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Income Tax Appellate Tribunal, DELHI BENCH: A: NEW DELHI
Before: SHRI CHANDRA MOHAN GARG & SHRI PRADIP KUMAR KEDIA
ORDER PER CHANDRA MOHAN GARG, J.M.
This appeal filed by the Revenue is directed against the Order of the Ld. CIT(A)-24, New Delhi, dated 22.06.2020, relating to the A.Y. 2015-16.
Briefly stated facts of the case are that the assessee is an individual having source of income mainly from income from business, income from rental of property, interest income and long term capital gains on sale of equity/shares/land and building. The assessee had originally filed her return of income on 27.09.2015 for the A.Y. 2015-16 declaring total income at Rs.18,38,28,500/-. The same was processed under section 143(1) of the I.T. Act, 1961. Subsequently, the case of the assessee was selected for scrutiny and notices under section 143(2), dated 22.09.2016 and 142(1) were issued and duly served upon the assessee. In response to the said notices, the Authorised Representative of the Assessee appeared before the A.O. and filed the requisite details/documents as called for. However, the A.O. did not 2 ITA.No.2042/Del./2021 Smt. Anita Singhal, Delhi. satisfy with the details/documents furnished by the assessee and completed assessment proceedings under section 143(3) of the I.T. Act, 1961 dated 26.12.2017 by determining the total income of the assessee at Rs.21,37,81,194/- as against the returned income of assessee at Rs.18,38,28,500/-. The ld. CIT(A) vide order dated 09.03.2020 quashed the said assessment order u/s. 143(3) of the Act.
2.1. Subsequently, a search and seizure action under section 132 of the I.T. Act, 1961 was carried in the Sanjay Singhal Group of cases as well as in the case of assessee on 15.11.2017 for the F.Y. 2017-18. Notice u/s. 153A of the Act was issued and served the assessee on 12/27.03.2019.n During the course of search assessment proceedings under section 153A/143(3) of the I.T. Act, 1961 also, the A.O. computed the total income of assessee at Rs.21,37,81,194/- vide order dated 22.12.2019 by adopting the original assessed income computed in the earlier scrutiny assessment order under section 143(3) of the I.T. Act, 1961 dated 26.12.2017 without making any further addition or disallowance or modifications.
2.2. Aggrieved by the said order of the A.O., passed under section 153A r.w.s. 143(3) of the I.T. Act, 1961 dated 22.12.2019, the assessee carried the matter in appeal before the Ld. CIT(A), who vide order dated 22.06.2020 allowed the appeal of assessee. Aggrieved by the said first appellate order dated 22.06.2020 of the ld. CIT(A) the revenue is now before this Tribunal in the extant appeal.
3. During the course of hearing, the Ld. D.R. strongly relied on the assessment order dated 22.12.2019 passed by the A.O. under section 153A r.w.s. 143(3) of the I.T. Act, 1961 He submitted that there is no bar either in Act or in Law that the income assessed in the original assessment order under section 143(3) of the I.T. Act, 1961 cannot be changed during the course of search assessment proceedings and consequent assessment order under section 153A read with section 143(3) of the I.T. Act, 1961. He submitted that the Ld. CIT(A)-37, New Delhi vide his order dated 09.03.2020 quashed the assessment order dated 26.12.2017 passed under section 143(3) of the I.T. Act, 1961 and therefore, the Ld. CIT(A) failed to note that there is no valid assessment under section 143(3) in the case of assessee. The ld. CIT(DR) submitted that the ld. CIT(A) has granted relief to the assessee without any basis therefore the impugned first appellate order may kindly be set aside by restoring that of the Assessing Officer.
3 ITA.No.2042/Del./2021 Smt. Anita Singhal, Delhi.
4. The Assessee Representative (AR), on the other hand, strongly relied on the order of Ld. CIT(A). He submitted written submissions, which are as follows:-
Notice us 153A was issued on 27/03/2019 against which the assessee filed return of income declaring income of Rs. 18,38,57,260/-. In the impugned assessment order passed us 153A/143(3) dated 22/12/2019, the assessing officer did not make any addition. As per para 5 of the assessment order the assessing officer completed the assessment by adopting the income as per assessed income as per assessment order us 143(3) dated 26/12/2017. The para 5 of the assessment order is as under: - 5. Based on material on records, assessed income us 143(3) of the Income Tax Act is accepted. Assessed income us 143(3) dt Rs. 21,37,81,194/- 26/12/2017 Rs. 21,37,81,194/- Assessed income us 1534/143(3) Since the assessing officer has not made any independent addition, no demand has been created pursuant to this order u/s 153A.
Since in the impugned assessment order us 153A, the assessing officer had not made any addition and had merely accepted the earlier original assessment order u/s 143(3), the CIT(A) rightly held that the assessing officer is directed to adopt the income computed/assessed after appeal effect of the appeal order(s) in relating to original assessment order passed us 143(3) of the Act.
The income after the appeal effect in respect of original assessment comes to Rs. 18,38,28,500/- i.e., income as originally returned by the assessee.
