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Facts
The Revenue received information regarding a plot purchased by the assessee. A search action revealed a document indicating a higher cost for the plot than what was recorded in the seller's books and declared by the assessee. This led to the reopening of assessment and an addition of Rs. 13,95,000/- as unexplained investment. The assessee challenged this order before the CIT(A), who dismissed the appeal.
Held
The Tribunal held that the reassessment proceedings were initiated under Section 147/148, but based on material seized during a search on a third party, Section 153C should have been invoked. The initiation of proceedings under Section 148 was thus deemed bad in law and without jurisdiction. The Tribunal also found that the reassessment order was barred by limitation and that reasons/material relied upon were not properly supplied to the assessee.
Key Issues
Whether the reassessment proceedings initiated under Section 147/148 were valid when the material was seized from a third party and Section 153C was applicable? Whether the reassessment order was barred by limitation? Whether the assessee was provided with proper reasons and material for reopening the assessment?
Sections Cited
147, 148, 133(6), 142(1), 69, 132, 153C, 153A, 153B, 139, 149, 151, 153, 148A
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 609/JP/2025
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 609/JP/2025 fu/kZkj.k o"kZ@Assessment Year : 2013-14 cuke Savita Gupta ITO, Vs. H. N. 37, 38 Vikram Nagar Town Ward 2(2), Ship, Kota Kota LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AIYPG2364D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Vinod Kumar Gupta, CA jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 26/06/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 09/07/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The above-named assessee by way of the present appeal challenges the order of the National Faceless Appeal Centre, Delhi [ for short CIT(A) ] dated 27/02/2025. The dispute relates to the assessment year 2013-14. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated 14.03.2022 which was passed by National Faceless Assessment Centre, Delhi [ for short AO].
2. In this appeal, the assessee has raised the following grounds: - “1. The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld.AO of initiating the assessment proceeding u/s 147 of the Income Tax Act. The very action taken u/s 147 of the act, is bad in law and without jurisdiction. Hence, the same kindly be quashed.
2. The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld.AO wherein the notice issued u/s 148 is erroneous and unsustainable as the reasons recorded in the notice are exfacie without any foundation and do not have any direct nexus or live link with the alleged escapement of income by appellant. The said action is illegal. Hence, the order deserves to be quashed.
3. The Ld. CIT(A) erred in confirming the action of Ld.AO in making addition of Rs. 13,95,000/- u/s 69 of the Act, on account of alleged investment made out of alleged unaccounted money. Hence, the addition by estimation so made, is unjustified and excessive, and may kindly be deleted.
4. That the appellant craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing.
3. Succinctly, the fact as culled out from the records is that the revenue was in possession of the information received from DCIT, Central Circle, Kota vide that office letter no.3755 dt. 22-03-2019. As per information, the assessee has purchased a plot E-13 area 1800 Sq. Feet from Bhatia Colonizers. The value of the plot was recorded in the books of accounts of seller company amounting to Rs. 16,20,000/-. Notices u/s 133(6) of the Act issued to the assessee on 04.04.2019 & 14.02.2020 to verify the source of Rs. 16,20,000/- was provided by the assessee in her reply but as per ITR the assessee declared total income of Rs. 1,73,680/- only. The investment made by the assessee and income declared in her ITR is not matching and therefore, to verify the facts with that of the seized documents during the search action u/s 132 of the IT Act was carried out at Shubham Group, Kota and statement of Shri Ram Bhatia it was come to notice that the actual cost of the plot no.E-13, Landmark City, Kota was Rs.30,15,000/- and thereby the case was reopened u/s 147 of the Income Tax Act, 1961 after recording reasons. Consequently, notice U/s 148 was issued on 28/04/2020 and duly served upon the assessee through ITBA System. The assessee vide letter dated 06/11/2020 replied that she was in receipt of money from her relatives and thereby paid to seller. She also contended that based on that proceeding u/s. 148 is required to be dropped.
Notice were issued u/s 142(1) on 04/03/2021, 15/03/2021, 22/03/2021 & 12/05/2021 seeking explanation with regard to the reasons conveyed to the assessee. The assessee vide reply dated 25/03/2021 submitted that she has purchased plot No E-13, Block-E, Landmark City Kunhari Kota, Rajasthan for an amount of Rs. 16,20,000/- in the year 2012- 13 and she has no knowledge of the amount of Rs. 30,15,000/- found in assessee in support of her claim has submitted copy of bank statement, copy of receipts and copy of sale agreement.
After considering the above submission of the assessee ld. AO issued a show cause notice to the assessee on 23-02-2022 to give an opportunity to show cause as to why the amount of Rs. 13,95,000/- should not be added to the total income of the assessee. In response to which the assessee again submitted the similar facts mentioned in her reply dated 04.03.2022.
Ld. AO noted that the as per the seized documents which contains record of sale of plots during the search action u/s 132 of the IT Act was carried out at Shubham Group, Kota it was come to notice that the actual cost of the plot no.E-13, Landmark City, Kota was Rs.30,15,000/-, Value recorded in books Rs. 16,20,000/- with that of the consideration revealed in search thereby the arrived difference of Rs. 13,95,000/- paid in cash as "on money" and the assessee could not substantiate the source of the same.
The submission of the assessee that the plot was purchased by her amounting to Rs. 16,20,000/-, all the proceeds that were invested in the plot were from borrowed funds and the list of the same was also provided. The assessee has further mentioned that the assessment was made on the third the assessee tenable as there was concrete information with the Department that the assessee has purchased the said plot for Rs. 30,15,000/-. The same has been established while search action by the investigation wing of the Income Tax Department. Further the assessee builder is not an independent third party and is directly related to the assessee and the further the case of the assessee has been reopened not merely on the basis of the statement as objected by the assessee, but on the basis of the credible documentary evidence during the course of search action where it was established that the assessee has given Rs. 13,95,000/- on money to the builder and the value of the plot as per seized documents was Rs. 30,15,000/-. Considering the detailed show cause notice and the reply which was examined by the ld. AO and not found tenable. He noted that a search action was carried out u/s 132 of the IT Act on Shubham Group Kota and M/s Shubham Infraprojects Pvt Ltd. is a flagship company of the group. During the search action at the premises of the assesses group situated at Choudhary Hotel premises, near Aerodrome Circle, Kota a document bearing page no. 1 of Annexure A-1 was seized by party no.
11. This document contains record of sale of plots in projects "Landmark City" of M/s Bhatia Colonizer Pvt. Ltd during the financial year 30,15,000/-, Value recorded in books Rs. 16,20,000/-, Difference Rs. 13,95,000/- which was paid in cash was thus added unexplained money in the case of the assessee u/s 69 of the Act.
4. Feeling dissatisfied with the order of the assessing officer, assessee preferred an appeal before the ld. CIT(A). Ld. CIT(A) dismissed the appeal of the assessee by recording the following observation :
“7. Adjudication: The observation in the assessment order and the averments of the appellant have been considered by me. The only issue raised in this appeal relates to addition made towards unexplained investment amounting to Rs. 13,95,000. It is the contention of the appellant that the property was purchased for a total consideration of Rs. 16,20,000. There is a source of information from Investigation Wing that the appellant has purchased the property according to the books seized at the premises for Rs. 30,15,000 and the value recorded in the books was Rs. 16,20,000. In this regard, the appellant submitted that the recorded amount in the books was her investment and no additional payment was made by her and it was recorded in the Sale Deed also. In this regard, it is for the appellant to prove that no additional payment was made by getting reconciliation from the party with whom the purchase of immovable property transaction was made. Because, a search was conducted in the premises of Bhatia Colonizers P Ltd. and the document was found at the premises of the company. When the property was registered for a consideration of Rs. 16,20,000, and if no excess money / on money was received by the seller, the seized document also would contain the figure of Rs. 16,20,000 against the purchaser name. There is no necessity to hike the price in respect of the appellant alone in the books seized at the time of search and where there is variation in the recorded transaction and as per the documents or incriminating materials found at the time of search, the assessment has been reopened. The onus lies on the appellant to prove that no additional amount was paid by getting confirmation from the seller and the document consideration may be higher or lower based on the guideline value of the property and stamp duty is collected only on the guideline value. Hence, there Savita Gupta vs. ITO is suppression in sales by the seller also as the amount received in cash would be treated as unaccounted sales. In view of the factual position, the source of investment is treated as unexplained in the hands of the appellant and the action of the Assessing Officer in treating the sum of Rs.13,95,000 as unexplained investment under Sec.69 of the Act is upheld.
In the result, the appeal is "Dismissed".”
