DCIT Vs D. K. Shivakumar (ITAT Bangalore)
Search Material Means 153C, Not 148: Bangalore ITAT Backs Assessee- When Seized Documents Exist, Reassessment u/s 147 Is Jurisdictionally Void-
Bangalore ITAT “B” Bench, in DCIT Vs Shri D.K. Shivakumar (ITA Nos. 45, 46, 47 & 48/Bang/2020 for AYs 2007-08 to 2010-11 & ITA No. 205/Bang/2022 for AY 2006-07; order dated 31.01.2025), upheld the orders of CIT(A) quashing reassessments initiated u/s 147/148 where incriminating material was found during search proceedings of third parties.
Searches u/s 132 were conducted in the cases of Davanam Group (02.09.2010) & Sobha Developers (10.10.2013), during which documents evidencing alleged payment of “premium” for purchase of shops at Madiwala Commercial Plaza were seized. Relying entirely on such seized material, AO reopened completed assessments u/s 147 & made additions u/s 69, instead of invoking the special search regime applicable to “other persons”.
Tribunal held that once seized material relating to Assessee is found in a search, jurisdiction must necessarily be assumed u/s 153C r.w.s. 153A, which contains a non-obstante clause overriding sections 147 & 148. Where the time-limit for initiating proceedings u/s 153C had not expired, AO could not bypass the statutory scheme by resorting to reassessment.
Placing reliance on ITO Vs Vikram Sujitkumar Bhatia (SC), Tribunal reiterated that the 2015 amendment to section 153C is retrospective, being by way of substitution, and applies even to searches conducted prior to 01.06.2015. It was further observed that Revenue cannot rely on pre-amendment interpretations or earlier HC rulings now overruled by the Supreme Court.
Distinguishing Abhisar Buildwell (SC), Tribunal clarified that reassessment u/s 147 may survive only where no incriminating material is found in search, which was not the case here. Since the very foundation of reopening was seized material, proceedings u/s 147/148 were held void ab initio. Consequently, Revenue’s appeals were dismissed & assessee’s appeal for AY 2006-07 was allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
