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Tax Publishers 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.

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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.