TaxTMI 
TaxTMI 
2026 (7) TMI 288
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....the delay may be condoned. The ld. AR, on the other hand, did not oppose the condonation of delay. Considering the reasons cited before us, we are inclined to condone the delay and admit the appeal for hearing. For A.Y. 2018-19 ITA No. 1167/KOL/2025 3. At the time of hearing, the ld. Counsel for the assessee brought to our notice the petition filed before the Bench, dated 8thSeptember, 2025, raising additional ground, which is extracted below:- "That A.O was wrong in initiating reassessment proceedings based on the seized document seized from the third party (Majee Group) in course of search & seizure action u/s 132 on 05.11.2020. That the assessment of appellant was completed u/s 153A/143(3) of the Income Tax Act, 1961 for assessment year under appeal. That in case the documents found and seized in search and seizure action against Majee Group if it belong to the appellant as alleged by the AO then 153C proceedings should have been initiated based on search and seizure action dated 05.11.2020 against Majee Group. As per amended Section 149(1) 2nd Proviso (As amended by Finance Act 2021), where 153A or 153C applies, section 148 will not apply to the search case u/....
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.... from Anoop Majhi Group. Thereafter, notice under Section 143(2) and 142(1)of the Act along with questionnaire were issued to the assessee to furnish the details of transactions with the Majhi Group along with supporting documentary evidences. The assessee furnished the details of entire purchases made during the year along with necessary evidences before the AO. The assessee denied to have entered into any purchase transactions of coal with Anup Majhi Group during financial year under consideration. Thereafter, the Ld. AO issued show cause notice on 18-03-2022 to the assessee referring to the substantial evidences and evidences in possession of the AO suggesting that the assessee actually made huge cash purchases of coal to the tune of Rs.13,62,19,119/- from the said Majhi Group. The AO also referred to the material found during the course of search and seizure operation on Majhi Group and noted that entries were found recorded in the incrementing documents and also after due deliberation of such facts and figures, the AO noted that the list compiled by the Investigation Wing suggested that the assessee had made purchases of the above amount from the Majhi Group. The learned AO al....
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.... 153C of the Act, which is exclusive code for assessing the income in case of search prior to 1.4.2021.The Ld. AR therefore prayed that the reopening of assessment under section 147 read with section 148 of the Act is bad in law, and so is the consequent assessment framed under section 147 of the Act, dated 30-03- 2023. In defense of this argument the Learned Year relied on series of decisions, as under:- i. DCIT Vs. Nawal Kumar Kanodia in ITA No. 1952/KOL/2025 vide order dated 06.03.2026. ii. DCIT Vs. Ajay Jalan, in ITA No. 2521/KOL/2025 vide order dated 21.04.2026. iii. DCIT Vs. Suresh Kumar Banthia, in ITA No. 1894/KOL/2025 vide order dated 13.01.2026. iv. ACIT Vs. Gopal Prasad Gupta reported in (2026) 183 taxmann.com 384 (SC). v. Shyam Sunder Khandelwal Vs. ACIT reported in (2024) 161 taxmann.com 255 (Rajasthan), against which the SLP filed by the Revenue is dismissed by the Hon'ble Court. vi. DCIT Vs. Sri Dinakara Suvarna (2023) 151 taxmann.com 489 (SC). vii. Tirupati Construction Company Vs. ITO (2024) 465 ITR 611 (Rajasthan) dated 21.03.2024. viii. Sejal Jewellery Vs. Union of India (2025) 171 taxman....
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....ssion books of account or other documents or evidence related to any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more. Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if 28[a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: 10.1. Therefore, the re-opening of assessme....
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.... the said loan. The Assessee in his submission has clearly stated that other than search U/s 132(1) on 30.11.2018 at the premises of Kasera, search U/s 132(1) was also conducted at the premises of assessee Shri Ajay Jalan and its other group concern on 07.12.2020. Consequent to the search on the assessee, the case of the assessee for the assessment year 2019-20,was assessed u/s 153(A)/143(3) on 28.03.2022. It is pertinent to mention here that search in the case of finance brokers Kasera was conducted on 30.11.2018 much prior to the assessment order passed U/s 153(A)/143(3) dated 28.03.2022 and the AO was in possession of the alleged incriminating material relating to cash loan and the same was not considered for making addition in the case of the Assessee. So, the further reopening of the assessment in some information by issuing notices u/s 148 on 06.04.2023 as nothing but change in the opinion of the AO. It is further important to mention here that addition made of cash loan of Rs. 6,65,00,000 and Rs. 5,95,00,000 u/s 69A based on the same information in the assessment year 2016-17 and 2017-18 had been deleted by the CIT(A). It is important to mention here that in case of search a....
