2018 (4) TMI 1607 - AT - Income Tax

Proceedings u/s 148 or 153C - Validity of reopening of assessment - whether AO has erred in invoking the provisions of section 147 when the provisions of section 153C were applicable? - Held that - Assessing Officer has to record satisfaction that books of account or assets seized or requisitioned, have a bearing on determination of the total income of such other person. The said provisions are notwithstanding anything contained in sections as mentioned above including sections 147 / 148 of the Act. The issue raised in the present appeal is squarely covered by the issue before the Tribunal in Joshi Wadewale Hadapsar Vs. DCIT 2018 (3) TMI 1583 - ITAT PUNE and following the same parity of reasoning, we hold that re-assessment proceedings initiated against the assessee under section 147 / 148 of the Act are not warranted. AO after receipt of information belonging to the assessee should have invoked provisions of section 153C of the Act and not section 147 / 148 of the Act. Accordingly, we hold so. Consequently, re-assessment order passed under section 148 of the Act does not stand. The Assessing Officer is thus, directed to cancel the same. Consequently, the additional ground of appeal raised by the assessee is allowed and we hold that assessment framed by the Assessing Officer is null and void. - Decided in favour of assessee.

Summary

Issues Involved:
1. Invocation of provisions under section 147 versus section 153C of the Income-tax Act, 1961.
2. Validity of reassessment proceedings initiated under section 147/148 of the Act.

Issue-wise Detailed Analysis:

1. Invocation of Provisions under Section 147 versus Section 153C:
The primary issue raised by the assessee was whether the Assessing Officer erred in invoking the provisions of section 147 when the provisions of section 153C were applicable. The assessee argued that the additional ground of appeal was purely a question of law and did not require any investigation of facts, thereby meriting admission. The assessee contended that the addition was based on documents found during a search of another person’s premises, and as per section 153C, the proceedings should have been initiated under this section, not under section 147. The Departmental Representative opposed this, asserting that the proceedings under section 148 were lawful, and the assessee had duly participated in them.

2. Validity of Reassessment Proceedings Initiated under Section 147/148:
The Tribunal examined whether the reassessment proceedings initiated under section 147/148 were valid when the basis for investigation was documents found during a search of another person. The Tribunal noted that section 153C explicitly states that if any document related to another person is found during a search, the proceedings must be initiated under section 153C, notwithstanding sections 139, 147, 148, 149, 151, and 153. The Tribunal referenced the Pune Bench’s decision in the case of Joshi Wadewale Hadapsar Vs. DCIT, which held that when documents found during a search pertain to another person, the proceedings must be initiated under section 153C, and not under section 147/148.

Conclusion:
The Tribunal concluded that in the given facts, where documents were found during a search at another person’s premises, the proceedings should have been initiated under section 153C. Consequently, the reassessment proceedings under section 147/148 were deemed not warranted and were directed to be canceled. The additional ground of appeal raised by the assessee was allowed, rendering the assessment framed by the Assessing Officer null and void. As a result, the issues raised on merits by the assessee and the Revenue became academic and were dismissed.

Result:
The appeals of the assessee were allowed, and the appeals of the Revenue were dismissed. The Tribunal’s decision applied mutatis mutandis to the related appeals, resulting in the same outcome.

Order Pronouncement:
The order was pronounced on the 24th day of April, 2018.