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2016 (7) TMI 1418 - AT - Income TaxReopening of assessment - whether the plea that reopening of the assessment u/s 147 was invalid and bad in law, can be looked into the consequential assessment proceedings carried out as per the directions of the learned CIT in the order passed u/s 263 - CIT-A directed the AO to revise the assessment order considering the issue of grant of 80 IB deduction to the assessee in respect of DEPB receipts - Held that:- The original assessment proceedings u/s 143(3) had already been completed and attained finality. At the time of search, the reopened assessment proceedings u/s 147 of the Act were pending. So, what were abated due to the search action were the reassessment proceedings u/s 147 of the Act (in which the issue of section 80IB deduction on DEPB receipt was pending) and not the original assessment proceedings u/s 143(3) of the Act. Now, subsequent to the search action, the fresh assessment order was passed by the AO u/s 153A of the Act. In this assessment order the AO did not consider the issue relating to the claim of deduction in relation to DEPB receipts. Admittedly, no incriminating material during the search action was found in relation to any of the issue and no additions were made. Under the circumstances, the learned CIT invoked his revision jurisdiction u/s 263 of the Act and directed the AO to consider the issues which were pending in the reassessment proceedings regarding the allowance of deduction of DEPB receipts. Clearly, independent of the reassessment proceedings under section 147, the AO could not have considered the issue of the claim of section 80IB on DEPB receipts in the section 153A proceedings as no incriminating material was found in the search on this issue. The very validity of reopening of the assessment proceedings strikes to the very base of such addition, the learned CIT(A) was supposed to decide the same. Admittedly, the AO had rejected the objections of the assessee regarding the validity of the reassessment proceedings u/s 147 of the Act during the fresh assessment proceedings u/s 153A of the Act. The assessee has raised this ground before the learned CIT (A), who has dismissed the said ground holding that the same cannot be taken by the assessee at this stage. The learned CIT (A) thus has wrongly taken a view that the assessee was estopped at this stage to raise this issue as he has not filed any appeal against the order of the CIT passed u/s 263 of the Act. As discussed above, such finding of the learned CIT (A) is not sustainable in the eyes of law. Hence, we direct the learned CIT (A) to consider the issue of the validity of the jurisdiction u/s 147 of the Act raised by the assessee and decide the same afresh. Needless to say that since it is a legal issue the assessee will be at liberty to challenge all aspects regarding validity and legality of the proceedings u/s 147 of the Act. The learned CIT (A) will consider the same and decide the said issue as per law. - Decided in favour of assessee for statistical purposes.
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