for instituting the proceedings by A.O. was missing, the consequential actions and orders must fail and that assessment made pursuant to such proceedings would have to be annulled. Since in the present cases there is no proper assumption of jurisdiction, the assessments made pursuant to such proceedings are annulled herewith. No submissions have been filed on other grounds. However, since the assessment is being treated as null and void - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of Rs. 1,24,00,000/- added as unexplained share application money.
2. Non-discussion of unexplained expenditure by CIT(A).
3. Deletion of Rs. 16,47,32,566/- added as unexplained deposits.
4. Reliance on inadequate and unauthentic submissions by the assessee.
5. Lack of independent inquiry by CIT(A).
6. Validity of reassessment orders under sections 147/143(3) of the Income Tax Act.
7. Jurisdiction and procedural compliance in framing reassessment orders.

Detailed Analysis:

1. Deletion of Rs. 1,24,00,000/- Added as Unexplained Share Application Money:
The Revenue contended that the CIT(A) erred in law and on facts by deleting the addition of Rs. 1,24,00,000/- made on account of unexplained share application money. The Tribunal reviewed the case records and found that the CIT(A) had appropriately addressed the issue based on the evidence and submissions provided by the assessee. The Tribunal upheld the deletion, finding no merit in the Revenue's appeal on this ground.

2. Non-Discussion of Unexplained Expenditure by CIT(A):
The Revenue argued that the CIT(A) failed to discuss the issue of unexplained expenditure, which was a basis for the addition of Rs. 1,24,00,000/-. Upon review, the Tribunal noted that the CIT(A) had considered all relevant facts and evidence before making a decision. The Tribunal found no error in the CIT(A)'s approach and dismissed this ground of appeal.

3. Deletion of Rs. 16,47,32,566/- Added as Unexplained Deposits:
The Revenue challenged the deletion of Rs. 16,47,32,566/- added as unexplained deposits. The Tribunal found that the CIT(A) had relied on substantial evidence and submissions provided by the assessee, which were adequate to justify the deletion. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this ground.

4. Reliance on Inadequate and Unauthentic Submissions by the Assessee:
The Revenue contended that the CIT(A) erred by relying on submissions by the assessee that were inadequate, incomplete, and unauthentic. The Tribunal reviewed the submissions and found them to be sufficient and credible. The Tribunal dismissed the Revenue's appeal, finding no merit in this ground.

5. Lack of Independent Inquiry by CIT(A):
The Revenue argued that the CIT(A) failed to conduct an independent and effective inquiry or give directions under subsection 4 of section 250 of the Income Tax Act. The Tribunal found that the CIT(A) had conducted a thorough review of the case and the evidence presented. The Tribunal dismissed this ground of appeal, supporting the CIT(A)'s approach.

6. Validity of Reassessment Orders under Sections 147/143(3) of the Income Tax Act:
The assessee's cross objections challenged the validity of the reassessment orders under sections 147/143(3) on the grounds of lack of jurisdiction and non-compliance with mandatory conditions. The Tribunal reviewed the case in light of similar cases, such as M/s Sam Portfolio Pvt Ltd, where reassessment orders were annulled due to incorrect jurisdiction. The Tribunal found that the reasons for reopening the assessment were identical to those in the annulled cases and upheld the assessee's objections, annulling the reassessment orders.

7. Jurisdiction and Procedural Compliance in Framing Reassessment Orders:
The Tribunal emphasized that the Assessing Officer (AO) must proceed from the stage of the return of income after an assessment order is declared null and void. The Tribunal found that the AO had wrongly assumed jurisdiction and framed the reassessment order without fresh material or new information. The Tribunal cited several judicial decisions supporting this view and annulled the reassessment orders, finding them void ab initio.

Conclusion:
The Tribunal dismissed the Revenue's appeals and allowed the assessee's cross objections, annulling the reassessment orders due to incorrect jurisdiction and procedural non-compliance. The Tribunal upheld the CIT(A)'s deletions of the additions made by the AO, finding no merit in the Revenue's grounds of appeal.