SEN FERRO ALLOYS (P) LTD.,KOLKATA vs. A.C.I.T., CC - 4(3), KOLKATA

Facts

The assessee company made cash payments of Rs. 30,00,000/- to Majee Group, which was found to be engaged in sales of illegal coal during a search operation. The AO treated this as unexplained expenditure u/s 69C and added it to the assessee's income. The CIT(A) upheld this addition.

Held

The Tribunal held that the assessment framed u/s 143(3) was invalid because the proper course of action, given the incriminating material found during a third-party search, should have been u/s 153C, which is a special provision. Therefore, the assessment was quashed.

Key Issues

Whether the assessment framed under Section 143(3) was valid when the AO had incriminating material from a search on a third party, or if Section 153C was the appropriate provision.