SHRI NAVEEN KUMAR DHUNDASHI,SIRSI vs. INCOME TAX OFFICER WARD-1, SIRSI

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ITA 1976/BANG/2017Status: DisposedITAT Bangalore13 April 2018AY 2010-113 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) had not decided the crucial issue of the validity of the reassessment proceedings based on the third-party search material. Therefore, the matter was set aside and restored to the CIT(A) for a fresh decision on this specific aspect.

What were the facts?

The assessee challenged the reassessment proceedings initiated under Section 147/148 of the Income Tax Act. The assessee argued that the reopening was based on search material from a third party, and therefore, proceedings under Section 153C should have been initiated instead.

What were the issues?

Whether reassessment proceedings initiated under Section 147/148 are valid when based on incriminating material found during a search of a third party, or if Section 153C should have been invoked.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 153C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE

Before: SHRI ARUN KUMAR GARODIA

For Appellant: Smt. Preethi, Advocate
For Respondent: Shri Guruprasad, Addl. CIT (DR)
Hearing: 11.04.2018Pronounced: 13.04.2018

O R D E R Per Shri A.K. Garodia, Accountant Member Thisappeal is filed by the assessee which is directed against the order ofld. CIT(A), Hubli dated 28.07.2017 for Assessment Year 2010-11.

2.

The grounds raised

by the assessee are as under. “1. The order of the Hon'ble Commissioner of Income Tax (Appeals) is opposed to law and facts of the case.

2. The Hon'ble Commissioner of Income Tax (Appeals) ought to have held that the re-assessment proceedings initiated u/s 147 and 148 of the Act are ab initio void.

3. The Hon'ble Commissioner of Income Tax (Appeals) ought to have held that the assumption of jurisdiction under Section 147 and 148 of the Act are bad in law.

4. The Hon'ble Commissioner of Income Tax (Appeals) ought to have held that the impugned order of assessment is passed in violation of the principles of natural justice.

5. The Hon'ble Commissioner of Income Tax (Appeals) ought to have held appreciated that the Assessing Officer is obliged to provide the documents/statement on the basis of which he proceeded to make additions to the returned income.

6.

The Hon'ble Commissioner of Income Tax (Appeals) erred in upholding the additions made in a sum of Rs.11,15,400/- placing reliance on certain statements given by the persons not connected with the appellant and the documents found during the course of the search of the third party.

7.

The appellant craves for leave to add to, delete from or amend the grounds of appeal.”

3. At the very outset, it was submitted by ld. AR of assessee that as per ground nos. 2 and 3 raised before CIT (A), this was the issue raised by assessee before CIT (A) that the initiation of proceedings u/s. 147 of IT Act is bad in law because the AO had no jurisdiction to issue notice u/s. 148 of IT Act. It was submitted by ld. AR of assessee that this issue was not decided by CIT(A) because this was the main objection of the assessee that in the present case, the reopening is on the basis of search carried out in the case of RNS Infrastructure Ltd., group Bangalore on 16.02.2012 and it is alleged that some incriminating material was found in the course of that search relating to the present assessee but even if it is so then also, action might have been taken as per law u/s. 153C of IT Act but not u/s. 147/148 of IT Act. Since the action was taken u/s. 147/148, such reopening is bad in law but there is no decision of CIT (A) on this aspect and therefore, it should be held that reopening is bad in law.

4.

At this juncture, it was pointed out by the bench if this is the claim of the assessee that the relevant aspect about validity of assessment proceedings was not decided by CIT (A) then the matter has to go back to the file of CIT (A) for decision on that aspect. In reply, both sides agreed to this proposition put forward by the bench. Hence I set aside the order of CIT (A) and restore the matter back to the file of CIT (A) for fresh decision with the direction that he should decide this aspect of the matter as to whether the reopening is valid or not on the basis of this allegation that some incriminating material was found in the case of search conducted in the case of a third party. He has to give clear finding as to whether the reopening is on the basis of incriminating material found in the course of search in case of a third party and if that is so then whether the reopening is valid or action should have been taken by the AO u/s. 153C of IT Act as per law. Needless to say, adequate opportunity of being

heard should be provided to both sides and if required, the CIT (A) can obtain remand report from the AO. In view of this decision, no adjudication is called for regarding the merit of the case at the present stage. Hence I do not make any comment on the merit of the case.

5.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.

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