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Facts
A search and seizure action was conducted on the assessee's group on 15.11.2017, rendering a prior assessment under Section 143(3) null and void by CIT(A)-37. Subsequently, an assessment under Section 153A was passed, determining income at the same figure as the quashed 143(3) order. The Revenue appealed against the CIT(A)-24's decision, which upheld the nullification of the 143(3) order and did not interfere with the 153A order, as no fresh additions were made concerning the disputed deductions.
Held
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)-24's decision. It was held that the initial 143(3) assessment order was rightly declared null and void by CIT(A)-37 after the search, and since no new additions concerning the deduction under Section 54F were made in the subsequent 153A order, CIT(A)-24 had no basis to adjudicate on that issue. The Tribunal found no reason to interfere with the CIT(A)-24's order.
Key Issues
Validity of an assessment under Section 143(3) after a search and seizure action leading to a Section 153A assessment; whether the CIT(A) should have examined the merits of disallowance of deductions under Section 54F in the Section 153A appeal.
Sections Cited
153A, 143(3), 132, 143(1), 54F, 54EC, 68
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Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI
Before: Dr. B. R. R. Kumar, Sh. Yogesh Kumar US
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Revenue against the order of ld. CIT(A)-24, New Delhi dated 22.06.2020.
Following grounds have been raised by the Revenue: “1. The Ld. CIT(A) erred in holding that the income assessable u/s 1534 is the income as determined u/s 143(3) vide order dated 27.12.2017 after appeal effect, falling to note that there is no valid assessment u/s 143[3] in this case as the Ld. OTA-37 wide an earlier under dated 09.03.2020 had quashed the same.
2. The Ld. CIT(A) erred in not applying the correct position of law while deciding the appeal against assessment u/s 153A, as the pending assessment proceedings u/s 143(3) stood abated on 15.11.2017 and the issue of deduction u/s 54F against bogus capital gain should have been considered in the assessment u/s 153A only.
Sanjeev Singhal 3. Whether the CIT(A) should not have examined the merits of disallowance of deductions u/s 547 against bogus capital gains in the appeal against u/s 1534, as once the Assessing Officer adopts the income after disallowing the deductions us 54F in the under u/s 1534, the same amounts to an addition in the under u/s 1534, albeit without detailed discussions.”
A search & seizure action u/s 132 of the Income Tax Act, 1961 was carried out in the Sanjay Singhal Group of cases on 15.11.2017. The assessee filed return of income on 28.09.2015 declaring total income of Rs.4,74,97,680/- which was processed u/s 143(1) of the Income Tax Act, 1961.
The pertinent facts are as under: Order u/s 143(3) on 27.12.2017 disallowing the LTCG claimed of Rs.4,17,60,000/- on sale of shares of SMS IT Solutions Pvt. Ltd. and determining the total income at Rs.5,25,74,894/-. Aggrieved, the assessee filed appeal before the ld. CIT(A). Meanwhile, a search & seizure action u/s 132 on the assessee on 15.11.2017. Subsequent to the search action, an order u/s 153A has been passed by the Assessing Officer on 18.12.2019 determining the total income at the same amount of Rs.5,27,74,894/- (the correct figure should be Rs.5,25,74,894/-) which was determined u/s 143(3). The ld. CIT(A)-37, Delhi vide order dated 09.03.2020 held that, in view of the search conducted on 15.11.2017 on the assessee, the order passed u/s 143(3) dated 27.12.2017 was null and void.
Sanjeev Singhal Aggrieved, the assessee filed appeal before the ld. CIT(A)- 24. The ld. CIT(A)-24 vide order dated 22.06.2020 held that “the assessment u/s 143(3) of the Act was completed at assessed income of Rs. 5,27,74,894/- by making addition on account of disallowance of deduction u/s 54F/54EC as gain on sale of shares of SMS IT Solutions Pvt. Ltd. taxed u/s 68 of Rs. 50,77,214/-. The appellant has filed separate appeal against this addition. Hence, the Assessing Officer is directed to adopt the income computed/ assessed after appeal effect of the appeal order(s) in relation to disallowance of deduction u/s 54F/54EC of Rs. 50,77,214/- in the original assessment order passed u/s 143(3) of the Act. Ground No. 3, 4 and 5 are decided accordingly.”
Aggrieved, the revenue filed appeal before us pleading that “the Ld. CIT(A) erred in holding that the income assessable u/s 1534 is the income as determined u/s 143(3) vide order dated 27.12.2017 after appeal effect, falling to note that there is no valid assessment u/s 143[3] in this case as the Ld. CIT(A)-37 wide an earlier under dated 09.03.2020 had quashed the same.”
In this case, the AO has made addition in order passed u/s 143(3) inspite of the fact that there has been a search and the order ought to have passed u/s 153A without keeping the proceedings u/s 143(3) in abeyance. Hence, the ld. CIT(A)-37 dealing with the order u/s 143(3), held that the order passed u/s 143(3) was null and void.
Subsequently, the ld. CIT(A)-24 dealing with the order passed u/s 153A, held that since the order passed u/s 143(3) has been declared as null and void, did not interfere with the decision of the ld. CIT(A)-37. There was no addition made on Sanjeev Singhal this account in the order passed u/s 153A. Hence, ld. CIT(A)-24 could not have adjudicated on this issue which he rightly did so.
Hence, we hold that no interference is called for in the order passed by the ld. CIT(A)-24.
In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 06/02/2024.