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....d therefore, statements were retracted. The case of the assessee was reopened on 26.03.2021, after recording the reasons to believe which stated that during the course of search operation on finance brokers Sanwaria and Kasera group on 31.11.2018, certain incriminating material/ documents were seized pertaining to the assessee group in which the assessee Suresh Kumar Bathia alias Jain is main person of Citizen Group and abbreviated as SK Jan/ Citizen. The ld. AO further noted that thereafter a survey was carried out on the assessee. The ld. AO also noted that there was a low profitability vis a vis the high turnover and high cash loan transactions and thus, the ld. AO noted that the assessee Shri Suresh Kumar Banthia was involved in unaccounted cash transactions. The ld. AO bifurcated the year wise loan transactions and for the year under consideration the ld. AO computed the loan transactions at 36.65 crores by relying on the statement of Shri Pravin Kumar Kasera and concluded that the same was accepted by the assessee in the statement recorded on 20.02.2020 that he used to lend cash through Praveen Kasera. 3.5. We have perused the rival contention material before us as w....
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....ome unearthed during the search or requisitioning and information possessed from the other sources. For Illustration:- An assessee had returned income of Rs. 100, undisclosed income of Rs. 200 is unearthed during search and there is information from annual information statement of non-disclosure of income of Rs. 150/-. The AO under section 153A and 153C shall pass order dealing with income of Rs. 100+Rs.200+Rs.150, the total income being Rs. 450/-. In cases where there is no unearthing of undisclosed income of Rs. 200/-, the department can resort to proceeding under section 147/148. 32. The argument that section 153C can be invoked in case there is incriminating material for all the relevant preceding years and otherwise section 148 is to be resorted to, is misplaced. On satisfaction of the twin condition for proceedings under section 153C, the AO has to proceed in accordance with section 153A. Notice is to be issued for filing of the returns for relevant preceding years and thereupon proceed to assessee or reassessee the 'total income'. It is not obligatory on the AO to make assessment for all the years, the earlier orders passed may be accepted.....
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....y had passed away prior to the date of search. It was argued on behalf of the Revenue that Shri. Ashok Kumar Chowta had offered tax on lump-sum income. 39. Further reliance was placed upon the decision of the Bombay High Court in the case of M/s. Aditi Constructions (supra). The para-9 is quoted:- "9. We find that the jurisdictional conditions for invoking section 147-148 are not satisfied as there is no failure to disclose material facts fully and truly. It is not in dispute that by the letter dated 11th September 2015 (Exhibit H) the Petitioner have submitted all the particulars along with supporting documents to the Respondent No.1. Hence the reasons to believe and a presumption based on the statement of Shri Bhanwarlal Jain (a third party) in the course of a search, that the loans of the entities were bogus or accommodation entries was clearly dispelled. Moreover, the specific provisions of S. 153C would prevail over the general provisions of section 147 in the case of search on 3rd party." 40. In view of above discussion the notices issued under section 148 and the impugned orders are quashed. However, the respondents shall be at liberty to proceed a....
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....missible course of action is the one provided under section 153C of the Act of 1961 and not under section 148 of the Act of 1961. Admittedly, present are not the cases where search was carried out after 1-4-2021, i.e., after coming into force the Finance Act, 2021. Present are the cases of search of prior period. 17. In view of above considerations, impugned orders passed on 27-7-2022 in both the cases cannot be sustained in law and the same are, accordingly, quashed and set aside." 10.8. In case of Sejal Jewellery Vs. Union of India (2025) 171 taxmann.com 846 (Bombay), the operative part read as under:- "22. Applying the principles of law as discussed hereinabove, we are of the clear opinion that the foundation of the present case was certainly a search action which was undertaken by the Revenue against one Shilpi Jewellers Pvt. Ltd. and in such search and seizure action, materials were seized and such materials were further explored and enquired. Such enquiry revealed significant information in regard to M/s. Green Valley Gems Pvt. Ltd., which according to the Revenue had provided accommodation entries to the petitioner, in which it was also revealed that Gre....
