Assessment order under section 153C itself being
invalid--Revision of Such Order Not Allowable
CA Manoj Gupta
Facts: Pr. CIT held
the assessment order framed under section 153C read with section 143(3) as
erroneous and prejudicial to the interest of revenue on the reasoning that
there should have been the addition of peak amount of the bank balance for the
accommodation entries reflected in the bank account and commission thereon
besides interest income declared by the assessee in each year. Assessee pleaded
that assessment order was itself invalid.
Held: Search was
conducted at third party dated 10-3-2015, i.e., prior to amendment brought
under section 153C, i.e., 1-6-2015. Under the old provision, proceedings under
section 153C could only be initiated if any incriminating document found
belonging to the assessee during the search carried out under section 132 at
the premises of 3rd party. However, AO in his satisfaction recorded had given
categorical finding that documents found pertained to assessee. Accordingly,
there remained no ambiguity to the fact that there was no document found
belonging to assessee. Therefore, assessment framed under section 153C read
with section 143(3) was not sustainable and once the assessment in itself was
invalid, then same could not be revised under section 263.
Case : Greenstone
Agro Product & Infrastructure (P) Ltd. v. PCIT 2022 TaxPub(DT) 1569
(Ahd-Trib)
Comments: 1. In Shri
Hitesh Ashok Vaswani & Ors. v. DCIT in IT(SS)A 118-123/AHD/2019 :
2020 TaxPub(DT) 4866 (Ahd-Trib), it was held that the assessment framed
under section 153C read with section 143(3) of the Act is not sustainable. Once
the assessment in itself is invalid then the same cannot be revised under the
provisions of section 263 of the Act.
2. At this juncture, a
question also arises as to whether the assessment framed under section 143(3)
read with section 153C of the Act can be challenged in the proceedings under
section 263 of the Act. This query has been answered by Mumbai Tribunal in ITA
No. 688/Mum/2016 of West-life Development Ltd. v. PCIT reported in (2016)
88 taxamann.com 439 (Mum) : 2016 TaxPub(DT) 4034 (Mum-Trib). In the
impugned case assessment framed section 143(3) was revised by the PCIT under
section 263 of the Act. The assessee being aggrieved proceeded to file appeal
before Mumbai Tribunal. The assessee contended that the order under section
143(3) passes by the assessing officer in the name of non-existing/amalgamated
company therefore the assessment itself was invalid. Hence, the order which is
invalid cannot be revised under section 263 of the Act. However the revenue
contended that the validity of original assessment cannot be challenged in the
proceeding under section 263 of the Act. The Mumbai bench in light of the above
counter argument held that the proceeding under section 263 is collateral
proceeding to original. Thus the validity of the original assessment can be
challenged along the proceeding of section 263 of the Act.