Section 153C – Assessment u/s 153C which has been initiated without issuance of notice u/s 153C is bad in law

7. Krez Hotel
& Reality Ltd. (formerly Jaykaydee Industries Ltd.) vs. JCIT (Mumbai) Shamim Yahya
(A.M.) ITA No.
2588/Mum/2018 A.Y.: 2008-09 Date of
order: 16^th June, 2020

Counsel for Assessee / Revenue: Mani Jani & Prateek Jain /
Chaitanya Anjaria

Section 153C
– Assessment u/s 153C which has been initiated without issuance of notice u/s
153C is bad in law

FACTS

In this case,
the assessee preferred an appeal against the order dated 30^th
October, 2014 passed by the CIT(A). Although various grounds were taken in
appeal, one of the grounds pressed was that the A.O. did not have valid
jurisdiction to make the assessment.

Before the
CIT(A) also, the assessee raised an additional ground contending that the
assessment was bad in law since, for the impugned assessment year, the
proceedings were not initiated by issue of notice u/s 153C of the Act.

The CIT(A)
rejected the assessee’s claim referring to the decision of the Indore Bench of
the Tribunal in the case of .

Aggrieved,
the assessee preferred an appeal to the Tribunal contending that the issue is
squarely covered by the decision of the Delhi High Court mentioned in the
decision of the ITAT Delhi Bench in ITA No. 504/Del/2015 vide
order dated 27^th June, 2018.

HELD

The Tribunal,
after noting the ratio of the decision of the Delhi High Court (Supra)
held that in a case where the assessment is to be framed u/s 153C of
the Act, the proceedings should be initiated by first issuing such a notice.
The issue of such notice is mandatory and a condition precedent for taking
action against the assessee u/s 153C. The assessment order passed without
issuance of notice u/s 153C was held by the Court to be void, illegal and bad
in law.

The Tribunal
examined the present case on the touchstone of the ratio of the decision
of the Delhi High Court and found that the A.O. had not issued notice u/s 153C.
This, the Tribunal held, is fatal. Following the above-stated precedent, the
Tribunal set aside the order of the authorities below and held that the
assessment was devoid of jurisdiction.

This ground
of appeal filed by the assessee was allowed.