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.... these petitions. 26. Rule is made absolute in the aforesaid terms. No costs." 10.9. The facts and the of the instant case before us are materially same vis-a-vis the facts of the decisions as discussed above, therefore respectively following the ratio laid, the re-opening of assessment as well as the consequent assessment framed are quashed as the same are in consonance with second proviso to section 149(1) of the Act. The additional ground raised by the assessee is allowed. 11. Even on merit the assessee has a very strong case. We note that the additions have been made by the AO on the basis of document/material seized from the third-party search without any corroboration. We note that the documents were not confronted to the assessee and statement relied by the AO were not provided to the assessee nor any opportunity of cross examination of the person whose statement was relied by the AO to make the addition was allowed to the assessee. The assessee is squarely covered by the decisions of the coordinate Bench wherein the identical issue of coal purchase from Manjhi group in cash were made. The decisions of the coordinate Bench in case of M/s Shakambhari Ispat & Po....
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....ve transported the material to the assessee premises. We note that AO calculated the estimated purchase quantity of coal at 13919 MT and the unexplained purchases were calculated at Rs. 5,56,77,000/- by applying average rate of Rs. 4000/- per MT to the quantity delivered to the assessee of 13919.25, which is again based on presumption and surmises whereas the actual purchase cost of coal varies from Rs. 2,500/MT to Rs. 17,000/MT depending upon the Carbon Content, Ash content and various other factors. Therefore, the very basis of the Assessing Officer that the assessee has made bogus purchases has no legs to stand. Moreover we find that the coal manufacturing requirement of the plant are within the acceptable norms and parameters as has been prescribed by the government in the manufacturing process of steel. Even if we assume that there has been purchase of coal from the Majee Group, then the same might have used for manufacturing plant but no evidence to thateffect was brought on records. We note that as the accounts of the assessee have not been disturbed and the manufacturing calculation of the assessee as disclosed in the audit report had not been disturbed and doubted by the l....
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.... and would stand deleted. We further note that the statements recorded during the course of search of Shri Anup Majee and materials gathered during search on such third party, which was relied by the ld. AO without confronting the same to the assessee or allowing any cross examination which is in violation of principle of natural justice as has been held in the case of Andaman Timber Industries Vs. CIT (2015) 10 TMI 442 (SC)&PCIT vs. Sreeleathers [2022] 143 taxmann.com 435 (Calcutta)/[2022] 448 ITR 332 (Calcutta)[14-07-2022]. 16. We have also perused the provisions of Section 142(2) and 142(3) of the Act and find that Section 142(2) of the Act deals with the obtaining full information in respect of income or loss of any person qua which the ld. AO wants enquire into as he considered necessary whereas the provisions of Section 142(3) of the Act provides that unless the assessment is made u/s 144 of the Act, the assessee has to be given anopportunity of hearing in respect of any material gathered on the basis of enquiry u/s 142(2) of the Act or any audit under sub section 2A of the Act, which are proposed to be relied for the purpose of assessment. However, in the present ca....
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.... of reasoning from the decision of the coordinate Bench of the Hon'ble Kolkata Tribunal in M/s. SPML Infra Ltd. vs. DCIT, ITA No. 1228/Kol/2018 wherein it has been held as under: ........................................... It was further held that, 7.14 Since the results of the enquiries conducted by the A.O. u/s 142(2) of the Act have not been confronted to the assessee's, we are inclined to agree with the Ld. A.R. that there has been a violation of the Principle(s) of Natural Justice implied within Section142 (2) of the Act and such statutory non-compliance vitiates the entire assessment proceedings, therefore, rendering it to be null and void. Thus, the Cross Objection taken on the violation of the Principle(s) of Natural Justice is also allowed in favour of the assessee's. 17. Similarly, PCIT Vs. Best Infrastructure (India) Pvt. ltd. (2017) 397 ITR 0082 (Delhi) and others. It was held that statement recorded u/s 132(4) of the Act do not by these constitute incriminating material and copy of the statement together that opportunity to cross-examine the deponent has to be provided to the assessee. The Hon'ble court held that if the state....