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TMI Blog2025 (4) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search proceedings, the documents were seized and certain discrepancies were found pertaining to assessee. After that an information was received from the office of the Deputy Director of Income-tax (Inv)-IV(1), Thane and on that basis the Ld.AO has reopened he assessee's case under section 147 of the Act for escaped assessment. After recording of satisfaction, the notice was issued and finally, the assessment was completed relied on the incriminating documents and the addition made amount to Rs. 1,37,43,500/- under section 69A based on the seized MOU with Ameya group, addition was made of Rs. 1,19,40,900/- on the basis of the seized documents, addition of Rs. 25 lakhs on account of cash loan to Ameya group under section 69A and interest on loan amount to Rs. 6,60,000/- under section 69A was added back with the total income of the assessee. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld.CIT(A) had adjudicated the appeal of the assessee both on legal and on merit. The legal issue related the jurisdiction of the Ld.AO for assessment under section 148 or section 153C of the Act was duly dismissed. But related to merit, the Ld.CIT(A) partly allowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons, the Ld. AO alleged that the appellant received cash amounting to Rs. 1,52,44,700/-. However, the reassessment order passed under Section 143(3) read with Section 147 on 18.12.2019 makes no reference whatsoever to the alleged cash receipt. It is clear that the Ld. AO, having received information from the Investigation Wing, Thane, thoroughly examined the matter and concluded that no such cash receipt existed in the appellant's case. Accordingly, no addition was made on that count in the reassessment order. Instead, the Ld. AO proceeded to make an addition of Rs. 1,37,43,500/- on account of alleged cash payment made by the assessee to M/s. Ameya Builders & Property Developers. This clearly indicates that while the reopening of the assessment was based on one ground-receipt of cash-the actual addition was made on an entirely different ground-cash payment by the appellant. Such a course of action is impermissible under the law. It is further submitted that the Ld. AO did not examine the seized documents at the time of recording the reasons for reopening. This is evident from the reasons recorded, where at Serial No. 2, the Ld. AO refers to a private cash loan of Rs. 119.40 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermitting action under Section 147 in such circumstances would render Section 153C redundant. Accordingly, the assumption of jurisdiction under Section 147 by issuance of notice under Section 148 dated 30.03.2019 is invalid, and the resulting assessment is liable to be quashed. The assessee, under Ground No. 3, has challenged this erroneous assumption of jurisdiction. 6. The Ld. AR supports its contention with the following decisions: G. Koteswara Rao v. DCIT [2015] 64 taxmann.com 159 (Visakhapatnam - Trib.). The bench has taken the following observations which are as follows:- "12. Under the provisions of section 147, the Assessing Officer is having power to re-open the assessment, if he is of the opinion that the income chargeable to tax has escaped assessment. Before doing so, the Assessing Officer should satisfy himself that, there is material which suggests that there is an escapement of income. The AO can exercise these powers with a reasonable belief coupled with some material which suggest the escapement of income. Once the conditions precedent for assumption of jurisdiction to commence the reassessment proceedings, he has to cross the hurdles attached with reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search conducted in a third party case. The AO formed the opinion based on the statement recorded from the assessee, consequent to post search proceedings taken up by the DDIT(Inv), which shows undisclosed income which is the very basis of reopening the assessment. The search is conducted on 22-8-2008 which comes under the assessment year 2009-10. The Assessing Officer reopened the assessment year 2008-09, which is falling within those six assessment years immediately preceding the assessment year in which search is conducted. The assessee case falls within the provisions of section 153C, as the incriminating document seized in the case of search in another case. The Assessing Officer, on satisfying the above condition is under obligation to issue notice to the person requiring him to furnish the return for the six assessment years immediately preceding the assessment year in which search is took place. Thereafter, the Assessing Officer has to assess or reassess the total income of those six assessment years. The word "shall" used in section 153A made it clear that the Assessing Officer has no option, but to issue notice and proceed thereafter to assess or reassess the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modation entries to the petitioner, in which it was also revealed that Green Valley Gems Pvt. Ltd. was a shell company. We do not find that the record would indicate something which is not on the basis of such new materials gathered under the search and seizure action under Section 132. If this be the case, then certainly the provisions of Section 153C read with Section 153A would be applicable, as held by the Supreme Court in Abhisar Buildwell (P) Ltd. (supra) when the Court interpreted the effect and purport of Section 153C and 153A, as also held by the Rajasthan High Court in Shyam Sunder Khandelwal (supra). 23. Insofar as Mr. Suresh Kumar's contention supporting the proceedings under Section 147 and 148 of I.T. Act are concerned, for the aforesaid reasons, such contention would in fact go contrary to the intention of the legislature as depicted by the provisions of Section 153A and 153C of the I.T. Act. There would not be any difficulty in accepting the proposition as canvassed by Mr. Suresh Kumar, referring to the decision of the Supreme Court in Phool Chand Bajrang Lal (supra), however, the facts in the present case are distinct. There cannot be any doubt on the positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding on verification, but that does not make the reopening bad in law". Here, importantly, the very items that formed the crux of the AO's reason (cash transactions with Ameya) did lead to additions (over Rs.31 lakh still sustained). So the premise of reopening was borne out. The cross-objector's claim that "no addition was made on the grounds recorded" is factually wrong. The AO's recorded reasons spoke of undisclosed dealings with Ameya, which indeed were assessed (even if quantum differed). In any case, as a matter of law, even if the particular transaction initially suspected had not been added, the AO is empowered to assess other escaped income found in the course of proceedings (Section 147 gives wide latitude, subject only to the condition that some escapement did exist which it unquestionably did here). Section 153C vs 147: The assessee's contention that only Section 153C (and not 147) could be used because the info came from a search, is not supported by the law as it stood or as it stands now. It is true that Section 153C is a special procedure for assessing third-party search cases, but it does not bar the normal provisions of 147 where its stringent p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axmann.com 249 (Gujarat)/[2022] 444 ITR 97 (Gujarat)[31-01-2022] cited by Delhi HC). The assessee's reliance on contrary ITAT rulings or the non obstante clause is misplaced because, as Delhi HC noted, the non-obstante clause applies only when the AO has assumed jurisdiction under 153C. Here, the AO did not (and could not, since the strict "belonging" test wasn't satisfied). Therefore, the reopening is valid. The CIT(A) was correct in dismissing Ground 1-3 of the appeal on this issue. In summary, the assessee's cross-objections challenging jurisdiction are devoid of merit. The Department has scrupulously followed procedure (sanction from Pr.CIT, reasoned order) and in substance, income that had escaped was brought to tax. To accept the assessee's technical plea would mean letting admitted undisclosed income go untaxed purely due to a procedural nuance an outcome neither justified by law nor equitable. The Tribunal, we submitted, should firmly uphold the reopening's validity, consistent with CIT(A)'s well-reasoned order and the legal principles stated above. Thus, Cross-Objection Nos. 1, 2, 3 should be dismissed, and the assessment proceedings held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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