5. That order of the ld. CIT(A) is under challenge before this tribunal on the grounds as stated herein above in para 2. To support the various grounds so raised by the assessee, ld. AR of the assessee, has filed a detailed written submissions which reads as follows:
“Brief Facts of The Case:
1. 1. Appellant is an individual, filed her Income Tax Return, u/s 139 of the Income Tax Act (hereinafter referred to as ‘Act’), on 26.03.2014 declaring total income of Rs. 1,72,800/-.
2. Thereafter, a notice u/s 133(6) of the Act was issued which was duly complied by the appellant.
3. The appellant had purchased a residential plot bearing No. E-13, Landmark City, Kota, from Bhatia Colonisers for a total consideration of Rs. 16,20,000/-, as duly recorded in the books of the seller.
4. However, the assessment was subsequently reopened u/s 147 of the Act, based on alleged information received from the DCIT, Central Circle, Kota. It was contended that during a search conducted u/s 132 of the Act at the premises of Shubham Group, Kota (of which Bhatia Colonisers is a part) a document was found suggesting that the actual value of the said plot was Rs. 30,15,000/-.
5. Based on this, the Ld. AO alleged that the difference of Rs. 13,95,000/- (Rs. 30,15,000 – Rs. 16,20,000) constituted “on-money” paid in cash by the appellant, and proceedings u/s 147 were initiated.
6. The appellant was served with notices u/s 142(1), to which detailed replies and supporting documents were filed.
Savita Gupta vs. ITO 7. Subsequently, order u/s 147 r.w.s. 144 of the Act was passed on 14.03.2022 wherein addition of Rs. 13,95,000/- was made u/s 69 of the Act. 8. Aggrieved with the order, the appellant preferred an appeal the Ld.CIT(A), who confirmed the Ld. AO assessment order in its entirety. 9. Aggrieved with the order of Ld.CIT(A), the appellant preferred an appeal before Hon’ble bench.
Ground of Appeal No. 1: The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld.AO of initiating the assessment proceeding u/s 147 of the Income Tax Act. The very action taken u/s 147 of the act, is bad in law and without jurisdiction. Hence, the same kindly be quashed.
Relevant findings of Ld. AO: (Para 4.1 at page 4 of assessment order):
Submission: A. Initiation of proceedings u/s 148 of the Act,based on material found during the search, is void-ab-initio Savita Gupta vs. ITO In view of the foregoing facts and findings of the Ld. AO, it is evident that the reopening of the appellant’s case was triggered solely on the basis of alleged documents found during a search action conducted, u/s 132 of the Income-tax Act, 1961, at the premises of Shubham Group, Kota, of which Bhatia Colonisers belongs. In this context, it is humbly as under: 1. During the said search, a document namely Page -1 of Annexure A-1 was allegedly found, recording that the value of Plot No. E-13, Landmark City, Kota (purchased by the appellant) was Rs. 30,15,000/-, whereas the consideration recorded in the seller’s books and paid by the appellant was Rs. 16,20,000/-. Relying solely on this document, the Ld. AO reopened the assessment under section 147 on 28.04.2020 and passed an order u/s 147 r.w.s. 144/144B.
2. The critical legal question that arises here is: Can proceedings under section 148 of the Act be initiated,as on 28.04.2020,against a person other than the searched person, where the only basis for such action is document seized from a third party’s premises? The correct answer, in light of the legal framework, is no. In such cases, Section 153C of the Act applies with overriding effect.
3. In this regard, we would like to submit the provision contained in Section 153C of the Income Tax Act as follows:- “153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person 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 referred to in sub-section (1) of section 153A :
Savita Gupta vs. ITO Provided that in case of such other person, the reference to the date of initiation of the search under section132 or making of requisition undersection 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : Provided further that the Central Government may by rules18 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, 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 19[and for the relevant assessment year or years as referred to in sub-section (1) of section 153A] except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year— (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) ofsection 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.”
4. Section 153C of the Act begins with a non-obstante clause and overrides sections 139, 147, 148, 149, 151, and 153. It mandates that if during a search (initiated on or before 31st March, 2021], any books of account, documents, or assets are seized which pertain to or relate to a person other than the one searched, such seized material must be handed over to the AO having jurisdiction over the said “other person,” and the proceedings must be initiated under section 153C and not under section 148.
Therefore, it is a question whether under the facts and circumstances, case under consideration is covered by provision contained u/s 153C or not? The obvious answer is yes, since during the search, certain alleged documents were found and information contained therein is related to person, other than person referred to in Section 153A. Accordingly, as per Section 153C of the Act, proceedings should be initiated u/s 153C and not 148 of the Act.
The appellant also wants to attract your honour’s attention to the judgement of Hon’ble Rajasthan High Court in the case of Shyam Sunder Khandelwal Vs. ACIT, CC-2, Jaipur[D.B. Civil Writ Petition No. 18363/2019] dated 19.03.2024. The facts of the case are completely similar to the current case where notice u/s 148 was issued to the petitioners on the basis of search conducted u/s 132 on Ramesh Manihar Group. The Hon’ble high court, while addressing the question of applicability of section 153C and148 of the Act on persons other than on whom search was conducted, concluded that in case where assessment is made of person(s) other than on whom search was conducted and where the basis for making assessment on such other person(s)is material/ information seized during the said search, the A.O has to proceed u/s 153C of the Act against such other person(s)and section 148 cannot be resorted to in such cases.
7. It is pertinent to note that the Judgement(supra) is squarely applicable on the current case. In this regard, the appellant is producing facts of the current case and the case before the Hon’ble Rajasthan High Court (supra) for your reference: Particulars Current Case Shyam Sunder Khandelwal Vs. ACIT, CC-2, Jaipur Assessment Re- Under Section 148 Under Section 148 opened. Reason for Re- Material/ Information gathered Material/ Information opening of during search conducted on gathered during search Assessment. Shubham Group. conducted on Ramesh Manihar Group. Search conducted A third party A third party on
8. Therefore, since the current facts are identical to the judgement(supra), the impugned order is liable to be quashed solely on the basis of this judgement. The appellant is reproducing relevant extracts of the Judgement for your reference: “CONCLUSION:-
Savita Gupta vs. ITO 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.
24. 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.
25. 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 otherassessee 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.
26. 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 153D have prevalence over the regular provisions for assessment or reassessment under Section 143 & 147/148.
27. 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.
28. 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 Section 153A to 153D, the cases being dealt thereunder were circumscribed in the scope of newly substituted Section 148.
29. 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 Savita Gupta vs. ITO 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.
30. 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 153A 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. … 32. 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 returns for relevant preceding years and thereupon proceed to assessee or reassessee 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 requisitioned belonging or relatable to the person other than on whom search was conducted, Section 153C is to be resorted to. …”
9. Similarly, the Hon’ble Rajasthan High Court in the case of Tirupati Construction Company Vs. ITO [D.B. Civil Writ Petition No. 17651/2022] dated 21.03.2024also relied on the judgement of Shyan Sunder Khandelwal Vs. ACIT, CC-2, Jaipur(supra)and held as under:
“8. Learned counsel for both the parties, on the legal issue that where basis for reopening the assessment is information/material collected during search, would not dispute that in such a case, reassessment has to be done only by taking recourse to the provisions contained in Section 153C read with Section 153A of the Act of 1961 and not under Section 148A/Section 148 of the Act of 1961. The legal position in this regard is well settled in view of the decision of the Hon’ble Supreme Court in the case of Principal Commissioner of Income-Tax Vs. Abhisar Savita Gupta vs. ITO Buildwell P. Ltd. [2023] 454 ITR 212 (SC) and decision dated 19.03.2024 rendered by Division Bench of this Court at Jaipur Bench in the case of Shyam Sunder Khandelwal Vs. Assistant Commissioner of Income Tax (D. B. Civil Writ Petition No. 18363/2019 and other connected writ petitions)”.
10. It is noteworthy that it is a settled legal position now that whereverSection 153C applies, proceeding initiated under Section 148 is bad in law and, therefore, initiation has been quashed. In this regard, we place our reliance on the following case laws: - � Hon’ble Bombay High Court in the case of Sejal JewellaryandAnr vs Union of India and 3 Ors, on 18th February 2025, [WRIT PETITION NO. 3057 OF 2019], held as under: “We are in complete agreement with the view taken by the Division Bench of Rajasthan High Court in the aforesaid decision. 22. Applying the principles of law as discussed hereinabove, we are of the clear opinion that the foundation of the present case was certainly a search action which was undertaken by the Revenue against one Shilpi Jewellers Pvt. Ltd. and in such search and seizure action, materials were seized and such materials were further explored and enquired. Such enquiry revealed significant information in regard to M/s. Green Valley Gems Pvt. Ltd., which according to the Revenue had provided accommodation entries to the petitioner, in which it was also revealed that Green Valley Gems Pvt. Ltd. was a shell company. We do not find that the record would indicate something which is not on the basis of such new materials gathered under the search and seizure action under Section 132. If this be the case, then certainly the provisions of Section 153C read with Section 153A would be applicable, as held by the Supreme Court in Abhisar Buildwell P. Ltd. (supra) when the Court interpreted the effect and purport of Section 153C and 153A, as also held by the Rajasthan High Court in Shyam Sunder Khandelwal (supra).
