ITAT Rejects Assessee’s Challenge to Section 153C Proceedings And Upholds Order of CIT(A) 

The Income Tax Appellate Tribunal (ITAT), Delhi, has held that the assessment framed under Sections 153C read with 144 of the Income Tax Act requires further examination and inquiry by the AO. So, the CIT(A)’s decision to set aside the assessment for fresh adjudication was justified.

The assessee, Rashmi Magazine, filed its return of income for assessment year 2014-15, declaring a total income of Rs 9.71 lakh. Later, a search and seizure operation was conducted under Section 132 of the Income Tax Act on 2 January 2020 in the case of the Sushen Mohan Gupta (SMG) Group. During the search, recovered digital data contained information relating to the assessee. Based on that material, the AO initiated proceedings under Section 153C and issued notice dated 30 March 2023.

As the assessee did not file a return in response to the notice and did not comply with notices issued during assessment proceedings, the AO completed the assessment under Sections 153C read with 144 and estimated the total income at Rs 4.16 crore.

Aggrieved by which, the assessee approached the CIT(A), challenging the validity of the proceedings and raising several objections.

The Tribunal observed that the assessment had been completed under Sections 153C read with 144 and that several issues required detailed examination and inquiry by the AO. It noted that the CIT(A), exercising powers available under the newly inserted proviso to Section 251(1)(a), had rightly considered the matter fit for setting aside and remanding for fresh adjudication.

The Tribunal further held that the CIT(A) had appropriately directed the AO to undertake a de novo assessment after considering the assessee’s submissions, granting an adequate opportunity of hearing. Finding no fault in the appellate order, the Tribunal upheld the action of the CIT(A) and rejected all grounds raised by the assessee. Consequently, the appeal was dismissed.