DCIT Vs Mani Ram Balwant Rai HUF Civil Lines (ITAT Chandigarh)
ITAT Chandigarh Quashes Sec 143(3) Assessment in Search Case – AO Must Proceed Under Sec 148; Revenue Appeal Dismissed
In DCIT vs Mani Ram Balwant Rai HUF (AY 2022-23), the ITAT Chandigarh dismissed the Revenue’s appeal and allowed the assessee’s cross-objection, holding that the assessment framed u/s 143(3) after a search was legally unsustainable. A search u/s 132 was conducted on 24.11.2022, yet the AO completed assessment under the regular scrutiny provision instead of invoking the special reassessment framework applicable to post-search cases.
The Tribunal noted that once search material exists, proceedings must be initiated under the new reassessment regime (sec 148 r.w.s. 143(3)), as explained in coordinate bench decisions like Jamnadas Nikkamal Jain and Aman Batra. The ITAT emphasized that special provisions override general assessment provisions and parallel proceedings u/s 143(3) cannot continue in such circumstances.
Further, the Tribunal observed that additions based on digital reports, WhatsApp chats and extrapolation lacked corroborative evidence, and CIT(A)’s relief on issues like alleged unaccounted purchases and gross-profit estimation was justified. Since the jurisdictional defect itself vitiated the assessment, the Revenue’s appeal was dismissed and the assessee’s cross-objection was allowed
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