5. The assessing officer has himself passed appeal effect order on 22/07/2020 whereby the assessed income has been computed at Rs. 18,38,28,500/- 6. The present appeal filed by the revenue and the grounds of appeal raised therein are infructuous and do not arise from the impugned order u/s 153A. The issue of disallowance of deduction us 54F could have not raised by the revenue only by the way of filing of appeal against the CIT(A) order relating to original assessment dated 26/12/2017. The issue of disallowance u/s 54F does not arise in the impugned assessment order u/s 153 A because in the assessment order W/s 153A, the assessing officer has neither examined the issue of deduction u/s 54F nor made any independent addition. The assessing officer has merely adopted the income as per original assessment order u/s 143(3). There was no ground of appeal before the CIT(A) relating to issue of 4 ITA.No.2042/Del./2021 Smt. Anita Singhal, Delhi. disallowance w/s 54F of the Act. The CIT(A) has rightly decided the grounds which were raised before him 7. Since the original assessment order u/s 143(3) has been quashed and held to be null and void, the additions made/remarks made therein do not exist. Accordingly, there is no infirmity in the order by the CIT(A). Therefore, the appeal filed by the revenue is liable to be dismissed. Therefore the ld. AR submitted that the first appellate order may kindly be upheld particularly in view of the fact that the Assessing Officer has passed appeal effect order on 22.07.2020 wherein he has assessed income of assessee at Rs. 18,38,28,500/-. Therefor he submitted that the appeal of revenue may kindly be dismissed.
We have heard the Learned Representative of both the parties and perused the material available on record. In the instant cases admittedly, the A.O. [ACIT, Circle-56(1), New Delhi] completed the assessment under section 143(3) of the I.T. Act, 1961 vide order dated 26.12.2017 determining the total income of assessee at Rs.21,37,81,194/- as against the return of income of assessee at Rs.18,38,28,500/-. Against the said order of A.O, the assessee carried the matter in the first appeal before the Ld. CIT(A)-37, New Delhi, who vide order dated 09.03.2020 quashed the assessment. The final and ultimate effect of the said order of ld. CIT(A) dated 09.03.2020 was that the sole addition of Rs. 2,99,52,694/- was deleted. The Ld. CIT(DR) on being asked submitted that there is no appeal by the Revenue against said order, consequently, we safely presume that the Department accepted the return income of Rs. 18,38,28,500/- of the assessee for AY 2015-16 as per return u/s. 139(1) of the Act.
5.1. From the perusal of the record, we note that the case of the assessee, again came up before the AO consequent to search and seizure action under section 132 of the I.T. Act, 1961 and the A.O. [DCIT, Central Circle-8, Delhi] completed the assessment proceedings under section 153A r.w.s. 143(3) of the I.T. Act, 1961 vide order dated 22.12.2019 again determining the total income of assessee at Rs.21,37,81,194/-. Which is akin and similar to the, assessed income in the first/original assessment order dated 26.12.2017 under section 143(3) of the I.T. Act, 1961. Finally, in the search assessment order u/s. 153A/143(3) of the Act, dated 22.12.2019 the AO accepted the assessed income in the earlier scrutiny assessment order dated 26.12.2017.
5 ITA.No.2042/Del./2021 Smt. Anita Singhal, Delhi. 5.2 Further, from copy of subsequent reassessment order u/s.153A r.w.s 143(3) of the Act dated 20.12.2019, we note that the Assessing Officer by referring to the original assessment order dated 26.12.2017 observed that the Assessing Officer in said original assessment order made disallowance of deduction u/s. 54F of the Act amounting to Rs. 2,99,52,694/- and again assessed the income at Rs. 21,37,81,194/- 5.3 The assessee also filed another appeal before the Ld. CIT(A)-24, New Delhi against the search assessment order dated 22.12.2019 passed under section 153A r.w.s. 143(3) of the I.T. Act, 1961, who vide order dated 22.06.2020 allowed the first appeal of the assessee. The relevant observation of Ld. CIT(A) in para 5.5.2 & 5.5.3 of the said order reads as follows:-
5.5.2 In Ground No. 3, 4 and 5, the appellant has contended that the addition made by the assessing officer is not sustainable and Assessing Officer has erred in adopting the earlier assessed income under section 143(3) as assessed income u/s. 153A /143(3). 5.5.3 The assessment us 143(3) of the Act was completed at assessed income of Rs.21,37,81,194/- by making addition on account of disallowance of deduction w/s 54F of Rs.2,99,52,694/-. 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 w/s 54F of Rs.2,99,52,694/- in the original assessment order passed u/s 143(3) of the Act. Ground No. 3, 4 and 5 are decided accordingly. 5.4. Thus, in view of above noted factual matrix, we find that the assessee had filed two appeals before the First Appellate Authorities i.e., one appeal against the assessment order passed by the A.O. under section 143(3) of the I.T. Act, 1961 dated 26.12.2017 before the Ld. CIT(A)-37, New Delhi and the second appeal against the search assessment order dated 22.12.2019 passed under section 153A r.w.s.143(3) of the I.T. Act, 1961 before the Ld. CIT(A)- 24, New Delhi. The Ld. CIT(A)-37, New Delhi vide his order dated 09.03.2020 quashed the original scrutiny assessment order dated 26.12.2017 framed under section 143(3) of the I.T. Act, 1961 by observing that “in view of specific provisions of second proviso to Section 153A, the assessment order is held to be without jurisdiction and non best in law and, therefore, it is to be quashed”. On being asked by the bench the ld. CIT(DR) shown his inability to assist and inform the bench about the further action by the Department against the said first appellate order. Hence we safely presumed that there is no appeal by the Department against the said first appellate order dated
6 ITA.No.2042/Del./2021 Smt. Anita Singhal, Delhi. 09.03.2020 and the Department has accepted returned income of assessee of Rs. 18,38,28,500/-.
