TaxTMI 
TaxTMI 
2017 (9) TMI 1599
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....Rs. 2404059/- for payment made of royalty, u/s 40(a)(i) r.w.s. 195 of the Income Tax Act 1961. 2. The learned CIT Appeals has failed to appreciate that the royalty has been paid outside India on sales effected outside India and therefore, the provisions of section 40(a)(i) r.w.s 195 were not applicable in the case of the Assessee." In addition to these grounds, the assessee also raised additional grounds of appeal which read as under : "Additional Ground 1: Considering the facts and circumstances of the case the impugned assessment order passed under Section 143(3) r.w.s 153A of the Income Tax Act, 1961 ('the assessment order') is void ab initio as there was no search action carried in the case or the appellant. Additional Ground 2: Without prejudice to Ground 1, the impugned assessment order passed is void ab-initio as the disallowance made under section 40(a)(i) of the Income Tax Act, 1961 is not based on any incriminating material found against DKLLC Additional Ground 3: Without prejudice to Ground 1, 2 and 3, depreciation under Section 32 of the Act be allowed to the Appellant on the royalty paid to UOP LLC, US as the said payment is towards acquisi....
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....before the Tribunal and was not raked up either before the AO or the ld.CIT(A). However, we find that the issue raised is purely technical and legal in nature and arising out of the assessment records which was available before the authorities below, therefore we admit the said additional ground for adjudication in view of the decision of the Hon‟ble Supreme Court in the case of National Thermal Power Co. Ltd. vs Commissioner Of Income Tax (1998) 229 ITR 383 (SC). 7. The ld. AR vehemently submitted before us that since there has been no initiation of search within the meaning of section 132 of the Act on the assessee, therefore, there is no jurisdiction with the AO to issue notice u/s 153A of the Act. The ld. AR submitted that the name of the assessee was not mentioned in the search warrant which has been admitted by the Departmental Representative also as the department has been allowed several opportunities to verify the fact and ultimately ld. DR agreed that the name of the assessee was not in letter of search but the search was conducted on the premises and therefore issue of notice u/s 153A and consequent assessment order u/s 143(3) r.w.s.153A is void ab-initio. In su....
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.... mentioned in the search warrant. Now, the issue before us whether the the AO has a proper and legal authority to issue notice u/s 153A of the Act when the name of the assessee is not mentioned in the search warrant and fate of consequent proceedings culminating into assessment being framed u/s 143(3) r.w.s.153A of the Act. In order to fully and clearly understand the matter, we would like to refer the provisions of sections 153A of the Act: "153A. Assessment in case of search or requisition.- (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribe....
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....isition is made. Therefore, it is clear that for the purpose of assumption and exercise of powers u/s 153A of the Act in case of a person, the initiation of search in terms of section 132 of the Act or 132A of the Act on the said persons is mandatory and therefore whether there is no initiation of search as contemplated u/s 132 of the Act , the fundamental conditions for issuance of notice u/s 153A is not fulfilled. Thus, the person in respect of whom the search is initiated u/s 132 of the Act is the same persons against whom the notice is to be issued u/s 153A of the Act. In view of this legal position , we are of the considered view that since no search has been initiated u/s 132 of th4e Act in the case of assessee ,therefore notice issued u/s 153A of the Act is without jurisdiction and the consequent assessment so framed u/s 143(3) r.w.s 153Á of the Act was also void abinitio. The case of the assessee is also supported by several decisions as cited by the ld AR which are discussed as under:- In the case of M/s Balaji Yarn Ltd(supra) , the coordinate bench has held that where there is not initiation of search u/s 132 of the Act , no notice u/s 153A could be issued and t....