2020 (12) TMI 739 - HC - Income Tax

High Court affirms ITAT's quashing of assessment order under Income Tax Act

The Pr. Commissioner of Income Tax-Central-3 Versus Allied Perfumers Pvt. Ltd.

The High Court upheld the ITAT's decision to quash the assessment order under Section 153A/143(3) of the Income Tax Act due to the absence of ... Assessment u/s 153C - it is contended that addition could be made in absence of any incriminating material found during the course of search. - HELD THAT:- It is clearly discernable that the ITAT has given a finding of fact that the assessments make no reference to the seized material or any other material for the years under consideration, that was found during the course of search, in the case of the assessee. Mr. Maratha is also unable to point out any incriminating material related to the assessee which could justify the action of the Revenue. Merely because a satisfaction note has been recorded, cannot lead us to reach to this conclusion, especially when the Revenue has not laid any foundation to support their contention. In the factual background as explained above, the assumption of jurisdiction under Section 153C cannot be sustained in view of the decision of this Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]. Issues:Delay in re-filing appeals, Jurisdiction under Section 153C of the Income Tax Act, Validity of assessment under Section 153A/143(3) of the Act.Delay in re-filing appeals:The High Court considered the condonation of delay in re-filing appeals ITA 391/2019 and ITA 380/2019, which had a delay of 296 days. The delay was condoned based on the reasons stated in the applications, and the applications were disposed of accordingly.Jurisdiction under Section 153C of the Income Tax Act:The appeals were filed against a common order passed by the Income Tax Appellate Tribunal (ITAT) in relation to Assessment Years 2001-02 and 2002-03. The group company of the assessee was involved in a search and seizure operation, leading to the issuance of a notice under Section 153C of the Act. The Assessing Officer framed assessment orders under Section 153/143(3) of the Act, which were challenged by the assessee. The ITAT allowed the cross objections of the assessee, quashing the assessment order based on the lack of incriminating material found during the search. The High Court upheld the ITAT's decision, stating that the additions made by the Assessing Officer were not sustainable in law due to the absence of incriminating material, in line with relevant case laws.Validity of assessment under Section 153A/143(3) of the Act:The Revenue contended that incriminating documents were found during the search operation, justifying the jurisdiction under Section 153C. However, the High Court, after considering the arguments, disagreed with the Revenue's stance. The ITAT found that the additions made by the Assessing Officer were beyond the scope of Section 153C as no incriminating material was found to doubt the transactions. The High Court concurred with the ITAT's findings, emphasizing that the Revenue failed to establish a valid basis for the jurisdiction under Section 153C. The High Court dismissed the appeals, stating that no substantial question of law required consideration in the case.In conclusion, the High Court addressed the issues of delay in re-filing appeals, jurisdiction under Section 153C of the Income Tax Act, and the validity of assessment under Section 153A/143(3) of the Act. The judgment upheld the ITAT's decision to quash the assessment order due to the lack of incriminating material, emphasizing the importance of establishing a valid basis for jurisdiction under Section 153C. The appeals were dismissed as no substantial question of law was found to warrant consideration.