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Facts
The assessee's case for AY 2021-22 was selected for scrutiny, and an addition of Rs. 50 lakhs was made under section 69 of the Act via an assessment order under section 143(3). The assessee contended that the assessment should have been under section 153C as documents pertaining to her were found during a search on a third party, and a 'Satisfaction Note' under section 153C was recorded for a related party. The CIT(A) dismissed the assessee's appeal.
Held
Following a precedent set by a coordinate bench in a similar case (Tejinder Kaur), the Tribunal held that the assessment order for AY 2021-22 should have been passed under Section 153C of the Act, not Section 143(3). Consequently, the assessment order dated 30.12.2022 passed under Section 143(3) and the CIT(A)'s order are quashed.
Key Issues
Whether the assessment for A.Y. 2021-22 should have been framed under Section 153C of the Income Tax Act, 1961, instead of Section 143(3), given that documents pertaining to the assessee were found during a search on a third party.
Sections Cited
Section 143(3), Section 153C, Section 143(2), Section 153A, Section 69, Section 132
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI YOGESH KUMAR U.S.
This appeal is filed by the Assessee against the order of Commissioner of Income Tax (Appeals)-30, Delhi [“Ld. CIT(A)” for short], dated 31.01.2024 for the Assessment Year 2021-22.
2. The Assessee raised the following additional grounds of Appeal: -
“7. The learned DCIT has erred in law and on facts in considering the assessment year under appeal as the assessment year relevant to the previous year in which search was conducted and consequently passing the assessment order in the case of the appellant under section 143(3) of the Act instead of section 153C of the Act.
8. The learned DCIT has erred in law and on facts in issuing the notice under section 143(2), pursuing the proceedings under that section and passing the assessment order under section 143(3) of the Act instead of complying with the provisions of section 153C of the Act read with section 153A of the Act and, therefore, the said proceedings are void-ab-initio and the assessment order passed under section 143(3) pursuant to the said notice, is liable to be quashed.”
Brief facts of the case are that, the Assessee filed return of income at total income of Rs. 23,61,230/-. The case of the Assessee was selected for scrutiny assessment by issuing notice u/s 143(2) of the Income Tax Act, 1961 (‘Act’ for short) and the assessment has been completed u/s 143(3) of the Act vide order dated 30/12/2022 by making an addition of Rs. 50,00,000/- on account of unexplained investment u/s 69 of the Act.
Aggrieved by the assessment order dated 30/12/2022, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 31/01/2024, dismissed the Appeal filed by the Assessee. As against the order of the CIT(A), the Assessee preferred the present Appeal.
The Ld. Counsel for the Assessee submitting on the additional Grounds of Appeal, contended that the Ld. A.O. erred in considering Assessment Year 2021-22 as the assessment relevant to previous year in which search was conducted and consequently committed error in passing the assessment order u/s 143(3) of the Act instead of Section 153C of the Act. The Ld. Counsel further submitted that in the case of the Vendor of the Assessee i.e. Tejinder Kaur in vide order dated 11/10/2024 the coordinate bench of the Tribunal quashed the assessment proceedings by allowing the similar additional grounds of Appeal of the Assessee thereof, thus, sought for allowing the present Appeal.
Per contra, the Ld. Departmental Representative by relying on the orders of the Lower Authorities sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record and also perused the order of the Coordinate Bench of the Tribunal in the case of Tejinder Kaur (supra)while adjudicating the very same additional grounds of Appeal, deleted the addition made by the A.O. in following manners:-
“7. We have carefully considered the rival submissions. The short question as per additional grounds is, whether the Assessment Order passed by the AO under Section 143(3) of the Act is illegal and not maintainable in view of the specific provisions of Section 153C of the Act. It is the case of the assessee that in the facts of the case, the Assessment Order ought to have been passed under Section 153C of the Act rather than under Section 143(3) of the Act. It is further case of the assessee that the prerequisites for invocation of Section 153C did exist in the present case and stood fulfilled for enabling the Assessing Officer to assess the income of the assessee under Section 153C of the Act.
As observed from case records, a search action under Section 132 of the Act was carried out at the premises of Praveen K. Jain Group (searched person) on 06.01.2022. Pursuant to search, document seized from the premises of Praveen K. Jain was received by the AO of the assessee on 03.10.2022. The Assessing Officer has also recorded 'Satisfaction Note' under Section 153C of the Act dated 03.10.2022 which is reproduced hereunder for ready reference:
SATISFACTION NOTE
“For initiating proceedings under Section 153C read with Section 153A of the Income Tax Act, 1961 in the case of Mrs. Tejinder Kaur (PAN: AALPK6683J), AYs. 2015-16 to 2021-22.
Action under section 132 of the Income Tax Act was conducted in HANS Group of cases by Investigation wing, New Delhi on 06.01.202.ilt has the en brought to the notice of the undersigned by the AO of Sh. Parveen K. Jain (in the instant case both the AO is same), being one of the persons covered in group search and in whose case action under section 132 of the Income tax Act was taken, that during the search and seizure action, the seized Assets and documents/digital data and information contained therein relate to, Mrs. Tejinder Kaur the person other than the searched person. The Assessing officer of the searched person has recorded his satisfaction dated 26.09.2022 that seized Assets and documents/digital data and information contained therein relate to the assessee i.e. Mrs. Tejinder Kaur.
Premises from where assets and documents/digital data found and Seized: Premise at C-42, C-Block, Preet Vihar, Delhi-110092.
Annexure Page No/file Remakrs Description
A-5 Cloned data Cloned data of Parveen Jain's of Parveen mobile marked as Annexure A-5 Jain's mobile i- seized from the premise at C- phone 42, C Block, Preet Vihar, Delhi- 110092 having details of the actual sale consideration of the property at D- 115, Anand Vihar, Delhi -92 and payments in cash thereof. It is noticed that, Mrs. Tejinder Kaur has sold the above said property in which huge amount of cash received by Mrs. Tejinder Kaur.
After examining the seized documents/digital data and information contained therein, it is observed that, The assessee i.e. Mrs. Tejinder Kaur has sold the above mentioned property in which huge cash component involved thereof. After examining the documents/digital data and information contained therein, I am satisfied that documents/digital data and information contained therein, also relate to Mrs. Tejinder Kaur and have a bearing on the determination of total income of this person. In view of the same, I am further satisfied that it is a fit case for initiating proceedings u/s 1530 r.w.s. 153A of the Income Tax Act, 1961 for the A.Ys. 2015-16 to 2021-22.
3. Accordingly, notices u/s 153C r.w.s. 153A are being issued as per provisions of the Income Tax Act, 1961 for the A.Ys. 2015-16 to 2021-22.
Date: 03.10.2022.