Appeal allowed, assessment order under section 143(3) quashed, all additions including disallowed foreign travel expenses deleted. (3)

The appeal was allowed, and the assessment order passed under section 143(3) was quashed. Consequently, all additions, including the disallowance of foreign travel expenses, were deleted.

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Issues Involved:
1. Validity of assessment under section 143(3) instead of section 153A.
2. Disallowance of 10% of foreign travel expenses of directors.

Summary:

Issue 1: Validity of Assessment under Section 143(3) Instead of Section 153A

The assessee argued that the CIT(A) erred in confirming the assessment under section 143(3) of the Act instead of section 153A, as the satisfaction note was prepared on 29/01/2014, which became the "substituted" date of search under section 153C. The assessment year 2013-14 fell within the six preceding assessment years (2008-09 to 2013-14) for the purpose of assessment under section 153A. The Tribunal referenced its decision in the assessee's own case for AY 2012-13, where it was held that the assessment order passed under section 143(3) was quashed. The Tribunal reiterated that the six assessment years should be considered from the date of recording satisfaction under section 153C. Since the AO did not issue a notice under section 153C, the assessment order under section 143(3) was deemed illegal and unsustainable. Consequently, the orders of the AO and CIT(A) were set aside, and the assessment order was quashed.

Issue 2: Disallowance of 10% of Foreign Travel Expenses

The assessee contested the estimated disallowance of Rs. 16,42,500/- (10% of foreign travel expenses of directors), arguing that no incriminating material was recovered during the search. The CIT(A) confirmed the disallowance, stating that a personal element could not be ruled out. The Tribunal, however, did not need to address the merits of this issue as the assessment order itself was quashed on legal grounds, rendering the disallowance moot.

Conclusion:

The appeal of the assessee was allowed, and the assessment order passed under section 143(3) was quashed. Consequently, all additions, including the disallowance of foreign travel expenses, were deleted.

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