JCIT (INSITU), KOLKATA vs. JAGDISH PRASAD CHOWDHURY, KOLKATA

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ITA 817/KOL/2026Status: DisposedITAT Kolkata07 October 2026AY 2017-189 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the proceedings initiated under Section 147 read with Section 148 of the Act are invalid and cannot be sustained. The Tribunal reasoned that when income is sought to be assessed based on material found during a third-party search conducted prior to 01.04.2021, Section 153C provides a special and exclusive machinery. This section overrides the provisions of Sections 147 and 148, as per the second proviso to Section 149(1). The Tribunal noted that the AO did not record satisfaction and hand over material to the AO of the other person, nor did the AO of the other person record their own satisfaction, which are prerequisites for proceedings under Section 153C. The Tribunal relied on several judicial precedents, including DCIT vs. Nawal Kumar Kanodia, Sri Dinakara Suvarna vs. DCIT, and Shyam Sunder Khandelwal vs. ACIT, to support its decision. Consequently, the reopening of assessment and the consequent assessment framed were quashed. The ground raised by the assessee in the cross-objection was allowed. The appeal of the Revenue was rendered infructuous and dismissed. Any other grounds raised in the cross-objection were left undecided.

What were the facts?

The assessee, Jagdish Prasad Chowdhary, is in appeal against the orders of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Years (AY) 2017-18 and 2019-20. The Revenue is also in appeal. The Revenue challenges the deletion of an addition of ₹13,30,00,000 made by the Assessing Officer (AO) under Section 69A read with Section 115BBE. The assessee, in its cross-objection, challenges the validity of the assessment order passed under Section 143(3) read with Section 147. The assessee contends that since the reopening was based on material found during a search on the Kasera Group on 30.11.2018, the assessment should have been framed under Section 153C, not Section 147. For AY 2017-18, the AO reopened the assessment under Section 147 by issuing a notice under Section 148 on 28.03.2024, based on information from a third-party search. For AY 2019-20, the AO issued a notice under Section 148A(b) on 18.03.2023, alleging financial transactions of ₹8,50,00,000 with Anil Kumar Kasera. The assessee denied these transactions and requested documents from the third-party search, which were not provided.

What were the issues?

1. Whether the assessment proceedings initiated under Section 147 read with Section 148 of the Income Tax Act, 1961 (the Act) are valid when the basis for reopening is incriminating material found during a third-party search conducted prior to 01.04.2021, and whether Section 153C of the Act provides an exclusive code for such assessments. Assessee's contention: The assessment proceedings are bad in law because the AO relied on material found during a search on the Kasera Group on 30.11.2018. Consequently, the assessment should have been framed under Section 153C, which is the specific provision for assessments based on seized material from a third-party search, and not under Section 147. The assessee also argued that necessary documents and cross-examination were not provided. Revenue's contention: The Revenue's appeal challenges the deletion of the addition made by the AO under Section 69A read with Section 115BBE. The judgment does not explicitly record the Revenue's arguments regarding the validity of the Section 147 proceedings, but their appeal implies a challenge to the assessee's grounds.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 143(3),Section 147,Section 148,Section 148A,Section 153C,Section 149(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM

For Appellant: Shri S. Jhajharia, AR
For Respondent: Shri Sanat Kumar Das &
Hearing: 19.08.2026Pronounced: 07.10.2026

Per Rajesh Kumar, AM:

These cross appeals of assessee & Revenue are against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 01.02.2026 for the AY 2017-18 & 2019-20.

ITA NO. 817/KOL/2026 & CO No. 43/KOL/2026 2. The Revenue has challenged the deletion of addition by the ld. CIT (A) of ₹13,30,00,000/- as made by the ld. AO u/s 69A read with section 115BBE of the Act.

3.

Whereas, the assessee in its CO has challenged the validity of the order passed by the ld. AO u/s 143(3) read with section 147 of the Act dated 26.03.2025 on the ground that since the reopening proceedings were triggered by the incriminating material found during the course of search on Kasera Group on 30.11.2018, therefore, the assessment proceedings as well as the assessment should have been framed u/s 153C of the Act. Since, the assessee has raised legal issue in the cross objection, therefore, we are inclined to adjudicate the legal issue raised by the assessee, which reads as under:-

“8 Without prejudice to Grounds No. 1 to 7 above, the impugned proceedings vide issue of notice u/s 148 and the consequent order u/s 147 have been initiated consequent to alleged search conducted on 'Kasera Group' (on 30.11.2018) and the AO has relied upon the alleged incriminating material so found in the said search and as such only notice u/s 153C could have been taken up and hence notice u/s 148 and consequent order u/s 147/144B is bad in law and hence it may be held accordingly.” 4. The facts in brief are that the assessee filed the return of income on 01.08.2017, declaring total income of ₹1,16,27,300/- which was processed u/s 143(1) of the Income-tax Act, 1961 (the Act). The case of the assessee was selected for scrutiny and accordingly, the assessment was framed u/s 143(3) of the Act vide order dated 18.10.2019, assessing the income at ₹1,16,27,300/-. Thereafter, the ld. Page 2 of 9

AO on the basis of information of third-party search conducted on 30.11.2018 re-opened the assessment u/s 147 of the Act by issuing notice u/s 148 of the Act 28.3.2024. In other words the search was conducted on Kasera Group on 30.11.2018, which was prior to 01.04.2021, and therefore, the assessment framed by the ld. AO u/s 147 read with section 143(3) of the Act dated 26.3.2025 is bad in law as there exists a specific and exclusive code u/s 153C of the Income-tax Act for dealing with such assessment done on the basis of information gathered from third party search.

