Assessments under Section 153A declared invalid; appeals allowed, notices void, income additions moot.

Raj Kumar Chawla Versus Assistant CIT Central Circle09,

Raj Kumar Chawla Versus Assistant CIT Central Circle09, - TMI Issues Involved:
1. Validity of assessment framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961.
2. Validity of notice issued under Section 153A as time-barred.
3. Validity of assessment framed without issuance of valid notice under Section 143(2).
4. Validity of addition on account of income from house property.
5. Action of the CIT(A) in restricting the exemption claimed under Section 54.

Detailed Analysis:

1. Validity of Assessment under Section 153A read with Section 143(3):
The assessee challenged the validity of the assessment framed under Section 153A read with Section 143(3) on the grounds that no incriminating material was found during the search. The Tribunal noted that the assessee's original return of income was processed under Section 143(1) and no statutory notice under Section 143(2) was issued within the prescribed time limit. The Tribunal relied on various judicial precedents, including the Special Bench decision in Al-Cargo Global Logistic Ltd. vs. ACIT, which held that in cases where no assessment was pending, the assessment under Section 153A should be made based on incriminating material found during the search. The Tribunal concluded that in the absence of incriminating material, the assessment framed under Section 153A was invalid and declared it null and void.

2. Validity of Notice Issued under Section 153A as Time-Barred:
In the assessment year 2007-08, the assessee also questioned the validity of the notice issued under Section 153A as time-barred. However, this ground was not pressed by the assessee and was accordingly rejected.

3. Validity of Assessment without Issuance of Valid Notice under Section 143(2):
The assessee questioned the validity of the assessment framed under Section 153A read with Section 143(2) without the issuance of a valid notice under Section 143(2) in the assessment year 2007-08. This ground was also not pressed by the assessee and was rejected.

4. Validity of Addition on Account of Income from House Property:
The assessee contested the addition made on account of income from house property, arguing that the provisions of Section 23(1)(a) read with Section 23(4) were applicable. The Tribunal noted that the Assessing Officer made the addition by rejecting the assessee's contentions. However, since the primary issue of the validity of the assessment under Section 153A was decided in favor of the assessee, the Tribunal did not adjudicate this ground separately.

5. Action of CIT(A) in Restricting Exemption under Section 54:
In the assessment year 2009-10, the assessee raised an issue regarding the action of the CIT(A) in confirming the Assessing Officer's decision to restrict the exemption claimed under Section 54 to Rs. 10,16,700 against the claimed amount of Rs. 28,81,000. Similar to the previous issue, this ground became infructuous due to the Tribunal's decision on the primary issue of the validity of the assessment under Section 153A.

Conclusion:
The Tribunal held that the assessments framed under Section 153A read with Section 143(3) were invalid in the absence of incriminating material found during the course of the search. Consequently, the assessments were declared null and void. As a result, the other issues raised by the assessee became academic and did not require separate adjudication. The appeals were allowed, and the decision was pronounced in the open court on 17.02.2015.