2019 (1) TMI 638 - AT - Income Tax

High Court upholds ITAT's decision on assessment orders under Income Tax Act sections 153A & 153C. CIT (Appeals) rules for assessee.

The High Court affirmed the ITAT's decision regarding the validity of assessment orders under sections 153A and 153C of the Income Tax Act. The CIT ... Assessment u/s 153C - Held that:- CIT (A) has decided the appeals in favour of the assessee/s by holding that since there was no incriminating material found during the course of search and seizure which could be said to be belonging to the assessee/s, there cannot be any additions in the hands of the assessee/s. On the other hand, he has confirmed the additions on merits. This is contrary to the settled legal position that if the appeals are allowed on the legal ground, then additions on merits cannot be sustained. CIT (A) has, thus, given contradictory findings in the same appellate order. Further, it is also settled law that an order giving effect to the appellate order is also appealable u/s 246A of the Act. Respectfully placing reliance on the judgment of Caltex Oil Refining (India) Ltd. vs. CIT (1992 (12) TMI 23 - BOMBAY HIGH COURT), we hold that the Ld. CIT (A) was legally incorrect in holding that the appeal effect order is not appealable and, therefore, his action of dismissing the assessee’s appeals in limine cannot be upheld. Accordingly, we restore all the four appeals to the file of the Ld. CIT (A) to reconsider the assessee’s appeals which have been filed against the order of the AO giving effect to the order of the Ld. CIT (A). - Appeals of the assessee allowed for statistical purposes. Issues:1. Validity of assessment orders under sections 153A and 153C of the Income Tax Act.2. Appealability of orders giving effect to decisions of appellate authorities under section 246A of the Act.Issue 1: Validity of assessment orders under sections 153A and 153C of the Income Tax Act:The judgment pertains to appeals by the assessee related to assessment years 2006-07 and 2007-08 for Best City Projects India Pvt. Ltd. and assessment years 2007-08 and 2008-09 for Best City Realtors India Pvt. Ltd. The case involved search and seizure operations leading to assessment orders under sections 153A and 153C of the Income Tax Act. The CIT (Appeals) confirmed the initiation of proceedings under section 153C for certain assessees but later, the ITAT deleted the additions made by the AO. The High Court affirmed the ITAT's decision. In the present case, the CIT (Appeals) decided in favor of the assessee due to lack of incriminating material found during the search, thus no further appeals were filed. However, the AO denied granting appeal effect, leading to further challenges.Issue 2: Appealability of orders giving effect to decisions of appellate authorities under section 246A of the Act:The contention arose regarding the appealability of orders giving effect to decisions of appellate authorities under section 246A of the Act. The Authorized Representative argued that such orders are appealable as they are as significant as original assessment orders. The Departmental Representative sought directions for reconsideration of the appeals. The ITAT, after considering the submissions and legal precedents, held that orders giving effect to appellate decisions are appealable under section 246A. Citing the judgments of the Bombay High Court and the Delhi High Court, the ITAT concluded that the CIT (Appeals) erred in deeming the appeal effect order as non-appealable. Consequently, the ITAT restored all appeals to the CIT (Appeals) for reconsideration, emphasizing the need for due process and opportunity for the assessee to present their case.In conclusion, the ITAT allowed all four appeals for statistical purposes, emphasizing the appealability of orders giving effect to appellate decisions under section 246A of the Income Tax Act. The stay applications were dismissed as they became irrelevant post the appeal decision. The judgment highlighted the importance of legal correctness and due process in tax assessments and appeals, ensuring fair treatment for the assessee in compliance with the law.