MOHAMMED OWAIS KHAN, MUMBAI CENTRAL vs. ITO- WARD -20.02.1, MUMBAI, PIRAMAL CHAMBERS, LALBAUG PAREL AREA

IN THE INCOME-TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.928/MUM/2026 (A.Y. 2012-13) Mohammed Owais Khan v/s. Income Tax Officer, Ward – 301, Tanvir Apartment, ‘A’ बनाम 20(2)(1) Wing, 3rd Floor, Leela Melville Piramal Chambers, Lalbaug Road, Mumbai Central, Mumbai Parel Area, Mumbai – – 400 008, Maharashtra 400012, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AHLPK4340D Appellant/अपीलार्थी .. Respondent/प्रतिवादी

Assessee by : Shri Venugopal Nair, AR Revenue by : Shri Bal Krishna Yadav,(Sr.DR)

Date of Hearing 15.07.2026 Date of Pronouncement 09.09.2026 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The instant appeal emanating from the appellate order dated 09.12.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax, Appeal, CIT(A) - 51, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 144 r.w.s. 147 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 15.12.2019 for the Assessment Year [A.Y.] 2012-13.

P a g e | 2 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan 2. The Revised grounds of appeal are as under: 1. The learned CIT(A) erred in facts, circumstances of the case and in law in holding re-assessment proceedings that AO resorted to by invoking general provisions of section 148 is in order, overlooking that assessment in present case ought to have been initiated under special provisions of section 153C as information allegedly pertaining to the appellant was seen from documents found in the course of search action conducted on another assesee prior to 01.04.2021. 2. Without prejudice, the learned CIT(A) erred in facts, circumstances of the case and in law in resorting to re-opening by issue on noticed u/s 148 by under the borrowed satisfaction of assessing officer of the searched entity without any verification. 3. Without prejudice the learned CIT(A) erred in facts, circumstances of the case and in law in holding assessment framed by AO without confronting the appellant with incriminating material found from search of another entity and statement under sec 132(4) made by a person from the searched entity and without providing opportunity to cross examine him to be in order. 4. Without Prejudice the learned CIT(A) erred in facts, circumstances of the case and in law in holding assessment framed by AO by making addition under 69A based on a statement made by third party and from a dumb document.

P a g e | 3 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan assessee was also appearing in that list indicating the payment of Rs.1,27,00,000/- in cash for purchase of property. Accordingly, the AO issued notice u/s 148 of the Act on 26.03.2019. The assessee did not respond to any of the notices issued by the AO and therefore, the AO made an addition of Rs.1,27,00,000/- as unexplained income u/s 69A of the Act to the total income.

P a g e | 4 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan then he must issue notice u/s 153(3) but not u/s 148 of the Act. The perusal of provisions of section 153C of the Act reflected that in case any document relating to any other person is found during the course of a search on a person, then the said document is to be forwarded to the AO in charge of the person other than the person searched. The proceedings had to been initiated against such a person on the basis of such document found and impounded. Section 153C of the Act very clearly provided that where the conditions as mentioned in the said section prevail, then provisions of the said section have to be applied notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153 of the Act. In other words, where the provisions of section 153C of the Act are attracted in given set of facts and the documents impounded during the course of the search, then the proceedings have to be initiated under section 153C of the Act as per prescribed procedure and no proceedings can be initiated under section 147 / 148 of the Act.

P a g e | 5 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan the material is handed over to the jurisdictional AO of that other person. In the present case, no such satisfaction of the AO of the searched entity had been produced or is available on record. Therefore, the basic jurisdictional requirement for invoking section 153C was absent.

5.1 Further, on examining the nature of the seized material, it was evident that the documents in question did not belong to the assessee. They were internal papers prepared and maintained by the builder, reflecting alleged on-money transactions with various purchasers. He featured in these documents merely as a counter-party, i.e., as one of the individuals to whom the builder sold units and against whom alleged on-money entries were recorded. The documents were neither created by the assessee nor were found in his possession or control. Accordingly, the statutory condition that the material must ‘belong to’ the other person was not fulfilled. In such circumstances, the information received from the search constitutes thirdparty information relating to the appellant, and the jurisdictional AO was well within his authority to act upon such information under section 147 of the Act

5.2 The ld.CIT(A) further observed that section 147 of the Act provides a wide and independent power to reopen assessments if the AO has reason to believe that income has escaped assessment. Upon

P a g e | 6 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan receiving specific information identifying the appellant and indicating an undisclosed cash component, the AO examined the material and recorded detailed reasons demonstrating such belief. The statutory procedure for reopening was therefore complied with. The absence of section 153C proceedings does not invalidate the action under section 147 when the preconditions for section 153C were not met.

5.3 In view of the above, he held that: (i) the seized documents did not belong to the assessee, (ii) no satisfaction was recorded by the AO of the searched person as required under section 153C, and (iii) the AO of the appellant correctly exercised jurisdiction under section 147 based on specific and tangible information. Accordingly, the argument that the notice under section 148 was bad in law for non-invocation of section 153C of the Act was without merit and this ground of appeal was dismissed.

P a g e | 7 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan that the ld.CIT(A) dismissed the ground holding that the holding that documents seized from Neptune group did not belong to him and also no satisfaction was recorded by AO of the searched person under Sec 153C of the Act. It is submitted that the decision is based only on 153C(a) of the Act without appreciating that post amendment of 153C in June 2015 and insertion of clause (b) to 153C providing ownership of the other person of documents seized in search is not the only condition and any information contained in documents seized related to a person other than the searched person is also sufficient for application of provisions of 153C of the Act. As per hon’ble SC in ITO vs. Vikram Sujit Kumar Bhatia amendment to 153C by Finance ACT 2015 was applicable to searches before 01-06-2015 also.

6.1 Since the documents seized from the search on 07th Jan 2015 provided information relating to the assessee, the provisions of 153C of the Act ought to have been invoked and not section 148 of the Act. The jurisdictional Bombay HC in Sejal Jewellery vs UOI reinforced that special provisions like section 153C override general reassessment provisions and held that reassessment proceedings under section 147 are void ab initio if the entire foundation for the reopening stems from search material.

P a g e | 8 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan 7. The ld.CIT-DR has relied upon the assessment order claiming that there is no infirmity in the action of the AO in taking action u/s 148 of the Act since no satisfaction was recorded at any stage by any of the authorities concerned in terms of section 153 C of the Act. Therefore, the only recourse available to the AO was section 147 of the Act.

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(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person][and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A] :

[Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to [sub- section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person :] [Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A] except in cases where any assessment or reassessment has abated.] [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year-- (a) no return of income has been furnished by such other person and no notice under sub- section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A." 8.2 This section begins with non-obstante clause and therefore,

has an overriding effect on sections 147 and 148 of the Act. As per the

scheme and object of section 153C r.w.s 153A of the Act, the AO has no

P a g e | 10 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan discretion or choice to invoke the provisions of section 147/148 instead of section 153C r.w.s. 153A of the Act. Once the case of reassessment is made out by the AO which falls under the preview of specific provisions of section 153C of the Act, the AO cannot resort to invoke the provisions of section 147/148 of the Act to assess or reassess income of the assessee. The action of the AO to initiate the proceedings under section 147/148 of the Act vitiates the entire reassessment proceedings and the assessment order. Once, the AO is satisfied that the documents seized belong to the persons other than the searched person, the AO shall proceed against such other persons and issued notice u/s 153C of the Act and assessee or reassess income of such other persons in accordance with the provisions of section 153A of the Act. Therefore, it is mandatory for the AO to proceed u/s 153C if he is satisfied that the seized material reveals the income of such other persons to be assessed or reassessed.

8.3 It is undisputed fact that the reassessment proceedings initiated u/s 147 of the Act are directly linked to incriminating materials shared by the Wing. The ld.AR has pointed out that in such circumstances, the AO ought to have taken recourse to section 153C of the Act. Therefore, subsequent assessment made u/s 147/143(3) is without assuming correct jurisdiction is void and illegal. Exactly

P a g e | 11 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan identical issue has been adjudicated by hon’ble Bombay High Court in

the case of Sejal Jewellary and Anr. vs Union Of India And 3 Ors

on 18 February, 2025 IN WP3057/2019.DOCwherein the hon’ble

Court has duly examined the provisions of section 147 and 153A/153C of the Act in a search and seizure related case. Relevant portions of the order are reproduced as below:

“16. On a plain reading of Section 153A, it is clear that it begins with a ' non- obstante' clause, when it provides that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31st May, 2003 but on or before 31 March, 2021, the Assessing Officer shall have jurisdiction to issue notice to such person to furnish the return of income as specified in the notice or assess or reassess the total income as provided by the provision. Section 153C also begins with a non-obstante clause, when it provides that notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, to provide that, in a situation which may fall under Section 153C insofar as assessment of income of any other person is concerned, the Assessing Officer shall proceed against such other person and issue notice and assess or reassess the income of other persons in accordance with the provisions of Section 153A, if he is satisfied that the books of account or document or assets seized or requisitioned have a bearing on the determination of the total income of such person for a period as specified in the said provision and after compliance of other provisions as mandated. On the other hand, Section 147 provides for "Income escaping assessment", can be invoked when any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year. In such situation, the Assessing Officer may subject to the provisions of Sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year and for which a prior notice under Section 148 would be required to be issued. Section 147 does not contemplate an eventuality which Section 153A or Section 153C contemplates, the basis of which is inter alia a search action under Section 132 being resorted as noted hereinabove. Thus, both these provisions are quite compartmentalized although the deeming effect of both the provisions, may be the same. However, the situations in which such provisions operate are required to be invoked are completely different. This is clear from the bare reading of the provisions, hence would not warrant any elaborate discussion. 17. The purport and effect of these provisions had fell for consideration of the Supreme Court in Abhisar Buildwell P. Ltd. (supra), wherein the scope of assessment under Section 153A of the I.T. Act was considered. In this case, the Revenue's contention was to the effect that the Assessing Officer was competent to consider all the materials which were available on record, including the materials found during search so as to make an assessment of the total income. Some of the High Courts had accepted such propositions. However, the assessee had

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contended that there were also decisions of the High Courts to the effect that if assessment proceedings were not pending on the date of initiation of the search, the Assessing Officer needs to consider only the incriminating material found during the search, and was precluded from considering any other material derived from any other source. It is in such context, the Supreme Court considering the purport of the provisions of Section 153A of the I.T. Act, vis a vis its applicability qua the provisions of Section 147, and the applicability of Section 132, 132A and notably the decision of the Delhi High Court in Commissioner of Income Tax, Central-III vs. Kabul Chawla6 inter alia held that the provisions of Section 153A(1) need to be mandatorily resorted once a search takes place. The Supreme Court held as under:

"7.1 In the case of Kabul Chawla (supra), the Delhi High Court, while considering the very issue and on interpretation of Section 153A of the Act, 1961, has summarised the legal position as under Summary of the legal position 38. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be (2015) 61 taxmann.com 412 (Delhi) made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to completed assessment proceedings.

vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.

vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment."

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"11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re- assessment, if any, (2016) 387 ITR 529 (Guj.) relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate.

As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub- section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under Sections 147/148 of the Act, subject to fulfillment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under Sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy.

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incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub- section (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permissible under the law."

"14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved.

The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs."

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than the material seized during the search of a related party. The relevant observations of the Division Bench are required to be noted, which reads thus:

"23. The reasons supplied in case in hand for initiation of proceedings under Section 147/148 are based on the incriminating material and documents including Pen Drives seized during the search carried out of the Manihar Group and the statements recorded during proceedings. From the information received the AO noticed that the loan advanced and interest earned thereon were unaccounted. In other words the basis for initiation of Section 148 proceedings is the material seized relating to or belonging to the petitioner, during the search conducted of Manihar Group. 24. In the case where search or requisition is made, the AO under Section 153A mandatorily is required to issue notices to the assessee for filing of income tax return for the relevant preceding years. The AO assumes jurisdiction to assess/reassess 'total income' by passing separate order for each assessment. 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition, the AO has to proceed under Section 153C. The two pre-requisites are that the AO dealing with the assessee on whom search was conducted or requisition made, being satisfied that seized material belongs or relates to otherassessee shall hand over it to AO having jurisdiction of such assessee. Thereafter, the satisfaction of AO receiving the seized material that the material handed over has a bearing for determination of total income of such other person for the relevant preceding years. On fulfillment of twin conditions the AO shall proceed in accordance with the provisions of Section 153A. 26. Special procedure is prescribed under Section 153A to 153D for assessment in cases of search and requisition. There cannot be a quibble with the proposition that the special provision shall prevail over the general provision. To say it differently the provisions of Section 153A to 153D have prevalence over the regular provisions for assessment or reassessment under Section 143 & 147/148. 27. Section 153A and 153C starts with non- obstante clause. The procedure for assessment/reassessment in Section 153A, 153C in cases of search or requisition has an overriding effect to the regular provisions for assessment or reassessment under Sections 139, 147, 148, 149, 151 & 153. 28. The language of explanation 2 to new Section 148 is akin to Section 153A and Section 153C. Corollary being that after seizing of operational period of Section 153A to 153D, the cases being dealt thereunder were circumscribed in the scope of newly substituted Section 148."

We are in complete agreement with the view taken by the Division Bench of Rajasthan High Court in the aforesaid decision.

P a g e | 16 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan according to the Revenue had provided accommodation 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 position in law when the Revenue intends to proceed purely on materials relevant for an action under Section 148 read with Section 147. We have already observed that the provisions of Sections 147, 148 vis-a-vis Section 153A and Section 153 are quite compartmentalized. To avoid any overlapping of these provisions, the legislature in its wisdom has thought it appropriate to provide for an independent effect, to be given under Section 153A read with Section 153C by incorporating the " non-obstante" clause, in these provisions, which carves out an exception to any normal/regular action being resorted under Section 147. 24. In this view of the matter, we are of the clear opinion that the impugned notice under Section 147 of the I.T. Act and all actions consequent thereto are required to be held to be without jurisdiction and bad in law. The petition is accordingly allowed in terms of prayer clauses (a) and (b).” 8.4 We find that the ratio decidendi of the above decision squarely applies to the facts of the case under consideration before us.On perusal of the above provisions, it is clear that the provisions of section 153C of the Act were applicable, which supersede the applicability of provisions of section 147 and 148 of the Act. As we have already noted hereinabove that relevant documents were seized during the search under section 132 of the Act, in our view only the provision in which any assessment could be made against the assessee in the Act was section 153C r/w s. 153A of the Act. Hence, notice issued

P a g e | 17 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan under s. 148 of the Act and proceedings under s. 147 of the Act by the AO are illegal and void ab initio. In the instant case, the procedure laid down under section 153C has not been followed by the AO and, therefore, assessment has become invalid. The AO initiated action u/s 147 incorrectly as the on the facts and the circumstances of the case in the presence of incriminating materials found in search action u/s 132 of the Act ,only recourse available with him was section 153C of the Act.

8.5 It is worthwhile to mention here that the coordinate Bench of Mumbai ITAT in certain recent decisions have taken similar view in the light of the judgement in the case of Sejal Jewls(supra) i.e.Parshwa Investment ,Mumbai in ITA No.1429/Mum/2025 dated 30 June, 2025 and Ghanshaym R.Shahin ITA No.4707/Mum/2024 dated21.4.2025,the later decision inter alia holding that,

“the legal issue is agitated before us whether the initiation of reassessment proceedings under Section 147 of the Act, is not legally sustainable in the present case. The foundation of the reopening rests entirely on documents seized during the search and seizure operation conducted on a third party, namely the xxxxxxxxxx. As per the express scheme of the Act, where documents seized in a search pertain to or belong to a person other than the searched party, the appropriate and mandatory course of action is to proceed under Section 153C and not under Section 147…………….. However, if the pre-conditions of Section 153C were not met, the invocation of Section 147 based solely on the same documents amounts to circumvention of the statutory safeguards embedded in Section 153C. Allowing such a course of action would render Section 153C otiose, defeating the purpose of the special procedure laid down by the legislature.”

P a g e | 18 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan 9. Respectfully following the jurisdictional High Court decision in the case of Sejal Jewellary and coordinate bench decisions(supra), we hold that the impugned notice under section 147 of the Act and all actions consequent thereto are without jurisdiction and bad in law and therefore,quashed allowing the ground of appeal.

Order pronounced in the open court on 09/09/2026.

Sd/- Sd/-

(CHALLA NAGENDRA PRASAD) (PRABHASH SHANKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: म ुंबई/Mumbai ददनाुंक /Date 09.09.2026 Lubhna Shaikh / Steno

P a g e | 19 ITA No. 928/Mum/2026 A.Y. 2012-13 Mohammed Owais Khan आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai गार्ड फाईल / Guard file. 5. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतिकरण/ ITAT, Bench, Mumbai.