INCOME TAX ACT, 1961

Section 251

Appeal [CIT(A)] - Assessment under section 153A - Necessity of incriminating material during the course of search -

Assessee was an infrastructure company deriving its income by way of contract revenue, management service fees, interest, profit on disposal of shares and securities. During the original assessment proceedings, AO made addition under section 14A read with rule 8D for assessment years under consideration. Assessment was completed for years under consideration by AO under section 143 (3) for assessment years 2008-09 and 2009-10 respectively, by computing disallowance under section 14A in both the years. Subsequently a search was undertaken in the premises of assessee. Primary question raised by assessee in present appeals for years under consideration were in respect of validity of assessment order passed by AO under section 153A without there being any incriminating material/undisclosed income found during course of search, since original assessment was completed under section 143(3). Held: Without there being a clear finding in respect of their being incriminating material/unaccounted money unearthed during the course of search, validity of assessment order passed under section 153A cannot be ascertained. Hence, it would be proper to remand the issue back to CIT(A) for fresh consideration on this aspect about validity of invocation of section 153A in the light of decision of CIT v. Sinhagd Technical Education Society (2017) 397 ITR 344 (SC) : 2017 TaxPub(DT) 3941 (SC) with a clear direction that he should first decide the legal ground raised by assessee and thereafter decide the issue on merits if assessee fails in the legal ground.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2008-09 to 2009-10

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