23. Insofar as Mr. Suresh Kumar's contention supporting the proceedings under Section 147 and 148 of I.T. Act are concerned, for the aforesaid reasons, such contention would in fact go contrary to the intention of the legislature as depicted by the provisions of Section 153A and 153C of the I.T. Act. There would not be any difficulty in accepting the proposition as canvassed by Mr. Suresh Kumar, referring to the decision of the Supreme Court in Phool Chand Bajrang Lal (supra), however, the facts in the present case are distinct. There cannot be any doubt on the position in law when the Revenue intends to proceed purely on materials relevant for an action under Section 148 read with Section 147. We have already observed that the Savita Gupta vs. ITO provisions of Sections 147, 148 vis-a-vis Section 153A and Section 153 are quite compartmentalized. To avoid any overlapping of these provisions, the legislature in its wisdom has thought it appropriate to provide for an independent effect, to be given under Section 153A read with Section 153C by incorporating the " non-obstante" clause, in these provisions, which carves out an exception to any normal/regular action being resorted under Section 147.
24. In this view of the matter, we are of the clear opinion that the impugned notice under Section 147 of the I.T. Act and all actions consequent thereto are required to be held to be without jurisdiction and bad in law. The petition is accordingly allowed in terms of prayer clauses (a) and (b).
25. Learned counsel for the parties are ad idem that the aforesaid observations would cover the other companion matters, which also stand allowed in terms of our aforesaid reasoning and the operative order passed in Writ Petition No. 3057 of 2019. The said petitions hence stand allowed in terms of prayer clauses (a) and (b) of each of these petitions.”
� ITAT, New Delhi bench in the case of Mahalaxmi Ornaments House Pvt. Ltd. Vs ITO, Ward-16(1), ITA 2231 to 2233/Del/2022 dated 16.06.2023 held as under: “13. In the recent judgment in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. (supra) their Lordship held that in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147 / 148. At the cost of repetition I my point out that their Lordship in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. (supra) has drawn a clear distinction between two types of cases first where no incriminating material has been found and seized then the only remedy available to the revenue would be to initiate reassessment proceedings u/s. 147/148 of the Act, subject to fulfilment of condition mentioned therein and second where incriminating material and documents have been found and seized. In my humble understating in later situation the only valid action and recourse available to the Assessing Officer is to invoke provision of section 153C of the Act. This view also gets strong support from the orders of various coordinate benches of the Tribunal including order of ITAT Delhi Bench in the case of Saurashtra Color Tones P. Ltd. vs. ITO (supra).
Savita Gupta vs. ITO 14. In the present case, the assessments were completed/unabated on the date of receipt of information from the Investigation Wing on 12.03.2013 and documents/material was found and seized during the course of search and seizure operation therefore the only action to be taken by the Assessing Officer was available u/s. 153C of the Act and he was not entitle to invoke provisions of section 147/148 of the Act to initiate reassessment proceedings on the basis of material found and seized during the course of search and seizure operation on the third person. Therefore, there was no justification for the A.O. to have been initiated proceedings w/s.147 / 148 of the I.T. Act. The correct course of action would have been to proceed against the assessee under section 153C of the I.T. Act. Therefore, initiation of reassessment proceedings w/s.147 / 148 of the I.T. Act is wholly invalid, void and bad in law. Accordingly, additional ground no. 1 is allowed.”
� ITAT, Jaipur bench in the case of Navrattan Kothari, Jaipur vs ACIT, Jaipur, ITA 425/JP/2017 dated 13.12.2017, held that: “Therefore, in conjoint reading of provisions of section 153A, 153C and 147/148 of the Act as well as a consistent view taken by this Tribunal in a series of decision cited (supra) we hold that the assessment or reassessment of income of the person other than search persons based on seized material can be only be made u/s 153C r.w.s. 153A and provisions of section 147/148 of the Act are not applicable in such cases. No contrary decision has been brought to our notice. Accordingly, we hold that initiation of proceedings u/s 147/148 by the AO to reassess the income is illegal being without jurisdiction and consequently the reassessment order passed u/s 147 r.w.s. 143(3) is also illegal and void ab- initio and is liable to be quashed.”
� ITAT, Jaipur bench in the case of Shri Kalyan Buildmart Pvt. Ltd., ... vs Assistant Commissioner of Income Tax, ITA 152 & 153/JP/2018 dated 28.06.2018, held that: “Following the earlier decision of this Tribunal, we hold that the reopening under section 147/148 of the Act is not valid when the proper course of action was only to initiate the proceedings under section 153C/153A of the Act. Since we have quashed the initiation of the reopening of the assessment as well as consequent reassessment order for both the years, therefore, the ground raised by the revenue on the merits of the addition on protective basis becomes infructuous.
11. In the result, appeals of the assessee are allowed and appeals of the revenue are dismissed.”
� Hon’ble ITAT, Kolkata in the case of Aristocrat Residences LLP Vs. Income Tax officer, Ward 34(1), dated 01.04.2025, [ITA No.1118/KOL/2024]:
“22.Applying the principles of law as discussed hereinabove, we are of the clear opinion that the foundation of the present case was certainly a search action which was undertaken by the Revenue against one Shilpi Jewellers Pvt. Ltd. and in such search and seizure action, materials were seized and such materials were further explored and enquired. Such enquiry revealed significant information in regard to M/s. Green Valley Gems Pvt. Ltd., which according to the Revenue had provided accommodation entries to the petitioner, in which it was also revealed that Green Valley Gems Pvt. Ltd. was a shell company. We do not find that the record would indicate something which is not on the basis of such new materials gathered under the search and seizure action under Section 132. If this be the case, then certainly the provisions of Section 153C read with Section 153A would be applicable, as held by the Supreme Court in Abhisar Buildwell P. Ltd. (supra) when the Court interpreted the effect and purport of Section 153C and 153A, as also held by the Rajasthan High Court in Shyam Sunder Khandelwal (supra).
Insofar as Mr. Suresh Kumar's contention supporting the proceedings under Section 147 and 148 of 1.T. Act are concerned, for the aforesaid reasons, such contention would in fact go contrary to the intention of the legislature as depicted by the provisions of Section 153A and 153C of the I.T. Act. There would not be any difficulty in accepting the proposition as canvassed by Mr. Suresh Kumar, referring to the decision of the Supreme Court in Phool Chand Bajrang Lal (supra), however, the facts in the present case are distinct. There cannot be any doubt on the position in law when the Revenue intends to proceed purely on materials relevant for an action under Section 148 read with Section 147. We have already observed that the provisions of Sections 147, 148 vis-a-vis Section 153A and Section 153 are quite compartmentalized. To avoid any overlapping of these provisions, the legislature in its wisdom has thought it appropriate to provide for an independent effect, to be given under Section 153A read with Section 153C by incorporating the "non-obstante" clause, in these provisions, which carves out an exception to any normal/regular action being resorted under Section 147.
24. In this view of the matter, we are of the clear opinion that the impugned notice under Section 147 of the IT. Act and all actions consequent thereto are � Hon’ble ITAT Delhi in the case of SHEEL TRADING COMPANY Vs. ACIT, dated 20.11.2024, [ITA No. 1566/DEL/2024], held as under:
“The Learned DR has not been able to controvert such submissions made by the Learned AR. The submission made by the Learned AR in the facts and circumstances of the case is acceptable since admittedly re-opening has been done under Section 148 of the Act though on the basis of the incriminating materials unearthed during the course of search conducted on M/s. Dhanuka Group on 13.03.2019. In fact, the proper course of action in such case of re-opening of the assessment of the 4 Page assessee before us could have been invoking the provision of Section 153C of the Act. The judgment relied upon the Learned AR as mentioned hereinabove are also taken into consideration as those are on the identical facts and thus the re- opening of the assessment under Section 148 of the Act is found to be illegal and void ab initio and liable to be quashed.
5. Hence, assessee’s appeal is, thus, allowed.”
11. Further, it is also settled law that decision of Hon’ble jurisdictional High Court is binding upon subordinate Tribunal and courts and quasi-judicial authorities.