5.

The facts in brief are that the case of the assessee was reopened by the ld. AO by issuing notice on 04.04.2023, u/s 148 of the Act, after order u/s 148A(d) of the Act was passed on 04.04.2023, after considering the reply filed by the assessee in response to notice issued u/s 148A(b) of the Act on 18.03.2023. The ld. AO noted that Shri Bajrang Lal Agarwal, and the impugned assessee have entered into financial transactions of ₹ 8,50,00,000/- through finance broker Shri Anil Kumar Kasera. The ld. AO issued notices u/s 142(1) of the Act from time to time calling upon the assessee to furnish the details and evidences to prove his case however, the assessee denied the cash transactions altogether through finance broker Shri Anil Kumar Kasera thereby denying all the allegations as made by the ld. Assessing Officer. The assessee submitted before the ld. AO that while issuing notice u/s 148A(b) of the Act, the assessee

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was not supplied with the statement or reply of Shri Anil Kumar Kasera and specifically requested for the same however, the same was never provided. Thereafter, the ld. AO passed the order u/s 148 A(d) of the Act and proceeded to reopen the case by issuing notice u/s 148 of the Act. Finally, the addition of ₹8,50,00,000/- was made by the ld. AO on the basis of documents seized from third party search in the assessment framed u/s 147 r.w.s 144B of the Act.

6.

In the appellate proceedings, the ld. CIT (A) upheld the legal issue as well as the issue on merit.

7.

After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the action on the assessee u/s 147/148 of the Act was taken by the ld. AO after information was flagged on the portal of the department that assessee has entered into financial transactions with Anil Kumar Kasera amounting to ₹8,50,00,000/-. Accordingly, the show cause notice u/s 148A(b) of the Act was issued but no documents relied upon by the AO were supplied despite the assessee specifically requesting the ld. AO to supply such documents which were recovered from Shri Anil Kumar Kasera during search on him and also the reply filed by Shri Anil Kumar Kasera. We also note that no cross examination was provided despite the assessee specifically asking for the same. The ld. AO relied on information/documents found and seized during the third-party search only. In our opinion the proceeding-initiated u/s 147 read with section 148 of the Act Page 4 of 9

are invalid and against the provisions of the Act as the search was conducted prior to 01.04.2021 and therefore the assessment has to be made in accordance with the provisions of Section 153C of the Act which is an exclusive code provided under the Act to frame the assessment on the basis of evidences found during the third-party search. We have perused the provisions of section 149(1) of the Act and second proviso thereto and are of the considered view that in terms of the said proviso , the assessment has to be framed under section 153C of the Act.

8.

Therefore where income is sought to be assessed upon such material as found during third party search , the Act provides a special and exclusive machinery in section 153C, which starts with a non-obstante clause and overrides the provisions of sections 147 and 148 of the Act in terms of provisions of section 149(1) read with second proviso thereto. The Ld. Assessing Officer of the searched person must record his satisfaction and hand over the material to the AO of the other person and the Ld. Assessing Officer of the other person must record his own satisfaction before proceeding in the matter, neither of which is shown to have been done here. Therefore, proceedings initiated by the ld. AO u/s 147/ 148 of the Act and the consequent order u/s 147/ 144B of the Act are bad in law and cannot be sustained. The case of the assessee is squarely covered by a series of decisions namely i) in DCIT vs. Nawal Kumar Kanodia (ITA No. 1952/Kol/2025, A.Y. 2019-20) ii) Sri Dinakara Suvarna vs. DCIT, [2022] 143 taxmann.com 362 (Karnataka) (special leave petition dismissed, [2023] 151 taxmann.com 489) iii) Shyam Sunder Khandelwal vs. ACIT, [2024] 161 taxmann.com 255 (Rajasthan) iv) Sejal Jewellary vs. Union of India, [2025] 171 taxmann.com 846 (Bombay) and ACIT vs. Pramod Jain, [2025] 163 taxmann.com 762 (SC). The same view has since been taken by this Hon'ble Tribunal in Maan Steel & Power Limited vs. DCIT, Central Circle-1(2), Kolkata, ITA Nos. 1167, 2354, 1096 & 2609/Kol/2025, order dated 26.06.2026.

9.

