ITAT rules appeal under section 153C moot, advises pursuing appeal under section 263

The ITAT upheld the CIT(A)'s decision that the appeal against the assessment order under section 143(3) read with section 153C was infructuous. The original assessment order was set aside for re-assessment by the Pr. CIT, rendering the appeal against it moot. The ITAT advised the assessee to pursue an appeal against the A.O.'s order under section 143(3) read with section 263 instead.

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Issues:
1. Correctness of holding that the appeal against the assessment order under section 143(3) read with section 153C is infructuous.

Analysis:
The case involves an appeal by the assessee against the order of the Ld. CIT(A)-11, Hyderabad pertaining to the A.Y. 2008-09. The primary issue is whether the Ld. CIT(A) was correct in deeming the appeal against the assessment order as infructuous. The assessee, a real estate company, filed its return of income admitting &8377;15,910. Subsequently, a search operation led to the discovery of incriminating material, resulting in a notice under section 153C. The assessment under section 143(3) read with section 153C disallowed amounts under section 40A(3) and as unexplained expenditure.

Another significant development was the Pr. CIT invoking section 263, setting aside the assessment order due to an error regarding cash payment of interest. The CIT(A) concluded that since the original assessment order was set aside for re-assessment, the appeal against it became infructuous and dismissed the appeal. The assessee challenged this decision before the ITAT.

The ITAT analyzed the directions of the Pr. CIT and the subsequent actions of the Assessing Officer (A.O.). It noted that the A.O. misinterpreted the direction to re-do the assessment afresh after considering fresh findings. The ITAT observed that technically, the original order under section 143(3) read with section 153C was non-existent after being set aside by the Pr. CIT. Therefore, the CIT(A) was correct in deeming the appeal as infructuous since the original order no longer stood. The ITAT suggested that the appropriate remedy for the assessee would be to appeal against the A.O.'s order under section 143(3) read with section 263. Consequently, the ITAT dismissed the appeal of the assessee.

In conclusion, the ITAT upheld the CIT(A)'s decision, emphasizing that the original assessment order under section 143(3) read with section 153C was non-existent after being set aside for re-assessment. The ITAT advised the assessee to pursue an appeal against the A.O.'s order under section 143(3) read with section 263 instead of the non-existent original order.

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