TaxTMI 
TaxTMI 
2026 (6) TMI 144
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....ri Group, which validly formed "reason to believe" after due approval u/s 151. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) made misplaced reliance on the decision of Hon'ble Supreme Court in ITO v. Vikram Sujitkumar Bhatia (453 ITR 417), Hon'ble Bombay High Court in Sejal Jewellery v. Union of India ([2025] 171 Taxmann.com 846) and the Hon'ble Rajasthan High Court in Shyam Sunder Khandelwal, as these do not bar reassessment u/s 147 when the AO independently forms belief based on third-party search material; Section 153C is not mandatory if no satisfaction is recorded by the AO of the searched person. 3. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not appreciating the decision of Hon'ble Supreme Court in the ACIT v. Rajesh Jhaveri (SC, 291 ITR 500), Hon'ble Allahabad High Court in PCIT v. Gaurav Khanna (Allahabad HC, 2022) and Hon'ble Delhi High Court in CIT v. Nova Promoters (Delhi HC, 342 ITR 169), which uphold validity of reopening u/s 147 based on seized documents from third parties pertaining to the assessee. 4. On the facts and in the circumstances of th....
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....in the notice, he submitted that no such amount has been received nor is reflected in his bank statement. Ld. Assessing Officer however taking into consideration the statements given by Mr. Vijesh Agarwal engaged in the business of commission for money transfer and also the details appearing in the seized material observes that there is correlation between assesses and the persons from whose premises diaries are found, names of the person appearing in diary and amount paid through cheque. Ld. Assessing Officer also placed reliance on the decision of this Tribunal in the case of Chander Mohan Mehta Vs. ACIT (1999) 71 ITD 245 (Pune) observed that the entries found on the loose papers are matching with the books of the assessee, then the other entries on pages are also true. Ld. Assessing Officer also discussed about the surrounding circumstances, human conduct, nature of incriminating material and made the addition of Rs. 15.40 crore u/s. 69A of the Act observing as under : "3.5 In nutshell, matching of cheque/RTGS entries in the diaries; corroboration of the same by the assessee; Mr. Vijesh Agarwal's submissions, affidavit and additional disclosure of commission (broker....
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....on 153C, have an overriding effect over the general provisions of reassessment u/s 147/148. The Court observed that once the statutory machinery of section 153C is attracted, the Assessing Officer is duty bound to proceed under those provisions alone and cannot invoke section 147. Importantly, the Court emphasized the legislative intent behind introducing a special code for search assessments, and held that permitting reopening under section 147 in such cases would render section 153C otiose. On this reasoning, the reopening of assessment u/s 148 was quashed by the Hon'ble High Court as being without jurisdiction. 7.8 Further, the appellant during the course of the appellate proceedings brought to my notice and relied upon the recent decision of the Hon'ble Bombay High Court in the case of Sejal Jewellery v/s Union of India dated 18.02.2025 reported in [2025] 171 Taxmann.com 846 (Bombay)wherein, the Hon'ble HC has held that where the Assessing Officer reopened assessee's case u/s147 of the Act on the basis of search action conducted at the premises of a group concern, since foundation of the present case was certainly a search action in which materials were....
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....as observed as under: "11. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court is held to be unsustainable and the question, i.e., "Whether the amendment brought to Section 153C of the Income Tax Act, 1961 vide Finance Act, 2015 would be applicable to searches conducted under Section 132 of the Act, 1961 before 01.06.2015, i.e., the date of amendment?", is answered in favour of the Revenue and against the assessee's and is answered accordingly. Therefore, it is observed and held that the amendment brought to Section 153C of the Act, 1961 vide Finance Act, 2015 shall be applicable to searches conducted under Section 132 of the Act, 1961 before 01.06.2015, i.e., the date of the amendment. The impugned common judgment and order passed by the High Court, therefore, deserves to be quashed and set aside and is accordingly quashed and set aside. " 7.10 On the other hand, the AO has defended the reopening by contending that the AO received tangible information from the Investigation Wing that the appellant had advanced substantial loans routed through intermediaries, and that such information gave the AO "....
