2023 (7) TMI 1275 - AT - Income Tax

Tribunal upholds CIT(A)'s income computation order, with a suo moto enhancement by assessee. Revenue's appeal partly allowed.

The Tribunal upheld the Ld. CIT(A)'s order directing the A.O. to adopt the income computed after the appeal effect of the original assessment order, which ... Assessment u/s 153A - disallowance of deduction u/s. 54F - A.O. did not satisfy with the details/documents furnished by the assessee and completed assessment proceedings u/s 143(3) by determining the total income of the assessee more as against the returned income of assessee - HELD THAT:- Since in the impugned assessment order u/s. 153A AO had not made any addition or disallowance and has impliedly accepted the earlier original assessment order u/s. 143(3) of the Act dated 26.12.2017, therefore the ld. CIT(A) rightly directed the Assessing Officer to adopt the income computed or assessed after appeal effect of the first appellate order dated 09.03.2020 in relation to said original scrutiny assessment order u/s. 143(3) of the Act dated 26.12.2017. Thus, the income after appeal effect in respect of original assessment order came to Rs. 18,38,28,500/- i.e. the income originally returned by the assessee in the return filed u/s.139(1) of the Act. It is pertinent to mention that the issue of disallowance of deduction u/s. 54F could have raised by the revenue only by way of filing appeal against the first order of ld. CIT(A) relating to original scrutiny assessment order dated 26.12.2017 and not in the present appeal, which has been filed against the subsequent order of ld. CIT(A), in the second appeal dated 22.06.2020 which was passed in the first appeal filed by the assessee against search assessment order dated 22.12.2019 passed u/s. 153A r.w.s. 143(3) of the Act. As neither the Assessing Officer has examined the issue of deduction u/s. 54F of the Act nor has made any addition or disallowance either u/s. 54F of the Act or under any provision of the Act, in the said search assessment order. Since in the original scrutiny assessment order u/s. 143(3) of the Act has been quashed by the ld. CIT(A) by passing first order, consequently returned income of assessee as per return of income u/s. 139(1) was accepted by the Department as there was no appeal against the said order before the Tribunal. In the second round of search litigation the returned income of assessee in the subsequent return filed response to notice u/s. 153A of the Act, was enhanced and thus the returned income increased. CIT(A) ignored the subsequent suo motto addition made by the assessee in the subsequent return filed in response to notice u/s. 153A - Resultantly, the controversy took rest by the subsequent order of ld. CIT(A) wherein the Assessing Officer was directed to adopt taxable income as per appeal effect order of earlier first appellate order dated 09.03.2020 ignoring the enhancement of income by Rs. 28,760/- therefore the Assessing Officer directed to take note of said suo motto enchantment by the assessee and thus, the taxable income of assessee was to be enhanced by said amount. The grounds of revenue are partly allowed in the manner as mentioned hereinabove. Issues Involved:1. Validity of the original assessment order under section 143(3) of the I.T. Act, 1961.2. Validity of the search assessment order under section 153A r.w.s. 143(3) of the I.T. Act, 1961.3. Disallowance of deduction under section 54F of the I.T. Act, 1961.Summary:Issue 1: Validity of the original assessment order under section 143(3) of the I.T. Act, 1961The assessee filed a return of income for A.Y. 2015-16 declaring Rs. 18,38,28,500/-. The Assessing Officer (A.O.) completed the assessment under section 143(3) determining the total income at Rs. 21,37,81,194/-. The Ld. CIT(A) quashed this assessment order on 09.03.2020, deleting the sole addition of Rs. 2,99,52,694/-. The Revenue did not appeal against this order, thereby accepting the returned income of Rs. 18,38,28,500/-.Issue 2: Validity of the search assessment order under section 153A r.w.s. 143(3) of the I.T. Act, 1961A search and seizure action was conducted, and the A.O. completed the assessment under section 153A r.w.s. 143(3), again determining the total income at Rs. 21,37,81,194/-. The Ld. CIT(A) directed the A.O. to adopt the income computed/assessed after the appeal effect of the original assessment order, which was Rs. 18,38,28,500/-. The Tribunal noted that since the A.O. in the search assessment order did not make any independent addition or disallowance and merely adopted the earlier assessed income, the Ld. CIT(A)'s direction was correct.Issue 3: Disallowance of deduction under section 54F of the I.T. Act, 1961The issue of disallowance under section 54F was not raised in the search assessment order under section 153A, as the A.O. did not examine or make any independent addition regarding this deduction. The Tribunal held that the issue of disallowance under section 54F could only be raised by appealing the original assessment order dated 26.12.2017, which had been quashed. Thus, the grounds of appeal concerning section 54F were infructuous.Conclusion:The Tribunal upheld the Ld. CIT(A)'s order directing the A.O. to adopt the income computed after the appeal effect of the original assessment order, which was Rs. 18,38,28,500/-. However, the Tribunal noted a suo moto enhancement of Rs. 28,760/- made by the assessee in the return filed in response to the notice under section 153A, which should be considered, resulting in a taxable income of Rs. 18,38,57,260/-. The appeal of the Revenue was partly allowed.Order Pronounced:The appeal of the Revenue is partly allowed. Order pronounced in the open court on 28.07.2023.