2016 (9) TMI 1441 - AT - Income Tax

Assessment order invalid due to jurisdictional error; assessee's appeal allowed.

The Tribunal found the assessment order to be barred by limitation and invalid. It determined that assessments should have been conducted under section ... Assessment barred by limitation - invalidity of reassessment where notice under section 148 was issued instead of proceedings under section 153A in search/requisition cases - search-and-requisition assessments governed by section 153A - non-application of section 292B to cure jurisdictional defects in assessment proceedingsAssessment barred by limitation - invalidity of reassessment where notice under section 148 was issued instead of proceedings under section 153A in search/requisition cases - search-and-requisition assessments governed by section 153A - Assessment orders framed after the last date for completion were invalid and barred by limitation where proceedings arising from search/requisition were not treated and conducted as proceedings under section 153A. - HELD THAT: - The Tribunal found that the notices and assessments in the search-related proceedings were not in conformity with the scheme applicable to search/requisition cases, which must be governed by section 153A for actions taken after 31.05.2003. The Tribunal followed the earlier coordinate-bench decision in the assessee's own case (ITA No.2968/M/2011) holding that where action under section 132/132A had been taken, proceedings could not properly be pursued by issuing notices under section 148 and completing reassessments outside the temporal limits applicable under section 153A. The Tribunal recorded that for AY 2004-05 the AO issued notice under section 143(2) and thereafter issued a notice under section 148 during the pendency of assessment and completed reassessment after the last permissible date, rendering the assessment invalid. Respectfully following the coordinate bench, the Tribunal set aside the order of the CIT(A) and held the assessments invalid and time-barred. [Paras 3, 4, 5]Assessment orders for the specified years are invalid and barred by limitation; the appeal is allowed.Non-application of section 292B to cure jurisdictional defects in assessment proceedings - section 292B not competent to convert or validate notice under one provision into another where jurisdictional requirements differ - Section 292B cannot be invoked to treat or cure a notice and assessment issued under section 148 as proceedings under section 153A where the defect is jurisdictional rather than a mere technical omission. - HELD THAT: - The Tribunal examined the scope of section 292B and the authorities summarised in the reproduced coordinate-bench reasoning. It held that section 292B cures only minor technical defects that do not militate against the intent and purpose of the Act, but cannot confer jurisdiction or validate fundamentally different statutory proceedings. The Tribunal agreed with the proposition that a notice issued under one section cannot be treated as a notice under another where the statutory schemes and jurisdictional foundations differ; therefore the Revenue's plea to treat the section 148 proceedings as section 153A proceedings could not be sustained by resort to section 292B. [Paras 3, 4]Section 292B does not cure the jurisdictional defect; the attempt to treat section 148 proceedings as section 153A proceedings is not permissible.Final Conclusion: The Tribunal, following a coordinate-bench decision in the assessee's own case, set aside the CIT(A)'s order, held the reassessments in respect of the mentioned assessment years invalid and time-barred, and rejected the Revenue's attempt to validate the proceedings by invoking section 292B. Issues Involved:1. Non-consideration of additional ground raised by the assessee regarding the assessment order being barred by limitation.2. Validity of assessment proceedings initiated under section 148 instead of section 153A.3. Applicability of section 292B to cure defects in the assessment process.Issue-Wise Detailed Analysis:1. Non-consideration of Additional Ground Raised by the Assessee:The primary issue raised by the assessee was that the assessment order passed under section 143(3) read with section 147 was barred by limitation. The assessment order was passed on 29.12.2006, whereas the due date for passing the order was 31.03.2006 as per the provisions of Section 153 of the Income Tax Act, 1961. The Tribunal noted that this issue had already been decided in favor of the assessee in its own case for the assessment year 2004-05 (ITA No.2968/M/2011), where it was held that the assessment framed by the AO was invalid and barred by limitation.2. Validity of Assessment Proceedings Initiated under Section 148 Instead of Section 153A:The Tribunal examined whether the proceedings initiated under section 148 could be treated as proceedings under section 153A. The Tribunal found that the AO had taken contradictory stands regarding whether a search was conducted under section 132A. The Tribunal cited the case of Abhay Kumar Shroff (290 ITR 114) and Saraya Industries Ltd. (306 ITR 189) to emphasize that post-31.05.2003, assessments in search cases must be completed under section 153A. The Tribunal concluded that since the AO had issued notices under section 148 instead of section 153A, the assessments were invalid.3. Applicability of Section 292B to Cure Defects in the Assessment Process:The Tribunal discussed the scope of section 292B, which allows for the curing of technical defects in assessment proceedings. However, it emphasized that section 292B cannot cure jurisdictional defects. The Tribunal cited various cases to illustrate that fundamental infirmities, such as issuing notices under the wrong section, cannot be rectified under section 292B. The Tribunal concluded that the mistake of issuing notices under section 148 instead of section 153A was a jurisdictional error and could not be cured by section 292B.Conclusion:The Tribunal found that the assessment order was indeed barred by limitation and invalid. It held that the assessments should have been completed under section 153A due to the search conducted under section 132A. The Tribunal also ruled that section 292B could not be applied to cure the jurisdictional defect of issuing notices under the wrong section. Consequently, the Tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee. The assessment made by the AO was declared invalid and barred by limitation.