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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
Per contra, the Ld. Departmental Representative [Ld. DR] fully supported the order of the Ld. Revenue Authorities. The Ld. DR also relied on the decision of the Hon’ble High Court of Madras in the case of Saloni Prakash Kumar vs. ITO [2023] 458 ITR 452 (Madras) wherein it was held that section 153C is only an enabling provision and does not preclude reopening U/s. 148A(b) of the Act. The Ld. DR therefore pleaded that the orders of the Ld. Revenue Authorities be upheld.
We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. In the instant case, the Ld. AO has relied upon the agreement of sale (unregistered) dated 6/1/2016 which was 8 seized by the search party. Relying on such information and the seized material, the Ld.AO initiated the proceedings U/s. 147 of the Act. Even though in the order of the Ld. AO, in para 5, the Ld. AO has mentioned about the material available on record for a belief that was formulated for reopening of proceedings U/s. 147 of the Act. However, no detailed discussion was found in the order of the Ld. AO regarding the material available on record for a belief that was formed enabling the Ld.AO warranting reopening of proceedings U/s. 147 of the Act. The Ld. AO has fully relied on the seized agreement of sale dated 6/1/2016. We find merit in the argument of the Ld. AR that section 153C of the Act overrides section 139, 147, 148 and 151 of the Act. The reliance placed by the Ld. AR in the case of Pr. CIT (Central) &Ors vs. Anand Kumar Jain (HUF) &Ors (supra) is of no assistance to the Ld. AR as the facts of that case are different from that of the instant case. However, the decision of the jurisdictional Coordinate Bench of the Tribunal at Visakhapatnam in the case of Smt. Samanthapudi Lavanya vs. ACIT and others (supra), wherein the Tribunal by relying on various High Court decisions has held that in the absence of any fresh information collected by the Ld. AO or no information has come to the notice of the Ld. AO in the normal course other than the information collected during
9 the course of search from the search person, the Ld. AO ought to have made the assessment U/s. 153C of the Act and not U/s. 147 of the Act. Further, in a recent decision, the Hon’ble High Court of Rajasthan in the case of Shyam Sunder Khandelwal vs. ACIT (supra) has held as under:
“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. 31. ……..
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 assess or reassess 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.”
The above decision has also considered the decision of the Hon’ble Madras High Court in the case of Saloni Prakash Kumar vs. ITO (supra) relied on by the Ld. DR. Further, the Ld. AR placed relied on the decision of the Hon’ble Supreme Court in the 10 case of Pr. CIT. vs. Abhisar Buildwell P. Ltd (supra) wherein the Hon’ble Supreme Court has held as under:
“35. 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 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.”
Following the above judicial pronouncements, we are of the considered view that the Ld. AO in the instant case ought to have resorted to make the assessment U/s. 153C of the Act whereby heavy reliance placed by the Ld. AO on the seized material. Further, the Ld. AO has not recorded about any information that has come to the notice of the Ld. AO and has solely relied on the seized documents from the premises of the searched person. We are therefore inclined to quash the assessment order as void-ab- initio and thereby allow the Ground No.2 raised by the assessee.
Grounds No. 3 and 4 raised by the assessee are on merits. Since the assessment order itself was quashed while adjudicating the Ground No.2 raised by the assessee in the foregoing paragraphs of this order, the adjudication of these grounds 11 becomes mere academic exercise. Therefore, these grounds are disposed of as infructuous.
In the result, appeal of the assessee is allowed. Pronounced in the open Court on 18th April, 2024.