12. In light of the above, it is humbly submitted that the reassessment proceedings initiated vide notice dated 28.04.2020 u/s 148 are wholly without jurisdiction, as the correct and only applicable provision in the facts and circumstances of the case was section 153C of the Act as the material forming the basis of the reassessment was found during a search conducted on a third party and not on the appellant. Section 153C, being in force at the time of issuance of notice and having overriding effect over section 147, mandates that proceedings in such cases must be initiated under its provisions. The action of the Assessing Officer in bypassing section 153C and wrongly resorting to section 148 renders the entire reassessment proceedings bad in law and void ab initio.
Accordingly, the impugned assessment order deserves to be quashed on this ground.
B. Reassessment Barred by Limitation under Section 153B r.w.s. 153C Savita Gupta vs. ITO Without prejudice to anything stated above, the impugned assessment order dated 14.03.2022 is clearly barred by limitationas per Section 153B of the Act for the following reasons:
Section 153B of the Income Tax Act, 1961 states as under: “…….. Provided further that in the case where the last of the authorisations for search under section 132 or for requisition under section 132A was executed during the financial year commencing on the 1st day of April, 2018,— (i) the provisions of clause (a) or clause (b) of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted; (ii) the period of limitation for making the assessment or reassessment in case of other person referred to in section 153C, shall be the period of eighteen months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed or twelve months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later:”
As stated in paragraph 1 of the assessment order dated 14.03.2022, the documents were handed over to the Assessing Officer of the appellant on 22.03.2019. This clearly falls under the second proviso of Section 153B. The dateof last authorization for search concerning the Shubham group under Section 132 must have been executed prior to the handover of the document i.e. in the financial year ending 31.03.2019.
2. According to Section 153B, the reassessment order must be passed within the following time frames: a. Eighteen months from the end of the financial year in which the last authorization for search was granted, or b. Twelve months from the end of the financial year in which the books of account, documents, or assets seized or requisitioned are handed over under Section 153C to the Assessing Officer having jurisdiction over such other person.
3. In this case, calculating the time limits: a. Eighteen months from the end of 31.03.2019 results in 30.09.2020. b. Twelve months from the end of 31.03.2019 results in 31.03.2020.
The later date is 30.09.2020. However, the reassessment order was passed on 14.03.2022, which is clearly beyond the stipulated limitation period.
4. Given the above submission, it is evident that the assessment order dated 14.03.2022 is barred by limitation as per the provisions of Section 153B. We therefore request your honour that this assessment order be deemed invalid for being barred by limitation. In support of this we rely on the recent judgement of Hon’ble Delhi High Court in the case of Landcraft Developers Private Limited Vs. ACIT, dated 05.05.2025, [W.P.(C) 3796/2025 & CM APPL. 17699/2025], wherein it was held as under: “6. As noted above, the note clearly records that the documents and information relating to the Petitioner were handed over to the AO having jurisdiction over the case of the Petitioner is correct. Thus, thedocuments in question were received by the AO of the Petitioner on 22.06.2022. In the given facts, the period of limitation, as stipulated under Section 153B of the Act, for passing an assessment order is to be reckoned from the said date.
7. As noted above, in terms of Section 153B of the Act, the AO was required to pass an assessment order within a period of twelve months from the end of the financial year in which the documents were received, that is, from the end of the financial year 2022-23. Therefore, the last date for completion of the assessment was 31.03.2024, which has since passed. The present petition was listed on 26.03.2025, and admittedly, no order ofassessment has been passed as of the date of filing of the petition.
8. In view of the above, the present petition is allowed and the proceedings commenced pursuant to the impugned notice are set aside. It is also clarified that, in the event, any assessment order has been passed after filing of this petition in respect of AY 2015-16 pursuant to the impugned notice, the same would also stand quashed.
9. The petition is allowed in the aforesaid terms.” C. Reassessment without supplying reasons/ approval or material relied upon is invalid: 1. Without prejudicial to anything stated above and without any admission, it is to be noted that in the present case, the appellant was not provided with the copy of the reasons recorded/approvaland material relied upon for reopening the assessment u/s 147 of the Act.
Savita Gupta vs. ITO 2. Attention is invited to the show cause notice issued u/s 144 of the Act, dated 23.02.2022, where the Ld. AO merely set out the reasons for reopening of assessment instead of providing the copy of the same to the appellant. The said reasons read as follows: “In this case the information received from DCIT, Central Circle, Kota vide his office letter no.3755 dt. 22-03-2019. As per information, the assessee has purchased a plot E-13 area 1800 Sq. Feet from Bhatia Colonisers. The value of the plot was recorded in the books of accounts of seller company amounting to Rs.16,20,000/-. Notices u/s 133(6) of the IT Act, 1961 issued to the assessee on 04.04.2019 & 14.02.2020 to verify the source of investment. In compliance of these notices source of such investment of Rs.16,20,000/- was provided by the assessee in her reply but as per ITR the assessee declared total income of Rs.1,73,680/- only. The investment made by the assessee and income declared in her ITR is not matching and need verification. But as per the seized documents during the search action u/s 132 of the IT Act was carried out at Shubham Group, Kota and statement of Shri Ram Bhatia it was come to notice that the actual cost of the plot no.E-13, Landmark City, Kota was Rs.30,15,000/-.” Therefore, case was reopened u/s 147 of the Income Tax Act, 1961 after recording reasons.”
3. The appellant, vide reply (sent via email) dated 24.05.2025 made specific request to the Ld. AO to provide reasons recorded, approval etc and material relied upon in the case of the appellant. However, neither any response to the said letter was given by the Ld. AO nor such documents were provided to the appellant. Copy of email containing reply is attached with this written submission.
4. It is pertinent to note that furnishing of reasons for reopening of assessment has to be strictly complied with as it is a jurisdictional issue. The requirement of supplying reasons for initiating proceedings u/s 147 has been spelt out by the Hon’ble Supreme Court in GKN Driveshafts (India) Limited v. Income Tax Officer and Others: (2003) 1 SCC 72 (259 ITR 19), wherein the Supreme Court directed as under: “However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years.”
5. Therefore, in view of the above stated facts, the assessment order is null and void since ‘reasons to believe’ were not provided to the appellant by the Ld. AO. In this regard, we rely on the following judgement: � The Hon’ble ITAT, Jaipur in the case of Shri Banwari Lal Pareek Vs. The ITO, Ward 1(5) [ITA No. 135/JP/2020] vide order dated 27.07.2022 allowed the appeal of the appellant and held as under: “… The SLP of the Revenue against the above order of Karnataka High Court (supra) has also been dismissed by the Hon’ble Supreme Court reported in (2019) 262 Taxman 16. Therefore considering the totality of the facts and circumstances of the case and keeping in view the legal proposition as discussed above, we hold that recording of reasons before initiation of reassessment proceedings and communication thereof to the assessee is sine qua non as held by the Hon’ble Supreme Court (supra) that goes to the root of the matter and confers or deprivesthe assessing authority of the jurisdiction to undertake such reassessment proceedings, as the case may be. In the present case, admittedly such reasons were not supplied to the assessee during the contemporary period before going ahead with the reassessment proceedings. Therefore, in our view, the reassessment proceedings initiated and consequential order passed by the AO and appeal orderpassed by the ld. CIT(A) are not justified and, therefore, we quash suchreassessment order. Therefore, the ground raised by the assessee is allowed and consequential appeal of the assessee is also allowed with no order as to cost.”
6. Further, as it can be seen that the above reasons stated that as per the seized document and statement of Shri Ram Bhatia, the actual cost of plot no. E- 13 is Rs. 30,15,000/-. Hence, such seized document and statement were ought to be provided to the appellant by the Ld. AO. However, the seized document and statement referred in the reasons recorded were neverprovided to the appellant.
The omission stated in point 5 above is significant in light of the law laid down by the Hon’ble Rajasthan High Court in Micro Marbles Private Limited vs. Office of the Income Tax Officer, Ward-1, Chittorgarh (D.B. Civil Writ Petition No. 13719/2021, order dated 04.01.2023). The Court held that the supply of the material and documents forming the basis of the “reasons to believe” is a sine qua non for enabling the assessee to effectively respond to the notice. Relevant observation of the Court is re-produced below for ready reference:
Savita Gupta vs. ITO “25. In view of the above decisions and one of the guidelines laid down therein, the supply of documents referred to in the reasons to believe becomes inevitable and in the event such documents are not supplied, it would be flagrant violation of the principles of natural justice.”
� Further, reliance is placed onHon’ble Delhi High Court in the case of Sabah Infrastructure Ltd. In W.P.(C) 1357/2016, wherein the court laid down the guidelines for reopening case u/s 148 by holding that:
“(iii) where the reasons make a reference to another document, whether as a letter or report, such document and/or relevant portion of such report should be enclosed along with the reasons”
Since under the current case, reasons, approval and material relied upon was never supplied to the appellant, the current assessment deserves to be quashed on this very ground.