Further, the Ld. CIT(A)-24, New Delhi in the later/second appeal filed by the assessee under section 153A r.w.s. 143(3) of the I.T. Act, 1961 vide his order dated 22.06.2020 directed the A.O. to adopt the income computed/assessed in the original assessment order passed under section 143(3) of the I.T. Act, 1961 as noted above i.e. Rs. 18,38,28,500/-
In view of above noted factual matrix of the appeal we note that the Assessing Officer while passing search assessment order dated 22.12.2019 u/s. 153A r.w.s 143(3) of the Act, firstly noted that in response to notice u/s. 153A of the Act the assessee filed return of income on 18.04.2019 declaring total income of Rs. 18,38,57,260/- by enhancing income to Rs. 28,760/- as compared to return filed by the assessee. From para 5 of said scrutiny assessment order, we note that the Assessing Officer accepted the assessed the income at Rs. 21,37,81,194/- as was assessed in the earlier/original scrutiny assessment order dated 26.12.2017. Thus the Assessing Officer, in the search assessment order has accepted the assessed income as per original scrutiny assessment order, without making any other independent addition or disallowance, assessed the income of assessee.
In view of foregoing discussion we are of the view that since in the impugned assessment order u/s. 153A of the Act, the Assessing Officer had not made any addition or disallowance and has impliedly accepted the earlier original assessment order u/s. 143(3) of the Act dated 26.12.2017, therefore the ld. CIT(A) rightly directed the Assessing Officer to adopt the income computed or assessed after appeal effect of the first appellate order dated 09.03.2020 in relation to said original scrutiny assessment order u/s. 143(3) of the Act dated 26.12.2017. Thus, the income after appeal effect in respect of original assessment order came to Rs. 18,38,28,500/- i.e. the income originally returned by the assessee in the return filed u/s.139(1) of the Act.
The present appeal of revenue and the grounds of appeal hesitated therein are thus infractuous and do not arise from the scrutiny assessment order u/s. 153A of the Act. It is pertinent to mention that the issue of disallowance of deduction u/s. 54F of the Act, could have raised by the revenue only by way of filing appeal against the first order of ld. CIT(A) dated 09.03.2020 relating to original scrutiny assessment order dated 26.12.2017 and not in the present appeal, which has been filed against the subsequent
7 ITA.No.2042/Del./2021 Smt. Anita Singhal, Delhi. order of ld. CIT(A), in the second appeal dated 22.06.2020 which was passed in the first appeal filed by the assessee against search assessment order dated 22.12.2019 passed u/s. 153A r.w.s. 143(3) of the Act. As neither the Assessing Officer has examined the issue of deduction u/s. 54F of the Act nor has made any addition or disallowance either u/s. 54F of the Act or under any provision of the Act, in the said search assessment order.
Thus, at the cost of repetition we again note that since in the original scrutiny assessment order u/s. 143(3) of the Act dated 26.12.2017 has been quashed by the ld. CIT(A) by passing first order dated 09.03.2020, consequently returned income of assessee as per return of income u/s. 139(1) of the Act amounting to Rs. 18,38,28,500/- was accepted by the Department as there was no appeal against the said order before the Tribunal. In the second round of search litigation the returned income of assessee in the subsequent return filed response to notice u/s. 153A of the Act, was enhanced by Rs. 28,760/-and thus the returned income was Rs. 18,38,57,260/- (18,38,28,500/- + 28,760). In the second order of Ld. CIT(A) dated 22.06.2020 the ld. CIT(A) directed the Assessing Officer to adopt income computed/assessed after appeal effect of the earlier appeal order dated 09.03.2020 wherein returned income was Rs. 18,38,28,500/-. But the ld. CIT(A) ignored the subsequent suo motto addition of Rs. 28,760/- made by the assessee in the subsequent return filed in response to notice u/s. 153A of the Act. Resultantly, the controversy took rest by the subsequent order of ld. CIT(A) dated 22.06.2020, wherein the Assessing Officer was directed to adopt taxable income as per appeal effect order of earlier first appellate order dated 09.03.2020 ignoring the enhancement of income by Rs. 28,760/- therefore the Assessing Officer directed to take note of said suo motto enchantment by the assessee and thus, the taxable income of assessee was to be enhanced by said amount. The grounds of revenue are partly allowed in the manner as mentioned hereinabove.