The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that section 153c is to be applied for assessment proceedings, based on material seized from third party.
The aforesaid observation was made by the Tribunal when cross appeals were preferred before it by the appellant, M/s. Global Paper Impex Ltd. and the appellant Dy. CIT, CC-2(2), Mumbai, against the order dated 20.09.2019, passed by Commissioner of Income Tax (Appeals), Mumbai, qua the assessment year 2010-11 & 2011-12.
The facts of the case were that on the basis of search and seizure operation carried out in the case of Reliable Paper (I) Pvt. Ltd. and its group company, Mumbai, during the period 23.02.2010 and 20.04.2010, a notice under section 142(1) of the Income Tax Act, 1961, dated 19.11.2012, was issued and served upon the assessee.
However, the assessee having failed to file the return of income in response to the notice under section 142(1) of the Income Tax Act, a notice under section 142(1) dated 11.01.2013, along with questionnaire was issued and duly served upon the assesse, fixing the next date as 23.01.2013.
However, with no one appearing on behalf of the assesse on the aforesaid date also, subsequent notices were issued upon the assesse. But the assessee having failed to comply with the same, the Assessing Officer (AO) proceeded to complete the assessment under section 144 of the Income Tax Act.
The AO proceeded to assess the income of the assessee on estimation basis, by taking the assessee’s sales turnover of the previous year and extrapolating the same by 10% of the previous years, amounting to Rs.9,57,30,405/, and by considering the extrapolating turnover by extra 10% which comes to Rs.1,05,30,34,458/, he proceeded to compute the income of the assessee at Rs.29,48,49,648/, which was 28% of the total turnover i.e. Rs.1,05,30,34,458/-
With the AO further making adhoc addition of Rs.55,00,000/- under section 68, as unexplained cash credit, on the assessee’s failure to submit the bank statements after repeated requests, he framed the assessment at the total income of Rs.29,98,49,650/- under section 144 of the Income Tax Act .
Subsequently, the assessee carried the matter before the CIT(A) by way of filing appeal, who had partly allowed the same. And it is feeling aggrieved by this, that the assessee as well as Revenue have come up before the Tribunal by way of filing the present cross appeals for A.Y. 2010-11.
Hearing the contentions of both the parties and perusing the materials available on record, the Tribunal consisting of S. Rifaur Rahaman, the Accountant Member and Kuldip Singh, the Judicial Member, observed as follows:
“we are of the considered view that the assessment framed in this case by the AO under section 144 of the Income Tax Act is not sustainable as the same was required to be framed under section 153C read with section 153A of the Income Tax Act, hence ordered to be quashed without entering into merits of this case.”
“Consequently, the appeals filed by the assessee are allowed and appeal filed by the Revenue is hereby dismissed”, the Bench ruled.
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