Disallowance challenged in appeal against original assessment u/s 143(3) can not be made again in search assessment

Disallowance challenged and pending in appeal against original assessment u/s 143(3) can not be made again in search assessment framed u/s 153A/153C of the Income Tax Act

ABCAUS Case Law Citation
ABCAUS 2362 (2018) 06 ITAT

The instant appeal was preferred by the assessee against the order of the Commissioner of Income Tax (Appeals) [(CIT (A)], inter alia, challenging sustaining of the disallowance u/s 40A(3) of the Income Tax Act, 1961 (the Act).

The assessment was originally completed u/s 143(3) of the Act in which addition was made u/s 40A(3) of the Act. This order was challenged before the CIT(A) and the matter was sub-judice before the Tribunal.

Consequent to a search carried out at various premises of a company and its group concerns and associated persons (Group cases) the assessment was framed in the hands of the assessee u/s 153A/153C of the Act. While completing the assessment the AO again made the addition for the same issue u/s 40A(3) of the Act which was sustained by the CIT(A).

Before the Tribunal, it was contended that since addition was already sub-judice before the Tribunal in regular appeal arising from the assessment order passed u/s 143(3) of the Act the same disallowance cannot be made in subsequent assessment framed u/s 153A/153C of the Act, as it amounted to a double addition.

The Tribunal opined that once the disallowance made u/s 40A(3) of the Act was a subject matter of appeal in an appeal arising from the original assessment order framed u/s 143(3) of the Act, the same addition in subsequent search assessment proceedings framed u/s 153A/153C of the Act was not sustainable in the eyes of law as it amounted to a double addition.

The Tribunal, accordingly set aside the order passed by the CIT(A) and deleted the addition.  

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