2026 (4) TMI 972

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....e order despite the fact that the assessment order has been passed without obtaining valid prior statutory approval under section 148B of the Income Tax Act. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law, in completing the assessment and passing the order under section 143(3) of the Act without following the statutory conditions and procedure under the provisions of Income Tax Act. 4. (i) On the facts and circumstances of the case the Learned CIT(A), has erred both on facts and in law in confirming the addition of Rs. 71,52,880/- made by the AO on account of long term capital gain on transfer of shares under section 45 read with section 50CA of the Income Tax Act 1961. (ii) That the learned CIT(A) has erred in confirming the action of AO in re-computing the sale value of shares by adopting the FMV as on 22.03.2022 without appreciating the fact that FMV of shares during the period FY 2016-2017 must be considered since the transfer relates back to the said period. (iii) That the abovesaid addition has been confirmed by rejecting the contention of the assessee that provisions of Section 50CA has....

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....ained that Return of Income under section 139(1) declaring income of Rs. 4,05,810/- was filed on 03.10.2022 which was processed under section 143(1) of the Act on 31.03.2022 accepting the returned income. Thereafter, assessment proceedings under section143(2) were initiated through issue of notice dated 28.06.2023. The ld. AO passed order under section 31.03.2024 making additions under section 56(2)(x) of Rs. 3,65,22,719/- and under section 45 of Rs. 71,52,880/- so as to determine final income of Rs. 4,40,81,409/-. While making the impugned additions, the ld. AO referred in para-2 of his order to a search and seizure action under section 132 in the case of Goyal Group of cases dated 10.01.2023 in which assessee was also a searched party. The ld. AO has recorded in para-3 of his order that the case was selected for compulsory scrutiny under CBDT guidelines dated 24.05.2023. 4. We have heard rival submissions in the light of material placed on record. The ld. Counsel for the assessee submitted that the Appellant filed its return of income for Assessment Year 2022-23 on 03.10.2022. Subsequently, a search under Section 132 of the Income-tax Act, 1961 (the Act) was conducted on 10.01....

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.... 3. It is in this factual backdrop that the assessee seeks to raise it's precise question challenging validity of the impugned assessment for the sole reason that the same ought to have been framed under section 148 with approval under section 148B of the Act in light of Homelife Buildcon (P.) Ltd. Vs. DCIT, (2025) 176 taxmann.com 614 (Chandigarh - Trib.) as relied in Jamna Das Nikkamal Jain Saraf Pvt. Ltd. Vs DCIT (ITA No. 403/Chd./2025) decided on 04.11.2025, adjudicating the very issue against the department as under: "11.4 In conclusion, it was submitted that since the year under appeal formed part of the three assessment years immediately preceding the year in which search was conducted, the assessment ought to have been framed under section 148 with approval u/s 148B. The framing of the assessment u/s 143(3) and approval taken only for the purposes of section 143(3) was thus asserted to be fundamentally defective, non-compliant with statutory mandate, and consequently void ab initio. On these grounds, following the ratio in Homelife Buildcon Pvt. Ltd., it was prayed that the impugned assessment be quashed. 12. The Ld. CIT-DR Shri Manav Bansal opposed....

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....hat return if he considers that income has been understated or tax underpaid. However, when a search under section 132 takes place and materials are found indicating possible escapement of income, the statute envisages a different route for carrying out assessment or reassessment under section 147 read with section 148, which is the special mechanism for bringing to tax the income discovered in consequence of a search. 13.5 Although section 148 (inserted w.e.f. 01.04.2021) does not begin with a non-obstante clause similar to the erstwhile section 153A, its context and Explanation 2 make it clear that where a search is initiated, the jurisdiction thereafter must flow through this special channel, subject to prior satisfaction and approval of the Principal Commissioner or Commissioner. The legislative intent is to ensure that when a search is carried out, the assessment is framed under the specific provisions meant for such cases and not under the general provision of section 143(3). Further we may mention that no notice under section 143(2) could have been issued after 3 months from the from the end of the financial year in which the return is furnished. In the present case....

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.... remains the same - to prevent multiplicity of proceedings and ensure that only one comprehensive order is passed, factoring in both the pre-search and post search materials. 13.8 The rationale is further reinforced by the well-settled principle of generalia specialibus non derogant - the special provision overrides the general. Section 148 (as a special provision triggered by search information) must prevail over section 143 (the general provision for regular scrutiny). Allowing the Assessing Officer to continue and conclude proceedings under section 143(3) after a search would defeat this legislative scheme and render the safeguards, such as prior approval of the Principal Commissioner, redundant. 13.9 Accordingly, we hold that once a search is initiated under section 132 and material is found relating to the assessee, the pending assessment under section 143(3) cannot validly continue, as the time for issuing the 143(2) in response to original return of income had already expired, therefore the Assessing Officer must necessarily proceed in accordance with the special provisions contained in section 148 of the Act." 4. Learned CIT(DR) representing the R....