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2025 (3) TMI 808 - AT - Income TaxValidity of assessment u/s 153A - validity of the impugned assessment framed as not sustainable in law given the fact that it had been subjected to a search action dated 23rd July 2015 - HELD THAT - There is no dispute raised at the Revenue s behest regarding the assessee s status on the searched persons on 23rd July 2015. We wish to reiterate here that the assessment year before is assessment year 2014-15 wherein the assessee had filed its return of income on 30th September 2014. Meaning thereby that its assessment on the date of search was indeed an abated one going by section 153(A) 2nd proviso and therefore we are of the considered view that going by statutory provisions containing a non-obstante clause notwithstanding anything contained in section 139 the learned lower authorities have erred in law and on facts in assessing it under the normal provision than the foregoing specific provision applicable in case of searched person. Decided in favour of assessee.
1. ISSUES PRESENTED and CONSIDERED
The primary legal issue considered in this judgment was whether the assessment framed on 22.12.2016 was sustainable in law in light of the search action conducted on 23rd July, 2015. Specifically, the question was whether the assessment should have been conducted under the provisions applicable to searched persons, as per Section 153A of the Income-tax Act, 1961, rather than under the normal provisions of Section 143(3). 2. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents: The legal framework considered includes Section 153A of the Income-tax Act, which provides for assessment in cases of search or requisition. The section mandates that upon a search, the pending assessments for the previous six years abate, and fresh assessments are to be conducted under Section 153A. The Court also referenced several precedents, including decisions from the Supreme Court and various High Courts, which clarified the application of Section 153A and the abatement of pending assessments. Court's Interpretation and Reasoning: The Court interpreted Section 153A as containing a non-obstante clause that overrides the normal assessment provisions under Section 139 and related sections. The Court emphasized that when a search is conducted, the pending assessments abate, and the Assessing Officer is required to issue notices for reassessment under Section 153A for the relevant years. The Court relied on precedents such as the National Thermal Power Co. Ltd. v. CIT and CIT vs. Jai Parabolic Springs Ltd., which support the admission of additional legal grounds and the abatement of pending assessments. Key Evidence and Findings: The Court found that the search action on 23rd July, 2015, rendered the pending assessment for the assessment year 2014-15 abated. The assessment framed on 22.12.2016 under Section 143(3) was therefore not sustainable, as it should have been conducted under Section 153A. Application of Law to Facts: The Court applied the legal principles established in the precedents to the facts of the case, concluding that the assessment should have been conducted under the provisions applicable to searched persons. The failure to do so rendered the assessment invalid. Treatment of Competing Arguments: The Court considered the arguments presented by both parties. The Department did not dispute the search action or the applicability of Section 153A. The Court noted the Department's agreement on the legal grounds raised by the assessee, which further supported the conclusion that the assessment was invalid. Conclusions: The Court concluded that the assessment framed on 22.12.2016 was not sustainable in law due to the abatement of the pending assessment upon the search action. The assessment should have been conducted under Section 153A, and the failure to do so rendered it a nullity. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court reiterated, "We adopt the foregoing detailed discussion mutatis mutandis to quash the impugned assessment framed by the Assessing Officer on 22.12.2016 as not sustainable in law. Ordered accordingly." Core Principles Established: The judgment reinforced the principle that assessments pending at the time of a search abate and must be reassessed under Section 153A. This ensures a single comprehensive assessment that includes both disclosed and undisclosed income. Final Determinations on Each Issue: The Court determined that the assessment for the assessment year 2014-15 was invalid as it was not conducted under the appropriate legal framework following the search action. The appeal was allowed, and the assessment was quashed.
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