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....he Assessing Officer from the Investigation Wing and there is no case of any satisfaction recorded by the Assessing Officer of the searched person with regard to any document pertaining to the assessee and in absence thereof, ld. Assessing Officer has validly initiated the reassessment proceedings u/s. 148 of the Act. 8. On the other hand, ld. Counsel for the assessee apart from placing reliance on the written submissions filed before ld.CIT(A) on the legal issue challenging the validity of reopening proceedings u/s. 148 r.w.s.147 of the Act also placed reliance on the following decisions : "1 ACIT v. Gopal Prasad Gupta [2026] 183 taxmann.com 384 (SC) 2. Shyam Sunder Khandelwal v. ACIT [2024] 161 taxmann.com 255 (Rajasthan) 3. Paras Chandreshbhai Koticha v. ITO Ward 1(2)(2) 4 Shrichand Shamdas Aswani Order of ITAT "A" Bench, Pune 5 M.K.Brothers (P.) Ltd. v. CIT [1972] 86 ITR 38 (SC) 6. ACIT v. Ms. Lata Mangeshkar [1974] 97 ITR 696 (BOM.) 7. J.R.C. Bhandari V. ACIT [2003] 133 Taxman 44 (Jodhpur) (Mag.) 8. Vinit Ranawat v. ACIT [2017] 88 taxmann.com 428 (Pune - Trib.) 9. Vikram Sujitkumar Bhatia v. IT....
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....f jurisdiction. If the correct statutory route is not followed, the notice under section 148, the order disposing objections, and the consequent reassessment order all fail. 9. We have heard the rival contentions and perused the record placed before us. Revenue has raised three grounds of appeal but they all are against the finding of ld.CIT(A) holding that the Assessing Officer erred in carrying out the assessment proceedings u/s. 147 r.w.s.148 of the Act rather than carrying out the assessment proceedings by issuing notice u/s. 153C of the Act. Since the provisions of section 153C has a direct bearing on the issue raised before us, we would like to go through the said provision which reads as under : "Assessment of income of any other person. 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein,....
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....ished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A. (3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April, 2021." 10. Now on bare perusal of the above provision, the basic condition which is required to carry out the proceedings u/s. 153C of the Act are that if the Assessing Officer is satisfied that any money, bullion, jewellery or other ....
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....arious persons as loan for the purpose of earning interest thereon. Now firstly, there is no satisfaction of the Assessing Officer of the searched person specifying that books of account or documents pertaining to any information contained therein relate to the assessee. Certainly, if satisfaction has not been recorded by the Assessing Officer of the searched person, as provided u/s. 153C of the Act, then handing over such seized asset/ document/books of account or information to the Assessing Officer of person other than the searched person will not arise nor will there be any satisfaction to be recorded by the Assessing Officer of the person other than the searched person. So the multiple conditions which are required for an Assessing Officer to carry out the proceedings u/s. 153C of the Act are not present in the instant case. Now another situation can be that during the course of search there was seized material/asset/books of account which belong/pertain/relate to a person other than the searched person but the Revenue authorities failed to take note of such details and could not proceed as per provisions of section 153C of the Act. 13. We note that during the course of ass....
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....section 153C of the Act ought to have been invoked rather than section 147 of the Act. However, as discussed above, the assessee in his statement has himself denied the contents of the reasons recorded stating that neither the name is appearing in such documents nor he has carried out any such transaction and that they relate to some other person namely Mr. Sharman Tejwani. When the Assessing Officer of the searched person has also not found in such seized document or any information contained therein relating to the assessee and also the assessee has denied the contents of the reasons recorded based on the information found on the basis of search u/s. 132 of the Act, then certainly remains no possibility to invoke section 153C of the Act. 15. What actually transpires is that the information found during the course of search which did not relate directly to the assessee, were examined by the Investigation Wing deeply along with the connected transactions and the information of other persons including assessee were also brought on record. The investigation Wing of Income Tax Department is entrusted with such kind of work only because they have separate dedicated team and also cer....