2018 (5) TMI 1259 - AT - Income Tax

Assessment declared void as time-barred under Income Tax Act Section 153B(b)

Vashdev G Adnani Versus ACIT 19 (1), Mumbai

The Tribunal set aside the CIT(A)'s order, declaring the assessment by the Assessing Officer invalid and void due to being time-barred under Section ... Assessment u/s 153A - Assessment barred by limitation - Held that:- The search in this case was conducted on 05.01.2005 and as per the provisions of section 153B(b) of the Act , the order of assessment u/s. 153A should have been framed on or before 31.03.2007 whereas, as a matter of fact, the same was framed vide order dated 31.12.2007. Assessment of the Assessing Officer is invalid and void ab-initio as the same was barred by limitation as provided u/s. 153B(b) of the I.T.Act. - Decided in favour of assessee. Issues Involved:1. Ex parte order by CIT(A) and rejection of adjournment request.2. Addition of Rs. 2,10,30,089 as foreign exchange brought into India.3. Cash deposits of Rs. 14,78,072 in Punjab and Maharashtra Co-op. Bank Ltd.4. Disallowance of Rs. 1,01,553 as interest payable on a loan from the appellant's wife.5. Disallowance of 15% expenses out of Motor Car Expenses, Telephone Expenses, and Electronic Equipment Depreciation.6. Levy of interest under Section 234B & C of the Income Tax Act, 1961.7. Validity of the assessment order passed under Section 143(3) due to the absence of a notice under Section 143(2).Issue-wise Detailed Analysis:1. Ex parte order by CIT(A) and rejection of adjournment request:The assessee contended that the CIT(A) erred in passing an ex parte order dismissing the appeal after rejecting the request for adjournment. The adjournment was sought until the ITAT decided on similar grounds of appeal for previous assessment years. The Tribunal noted that the CIT(A) should have considered the request for adjournment, especially when similar issues were pending before the ITAT.2. Addition of Rs. 2,10,30,089 as foreign exchange brought into India:The assessee argued that the CIT(A) erred in confirming the addition of Rs. 2,10,30,089, which was the value of foreign exchange allegedly brought into India. The assessee claimed that the foreign exchange was taken back to Hong Kong upon return. The Tribunal observed that the CIT(A) relied on appellate orders for other years, which were pending before the ITAT, and ignored the assessee's explanation. The Tribunal found merit in the assessee's argument and noted that the issue required reconsideration.3. Cash deposits of Rs. 14,78,072 in Punjab and Maharashtra Co-op. Bank Ltd.:The CIT(A) confirmed the findings of the Assessing Officer that the cash deposits of Rs. 14,78,072 in the name of Mr. Subodh Thakur were benami holdings of the appellant. The Tribunal noted that the CIT(A) did not properly consider the evidence and explanations provided by the assessee. The Tribunal found that the addition was not justified and required further examination.4. Disallowance of Rs. 1,01,553 as interest payable on a loan from the appellant's wife:The CIT(A) disallowed the interest payable on the loan from the appellant's wife on the ground that the interest income was not shown in her Income Tax Return. The Tribunal observed that the CIT(A) should have considered the overall circumstances and the evidence provided by the assessee. The disallowance was found to be unjustified and required reconsideration.5. Disallowance of 15% expenses out of Motor Car Expenses, Telephone Expenses, and Electronic Equipment Depreciation:The CIT(A) disallowed 15% of the expenses claimed under Motor Car Expenses, Telephone Expenses, and Electronic Equipment Depreciation. The Tribunal noted that the disallowance was made without proper justification and required a detailed examination of the evidence provided by the assessee.6. Levy of interest under Section 234B & C of the Income Tax Act, 1961:The assessee contested the levy of interest under Section 234B & C. The Tribunal noted that the issue of interest levy is consequential and depends on the outcome of the other issues raised in the appeal. Therefore, the Tribunal did not provide a separate adjudication on this matter.7. Validity of the assessment order passed under Section 143(3) due to the absence of a notice under Section 143(2):The assessee raised an additional ground challenging the validity of the assessment order passed under Section 143(3) due to the absence of a notice under Section 143(2). The Tribunal found that the assessment order was passed after the statutory time limit provided under Section 153B(b). The Tribunal referred to its earlier decision in the assessee's own case for A.Y. 2002-03, where it was held that the assessment order was invalid as being barred by limitation. Following the same reasoning, the Tribunal held that the assessment order for the current year was also invalid and void ab initio.Conclusion:The Tribunal set aside the order of the CIT(A) and held that the assessment made by the Assessing Officer was invalid and void ab initio as it was barred by limitation under Section 153B(b) of the Income Tax Act. Consequently, the other grounds raised by the assessee did not require adjudication. The appeal was partly allowed.