(This space is left blank intentionally) Ground of Appeal No. 2: The Ld. CIT(A) has erred in law as well as on the facts of the case in confirming the action of Ld.AO wherein the notice issued u/s 148 is erroneous and unsustainable as the reasons recorded in the notice are ex-facie without any foundation and do not have any direct nexus or live link with the alleged escapement of income by appellant. The said action is illegal. Hence, the order deserves to be quashed.
Ground of Appeal No. 3: The Ld. CIT(A) erred in confirming the action of Ld.AO in making addition of Rs. 13,95,000/- u/s 69 of the Act, on account of alleged investment made out of alleged unaccounted money. Hence, the addition by estimation so made, is unjustified and excessive, and may kindly be deleted.
Facts of the Case:
1. 1. The appellant had purchased a residential plot bearing No. E-13, Landmark City, Kota, from Bhatia Colonisers for a total consideration of Rs. 16,20,000/-.
2. A search was carried out at the premises of Shubham Group, Kota(of which Bhatia Colonisers was a part).
Savita Gupta vs. ITO 3. During the search of Shubham Group, a document namely page 1 of Annexure A-1 was found which allegedly contained the record of sales of plot in Project Landmark City of M/s Bhatia Colonisers Pvt. Ltd.
4. In view of the Ld. AO and CIT(A), in terms of the said document and statement of Shri Ram Bhatia, actual cost of the said plot was Rs. 30,15,000/- (Kindly refer first para at page 2 of the assessment order).
5. However, neither the seized document not the statement or cross examination of Shri Ram Bhatia was provided to the appellant.
6. Based on the seized document and the statement, the Ld. AO alleged that the appellant had purchased the plot for Rs. 30,15,000/- instead of 16,20,000/- and termed the difference of Rs. 13,95,000/- (Rs. 30,15,000 – Rs. 16,20,000)as “on-money” paid by the appellant. Findings of The Ld. AO: Point 4.1 and 4.2 at page 4 and 5 of the order:
Findings of The Ld. CIT(A): Point 7 at page 14 of the order
Submission: A. No addition on the basis of document found from third party without any corroborative material: 1. The entire foundation of the current proceeding restson the document namely Page 1 of Annexure A-1allegedly found,from Party-11, during a search conducted u/s 132 of the Act on Shubham Group, Kota, of which Bhatia Colonisers, the seller of the plot, is a part. On perusal of the assessment order and appellate order, it is clear that the Ld. AO and the Ld. CIT(A) has solely relied on the alleged document namely Page 1 of Annexure A-1 to make/ confirm addition under the current case.
2. The Ld. AO in point 4.1 of page 4 of the assessment order stated that the seized document contains records of sale of plots in project ‘Landmark City’ of M/s Bhatia Colonizers Pvt. Ltd. during the F.Y. 2012-13. Further, it is also stated in point 4.2 of page 4 of the assessment order that in the seized document value of plot was Rs. 30,15,000/-, valued recorded in books is Rs. 16,20,000/- and accordingly the difference of Rs. 13,95,000/- (30,15,000 – 16,20,000) was paid in cash by the appellant to the seller.
3. In this regard, at the outset, it is to be noted that the seized document has neither provided to the appellant nor affixed in the assessment order, hence it is not clear what was written in the said document with regard to the appellant or the plot purchased by the appellant.Further, it is also not known from whom such document was seized as the Ld. AO has just referred ‘Party no. 11’ in the order without specifying his/her name.
4. Further, the Ld. AO has produced a table below point 4.1 at page 2 of the order allegedly containing record of sales of plots in project ‘Landmark City’. However, the appellant wants to highlight following deficiencies in the said table:
a) The table produced in the assessment order is prepared by the officials of Income Tax Department and not by the searched party which is evident from the content of the table for instance the columns of the table particularly column: Jurisdictional Assessing Officer. Further, since it is prepared by the department officials, authenticity of the same cannot be verified whether it reflects the same content as appearing in the seized document or not; b) PAN against the name of buyer: SAVITA GUPTA is written wrongly: AIYPG23364D instead of AIYPG2364D; c) What does the word ‘value’ in the column ‘value as per seized documents’ denotes. It is not evident whether this refers to the projected value, an indicative quotation, or merely a figure noted in response to an enquiry made by a prospective customer. d) Further, there is no mention of word ‘cash’ in the table. As the table is a direct reproduction of the contents of the seized document, the absence of the term ‘cash’therein implies that the original document too does not contain any explicit reference to cash transactions.In such a scenario, it is unclear on what e) Date of payment of alleged ‘on money’ is not mentioned. In case the date in the table was not mentioned since it was not mentioned in the seized document, then how the Ld. AO came to this conclusion that the alleged ‘on money’ was paid during the year under consideration. f) Additionally, it remains unclear how the Ld. AO arrived at the conclusion that the alleged payment was actually made by the appellant, in cash, particularly when the seized document—as reflected in the reproduced table—does not contain any reference to either the mode of payment (i.e., the word "cash") or the date of such payment. In the absence of these critical details, the inference that a cash payment was indeed made by the appellant is purely presumptive and unsupported by documentary evidence. All these above deficiencies in the table itself makes it unreliable to make addition of such huge amount.
5. Without prejudicial to anything stated above and without any admission, the appellant want to attract attention of the Hon’ble Bench to the contention of the the Ld. CIT(A) in point no. 7 at page 14 of the appellate order where he stated that “the onus lies on the appellant to prove that no additional amount was paid by getting confirmation from the seller and the document consideration may be higher or lower based on the guideline value of the property and stamp duty is collected only on the guideline value”. In this regard, the appellant humbly submits as under:
a) It is a settled law that once the assessee denies the transaction, the onus to prove the authenticity of a transaction is on the person affirming such a transaction. In the current case, the appellant has paid only Rs. 16,20,000/- that too through banking channel and completely denied to have paid any cash, over and above of Rs. 16,20,000, against purchase of plot. b) The Ld. CIT(A) assertion that the onus lies on the appellant to obtain a confirmation from the seller stating that no additional amount was paid is completely misplaced and unwarranted. There is no requirement to seek confirmation for an event that never took place. The registered sale deed, a legally recognized government document, clearly evidences that the appellant paid only Rs.16,20,000/- to the seller. When the total consideration is already transparently recorded in the registered deed, there is no basis for requiring further confirmation from the seller to prove that no additional payment was made Savita Gupta vs. ITO since the registered sale deed itself is a confirmation that no additional amount except as mentioned in the sale deed has ever been paid by the buyer to the seller. c) In support of the submission made in point (b) above, it is to be noted that the consideration of Rs. 16,20,000/- has been agreed as full and final consideration by M/s Bhatia Colonizers Pvt. Ltd. in a Registered Sale Deed executed before Sub-Registrar. Under the facts and circumstances, it is well known principle that no evidence other than executed by all parties (Supplementary Documents) is admissible once the document contains all the terms & conditions. Section 91 and 92 of the Indian Evidence Act, 1872 incorporate the aforesaid principle. According to the Section 91 of the said Act when terms of a contracts, grants or other dispositions of property has been reduced to the form of document then no evidence is permissible to be given in proof of any such term or such grant or disposition of the property except the document itself i.e. Sale Deed in the instant case or the secondary evidence thereof. According to Section 92 of 1872 Act, once the document is tendered in evidence and proved as per requirement of the Section 91 then no evidence of any oral agreement or statement would be admissible as between the parties to such instruments for the purposes of contradicting, varying, adding to or subtracting from its terms. In the instant case, Sale Deed has been tendered to the Sub-Registrar by the parties of the Deed as evidence and, therefore, it is absolute agreement in writing between the parties and, hence, no other material, if any can be used to add, alter, vary, subtracts the terms written in the Sale Deed. In this regard, we placed our reliance on the judgment given in the case of following judgement: � Paramjit Singh V/S. ITO, held as under:- “We have thoughtfully considered the submissions made by the learned counsel and are of the view that they do not warrant acceptance. There is a well-known principle that no oral evidence is admissible once the document contains all the terms and conditions. Section 91 and 92 of the Indian Evidence Act, 1872 (for brevity ‘the 1872 Act’) incorporate the aforesaid principle. According to section 91 of the Act when terms of a contracts, grants or other dispositions of property has been reduced to the form of a documents then no evidence is permissible to be given in proof of any such terms of such grant or disposition of the property except the document itself or the secondary evidence thereof. According to section 92 of the 1872 Act once the document is tendered in evidence and proved as per the requirements of section 91 then no evidence of any oral agreement or statement would be admissible as between the parties to any such instrument for the purposes of contradicting, varying, adding to or subtracting Savita Gupta vs. ITO from its terms. According to illustration ‘b’ to section 92 if there is absolute agreement in writing between the parties where one has to pay the other a principal sum by specified date then the oral agreement that the money was not to be paid till the specified date cannot be proved. Therefore, it follows that no oral agreement contradicting/varying the terms of a document could be offered. Once the aforesaid principal is clear then ostensible sale consideration disclosed in the sale deed dated 24-9-2002 (A.7) has to be accepted and it cannot be contradicted by adducing any oral evidence. Thereafter, the order of the Tribunal does not suffer from any legal infirmity in reaching to the conclusion that the amount shown in the registered sale deed was received by the vendors and deserves to be added to the gross income of the assessee-appellant.”
