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2015 (12) TMI 1280 - AT - Income TaxReopening of assessment - Held that - Assessing Officer, has no jurisdiction to issue notice u/s 148 of the Act to reopen the assessments in respect of those six assessment years immediately preceding the assessment year in which search is conducted or requisition is made. The period under consideration falls within the exclusive domain of section 153A. In the instant case, since the assessment is made consequent to search in another case, the Assessing Officer is bound to issue notice u/s 153C and thereafter proceed to assess or reassess total income under section 153A of the Act. The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction. Hence, the assessment order dated 31-12-2010 passed u/s 143(3) r.w.s. 147 is quashed. Since, we have allowed the assessee ground on legality of reopening of assessment u/s 147 and quashed the assessment order, therefore, we do not consider it appropriate to discuss the other grounds raised by the assessee on merits of the case. - Decided in favour of assessee.
Issues Involved:
1. Validity of reopening the assessment under Section 147. 2. Assessment of unexplained investments. Detailed Analysis: Validity of Reopening the Assessment under Section 147: The primary issue in this case revolves around the validity of reopening the assessment under Section 147 of the Income-tax Act, 1961, in light of a search operation conducted under Section 132. The Appellate Tribunal examined whether the Assessing Officer (AO) had the jurisdiction to issue a notice under Section 148 for reopening the assessment when the search was conducted on a third party, and the documents seized pertained to the assessee. The Tribunal noted that the AO based the reopening on the report from the Deputy Director of Income-tax (Investigation) [DDIT(Inv)], which indicated unexplained investments by the assessee. The Tribunal emphasized that under Section 153C, the AO is required to issue a notice and assess or reassess the income of the person if any documents or assets seized belong to that person. The Tribunal referred to the provisions of Section 153A to 153C, which govern the assessment procedures in search cases post-31st May 2003. These sections override the normal assessment and reassessment procedures under Sections 139, 147, 148, 149, 151, and 153. The Tribunal highlighted that the AO should have issued a notice under Section 153C instead of Section 148, as the case involved documents seized during a search on another party. Citing several precedents, including the Special Bench decision in All Cargo Global Logistics Ltd and the Mumbai Bench decision in State Bank of India vs. DCIT, the Tribunal concluded that the AO's action of reopening the assessment under Section 147 was illegal and without jurisdiction. Therefore, the assessment order passed under Section 143(3) read with Section 147 was quashed. Assessment of Unexplained Investments: Given the Tribunal's decision to quash the assessment order on the grounds of improper jurisdiction under Section 147, it did not delve into the merits of the case regarding the unexplained investments. The assessee had argued that the investments were explained with credible evidence, including retirement benefits and unsecured loans from family members. However, since the Tribunal found the reopening itself invalid, it did not address these arguments. Conclusion: The Tribunal allowed the appeals of the assessee, quashing the assessment orders passed under Section 143(3) read with Section 147 for the assessment years in question. The decision underscores the importance of following the correct procedural provisions in search-related assessments, specifically the necessity of adhering to Sections 153A and 153C when dealing with documents or assets seized during a search on a third party.
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