DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, JAIPUR vs. SHWETA CHORDIA, JAIPUR

Ground (iv) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.

This common order is to dispose of the above captioned two appeals filed by the department challenging the two separate orders passed by the Ld. CIT (A).

One impugned order dt. 20.01.2025 relates to A.Y. 2015-16 and the other impugned order dt. 20.01.2025 relate to A.Y. 2016-17.

Feeling dissatisfied with the two impugned orders, two separate appeals were filed by the revenue challenging the appeal order as mentioned (supra). Vide these two impugned orders, the Ld. CIT(A) has set aside both the assessment orders while relying on the decision of Hon’ble Supreme Court in case of PCIT Vs. Abhisar Buildwell Pvt. Ltd. (2023) 149 Taxman.com 399/ 293 Taxman 141/ 454 ITR 212 and similar decision of Hon’ble Supreme Court in case of DCIT Vs. UK Paints (2023) 454 ITR 441 where it is held that in case during the search incriminating material is found, in case of completed/ unabated assessment, the only remedy available to the revenue would be to initiate the reassessment proceedings u/s. 147/ 148 of the Act subject to fulfilment of conditions mentioned therein and not u/s. 153A of the Act and in relying on the decision of Hon’ble Rajasthan High Court in case of Shyam Sunder Khandelwal Vs. ACIT 161 Taxmann.com 255 where it was held that once there is incriminating material seized relatable to the person & 440/JP/2025 DCIT vs. Shweta Chordia other than on whom search was conducted, section 153C of the Act is to be resorted to.

The Ld. D/R for the appellant has submitted that notices u/s. 153A were correctly issued by the AO in the given facts & circumstances of the case as a search was conducted on the assessee on 19.01.2021 and therefore no notice u/s. 153C of the Act was required to be issued to the assessee. Therefore, Ld. D/R urged that appeals deserves to be allowed.

On the other hand, the Ld. A/R of the assessee has stood by the findings recorded by the Ld. CIT (A) in allowing the appeals filed by the assessee by stating that in the search conducted on the assessee on 19.01.2021 no incriminating document was found and no addition with reference to the document found in search of the assessee was made by the AO. As per section 153A of the Act addition could be made only with reference to the document found in the search of assessee. In case a document is found in the search of a third person, section 153C of the Act provides that the AO of the searched person shall handover those documents to the AO of the assessee to whom such documents pertain to and thereafter such AO after recording the satisfaction can issue notice u/s. 153C of the Act and complete the assessment. In this case, AO has made the addition with reference to the document found in search of Shri Ramesh Manihar. Hence such addition could be made only by issuance of notice u/s. 153C of the Act and not by issuance of notice u/s. 153A of the Act. The department in its ground of appeal has incorrectly stated that AO cannot initiate proceedings u/s. 153C of the Act simultaneously with the ongoing proceedings u/s. 153A of the Act ignoring that & 440/JP/2025 DCIT vs. Shweta Chordia there is no law which prohibits initiating proceedings u/s. 153C of the Act when proceedings u/s. 153A has already been initiated. Hence there is no perversity in the order of the Ld. CIT (A) and therefore the same be upheld by dismissing the ground of the department.

Undisputedly in the assessment order passed by AO u/s. 153A, addition has been made on the basis of the pen drive found in search of Ramesh Manihar Group. Having regard to the decision of Hon’ble Supreme Court in case of Abhisar & 440/JP/2025 DCIT vs. Shweta Chordia Buildwell and the decision of Hon’ble Rajasthan High Court in case of Shyam Sunder Khandelwal, we find that the Ld. CIT (A) was fully justified in applying the said decisions to the facts of the present two matters, and in holding that the AO, as regards the assessee, should have taken action as per section 153C of the Act instead of resorting to section 153A of the Act.

As a result, we find no merit in these appeals filed by the department, we uphold the two impugned orders passed by the Ld. CIT (A) and thus appeals filed by the department are dismissed.

In the result, both the appeals of the revenue are dismissed.