� Hon’ble Rajasthan High Court in the case of Commissioner of Income Tax vs. BhanwarlalMurwatiya and Ors., IT Appeal Nos. 68 & 69 of 2004 and 8 of 2005 dated 11.02.2018, held that:- “7. We have considered the submissions, and after going through the impugned orders, are of the view that all said and done, the question as to what was the price of the land at the relevant time, is a pure question of fact. Apart from the fact, that even if, it were to be assumed, that the price of the land was different than the one, recited in the sale deed, unless it is established on record by the Department, that as a matter of fact, the consideration, as alleged by the Department, did pass to the seller from the purchaser, it cannot be said, that the Department had any right to make any additions. It is a different story as to, to what extent and how, the statement of Suresh Kumar Soni, as given before different authorities, at different times, can be used against the assessee. More so, when none of the witnesses were examined before the AO, and the assessee did not have any opportunity to cross examine them.
8. In any case, the question as to whether the consideration of Rs. 61 lacs, or any other higher consideration than the one, mentioned in the sale deed, did pass from the assessee to the seller or not, does nonetheless remain a question of fact, and it is not shown by the Department, that any relevant material has been ignored, or misread by the learned CIT, or the learned Tribunal.”
d) Accordingly, the onus was on the Ld. AO to establish that the appellant had actually paid Rs. 30,15,000/- instead of Rs. 16,20,000/-by producing tangible corroborative material. However, no such corroborative material was ever brought on record in the current case and addition was made based on suspicion.
Savita Gupta vs. ITO 6. Further, time & again, similar issue came for judicial scrutiny, wherein addition has been deleted where reliance is placed solely on documents found from third-party documents or statement of third party, without bringing any material which proves that the assessee had in fact paid something over and above the purchased value in cash. In this regard, we rely on the following case law: � The Hon’ble ITAT, Jaipur in the case of Shri Mukut Behari Agarwal vs. DCIT, Circle 1, Jaipur, [ITA No. 1067/JP/2024] vide order dated 28.11.2024 held as under: “The Bench has taken note of the facts of the case and found that impugned addition was made solely on the basis of document obtained during the search conducted in case of a third party (Veto group). The entries found recorded in the ledger with one of the employee ‘Sh. Nandan Lal Alwani’ of Veto group was the only basis for making addition in the case of the assessee. Since the assessee had no connection with the said person, the assessee had specifically requested for cross examination of such person from whom the ledger was found (which was alleged to be pertaining to assessee). The request of assessee was brushed aside which is against the principle of natural justice. The Bench has taken into consideration the entire conspectus of the case from where it emerges out as under:- … Hence, it appears from the records that the department has failed to bring on record any adverse material which could prove that the assessee has paid an amount of Rs. 74,51,800/- to Vikas or to Shri Nandan Lal Alwani or to someone related to Veto Group wherein the handwriting of the assessee is found or the signatures of the assessee are found. In this view of the matter, the Ground Nos. 3 to 3.3 are allowed.”
� The Hon’ble Ahmedabad in the case of Jawaharbhai Atmaram Hathiwala Vs. ITO [ITA No. 2695/AHD/2006] vide order dated 09.10.2009 held as under: 11. We find that even at time of cross examination by the assessee the partner of M/s. Ohm Developers could not produce any evidence that the amount written in the seized document was in fact received from the assessee. In the instant case as the assessee has categorically denied to have made any payment in excess of Rs.101,687/- upto 31-3-99 in respect of purchase of flat in our considered view the said denial cannot be brushed aside without bringing any positive material on record. Merely recording made by a third party or statement of a third party cannot be treated as so sacrosanct so as to read as a positive material against the assessee. In view of the above in our considered view the CIT(A) was not justified in confirming Savita Gupta vs. ITO addition to the extent of Rs.3,81,414/- in the hands of the assessee. We therefore delete the addition of Rs.3,81,414/- and allow the ground of appeal of the assessee.
� Naren Premchand Nagda vs. ITO (ITA No.3265 (Mum) of 2015 dated 08-07- 2016. � CIT vs, Santlal (2020)(118 taxmann.com 432)(Delhi) � Asst CIT vs. Prabhat Oil Mills (1995)(52 TTJ 533)(Ahd) � ACIT vs. Anand Kumar Jain (2023)( (147 taxmann.com 124)(Mum – Trib)
Therefore, in view of the above submission and juris prudence, the addition cannot be made on the basis of documents found from the premises of a third party or statement unless such material or statement is corroborated by the independent evidence linking such material to the assessee.
B. No addition can be made on the basis of material found at third party: 1. Even otherwise also, without prejudicial to anything stated above and without any admission, it is well settled position that no addition can be made, in the hands of the assessee, on the basis of material found at the place of third person.
2. In the current case, reference can be made to point 4.1; page 4 of the assessment order where the Ld. AO has stated the source of addition made in the hands of the appellant. In the said point, the Ld. AO manifested that document was seized from the premises of Shubham Group. Therefore, it is an admitted fact that the addition of Rs. 13,95,000/- has been made on the basis of alleged document found, during the search, at the place of third party i.e. Shubham Group.
Further, it is also to be noted that the Ld. AO has also not made any averment in the order that any such material was found in possession of the appellant. Hence, the evidentiary value of this seized document, as far as appellant is concerned, could not be taken as conclusive given the fact that it was discovered during search of third party and not from the appellant. In this regard, we rely on the following case laws: � Hon’ble Karnataka High Court in the case of DCIT/ CIT(Appeals) Vs. Shri Balbir Singh and Sunil Kumar Sharma [W.A No. 830/2022] dated 22.01.2024, held as under: 50. In the instant case, the first issue raised by the Revenue is as regards the addition of income made by the Assessing Officer based on loose sheets found Savita Gupta vs. ITO in the house of a third party. However, we find that the Revenue has not established the said loose sheets to be considered as evidence in law by producing corroborative evidence supported by judgments and findings. Further, since the statement made by Shri K. Rajendran under Section 132 of the IT Act is later retracted by him by filing an affidavit, the statement given by him does not hold any evidentiary value.
Therefore, the addition deserves to be deleted since the addition has been made solely on the basis of material found at the place of third party.
C. No addition on the basis of Statement of third party: Shri Ram Bhatia without cross-examination: 1. The Ld. AO has also placed reliance on the statement of Shri Ram Bhatia for making addition in the current case (kindly refer first para at page 2 of the assessment order). However, the said statement had neither been provided to the appellant nor affixed in the assessment order. Hence, it is not clear who is Shri Ram Bhatia, what is his relation with Bhatia Colonizer Pvt. Ltd. or Shubham Group, whether he is actively involved in business activities of Shubham Group, when and under which section of the Act statement was recorded, whether such statement was retracted subsequently or notand what he has stated in his statement with regard to the plot purchased by the appellant.Therefore, in the absence of all these critical points, it is hard to rely on the statement of Shri Ram Bhatia.
Without prejudicial to anything stated above and without any admission, it is a well-established law that no addition can be made on the basis of statement of third party without providing the opportunity to the assessee to cross examine the person who gave the said statement. In the current case, no such opportunity to cross examine Shri Ram Bhatia was provided to the appellant.
3. Since the Ld. AO had relied on the said statement therefore, at least copy of statement and an opportunity to cross examine should have been provided to the appellant.
It is worth noting that cross-examination is also one of the important aspects of Principle of Natural Justice and in order to prevent injustice in a sense that evidence may not be read against a party until the same not been subjected to cross examination, it is essential to provide opportunity to cross examine the witness by the aggrieved person.
Savita Gupta vs. ITO 5. The Supreme court and other appellate authorities had time and again held that denial of cross examination of witnesses, whose statements were relied upon, amounts to violation of principles of Natural Justice and assessment made without providing opportunity to cross examine the witness is against the principle of natural justice and such additions should be rightfully deleted.
