2025 (6) TMI 2099

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....the Learned Assessing Officer has erred in not providing the sanction note of the Learned Pr. CIT-, Ahmedabad thereby violating the directions laid down by the Hon'ble Bombay High Court in the case of Tata Capital Financial Services Limited vs. ACIT [WP No. 546/2022; order dated 15.02.2022]. 3. In the facts and circumstances of the case and in law, the Learned Assessing Officer has erred in initiating the assessment u/s 147 by obtaining a mere mechanical sanction u/s 151 and thus violating the law laid down by Honorable Supreme Court in the case of Chhugamal Rajpal v. SP Chaliha (1971) 79 ITR 603. 4. In the facts and circumstances of the case and in law, the Learned CIT (Appeals) has passed the Order dated 31.12.2024 in gross violation of the principle of Natural Justice without giving proper opportunity of being heard. 5. In the facts and circumstances of the case and in law, the Learned CIT (Appeals), Mumbai has erred in upholding the addition of Rs. 71,52,27,967/- being unsecured loans as unexplained cash credits under section 68, merely on surmises and conjectures, even after providing all requisite explanations and evidences to substantiate the g....

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....der under Section 148A(d) of the Act. The basis for the reopening was the information uploaded on the "Insight portal", which disclosed that during the course of search and seizure operations under Section 132 conducted on 06.11.2019 in the case of the "Oneworld Group", it was unearthed that several entities under the said group were controlled by one Shri Rajesh G. Mehta, who was engaged in facilitating accommodation entries and issuing bogus purchase and sale invoices without any actual movement of goods. Statements recorded post-search, including those of Shri Urvil A. Jani and Shri Rajesh G. Mehta, affirmed that bogus transactions were routed through entities such as M/s Aneri Fincap Ltd., which had allegedly extended accommodation entries to the assessee amounting to Rs. 35,84,37,373/-. In the course of reassessment, the Assessing Officer noted that the assessee had received unsecured loans aggregating Rs.71,52,27,967/- from four such entities and concluded, relying upon the search material and statements, that a sum of Rs.7,15,22,797/- constituted unexplained cash credit under Section 68. Additionally, interest expenditure amounting to Rs. 1,90,68,140/- was disallowed as unex....

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....nd seized during the search action on the "oneworld" group entities. In the instant case, it is clear from the assessment records and correspondence on record that the material relied upon by the AO, namely the statements of Shri Rajesh Mehta and others, as well as documents relating to M/s Aneri Fincap Ltd. and other entities, were unearthed in the course of the search on the Oneworld Group, and not in relation to any independent inquiry against the assessee 5.3 The AO, having relied entirely on such third-party search material, nonetheless proceeded to initiate reassessment proceedings under Section 147 rather than following the special procedure envisaged under Section 153C of the Act. The Section 153C of the Act, as amended and applicable to the relevant period, lays down a specific procedure to be followed when during a search under Section 132, any books of account, documents, or information are found which pertain to, or contain information relating to, a person other than the searched person. It mandates that the AO of the searched person must record satisfaction that the seized material belongs to, or pertains to, such third person and must forward such material to the ....

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....from the recorded reasons. Such divergence between the recorded reasons and the eventual addition undermines the very jurisdiction assumed under Section 147. It is further submitted that the Ld. AO did not establish that the documents "belonged" to the assessee, as required under the law prevailing at the relevant time to invoke Section 153C. However, if the pre-conditions of Section 153C were not met, the invocation of Section 147 based solely on the same documents amounts to circumvention of the statutory safeguards embedded in Section 153C. Allowing such a course of action would render Section 153C otiose, defeating the purpose of the special procedure laid down by the legislature. The legal position taken by the Department, relying on subsequent judicial pronouncementsin case of Hon'ble Delhi High Court in Naveen Kumar Gupta (supra), particularly post-amendment interpretations, does not apply to the facts of the present case, as the action of reopening was undertaken in 2019 in respect of AY 2012-13, and the requisite threshold under the unamended Section 153C was not fulfilled. Judicial precedents cited by the appellant-includingruling of Hon'ble Apex Court in Abhisar ....

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....then certainly the provisions of Section 153C read with Section 153A would be applicable, as held by the Supreme Court in Abhisar Buildwell P. Ltd. (supra) when the Court interpreted the effect and purport of Section 153C and 153A, as also held by the Rajasthan High Court in Shyam Sunder Khandelwal (supra). 23. Insofar as Mr. Suresh Kumar's contention supporting the proceedings under Section 147 and 148 of 1.T. Act are concerned, for the aforesaid reasons, such contention would in fact go contrary to the intention of the legislature as depicted by the provisions of Section 153A and 153C of the I.T. Act. There would not be any difficulty in accepting the proposition as canvassed by Mr. Suresh Kumar, referring to the decision of the Supreme Court in Phool Chand Bajrang Lal (supra), however, the facts in the present case are distinct. There cannot be any doubt on the position in law when the Revenue intends to proceed purely on materials relevant for an action under Section 148 read with Section 147. We have already observed that the provisions of Sections 147, 148 vis-a-vis Section 153A and Section 153 are quite compartmentalized. To avoid any overlapping of these provis....