2023 (8) TMI 329 - AT - Income Tax

Validity of the assessment order passed u/s 147 r.w.s. 143(3) - post search assessment - reassessment proceedings stood abated by virtue of search and seizure action u/s 132(1) - scope and ambit of assessment proceedings u/s 153A - HELD THAT - There will be only one assessment order in respect of each of the six assessment years in which both disclosed and undisclosed income would be brought to tax . Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment u/s 153A merges into one and consequently only one assessment shall be made. Therefore, a mandate is cast upon the assessing officer as per the first proviso to section 153A(1) that the assessing officer shall assess or reassess the total income in respect of each assessment years falling within such six assessment years and the assessment or reassessment as the case may be relating to the assessment years pending on the date of search u/s 132 or requisition u/s 132A shall abate and consequently those pending assessment proceedings gets merged with the proceedings u/s 153A of the Act. Sub- section (2) of section 153A of the Act provides that if any proceedings or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal proceedings then the assessment or reassessment relating to the assessment years which is abated under 2 nd proviso would stand revived. Therefore, in the case on hand the pending reassessment proceedings u/s 147 of the Act got abated by virtue of 2 nd proviso to section 153A(1) and scope and ambit of assessment proceedings u/s 153A would cover the assessment as could have been passed u/s 147 of the Act because the proceedings u/s 147 will merge with the scope and ambit of the assessment u/s 153A. Thus, the jurisdiction of the AO to make the original assessment and assessment u/s 153A of the Act, so far as pending assessment are concerned, merges into one and consequently only one assessment shall be made on the basis of the finding of the search and any other material existing or brought on record of the AO. Thus, once the reassessment proceedings initiated vide notice u/s 148 stood abated by virtue of search and seizure action u/s 132(1) carried out then the reassessment order passed by the AO u/s 147 r.w.s. 143(3) is illegal and void-ab-initio and liable to be quashed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the assessment order passed u/s 147 r.w.s. 143(3) in light of pending proceedings abating due to search and seizure.
3. Grounds of appeal regarding reassessment, loss from trading in shares/derivatives, and addition of deemed gross profit on alleged suppressed sales.

Summary:

Condonation of Delay:
The assessee filed an appeal with a delay of 30 days, supported by an affidavit explaining the delay due to multiple proceedings at different jurisdictions and locations. The Tribunal, considering the reasonable cause and in the interest of justice, condoned the delay.

Validity of Assessment Order u/s 147 r.w.s. 143(3):
The primary issue was whether the reassessment proceedings u/s 147 initiated by notice dated 22.03.2013, which were pending on the date of search (16.05.2013), stood abated by virtue of the 2nd Proviso to section 153A(1). The Tribunal noted that the reassessment proceedings pending on the date of search merged with the assessment proceedings u/s 153A. Citing the Supreme Court's decision in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd., the Tribunal held that the reassessment order dated 19.02.2014 passed u/s 147 r.w.s. 143(3) was illegal and void-ab-initio due to the abatement of pending proceedings. Consequently, the reassessment order was quashed.

Grounds of Appeal:
Given the quashing of the reassessment order, the Tribunal did not address other grounds of appeal, which became infructuous.

Conclusion:
The appeal of the assessee was allowed, and the reassessment order was quashed as illegal and void-ab-initio. The decision was pronounced in the open court on 24.05.2023.