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2022 (10) TMI 163 - AT - Income TaxScope of appeal before CIT(A) after revision order u/s 263 - Revision u/s 263 AND Legality or otherwise of assessment order passed by the AO u/s.143(3) r.w.s.153C - Merging of two proceedings - Legality of assessment order passed by the AO and consequent additions made thereon in absence of incriminating material found as a result of search - additional grounds filed by the assessee challenging validity of assessment proceedings and consequent addition made thereon - HELD THAT:- The assessment proceedings in pursuant to search action u/s.132 of the Act, become final and reached finality. Further, the case has been subjected to 263 proceedings by the PCIT. The PCIT has taken up 263 proceedings on certain issues and set aside the assessment order passed by the AO u/s.143(3) r.w.s.153C of the Act, for the AYs 2003-04 to 2007-08 with a direction to AO to re-do the assessment on the issue questioned in the 263 proceedings. We do not know, whether the assessee has challenged 263 order passed by the PCIT or not. AO has passed consequential assessment order u/s.143(3) r.w.s.263 of the Act, for all assessment years and has made additions to the issues questioned by the PCIT in 263 proceedings. The assessee has challenged the order passed by the AO u/s.143(3) r.w.s.263 of the Act, before the First Appellate Authority and challenged various additions made by the AO and not challenged legality of assessment order passed by the AO. The Ld.CIT(A) dismissed the appeal filed by the assessee ex-parte for non-appearance. The assessee carried the matter in further appeal before the ITAT and the Tribunal [2016 (4) TMI 1431 - ITAT CHENNAI] set aside the appeals to the file of the Ld.CIT(A) with a direction to re-consider the issues. At this stage, in the second round of litigation, the assessee has filed petition for admission of additional grounds by taking a legal ground challenging validity of additions made by the AO in the assessment framed u/s.143(3) r.w.s.153C of the Act, on the ground that additions made by the AO does not have any reference to incriminating material found as a result of search. We are not going into the aspects whether additions made by the AO are supported by any incriminating material found as a result of search, or not, but we are only on the question whether the assessee can take a legal issue in this round of proceedings or not. In our considered view, the assessee cannot take this legal issue challenging validity of assessment proceedings and consequent additions made by the AO in absence of incriminating material found as a result of search, because, the present proceedings pertains to assessment order passed in pursuant to directions of the PCIT u/s.263 of the Act. Since, pending proceedings before the Ld.CIT(A) is with reference to additions made in pursuant to directions of the PCIT, in our considered view, the assessee can only challenge additions made by the AO in pursuant to directions of the PCIT in 263 proceedings on merits, but the assessee cannot question the legality or otherwise of assessment order passed by the AO u/s.143(3) r.w.s.153C of the Act, in pursuant to search action u/s.132 of the Act. Two proceedings are independent and different. The first proceedings of assessment order passed by the AO in pursuant to search action is altogether a different proceedings which has reached finality when the assessee does not challenge assessment order passed by the AO before the First Appellate Authority. The present proceedings pending before the First Appellate Authority, is in pursuant to directions of the PCIT u/s.263 of the Act, and is altogether a different proceedings and in this proceedings, the assessee cannot question the legality of assessment order passed in pursuant to search action u/s132 of the Act. Therefore, we are of the considered view that the Ld.CIT(A) has rightly rejected additional grounds filed by the assessee challenging validity of assessment proceedings and consequent addition made thereon. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeals filed by the assessee for the AYs 2003-04 to 2007-08. Appeals filed by the assessee are dismissed.
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