The co-ordinate Bench in case of DCIT Vs. Nawal Kumar Kanodia(supra), wherein it has held as under:-

“5. After hearing the rival contention and perusing the material available on record, we find that incriminating material on the basis of which proceeding u/s 147/148 of the Act were initiated apparently on the basis of said incriminating material found and seized during the course of search on Kasera and Sanwaria Group on 30.11.2018. Therefore proceeding have been initiated to assess the escaped income u/s 153C of the Act which is the special provisons provided under the Act as it overrides the other provisions of the Act. Therefore, the Ld. CIT(A) has rightly annulled the assessment framed by the AO. The case of the assessee is squarely covered by the decision as discussed by the Ld. CIT(A) in the appellate order. Beside the case is squarely covered by decision in the case of Shyam Sunder Khandelwal Vs. ACIT (supra) which was duly approved by the Hon’ble Apex Court in the case of ACIT Vs. Promod Jain (2025) 163 taxman.com 762 (SC). Thus we do not find any infirmity in the appellate order which a very reasoned and speaking order. We are inclined to uphold the order of CIT(A) and dismissed the appeal of the revenue. The appeal of the revenue is dismissed6. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, we find that Assessing Officers in the assessment order has stated that information”. 10. Further, in case of DCIT Vs. Ajay Jalan(supra), the coordinate bench held the issue as under:- Page 6 of 9 “6. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, we find that Assessing Officers in the assessment order has stated that informationin the case of assessee was received on insight portals stating that as per ceased materials found in search at the premises of KaseraGroup,the assessee Shri Ajay Jalan has given cash loan amount to Rs. 3,50,00,000/- through the finance broker Kasera and has earned interest income on the said loan.The Assessee in his submission has clearly stated that other than search U/s 132(1) on 30.11.2018 at the premises of Kasera, search U/s 132(1) was also conducted at the premises of assessee Shri Ajay Jalan and its other group concern on 07.12.2020. Consequent to the search on the assessee, the case of the assessee for the assessment year 2019-20,was assessed u/s 153(A)/143(3) on 28.03.2022. It is pertinent to mention here that search in the case of finance brokers Kasera was conducted on 30.11.2018 much prior to the assessment order passed U/s 153(A)/143(3) dated 28.03.2022 and the AO was in possession of the alleged incriminating material relating to cash loan and the same was not considered for making addition in the case of the Assessee. So, the further reopening of the assessment in some information by issuing notices u/s 148 on 06.04.2023 as nothing but change in the opinion of the AO. It is further important to mention here that addition made of cash loan of Rs. 6,65,00,000 and Rs. 5,95,00,000 u/s 69A based on the same information in the assessment year 2016-17 and 2017-18 had been deleted by the CIT(A). It is important to mention here that in case of search at the premises of a person if certain incriminating documents relating or belonging to an assessee is found and ceased the Section to open the case of the assessee is Section 153C of the Act. It is further important to mention here that during the assessment proceeding by filing an affidavit assessee has submitted that he does not know any person by the name of any person Sri. Prabhat Kumar Kasera. 7. On perusal of the impugned order and finding of the CIT(A), we find that CIT(A) has discussed the legality of the issuance of the notices u/s 147, discussed the case of the assessee on merit and thereafter allow the appeal of the assessee on legal ground as well as on merit also.We do not find any infirmity in the impugned order.” 11. The case of the assessee is also squarely covered by the decision of Hon'ble Karnataka High Court in the case Sri Dinakara Suvarna Vs. DCIT (supra) wherein the Hon'ble Court has held that where the AO on the basis of search conducted at the premises of third party reopened the assessment of the assessee and if no proceedings were initiated u/s 153C of the Page 7 of 9

Income-tax Act, 1961 (the Act) then same is not sustainable. The SLP filed by the Revenue against the above decision has been dismissed by the Hon'ble Supreme Court.

12.

The facts of the instant case before us are materially same vis-a-vis the facts of the decisions as discussed above, therefore respectfully following the ratio laid in the above decisions , the re-opening of assessment as well as the consequent assessment framed are hereby quashed. The ground no. 8 raised by the assessee in the cross objection is allowed.

13.

The other grounds raised in the cross objection are not being decided at this stage and are left open to be adjudicated if need arises for the same in future.

14.

Since we have quashed the assessment framed by the AO on legal issue (supra), the appeal of the revenue becomes infructuous and is accordingly dismissed.

15.

The cross objection filed by the assessee is allowed on legal issue and appeal of the revenue is dismissed.

ITA NO. 818/KOL/2026 & CO No. 44/KOL/2026

16.

The issues raised in the cross objection filed by the assessee and in the appeal of the revenue are similar to ones as decided by us in ITA NO. 817/KOL/2026 & CO No. 43/KOL/2026(supra). Therefore, our decision in ITA No. 817/KOL/2026 & CO No. 43/KOL/2026(supra) would apply , Page 8 of 9 mutatis mutandis , to this appeal as well. Consequently, the cross objection filed by the assessee is allowed and appeal of the revenue is dismissed.

17.

In the result, the CO of the assessee is allowed and the appeal of the Revenue is dismissed.

Order pronounced on 07.10.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 07.10.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Dy. Registrar Income Tax Appellate Tribunal, Kolkata

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