2019 (6) TMI 1405 - AT - Income Tax

Tribunal nullifies reassessment order, allows appeal on jurisdictional error.

Jayant Hemraj Choudhari Versus ITO, Ward-10 (2), Pune.

The Tribunal allowed the assessee's additional ground challenging the jurisdictional error in issuing the notice under Section 148 instead of Section 153C ... Assessment u/s 147/148 or 153C - addition u/s 69A - information relating to the assessee was found from the documents seized - HELD THAT:- The issue raised in the present appeal is squarely covered by the issue before the Tribunal in Joshi Wadewale Hadapsar Vs. DCIT [2018 (3) TMI 1583 - ITAT PUNE] and following the same parity of reasoning, we hold that re-assessment proceedings initiated against the assessee under section 147 / 148 of the Act are not warranted. The Assessing Officer after receipt of information belonging to the assessee should have invoked provisions of section 153C of the Act and not section 147 / 148 of the Act. Accordingly, we hold so. Consequently, re-assessment order passed under section 148 of the Act does not stand. The Assessing Officer is thus, directed to cancel the same. Consequently, the additional ground of appeal raised by the assessee is allowed and we hold that assessment framed by the Assessing Officer is null and void. - Decided in favour of assessee. Issues Involved:1. Validity of the addition of Rs. 15,00,000 under Section 69A of the I.T. Act, 1961.2. Jurisdictional error in issuing notice under Section 148 instead of Section 153C of the I.T. Act, 1961.Issue-wise Detailed Analysis:1. Validity of the Addition of Rs. 15,00,000 under Section 69A of the I.T. Act, 1961:The assessee contested the addition of Rs. 15,00,000 made by the Assessing Officer (AO) under Section 69A of the Income Tax Act, 1961, which pertains to unexplained money. The AO had made this addition based on a document seized during a search action under Section 132 of the Act involving Sinhagad Technical Education Society (STES). This document indicated that the assessee had paid Rs. 15 lakhs as a capitation fee/donation to Sinhagad Dental College and Hospital for securing admission. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this addition. The assessee argued that this addition was arbitrary, perverse, and devoid of merits, and requested its deletion.2. Jurisdictional Error in Issuing Notice under Section 148 Instead of Section 153C of the I.T. Act, 1961:The assessee raised an additional ground challenging the jurisdiction of the AO in issuing the notice under Section 148 instead of Section 153C. The assessee argued that since the information related to the assessee was found from documents seized during a search on STES, the correct procedure would have been to issue a notice under Section 153C. The Tribunal referred to the amended provisions of Section 153C, which were applicable at the time of issuing the notice under Section 148. The Tribunal noted that the AO erroneously assumed jurisdiction under Section 147 instead of Section 153C, as the seized documents pertained to the assessee but belonged to STES.The Tribunal cited previous decisions, including the Pune Bench's decision in the case of Shri V. L. Khandge vs. ITO, which held that where documents found during a search pertain to a person other than the one searched, proceedings should be initiated under Section 153C. The Tribunal concluded that the AO should have invoked Section 153C and not Section 147/148, rendering the reassessment order unsustainable in law.Conclusion:The Tribunal allowed the additional ground raised by the assessee regarding the jurisdictional error, thereby nullifying the reassessment order passed under Section 148. Consequently, the other grounds, including the validity of the addition under Section 69A, were dismissed as academic. The appeal was partly allowed, providing relief to the assessee on the jurisdictional issue.Order Pronouncement:The order was pronounced on June 14, 2019, with the appeal of the assessee being partly allowed.