6. In view of the above submission, since no opportunity to cross examine Shri Ram Bhatia was given to the appellant, the assessment order passed is null and void. Our contention gain strength from the following case laws:
� Hon’ble Rajasthan High court in case of Commissioner of Income Tax vs. Smt. Sunita Dhadda, 406 ITR 220 dated 31.07.2017 has held that:- “7. Taking into consideration the observation made by the Tribunal regarding not allowing cross-examination of Mr. Thakkar from whose documents the amount is alleged to have been taken in the interest of the assessee.
8. In that view of the matter the finding recorded by the Tribunal is just and proper and issues is answered in favour of the of the assessee against the department.”
� Hon’ble Rajasthan High court in case of CIT vs. Supertech Diamond Tools Pvt. Ltd., ITA- 74/2012, dated 12.12.2013, held that:- “The reference to the statements made by some of the persons related with the said investing companies is of no effect because such statements could not have been utilized against the assessee Company when the assessee company had not been afforded an opportunity of confronting and cross-examining the persons concerned. There does not appear anything occurring in the statements of the persons relating with the assessee Company so as to provide a basis for the findings recorded by the AO.”
� In CIT v. Eastern Commercial Enterprises [1994] 210 ITR 103, the Hon'ble Calcutta High court held that "Cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross-examine the witness”.
� The Hon’ble Delhi High Court also in case CIT v. Pradeep Kumar Gupta [2008] 303 ITR 95 (Delhi) held that “where addition was sought to be made in reassessment proceedings only on the basis of statement, it was held that it was mandatory for the revenue to produce the proprietor for cross-examination by the � The Hon’ble High Court of Delhi in the case of CIT Vs Mr. S.M. Aggarwal (2007) 293 ITR 43 (Delhi) has held as under:
“11. In the present case the Assessing Officer has placed reliance on the statement of Smt. Sarla Aggarwal, daughter of the assessed while arriving at the conclusion that the entries belong to the transactions of the assessed. This statement made by Smt. Sarla Gupta, cannot be said to be relevant or admissible evidence against the assessed, since the assessed was not given any opportunity to cross examine her and even from the statement, no conclusion can be drawn that the entries made on the relevant page belongs to the assessed and represents his undisclosed income. It is also an admitted fact that the statement of the assessed was not recorded at any stage during the assessment proceedings. The only conclusion which can be drawn about the nature and contents of the document is that it is a dumb document and on the basis of the entry of nothings or figure etc. in this document, it cannot be concluded that this represents the undisclosed income of the assessee.”
� The Hon’ble Supreme Court in thecase of Andaman Timber Industries Vs CCE, Kolkata-II (Civil Appeal No. 4228 of 2006) wherein, it was held that not providing the opportunity of cross- examination to the assessee amounts to gross violation of the principles of natural justice and the same will render the order passed null and void. The relevant part of the said decision is extracted hereinbelow: “According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- Savita Gupta vs. ITO examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal”.
� Additionally, the Hon’ble Supreme Court in the case of State of Kerala Vs. K.T. Shaduli Grocery Dealer [(1977) 2 SCC 777] held that quasi-judicial authorities are bound by the principal of natural justice. The relevant para is re- produced below: “2. Now, the law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi- judicial functions and they are bound to observe principles of natural justice in reaching their conclusions. It is true, as pointed out by this Court in Dhakeswari Cotton Mills Ltd. v. CIT [AIR 1955 SC 154 : (1955) 1 SCR 941 : (1955) 27 ITR 126] that a taxing officer “is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law”, but that does not absolve him from the obligation to comply with the fundamental rules of justice which have come to be known in the jurisprudence of administrative law as principles of natural justice. It is, however, necessary to remember that the Savita Gupta vs. ITO rules of natural justice are not a constant: they are not absolute and rigid rules having universal application. It was pointed out by this Court in Suresh Koshy George v. University of Kerala [AIR 1969 SC 198 : (1969) 1 SCR 317 : (1969) 1 SCJ 543] that “the rules of natural justice are not embodied rules” and in the same case this Court approved the following observations from the judgment of Tucker, L.J. in Russel v. Duke of Norfolk [(1949) 1 All ER 109] :“There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.” Ground of Appeal
No.
4. That the appellantcraves your indulgence to add, amend or alter all or any groundsof appeal before or at the time of hearing.”
6. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee the case of the assessee is covered on the technical by the decision of our High Court in the case of Shayma Sunder Khandelwal Vs. ACIT 161 taxmann.com 255 (Rajasthan) and therefore, the appeal be decided based on that submission placed on record.
7. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). He also submitted that the recourse of section 148 of the Act is available with the revenue and thereby the notice is property to submit the counter reply on the submission filed by the assessee. The one week expired and there is no submission counter the submission of the assessee.
We have heard the rival contentions and perused the material placed on record. Vide ground no. 1 & 2 the assessee challenges the action of reopening of the assessment made in her case. The brief facts related to the dispute is that based on the seized documents which contains record of sale of plots during the search action u/s 132 of the IT Act was carried out at Shubham Group, Kota it was come to notice of the revenue that the actual cost of the plot no.E-13, Landmark City, Kota was Rs.30,15,000/- and the assessee recorded the same at Rs. 16,20,000/-. Thus, it was revealed that the assessee paid on money for Rs. 13,95,000/- paid in cash as "on money" and the assessee could not substantiate the source of the same. Based on that set of facts notice u/s. 148 of the Act was issued to the assessee on 28/04/2020 and served upon the assessee through ITBA System. Considering that set of facts the ld. AO completed the assessment by making the addition of Rs. 13,95,000/- u/s. 69 of the Act. When the matter taken up before the ld. CIT(A) he did not deal with the submission and ground on 148 taken up by the assessee before him. Before us the ld. based on the search document collected at third party the case of the assessee is required to be covered by the provision of section 153C of the Act as the specific provision is there to deal with such action and third party evidence. Thus, the action of the ld. AO to issue notice u/s. 148 of the Act is not correct and the proceeding u/s. 153C should have been initiated against the assessee. The issue is squared covered by the decision of our High Court in the case of Shayma Sunder Khandelwal Vs. ACIT 161 taxmann.com 255 (Rajasthan) wherein the our High Court held as under :
ISSUE:- 7. The question involved is of applicability of sections 153C and 148 of the Act in case of seizure of material in search or requisition of books-documents relating to assessee other than on whom the search was conducted or requisitioned made. History of special provisons:- 8. Before proceeding further it would be necessary to trace the history of the extant special provisions for assessment in the cases of search and requisition.
The Finance Act, 1995 inserted section 158B to 158BG, stipulating special procedure for assessment in cases where search were initiated after 30.06.1985 but before 1.1.1997. Prior to this, the assessment and reassessment in search cases were dealt under regular provisions of section 143, 147 and 148. The Assessing Officer (for short 'AO') under the special provisions had to assess only the undisclosed income with regard to the block period (which prior to 01.06.2001 was ten years and after 01.06.2001 was six years) preceding the financial year in which search was conducted, by passing a single order. The undisclosed income was to be taxed at special rate specified under section 113. The block assessment was independent of the regular assessment, resulting in parallel proceeding for assessment of regular income and the undisclosed income.
Finance Act, 2003 introduced section 153A to 153D, laying down the special procedure for assessment in cases of search or requisition made on or after 1st June, 2003. Under the new provisions following deviations were made from the earlier regime:- (i) the assessment /reassessment of 'total income' was to be made for each of relevant preceding year by passing separate order for each assessment year, instead of initiation of parallel proceedings for the undisclosed and regular income. The concept of assessment for broken period i.e. from 1st April to the (ii) date when the search was conducted, was no longer there. (iii) The normal rates of the tax applicable in each year were to be applied. (iv) The pending assessment or reassessment proceedings, on date of initiating of search or requisition, abated. In case of annulment of the assessment/reassessment under section 153A the abated assessment or reassessment revived.
(v) The provisions of section 153A to 153D brought within its ambit not only the cases of assessee on whom the search was conducted or requisition made but also assessee to whom the seized material related to or belonged to.
The Finance Act of 2021 amended section 153A restricting its applicablity to search and requisition made on or before 31.03.2021. Simultaneously for bringing assessment of search and requisition cases within ambit of section 148 new provision was substituted. The procedure to be followed before issuance of notice u/s 148 was laid down in section 148A. Both the provisions were effective from 1.4.2021.
