TaxTMI 
TaxTMI 
2026 (5) TMI 1414
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1. That the Ld. CIT(A) has erred in sustaining addition of Rs. 30,95,000/- u/s 69A on account of cash received from MEPL based upon certain incriminating material found from MEPL. 2. That the Ld. CIT(A) has erred in law and on facts in upholding the impugned assessment, despite the appellant not being an employee of M/s MEPL and in the absence of any seized or incriminating material. 3. That without prejudice to above grounds of appeal the Ld. CIT(A) has erred both in law and on facts in confirming the addition u/s 69A on account of cash received from MEPL, pursuant to the assessment completed under section 143(3) of the Income-tax Act, 1961. The CIT(A) failed to appreciate that the assessment in the present case was required to be framed under section 147, and consequently, the addition made under section 143(3) is without jurisdiction and bad in law, in view of Explanation 2(iv) to section 148 of the Act. 4. That ld. CIT (A) erred in upholding the assessment despite the fact that the Ld.AO has further erred in relying on documents seized during a search conducted on another person for making additions in the hands of the assessee, without obtain....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... facts of the case are a search and seizure operation u/s. 132 of the Income Tax Act, 1961 was conducted on Uflex Montage Group on 21.2.2023. During the course of search several incriminating documents were found and seized that pertained to the assessee. In this light, notice under section 143(2) of the Act was issued and served on the assessee. Thereafter, AO completed the assessment proceedings u/s 143(3) of the Income Tax Act, 1961 by making the addition of Rs. 30,96,000/- on account of unexplained money u/s 69A of the Income Tax Act, 1961. The AO has observed that during the course of search in the case of U-Flex /Montage Group data extracted from the office system and e-mails of Sh. Abhijit Giri, HR Manager of Montage Enterprises Private Limited revealed that apart from regular salary paid to the assessee (being employee of Montage Enterprises Private Limited), cash was also paid to the top employees. The AO has reproduced the relevant document in the assessment order. Moreover, as per AO Sh. Manoj Kandpal AGM of the employer company has acknowledged in his statement recorded on 24.02.2023 that cash amount over and above regular salary was given to the employees which was cal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for issue of notice u/s. 143(2), there is no need to issue notice u/s. 148 of the Act. The assessment order under appeal is for AY 2022-23 for which the date of issue of notice u/s. 143(2) had not been expired. Therefore, he submitted that AO has rightly invoked the provisions of section 143(3) of the Act. 8. On careful consideration of the facts, it is observed that no addition is made on the basis of the documents found from the possession of the assessee. The Explanation 2 to section 148 as amended by Finance Act, 2021 has related to the issue of such assessment to be completed in respect of the search conducted u/s. 132 on or before 01.04.2021. Explanation 2 provides as under:- "Explanation 2 - For the purpose of this section, where - (i) A search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) A survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) The AO is s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the documents found and seized form the possession of third person without following procedure as prescribed in clause (3) and (4) of Explanation (2) to section 148 and without obtaining mandatory approval from the prescribed authority to use such material against the assessee." 10. Similarly, the Coordinate Bench of the Chandigarh Tribunal in the case of Homelife Buildcon P Ltd. vs. DCIT [2025] 176 taxmann.com 614 has expressed exactly similar view by observing as under:- "Where Assessing Officer had relied upon material seized during searches conducted on other persons, it was mandatory for Assessing Officer to invoke provisions of section 147 and not to bypass statutory framework by proceeding under section 143(3)Furthermore, a plain reading of the Finance Act, 2021 and the Explanatory Memorandum to the Finance Bill clearly indicates that the legislative intent was to bring all searches conducted on or after 1-4-2021 within the ambit of the new reassessment regime under section 147. This new regime was introduced through significant amendments to section 147 and section 148, along with the insertion of Explanations 1 and 2, and the concept of 'information sugg....