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2024 (4) TMI 837 - AT - Income TaxReopening of assessment v/s assessment u/s 153C - reliance placed by the Ld. AO on the seized material - AR argued that since th AO has acted based on the seized documents in the premises of the searched party, the assessment ought to have been framed u/s. 153C - HELD THAT - In the instant case, AO has relied upon the agreement of sale (unregistered) dated 6/1/2016 which was seized by the search party. Relying on such information and the seized material, the Ld.AO initiated the proceedings u/s. 147 of the Act. Even though in the order of the Ld. AO, in para 5, the Ld. AO has mentioned about the material available on record for a belief that was formulated for reopening of proceedings u/s. 147 of the Act. No detailed discussion was found in the order of the Ld. AO regarding the material available on record for a belief that was formed enabling the Ld.AO warranting reopening of proceedings u/s. 147 of the Act. The Ld. AO has fully relied on the seized agreement of sale dated 6/1/2016. We find merit in the argument of the AR that section 153C of the Act overrides section 139, 147, 148 and 151 of the Act. Decision of the jurisdictional Coordinate Bench of the Tribunal at Visakhapatnam in the case of Smt. Samanthapudi Lavanya vs. ACIT 2021 (5) TMI 26 - ITAT VISAKHAPATNAM wherein the Tribunal by relying on various High Court decisions has held that in the absence of any fresh information collected by the Ld. AO or no information has come to the notice of the Ld. AO in the normal course other than the information collected during the course of search from the search person, the Ld. AO ought to have made the assessment u/s. 153C of the Act and not u/s. 147. AO in the instant case ought to have resorted to make the assessment u/s. 153C of the Act whereby heavy reliance placed by the Ld. AO on the seized material. Further, the Ld. AO has not recorded about any information that has come to the notice of the Ld. AO and has solely relied on the seized documents from the premises of the searched person. We are therefore inclined to quash the assessment order as void-ab-initio and thereby allow the Ground No.2 raised by the assessee.
Issues involved:
The appeal challenges the order of the Ld. Commissioner of Income Tax (Appeals)-10, Hyderabad in DIN & Order No. ITBA/APL/S/250/2022-23/1046188608(1), dated 6/10/2022 u/s. 147 of the Income Tax Act, 1961 [the Act] for the AY 2016-17. Issue 1: Initiation of proceedings u/s 147 of the Act The assessee, an NRI engaged in Medical Profession in USA, filed a return of income admitting a total income of Rs. 8,860/- for AY 2016-17. It was discovered that the assessee entered into an agreement for purchase of property worth Rs. 7,89,85,000/-. The Ld. AO initiated proceedings u/s 147 based on seized documents. The Ld. CIT(A) partly allowed the appeal by deleting an addition and sustaining another. The legal issue raised by the assessee regarding the initiation of proceedings u/s 147 was not adjudicated by the Ld. CIT(A). Issue 2: Validity of notice u/s 148 vs. 153C of the Act The assessee contended that since the Ld. AO acted based on seized documents, the assessment should have been framed u/s 153C, not u/s 147. The Ld. AR relied on various case laws to support this argument. The Ld. DR supported the Ld. Revenue Authorities' order. The Tribunal found merit in the argument that section 153C overrides other sections. Citing relevant case laws, the Tribunal held that the assessment order passed u/s 147 was void-ab-initio and quashed it. Grounds 3 and 4 raised by the assessee on merits were disposed of as infructuous due to the quashing of the assessment order. Conclusion: The Tribunal allowed the appeal of the assessee, quashing the assessment order passed u/s 147 of the Act and disposing of the other grounds as infructuous. The decision was pronounced in the open Court on 18th April, 2024.
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