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Facts
The appeal was filed by the department challenging an order that set aside the assessment order. The set aside order was passed because the assessment order under Section 147 of the Income Tax Act was deemed ineffective in light of a High Court decision quashing a notice under Section 148.
Held
The Tribunal held that since the department itself had issued a notice under Section 153C of the Act in compliance with the High Court's decision, the subsequent appeal challenging the set aside order was not maintainable. The special procedure under Section 153A and 153C prevails over general provisions like Section 147/148.
Key Issues
Whether an appeal filed by the department is maintainable when the department subsequently acted in compliance with the very High Court decision that formed the basis for setting aside the original assessment order.
Sections Cited
153C, 147, 148, 153A, 139, 149, 151, 153, 143
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B-Bench” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 954/JPR/2025
fu/kZkj.k o"kZ@Assessment Year : 2012-13 Assistant Commissioner of Cuke Girraj Prasad Vs. Income Tax, 41, Gangwal Park, M.D. Central Circle-4, Road, Jaipur. Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHSPS1439A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Sh. R.K. Bhatra, C.A. jktLo dh vksj ls@Revenue by :Mrs. Alka Gautam, CIT-DR (through V.C.) lquokbZ dh rkjh[k@Date of Hearing : 21/08/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 22/08/2025 vkns'k@ORDER PER: Narinder Kumar, Judicial Member Present appeal, came to be presented by the department on 25.06.2025, challenging order dated 05.04.2025, passed by Learned CIT(A), relating to the assessment year 2012-13, whereby the assessment order dated 14.12.2019 was set aside.
Arguments heard. File perused.
Girraj Prasad Sodhani, Jaipur.
At the very outset, Ld. AR for the assessee has brought to our notice that separate notice dated 06.02.2025, u/s 153C of the Act, was issued by the department in respect of assessment year under consideration, even before institution of the appeal.
Vide impugned order, the assessment order was set aside on the ground that the assessment order u/s 147 of the Act did not survive in view of decision by our own Hon’ble High Court in Shyam Sunder Khandelwal v. Assistant Commissioner of Income Tax, (2024) 161 taxmann.com 255 (Rajasthan), D.B. Civil Writ Petition No. 18363/2019. In nut-shell Learned CIT(A) was of the view that since Hon’ble High Court quashed the notice u/s 148 of the Act, for the reasons recorded therein, the assessment order passed by the Assessing Officer had become ineffective.
Ld. DR for the department-appellant admits that separate notices u/s 153C of the Act was issued by the department to the assessee on relating to assessment year 2012-13 even before instituting this appeal. Ld. DR for the department-appellant submits that the said notice came to be issued in compliance with the decision by our own Hon’ble High Court in Shyam Sunder Khandelwal case (supra).
Girraj Prasad Sodhani, Jaipur.
At this stage, relevant observations and findings recorded by our own Hon’ble High Court in Shyam Sunder Khandelwal case (supra), need to be reproduced. Relevant portion reads as under:- "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 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.
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.
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.
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 1530 have prevalence over the regular provisions for assessment or reassessment under Section 143 & 147/148.
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.
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 Girraj Prasad Sodhani, Jaipur. Section 153A to 153D, the cases being dealt thereunder were circumscribed in the scope of newly substituted Section 148.
The Department has not set up a case that for initiating proceedings under Section 148 it had material other than the material seized during the search of Manihar Group. The contention was that though the material with regard to unaccounted loan advanced by the petitioner was received, the earning of interest on unaccounted loan was derivation of the AO from the material received. The submission is that the derived conclusion cannot be acted upon under Section 153C. The submission lacks merit and shall defeat the concept of single assessment order for each of relevant preceding years for assessing 'total income' in case of incriminating material found during search or requisition.
The argument that by enactment of Section 153A to 153D has not eclipsed Section 148 does not enhance the case of respondent to initiate the proceedings under Section 148. On fulfillment of two conditions for invoking Section 153C the proceeding in accordance with Section 153A are to be initiated. The operating field of and Section 1534 to 153D and Section 148 are different Applicability of Section 153C in cases where the seized material related to or belonged to person other than on whom search is conducted or requisition made does not render Section 148 otiose. Section 148 shall continue to apply to the regular proceedings and also in cases where no incriminating material is seized during the search or requisition.
The other aspect of the matter is that under Section 153A and 153C, the total income' is to be assessed. The total income includes returned income (if any), undisclosed income unearthed during the search or requisitioning and information possessed from the other sources. For Illustration: An assessee had returned income of Rs.100, undisclosed Income of Rs.200 is unearthed during search and there is information from annual information statement of non- disclosure of income of Rs. 150/-, The AO under Section 153A and 1530 shall pass order dealing with income of Rs. 100+Rs.200+Rs.150, the total income being Rs.450/-. In cases where there is no unearthing of undisclosed income of Rs.200/-, the department can resort to proceeding under Section 147/148.
The argument that Section 153C can be invoked in case there is incriminating material for all the relevant preceding years and otherwise Section 148 is to be resorted to, is misplaced. On satisfaction of the twin condition for proceedings under Section 153C, the AO has to proceed in accordance with Section 153A. Notice is to be issued for filing of the retums for relevant preceding years and thereupon proceed to assessee or reassesses the 'total income'. It is not obligatory on the AO to make assessment for all the years, the earlier orders passed may be accepted. But once there is incriminating material seized or Girraj Prasad Sodhani, Jaipur. requisitioned belonging or relatable to the person other than on whom search was conducted, Section 153C is to be resorted to. 40. In view of above discussion the notices issued under Section 148 and the impugned orders are quashed. However, the respondents shall be at liberty to proceed against the petitioners in accordance with law."
Once the department admittedly issued notice u/s 153C of the Act, in compliance with the decision by our own Hon’ble High Court, it can safely be said that the department could not file this appeal. In other words, this appeal is not maintainable, when the department accepted and acted upon the said decision by the Hon’ble High Court. Result 8. Consequently, this appeal is hereby dismissed being not maintainable. File of appeal be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 22/08/2025. Sd/- Sd/- ¼jkBkSM+ deys'k t;UrHkkbZ ½ ¼ujsUnz dqekj½ (RATHOD KAMLESH JAYANTBHAI) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 22/08/2025 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- ACIT, Central Circle-4, Jaipur. 1. 2. izR;FkhZ@ The Respondent- Girraj Prasad Sodhani, Jaipur.