2016 (1) TMI 1410

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..... dictional defects in the assessment order. It is well settled law that where the very initiation of assessment proceedings by the AO was invalid then Ld. CIT(A) cannot direct for making a fresh assessment. CIT(A) should annul the assessment where the assessment proceeding is a nullity in the sense that the AO had no jurisdiction ab initio to take the proceeding. AO could take up the issue regarding disallowance u/s 14A only after recording satisfaction. Non-recording of satisfaction results into creeping of illegality in the assessment order and not a mere irregularity. The jurisdiction of recording satisfaction for invoking section 14A lies with the assessing officer and once he has not recorded such satisfaction then the said basic fun .....

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..... opal Enterprises Ltd. vs. JCIT wherein the decision of Hon ble Jurisdictional High Court in the case of Max Opp Investment Ltd. vs. CIT 203 Taxman 364 (Del) had been referred to wherein it has been held that AO has to record his satisfaction first regarding assessee s claim being not acceptable and then only he can embark upon determination of the amount of expenditure for the purposes of Section 14A. Ld. CIT(A) observed that though assessee had not provided as to what was the basis for arriving at sum of ₹ 25,000/- but at the same time AO had also not recorded his satisfaction in the assessment order. He further held that the first appellate authority has coterminous power with the AO and, therefore, he was satisfied that the explana .....

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..... ation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. 8. A bare reading of the aforementioned provision makes it clear that the satisfaction is to be recorded by assessing officer and by no other authority. Under section 251 Ld. CIT(A) in an appeal against an order of assessment is empowered to confirm, reduce, enhance or annul the assessment but if the assessment order suffers from jurisdictional erro .....

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