BAJRANG LAL AGARWAL,KOLKATA vs. A.C.I.T., CIRCLE - 32,, KOLKATA
What did the Tribunal hold?
The Tribunal held that the proceedings initiated under Section 147 read with Section 148 of the Income Tax Act, 1961, and the consequent assessment order are invalid and cannot be sustained. The primary reason is that the assessment was based on material found during a third-party search conducted prior to 01.04.2021. In such cases, Section 153C of the Act provides a special and exclusive machinery, which overrides Sections 147 and 148, as supported by the second proviso to Section 149(1) of the Act. The Tribunal noted that the AO failed to follow the prescribed procedure, including providing the seized documents and allowing cross-examination. The Tribunal relied on several judicial precedents, including DCIT vs. Nawal Kumar Kanodia, Sri Dinakara Suvarna vs. DCIT, Shyam Sunder Khandelwal vs. ACIT, and Sejal Jewellary vs. Union of India, to quash the reassessment proceedings. Furthermore, the Tribunal found that even on merits, the assessee had a strong case, as the seized documents did not name the assessee, nor did the third party's statements mention the assessee, and crucial evidence was withheld. Therefore, the appeal was allowed on both legal and merit grounds.
What were the facts?
The assessee, Bajrang Lal Agarwal, is in appeal against the order of the National Faceless Appeal Centre, Delhi, for Assessment Year 2019-20. The Assessing Officer (AO) reopened the assessee's case under Section 147 read with Section 144B of the Income Tax Act, 1961, based on information and documents seized during a search on a third party, the Sanwaria and Kasera Group, on 30.11.2018. The AO alleged financial transactions of ₹8,50,00,000/- between the assessee and finance broker Anil Kumar Kasera. The assessee denied these transactions and requested the documents and statements from the third-party search, which were not provided. The AO ultimately made an addition of ₹8,50,00,000/-. The CIT(A) upheld the AO's order.
What were the issues?
1. Whether the assessment framed by the AO under Section 147 read with Section 144B of the Income Tax Act, 1961, is invalid and a nullity, as it should have been framed under Section 153C of the Act, given that the addition was based on documents seized from a third-party search (Sanwaria and Kasera Group) conducted prior to 01.04.2021? Assessee's contentions: The assessment is invalid because the AO initiated proceedings under Section 147/148 when the material was found during a third-party search. Section 153C provides a specific and exclusive code for such assessments. The AO failed to provide the seized documents, statements, or cross-examination, despite specific requests. The assessment should have been framed under Section 153C, as per the second proviso to Section 149(1) of the Act, and decisions like DCIT vs. Nawal Kumar Kanodia and Sejal Jewellary vs. Union of India. Revenue's contentions: The revenue does not dispute the legal position that if the basis for reassessment is incriminating material from a search, Section 153C is the only permissible course of action, not Section 148. The search was conducted prior to 01.04.2021.
Which sections of the Income-tax Act were involved?
Section 147,Section 144B,Section 153C,Section 148,Section 148A,Section 142(1),Section 149(1),Section 132,Section 132A,Section 153A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 03.09.2025 for the AY 2019-20. 2. At the time of hearing, the assessee raised additional ground which is extracted below:
“That the assessment framed by the AO u/s 147 read with section 144B of the Act is invalid and nullity as the same should have been framed by the AO u/s 153C of the Act as the addition was made on the basis of search on third party Sanwaria and Kasera Group on 30.11.2018”
After hearing the rival contentions and perusing the material on record, we find that the assessee has raised the Bajrang
The order continues below.
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