TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 172
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....s of the case and in law, the learned Assessing Officer erred in reopening the assessment. 3. In the facts and circumstances of the case and in law, the Assessing Officer erred in making unjustified addition of Rs. 47,58,911/- on account of interest allegedly received in cash. 4. In the facts and circumstances of the case and in law, the Assessing Officer erred in charging interest u/s 234A, B, C and D and initiating penalty u/s 271[1][c]. 3. The assessee, an individual derived income from salary, house property, profit and gain from business etc. Fact of the case as narrated in the assessment order reveal that the Assessing Officer of one Shri Jaikishin Rohra handed over the documents which pertained to/related to the assessee, in whose case search action u/s. 132 of the Act was conducted on 24.02.2014.Loose papers and other documents were seized. It was found that page nos. 118 and 119 of Annexure A-1 contained financial transaction in cash and cheque which belonged to one Shri Kumar Mordani, who was partner in Paramvir Developers LLP. The statement of Shri Jaikishin Rohra was recorded u/s. 131 of the Act in which he stated that the said documents and transac....
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.... the circumstances of the case, no action could have been taken u/s 147/148 of the Act as the assessment order was based on seized materials for which only recourse available to the AO was the provisions of section 153C of the Act and not 148 of the Act. In this regard, our attention has been invited to page 89 of the Paper Book. According to it, the AO initially issued a notice u/s 153C of the Act on 24.11.2017.However,as claimed by the ld.AR, the AO withdrew the said notice and proceeding u/s 153C of the Act was dropped and instead proceeding u/s 148 of the Act was initiated vide notice u/s 148 of the Act dated 22.12.2017 for the relevant assessment year, as evident from the response of the assessee dated 26.12.2027 as per page-88 of the PB. Page 90 of the Paper book has also been filed showing recorded reasons. 5.1 In this regard, the ld.AR placed heavy reliance on the jurisdictional High Court order in the case of Sejal Jewellary and others 171 Taxmann.com 846(Bom) and Sri Dinaka Suvarana 454 ITR 21(Kar) and also dismissal of SLP by the hon'ble Supreme Court reported in 151 Taxman.com 489 SC in the later case. 6. The ld.DR however, contested the claim stating that the AO ....
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....h Court is binding on revenue authorities under its jurisdiction. 7.2 We find that assessee's case is intrinsically linked to a search and seizure operation in a case and the information received emanated from search proceedings. Seized paper and its contents have been discussed by the AO which evidently pertained to the assessee. The AO even initiated proceedings u/s 153C of the Act which was however, dropped. Since the said paper was seized from the premises of the third party, action u/s 153C of the Act was appropriate on the facts and the circumstances of the case. This section begins with non-obstante clause and therefore, has an overriding effect on sections 147 and 148 of the Act. As per the scheme and object of section 153C r.w.s 153A, the AO has no discretion or choice to invoke the provisions of section 147/148 instead of section 153C r.w.s. 153A of the Act. Once the case of reassessment is made out by the AO which falls in the preview of specific provisions of section 153C of the Act, the AO cannot resort to invoke the provisions of section 147/148 of the Act to assess or reassess income of the assessee. The action of the AO to initiate the proceedings under section 1....
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....hen any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year. In such situation, the Assessing Officer may subject to the provisions of Sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year and for which a prior notice under Section 148 would be required to be issued. Section 147 does not contemplate an eventuality which Section 153A or Section 153C contemplates, the basis of which is inter alia a search action under Section 132 being resorted as noted hereinabove. Thus, both these provisions are quite compartmentalized although the deeming effect of both the provisions, may be the same. However, the situations in which such provisions operate are required to be invoked are completely different. This is clear from the bare reading of the provisions, hence would not warrant any elaborate discussion. 17. The purport and effect of these provisions had fell for consideration of the Supreme Court in Abhisar Buildwell P. Ltd. (supra), wherein the scope of assessment under Section 153A of the I.T. Act was considered. In thi....
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....e assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be (2015) 61 taxmann.com 412 (Delhi) made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of t....
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....ess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under Sections 147/148 of the Act, subject to fulfillment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue ....
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....se in hand, are required to be noted, which reads thus: "14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the....
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....ss 'total income' by passing separate order for each assessment. 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition, the AO has to proceed under Section 153C. The two pre-requisites are that the AO dealing with the assessee on whom search was conducted or requisition made, being satisfied that seized material belongs or relates to other assessee shall hand over it to AO having jurisdiction of such assessee. Thereafter, the satisfaction of AO receiving the seized material that the material handed over has a bearing for determination of total income of such other person for the relevant preceding years. On fulfillment of twin conditions the AO shall proceed in accordance with the provisions of Section 153A. 26. Special procedure is prescribed under Section 153A to 153D for assessment in cases of search and requisition. There cannot be a quibble with the proposition that the special provision shall prevail over the general provision. To say it differently the provisions of Section 153A to 153D have prevalence over the regular provisions for assessment or reassessment under Sectio....
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....nnot 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 provisions, the legislature in its wisdom has thought it appropriate to provide for an independent effect, to be given under Section 153A read with Section 153C by incorporating the " non-obstante" clause, in these provisions, which carves out an exception to any normal/regular action being resorted under Section 147. 24. In this view of the matter, we are of the clear opinion that the impugned notice under Section 147 of the I.T. Act and all actions consequent thereto are required to be held to be without jurisdiction and bad in law. The petition is accordingly allowed in terms of prayer clauses (a) and (b)." 7.4 We find that the ratio decidendi of the above decision squarely applies to the facts of the case under consideration before us.On perusal of the above provisions, it is clear that the provisions of section 153C of the Act were applicable....