2024 (7) TMI 1133 - AT - Income Tax

Legal validity of the order u/s 143(3) - Period of limitation - reckoning of six years period - search was conducted for initiating proceeding u/s 153C - HELD THAT - The date of recording of the satisfaction will be the deemed date for the possession of the seized documents, which is 30.06.2022 in the present case and the date of search and six years period would be reckoned from this date i.e. 30.06.2022. Therefore, there is merit in the submission of the assessee that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act will be AY 2018-19 to 2022-23. Therefore, it is held that in the present case, the assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act as done by the AO in this case. No other contrary facts or decision was brought on record by the Ld. DR Therefore, it is held that the assessment order dated 29.12.2022 passed u/s 143(3) of the Act by the issuance of notice u/s 143(2) of the Act dated 30.06.2022 is bad in law and hence the notice u/s 143(2) of the Act, dated 30.06.2022 and the consequent assessment order dated 29.12.2022 passed u/s 143(3) of the Act are hereby quashed. The additional grounds filed by the assessee are allowed.

Summary

Issues Involved:
1. Validity of the order passed by the CIT(A) without quoting a valid DIN.
2. Ex parte order passed by the CIT(A) without providing adequate opportunity to the assessee.
3. Legality of the notice issued under section 143(2) and the consequent reassessment order.
4. Compliance with the provisions of section 153D of the Income Tax Act.
5. Addition of Rs. 94,00,000/- under section 45 of the Income Tax Act.
6. Addition of Rs. 2,50,000/- as unexplained expenditure under section 69C read with section 115BBE of the Act.
7. Confirmation of additions based on assumptions, surmises, and without direct evidence.
8. Reliance on third-party statements without providing an opportunity for cross-examination.
9. Jurisdictional issue regarding the assessment proceedings initiated without complying with section 153C.

Detailed Analysis:

1. Validity of the Order Passed by the CIT(A) Without Quoting a Valid DIN:
The assessee contended that the order passed by the CIT(A) lacked a valid Document Identification Number (DIN) as required by the CBDT Circular dated 14.08.2019. This procedural lapse was argued to render the order invalid both in law and on facts.

2. Ex Parte Order Passed by the CIT(A) Without Providing Adequate Opportunity to the Assessee:
The assessee argued that the CIT(A) passed the order ex parte without providing adequate opportunity for a hearing, violating the principle of natural justice. The CIT(A) noted that the assessee filed only adjournment letters and no substantive replies, indicating a lack of interest in pursuing the appeal.

3. Legality of the Notice Issued Under Section 143(2) and the Consequent Reassessment Order:
The assessee challenged the legality of the notice issued under section 143(2) and the subsequent reassessment order, arguing that they were issued without valid jurisdiction. The reassessment order was contended to be illegal and invalid.

4. Compliance with the Provisions of Section 153D of the Income Tax Act:
The assessee contended that the order passed by the AO violated the provisions of section 153D of the Income Tax Act. The specifics of this non-compliance were not detailed in the summary.

5. Addition of Rs. 94,00,000/- Under Section 45 of the Income Tax Act:
The CIT(A) confirmed the addition of Rs. 94,00,000/- by invoking section 45, treating the full value of consideration for the property transferred as Rs. 2,54,00,000/- instead of the declared Rs. 1,60,00,000/-. The AO did not provide evidence of the additional amount paid by the assessee or conduct an independent inquiry from the buyers.

6. Addition of Rs. 2,50,000/- as Unexplained Expenditure Under Section 69C Read with Section 115BBE of the Act:
The CIT(A) confirmed the addition of Rs. 2,50,000/- as unexplained expenditure, treating it as commission payment on the sale of property. The AO did not bring any evidence on record to support this allegation.

7. Confirmation of Additions Based on Assumptions, Surmises, and Without Direct Evidence:
The assessee argued that the CIT(A) confirmed the additions based on assumptions and surmises without bringing any direct evidence against the assessee. The additions were made solely on presumptions.

8. Reliance on Third-Party Statements Without Providing an Opportunity for Cross-Examination:
The CIT(A) confirmed the additions relying on third-party statements recorded at the back of the assessee without providing an opportunity for cross-examination, violating the principles of natural justice.

9. Jurisdictional Issue Regarding the Assessment Proceedings Initiated Without Complying with Section 153C:
The assessee raised additional grounds challenging the jurisdiction of the assessment proceedings initiated without complying with section 153C. The satisfaction note for initiating proceedings under section 153C was recorded on 30.06.2022, and the notice under section 143(2) for AY 2021-22 was issued on the same date. The Tribunal found merit in the assessee's submission that the assessment should have been framed under section 153C, not 143(3), as the documents were received on 30.06.2022. The Tribunal quashed the assessment order dated 29.12.2022 passed under section 143(3) as it was bad in law.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the assessment order dated 29.12.2022 passed under section 143(3) due to jurisdictional issues. Consequently, the additions questioned by the assessee do not survive and do not require further adjudication.