2024 (5) TMI 161

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....ction note was sent to the AO of the assessee. 2. Brief facts of the case are that in this case assessment was done pursuant to the reopening of the case an assessment was framed u/s. 147/143(3) of the I.T Act, 1961. In the assessment, AO held that it is clear that the assessee has received accommodation entry in the form of bogus LTCG/STCG of Rs. 4,03,21,009/- from M/s. Alankit Ltd. through one entry operator namely Shri Alok Kumar Agarwal. Therefore, AO held that an amount of Rs. 4,03,21,009/- is added back to the total income of the assessee for the year under consideration as unexplained cash credit u/s. 68 of the I.T Act, 1961. 3. Against the above order, assessee appeal before the ld. CIT(A). 4. The Ld. CIT(A) granted relief to the assessee by holding that assessment should have been done in this case u/s. 153C and not by way of reopening u/s. 147 of the I.T Act, 1961. The order of the Ld. CIT(A) in this regard, reads as under:- "5.4 Before arriving at any conclusion, it is important to examine the provisions of Section 153C of the Act, which are as under: "153C.(1) Notwithstanding anything contained in, section 147, section 148, section 149, sectio....

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.... 5.5.3 Further, the name of Mr. S K Bhalla is also appearing in the statement of Mr. S K Gupta wherein he has clearly mentioned that he and Mr. S K Bhalla are involved in providing the entries of capital gains/losses to their clients. Mr. S K Gupta in his statement has also explained in detail the modus operendi of providing the entries of capital gains/losses to their clients. 5.5.4 In view of the above analysis, it can be concluded that this seized paper, based on its contents and the statement of Mr. S K Gupta, acquires the nature of "Incriminating paper." 5.5.5 Once it is established that the seized paper is an incriminating material found during the search operation on Alankit Group and pertains to third party i.e. Mr. Yogesh Gambhir, then correct section under which any addition on the basis of this paper can be made in the case of the appellant, is Section 153 C of the Act. 5.6 Some judicial decisions in this regard are as under: 5.6.1 The decision of the Co-ordinate Bench of Hon'ble ITAT Amritsar in the case of ITO Vs Arun Kumar Kapoor, ITA No. 147 (ASR.) of 2010 dated 21.06.2011: "8. On a perusal of the above provis....

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....come to the conclusion that in the above situation, provisions of sec. 153C were applicable which excludes the application of sections 147 and 148 of the Act. The ITAT held the notice issued under sec. 148 and proceedings under sec. 147 as illegal and void ab initio. It was held that Assessing Officer having not followed procedure under sec. 153C, reassessment order was rightly quashed by the Learned CIT(Appeals). In the present case before us, it is an admitted fact, as also evident from the reasons recorded and the assessment order that the initiation of reopening proceedings was made by the Assessing Officer on the basis of information received from the Directorate of Income-tax (Inv.) on the basis of search & seizure operation conducted at the premises of Rock Land Group of Cases and the documents related to the assessee found during the course of search were made available to the Assessing Officer of the present assessee. We thus respectfully following the decision of Co-ordinate Bench of the ITAT in the case of ACIT vs. Arun Kapur - 140 TT] 249 (Amritsar) hold that provisions of sec. 153C of the Act were applicable in the present case for framing the assessment, if any, which....

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.... of income. In order to assess the same, notice u/s 148 of the I.T. Act needs to be issued." 9. It can been from the above that search operation was carried on in the premises of Santosh Group of Institutions. This means that any document found during the course of the search makes the assessee "other person" therefore the correct section for initiation of any proceeding against the assessee is section 153C of the Act. On identical set of facts the co-ordinate bench in the case of Sushil Gaur (supra) had the occasion to consider identical set of facts. In that case also the search in the premises of Santosh Medical College was under consideration. The relevant findings of the coordinate bench reads as under: - "8.1 have heard both the parties and perused the records, especially the impugned order as well as the Paper Book. On having gone through the decisions cited above especially the decision of Amritsar Bench in the case of ITO vs. Arun Kumar Kapoor (supra), I find that in that case as in the present case before me, reassessment was initiated on the basis of incriminating material found in search of third party and the validity of the same was challenged by the....

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.... Santosh Medical College was under consideration and coordinate bench was pleased to delete the impugned addition. 11. Respectfully following the findings of the coordinate bench (supra). I am inclined to hold that the notice issued u/s 148 of the Act and assessment framed u/s 147 of the Act is void ab initio. 13. On finding parity of facts I do not find any reason to differ from the findings of the coordinate bench (supra) and following the findings of the co-ordinate bench I am inclined to hold that the notice issued u/s. 148 and the assessment framed u/s. 147 of the Act is void-ab-initio. 14. Since the assessment has been quashed, I do not find it necessary to dwell into the merits of the case. Accordingly, the appeal filed by the assessee is allowed." 5.6.4 Sushil Gaur, Shelly Agarwal vs. ITO, in ITA No.1500/Del/2017 and ITA No. 1501/Del/2017: "6. At the time of hearing, Ld. Counsel of the assessee has filed a Paper Book containing pages 1 to 22 in which the Assessee's counsel has attached the written submissions; copy of reasons recorded and the copy of the order of the ITAT, New Delhi in the case of Rajat Shubra Chatterji vs. A....

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....The same was questioned by the Revenue before the ITAT and the ITAT after discussing the cases of the parties and the relevant provisions in details has come to the conclusion that in the above situation, provisions of sec. 153C were applicable which excludes the application of sections 147 and 148 of the Act. The ITAT held the notice issued under sec. 148 and proceedings under sec. 147 as illegal and void ab initio. It was held that Assessing Officer having not followed procedure under sec. 153C, reassessment order was rightly quashed by the Learned CIT(Appeals). I also draw my support from the ITAT, New Delhi decision in the case of Rajat Shubra Chatterji vs. ACIT, New Delhi ITA No. 2430/Del/2015 dated 20.5.2016, wherein the reassessment was quashed on the similar facts and circumstances by following the ITAT, Amritsar decision in the case of ITO vs. Arun Kumar Kapoor (supra). In the present case before me, it is an admitted fact, as also evident from the reasons recorded and the assessment order that the initiation of reopening proceedings was made by the Assessing Officer on the basis of information available with the AO. I thus respectfully following the decision of Coordinate....