MIHIR RAMESH VORA,MUMBAI vs. INCOME-TAX OFFICER, CIRCLE 42(2)(1), MUMBAI

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ITA 323/MUM/2026Status: DisposedITAT Mumbai29 July 2026AY 2019-205 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the reassessment proceedings were initiated based on information from a search and seizure action, the assessment should have been done under Section 153C, not Section 147. Therefore, the notice under Section 148 and the subsequent assessment order were without jurisdiction.

What were the facts?

The assessee's appeal was against an order passed by the NFAC. The additions/disallowances were made based on information from a search and seizure action, but the assessment was reopened under Section 147 instead of Section 153C.

What were the issues?

Whether reassessment proceedings initiated under Section 147 based on search and seizure information are valid, or if Section 153C should have been invoked. Also, whether the notice was issued within the time limits prescribed by Section 149.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 149,Section 153C,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “H (SMC

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI MAKARAND VASANT MAHADEOKAR

For Appellant: Mr. Dharmesh Shah, Ld. Adv
For Respondent: Mr. Praveen Saluke, Ld. Sr. DR
Hearing: 28.07.2026Pronounced: 29.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “H (SMC)”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER And SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 323/M/2026 Assessment Year: 2019-20 Mihir Ramesh Vora, Income Tax Officer, 701, A-Wing, Atharv Shagun – Circle - 42(2)(1), Labh Darshan, South Pond Kautilya Bhavan, Vs. Road, Near Jain Temple, Vile Bandra Kurla Complex, Parle (West), Mumbai, Bandra (East), Mumbai, Maharashtra - 400056. Maharashtra - 400051 PAN – AEBPV7491P (Appellant) (Respondent) Present for: Assessee by : Mr. Dharmesh Shah, Ld. Adv Revenue by : Mr. Praveen Saluke, Ld. Sr. DR Date of Hearing : 28.07.2026 Date of Pronouncement : 29.07.2026 O R D E R Per : Narender Kumar Choudhry, Judicial Member:

This appeal has been preferred by the ASSESSEE against the order dated 25.11.2025, impugned herein, passed by the National Faceless Appeal Centre (NFAC), Delhi (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2019-20.

2.

In the instant case, admittedly, the income alleged to have escaped assessment, which resulted in the additions/disallowances of Rs.1,75,000/- and Rs.1,00,000/- under sections 80GGC and 80G of the Act, respectively, aggregates to Rs.2,75,000/-. Thus, the alleged escaped income was below the prescribed limit of Rs.50 lakh for issuance of notice u/s 148 of the Act, after the expiry of 03

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years from the end of the relevant assessment year, as stipulated u/s 149 of the Act. Therefore, on this ground alone, the notice dated 17.04.2023 issued u/s 148 of the Act and the assessment order dated 21.03.2025 passed pursuant thereto, are liable to be quashed.

3.

Further, admittedly, the Assessee’s case was reopened u/s 147 of the Act on the basis of information emanating from the search and seizure action carried out u/s 132 of the Act. Therefore, the assessment proceedings ought to have been initiated u/s 153C of the Act and not u/s 147 of the Act. Consequently, on this aspect as well, the notice dated 17.04.2023 issued u/s 148 of the Act and all actions consequent thereto, are void ab initio, without jurisdiction and bad in law specifically in view of judgement by the Hon’ble Jurisdictional High Court, in the case of Sejal Jewellery v. Union of India [(2025) 171 taxmann.com 846 (Bom.)], wherein the Hon’ble High Court after considering the judgment of the Hon’ble Rajasthan High Court in Shyam Sunder Khandelwal v. CIT [(2024) 161 taxmann.com 255 (Raj.)], quashed an identical notice issued u/s 148 of the Act and held that the notice and all actions consequent thereto are without jurisdiction and bad in law by observing as under:

“21. The Rajasthan High Court in Shyam Sunder Khandelwal (supra) also had taken a similar view when the issue which had arisen before the Court was in regard to the notice issued under Section 148 of the 1. T. Act, the basis of issuance of such notice was the material seized during search. The contention of the assessee was to the effect that in the said circumstances, the proceedings ought to have been initiated under Section 153C of the I.T. Act. The Division Bench referring to the decision of Supreme Court in Abhisar Buildwell (P).Ltd. (supra) as also the decision of Karnataka High Court in Sri Dinakara Suvarna (supra) allowed the petitions observing that the department had not set up a case, that for initiating proceedings under Section 148, it had material other 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

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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 other assessee 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.

22.

Applying the principles of law as discussed hereinabove, we are of the clear opinion that the foundation of the present case was certainly a search action which was undertaken by the Revenue against one Shilpi Jewellers Pvt. Ltd. and in such search and seizure action, materials were seized and such materials were further explored and enquired. Such enquiry revealed significant information in regard to M/s. Green Valley Gems Pvt. Ltd., which 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.

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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 L.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).

4.

Thus, in view of peculiar facts of the case and the binding judicial precedent {supra}, the notice dated 17.04.2023 issued u/s 148 of the Act, after the expiry of three years from the end of the relevant assessment year, and the assessment order dated 21.03.2025 passed u/s 147 r.w.s. 144B of the Act pursuant thereto, would be without jurisdiction and liable to be quashed. Thus, the notice u/s 148 of the Act and the assessment order, are quashed.

5.

As we have quashed the notice issued u/s 148 of the Act and the assessment order passed pursuant thereto on jurisdictional grounds, thus, we do not deem it appropriate to delve into the merits of the case, as adjudication thereof would be a futile exercise.

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6.

In the result, the Assessee’s appeal is allowed.

Order pronounced in the open court on 29.07.2026.

Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER (ANKIT SWARNKAR) Private Secretary Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench

//True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.

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