2023 (3) TMI 1150 - AT - Income Tax

Validity of reassessment proceeding u/s 147 v/s 153C - material found and seized during the course of search and seizure operation - whether AO should have invoked provisions of section 153C of the Act and not section 147/148? - HELD THAT - As identical legal issue raised by the assessee was adjudicated in favour of the assessee by case of Vikram Munishwarlal Bajaj 2018 (10) TMI 1599 - ITAT PUNE wherein hold that the re-assessment order passed u/s 148 of the Act in the present case does not stand and therefore the assessment framed by the AO to be null and void. Re-assessment proceedings initiated against the assessee under section 147 / 148 of the Act are not warranted. The Assessing Officer 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 - reassessment order passed under section 148 of the Act does not stand. The Assessing Officer is thus, directed to cancel the same - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the reassessment proceedings initiated under sections 147/148 instead of section 153C.
2. Applicability of precedents from similar cases.

Summary:

Validity of Reassessment Proceedings:
The primary issue was whether the Assessing Officer (AO) should have invoked the provisions of section 153C instead of sections 147/148 for reassessment. The assessee argued that the reassessment proceedings initiated under sections 147/148 were invalid because they were based on material found during a search operation on another entity, which should have triggered section 153C. The Tribunal agreed, citing the ITAT Pune Bench's decision in Vikram Munishwarlal Bajaj vs. ITO, which held that when documents belonging to a person other than the one searched are found, the AO must proceed under section 153C. The Tribunal found that the reassessment order dated 11.03.2013 was null and void.

Applicability of Precedents:
The Tribunal noted that the identical issue had been adjudicated in favor of the assessee in the case of V.L. Khandge and others, where it was held that proceedings should be initiated under section 153C when documents related to another person are found during a search. The Tribunal also referenced the case of Joshi Wadewale Hadapsar Vs. DCIT, which supported the same principle. The Tribunal dismissed the Revenue's reliance on the ITAT Delhi Bench decision in M/s. Mannat Hospitality (P) Ltd. vs. ITO, noting that the facts of that case were dissimilar.

Conclusion:
The Tribunal concluded that the reassessment order passed under sections 147/148 was not valid and sustainable, thus quashing the reassessment order. Consequently, other grounds raised by the assessee on merits were deemed academic and not adjudicated.

Order:
The appeal of the assessee was partly allowed, with the reassessment order being quashed. The order was pronounced in the open court on 23.03.2023.