Loading judgment…
Facts
The assessee filed a return of income, later revised, declaring income from land dealings and wholesale/retail business. A search was conducted, and the assessee admitted Rs. 2 Crores as income. The AO issued a notice under Section 148 and completed the assessment under Section 144 r.w.s. 147.
Held
The Tribunal held that in a search case, the assessment should be completed under Section 153A, not Section 147/148. Since the AO issued notice under Section 148 instead of Section 153A, proper jurisdiction was not exercised.
Key Issues
Whether the assessment proceedings initiated under Section 147/148 were valid when a search was conducted, or if Section 153A should have been invoked.
Sections Cited
147, 148, 132, 132(4), 144, 292BB, 153A, 153C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI. LAXMI PRASAD SAHU & SHRI. SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This appeal filed by the assesse eis against the Order passed by the Pr.CIT vide DIN and Order No.ITBA/APL/M/250/2025-26/1076281811(1) dated 19.05.2025.
Briefly stated facts of the case are that assessee is an individual filed his return of income on 18.12.2019 declaring total income of Rs.29,76,360/-. During the appellate proceedings, assessee filed revised statement of income declaring total income of Rs.53,72,485/-. Assessee is engaged in dealing with land dealings and get profits out of land dealings (real estate business). Assessee is also dealing in wholesale / retail business of fish / halal chicken and the profit earned is Rs.23,96,126/-. A search took place in the premises Page 2 of 8 of the assessee on 01.02.2017 at 9.00 am and on conclusion of the search was on 02.02.2017 at 2.30 a.m., assessee while answering the question Nos.7 and 8 and statements recorded during the course of search proceeding stated that he was admitting Rs.2 Crores as income for the Assessment Year. On the basis of search, the AO issued notice under section 148 of the Act dated 13.08.2018. In response to the notice under section 148 of the Act, assessee did not file return of income. A show cause notice was issued to the assessee on 29.09.2019 proposing to assess a sum of Rs. 2.00 Crores as income of the assessee on the basis of the voluntary declaration made in the sworn statement made under section 132(4) of the Act. Question and answer Nos.7 and 8 are as under:
After considering the statement recorded, the voluntary disclosure made during the statement recorded under section 132(4) of the Act was added to the income of the assessee and assessment was completed under section 144 r.w.s. 147 of the Act.
Aggrieved from the above Order, assessee filed appeal before the learned CIT(A). The learned CIT(A), after considering the entire submissions, dismissed appeal of the assessee and legal grounds raised by the assessee were also not accepted observing as under, and he also relied on section 292BB of the Act :
Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel reiterated the submissions made before the learned CIT(A) and he strongly objected that the assessment made under section 144 r.w.s. 147 of the Act is not correct and submitted it is not correct since the search was carried out in the premises of the assessee as per Panchanama drawn which is placed at Paper Book Page Nos.6 to 13 and the warrant was issued in the name of the assessee. In the Panchanama the name of authorized officer is also mentioned (D. Srihari) and search was commenced on 01.02.2017 at 9 AM and it was concluded on 02.02.2017 at 2.30 AM and search statement under section 132) of the Act was also recorded on 02.02.2017. During the course of search proceeding, sworn statement under section 132(4) of the Act was recorded which is placed at Paper Book Page Nos.14 to 16 in which the assessee has admitted income of Rs. 2.00 crore. As per the search statement, there is no reference of the materials found. Only the assessee has declared Rs.2 Crores voluntarily. Thereafter, learned Counsel referred to provision of section 153A of the Act and he submitted that search conducted in the case of assessee, the AO is mandatorily required to issue notice under section 153A of the Act and assessment to be completed under section 153A of the Act. The notice issued under section 148 of the Act for the impugned Assessment Year is not correct. It is invalid in the eyes of law. He relied on the judgment of the Co-ordinate Bench of the Tribunal in the case of D. K. Shivakumar in to 47/Bang/2020 and 205/Bang/2022, Order dated 31.01.2025.
On the other hand, learned DR relied on the Order of lower authorities and submitted that during the course of search proceedings, it was observed that assessee has not disclosed his business income from poultry and fish for the impugned Assessment Year 2015-16 in his return of income. Therefore, the notice was issued to the assessee under section 148 of the Act for assessing the escaped income t and referred to and relied on the judgment of the Hon’ble Apex court in the case of PCIT Vs. Abhisar Buildwell reported in (2023) 149 taxmann.com 399 (SC) and submitted that on the basis of the judgment of Hon’ble Apex Court, the AO has rightly initiated notice of notice under section 148 of the Act.
In the rejoinder the ld. counsel submitted that the judgement of Hon’ble Apex Court is applicable in those cases where the notice u/s 153A/153C is not possible but in the case of the assessee notice can be issued u/s 153A of the Act and section 153A mandates to issue notice in case of search. There is search in the case of the assessee.
Considering the rival submissions, we noted that there is no dispute that the search was conducted in the case of assessee and Panchanama was drawn on 02.02.2017 at 2.30 AM. Here the dispute is that assessment should have been completed under section 153A of the Act but not under section 147/148 of the Act. Copy of the Panchanama is enclosed in Paper Book Page Nos.6 to 13. As per the Panchanama, warrant was issued in the name of the assessee. To decide this issue, we need to refer to section 153A of the Act as under:
Page 5 of 8 153A. (1) 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 the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section-139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years : Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub- section 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 : Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases 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: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless— (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; Page 6 of 8 (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section-132 is initiated or requisition under section-132A is made on or after the 1st day of April, 2017. Explanation 1.—For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.—For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) 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 Principal Commissioner or Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, section- 153B and section-153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.
From the above section, we noted that as per section 153A(1) of the Act, the word used “shall” and as per the proviso, the AO has to assess or reassess the total income in respect of six Assessment Years filing within such 6 Assessment Years and for the relevant Assessment Years as per section 153A of the Act. We also noted that during the course of search and seizure proceeding, there was no incriminating document found. Only the AO has made addition on the basis of sworn statement of the assessee. As per the Page 7 of 8 considered opinion, the notice should have been issued under section 153A of the Act to the assessee for completing the assessment but the AO issued notice under section 148 of the Act on 14.08.2018 notice No.ITBA/AST/S/148/2018- 19/1011328873(1) dated 14.08.2018. Accordingly, we hold that before completing the reassessment by the AO, no proper jurisdiction has been exercised by the AO. Accordingly, we quash the Assessment Order and subsequent proceedings. The learned CIT(A), while deciding the issue has referred to section 292BB of the Act which will not support the Revenue. Here in this case, proper notice was not issued to the assessee and assessee challenged the assessment should have been completed under section 153A of the Act here in the case on hand the assessee has not disputed that the notice was not issued to the assessee. We are in agreement with the arguments of the the ld. AR of the assessee.
In the result, appeal filed by the assessee is allowed in above terms..