As per the explanation 2 of new section 148, the AO shall be deemed to have information suggesting escapement of tax on income chargeable to tax (i) in case initiation of search or requisition made or survey conducted of the assessee on or after 1st April 2021; (ii) where AO with prior approval of prescribed authority is satisfied that material seized from other person, belongs to assessee or information contained in seized or requisitioned books of account documents from other person relates to assessee. The proviso to section 148A makes an exception for such cases for the applicability of procedure laid down for issuance of notice u/s 148. ANALYSIS:- 13. The heading of section 153A is Assessment in Case of Search or Requisition. Section 153A notwithstanding sections 139, 147, 148, 149, 151 and 153, obligates the AO to issue notices for furnishing income tax returns in a prescribed form and manner, for relevant year or years and for each of six assessment years preceding the assessment year relevant to previous years in which search is conducted (hereinafter referred to 'relevant preceding years') in cases of search and requisition. 14. As per first proviso total income is to be assessed or reassessed in respect of each of the assessment year. The second proviso provides that pending assessment or reassessment relating to the relevant preceding year on the date of initiation of search or requisition shall abate. Under the third proviso the Central Government may by Rules specify the class or classes of cases where the AO Savita Gupta vs. ITO shall not issue notice for assessment or reassessment for the relevant preceding years. The exception being abated assessment or reassessment as per proviso (2). Under clause (a) of fourth proviso no notice for assessment or reassessment shall be issued in case escaped assessment amount revealed by the books of account or documents or evidence in possession of the AO is less than Rs.50 Lakh in the relevant year or in aggregate of the relevant assessment years. Clause (b) provides that income or part of it referred to Clause (a) should have escaped the assessment for such year or years. Clause (c) provides that the search or requisition should have been initiated on or after 01.04.2017. Explanation (1) explains the relevant assessment year. Explanation (2) provides that the 'asset' in the fourth proviso shall be inclusive of immovable property, land or building or both, shares and securities, loans and advances, financial deposits in Bank. Sub-section (2) deals with eventuality of annulment of assessment or reassessment made under sub-Section (1), in appeal or other legal proceedings. In such event the abated assessment or reassessment shall stand revived with effect from the date of receipt of order of such annulment by the Commissioner. As per the proviso on setting aside of annulment order the revival shall cease.
Section 153B deals with time limit for completion of assessment under section 153A.
The heading of section 153C is Assessment of Income of any other person. Proceedings under section 153C are notwithstanding provisions of sections 139, 147, 148, 149, 151 & 153. On satisfaction of the AO dealing with seized money, bullion, jewellery or valuable article or thing, seized or requisitioned books of account or document (for brevity 'seized material') that information contained in it belongs to or relates to person other than on whom search was conducted, shall hand over the seized material to the AO having jurisdiction of such other person. The AO on receiving the seized material and being satisfied that it has bearing on the determination of total income of relevant preceding years shall issue notice to assess or reassess the 'total income' of relevant preceding years and proceed in accordance with section 153A.
Under first proviso the date of initiation of search or requisition in Sub-section (1) of section 153A shall be the date of receiving of seized material by the AO having jurisdiction over the other person. Under second proviso the Central Government can frame Rules for the class or classes of cases of other persons to whom AO is not required to issue notice for assessing or reassessing for the relevant preceding years. The exception being abated assessment or reassessment.
Under sub-section (2) in case of receipt of seized material after the due date for furnishing the income tax return of assessment year in which the search was conducted or requisition made, the AO having the jurisdiction on such other persons shall issue notice for assessing or reassessing total income in manner and for the assessments years provided under section 153A. Notice shall be issued even if no return was furnished by such persons and no notice was issued under section 142(1) or where the return was furnished but no notice under section Savita Gupta vs. ITO 143(2) was served and the limitation had expired or where the assessment or reassessment was made.
As per sub-section (3) the section 153C shall not apply to the search or requisition made on or after 01.04.2021.
Section 153D provides that no order of assessment or reassessment shall be passed by the Officer below the rank of Joint Commissioner except with the prior approval of the Joint Commissioner. Proviso precludes the application of section in cases where assessment or reassessment as per section 144BA (12) is to be passed with prior approval of the Principal Commissioner or Commissioner. CASE LAW:- 21. The Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) while dealing with the scope of assessment under section 153A dealt with the following question. Para 11 is quoted:- "11. The question which is posed for consideration in the present set of appeals is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search under section 132 or requisition under section 132A or not, i.e., whether any addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132 A of the Act, 1961 or not."
It was held that on a search or requisition of an assessee it is mandatory to issue notice under section 153A for filing returns in respect of relevant preceding years. The AO assumes jurisdiction to assess or reassess 'total income' of the relevant preceding years. The pending assessment and reassessment abate by operation of the provision of section 153A. The completed and unabated assessments could not be reopened in absence of an incriminating seized material relating to the concerned assessment years. The assessment and reassessment under section 153A has to be of the 'total income', taking into consideration the returned income (if return is filed), incriminating material result of search or requisition and other material. In case no incriminating material was found in search, the department can reopen completed/unabated assessment under sections 147 & 148 of the Act. The para-23 of the judgment is quoted:- "23.In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments /unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961.
Savita Gupta vs. ITO However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved." CONCLUSION:- 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 153D 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 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 Savita Gupta vs. ITO 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 153A 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 153C 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 returns for relevant preceding years and thereupon proceed to assessee or reassessee 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 requisitioned belonging or relatable to the person other than on whom search was conducted, section 153C is to be resorted to.
Before concluding, it would be fair to deal with the case law cited by both the parties.
Reliance of respondents on decision of M/s. M.R. Shah Logistics Pvt. Limited (supra) is of no avail. The issue of interplay of provisions of section 147/148 vis-a-vis section 153C in the case of seized material relating or belonging to the person other than on whom the search was conducted or requisition made was not the issue before the Supreme Court.
The Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra) while dealing with the provisions of section 153A held that in case of absence of incriminating material seized during the search, the department is not remediless for reassessing the unabated assessment on the basis of material received from the other sources and can proceed under section 148. The decision does not Savita Gupta vs. ITO support the contentions raised that section 148 is rendered redundant if section 153C is to be resorted to in the facts of the present case.
The Single Bench of this Court in the case of Vijay Kumar Mehta (supra) held that if the Department has chosen not to proceed under section 153C, no right is created to the petitioner for getting the notice under section 148 quashed. Moreover, learned Single Judge was not having the benefit of the decision of the Supreme Court in the case of Abhisar Buildwell (P.) Ltd. (supra). The appeal against the order was dismissed having rendered infructuous in view of the subsequent developments that the assessment order was passed.
The decision of the Madras High Court in the case of Saloni Prakash Kumar (supra) is of no help to the respondents. The High Court held that section 153C does not preclude issuance of notice under section 148. The field of applicability of two sections was not the issue before the Court.
The petitioner relied upon the decision of the Karnataka High Court in the case of Sri Dinakara Suvarna (supra). It would be relevant to quote Para-10: 10. Admittedly no proceedings were initiated under section 153C of the Act. Thus, there is patent non-application of mind. It is relevant to note that the author of the diary Smt. Soumya Shetty had passed away prior to the date of search. It was argued on behalf of the Revenue that Shri. Ashok Kumar Chowta had offered tax on lump-sum income.
Further reliance was placed upon the decision of the Bombay High Court in the case of M/s. Aditi Constructions (supra). The para-9 is quoted:- "9. We find that the jurisdictional conditions for invoking section 147-148 are not satisfied as there is no failure to disclose material facts fully and truly. It is not in dispute that by the letter dated 11th September 2015 (Exhibit H) the Petitioner have submitted all the particulars along with supporting documents to the Respondent No.1. Hence the reasons to believe and a presumption based on the statement of Shri Bhanwarlal Jain (a third party) in the course of a search, that the loans of the entities were bogus or accommodation entries was clearly dispelled. Moreover, the specific provisions of S. 153C would prevail over the general provisions of section 147 in the case of search on 3rd party."
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.
The first ground of challenge to initiation of proceedings under section 148 is being accepted and there is no need to dilate upon other grounds raised
for challenging the notice issued under section 148 of the Act.
42. It would be appropriate to mention that during the pendency of the writ petitions there was interim protection in favour of the petitioners.
43. The writ petitions are allowed accordingly.
Since it is not under dispute that there was a information based on the search wherein it was alleged that the there was some material collected have been applied as held by our High Court and respectfully following that finding we considered the ground no. 1 & 2 raised by the assessee and thereby the same are allowed.
Since we have allowed the appeal of the assessee on technical grounds, ground no. 3 raised becbecomesucative and is not required to be adjudicated. Ground no. 4 general does not require our finding.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 09/07/2025.
Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 09/07/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Savita Gupta, Kota izR;FkhZ@ The Respondent- ITO, Ward 2(2), Kota 2. vk;dj vk;qDr@ The ld CIT 3. 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 609/JP/2025) 6. vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत