Parshwa Investment Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that where the entire foundation of reopening solely based on material found during the search of another person, the appropriate course of action is to proceed under Section 153C, and not under Section 147. Accordingly, reassessment proceedings u/s. 147 quashed.
Facts- In the course of reassessment, the Assessing Officer noted that the assessee had received unsecured loans aggregating ₹71,52,27,967/- from four entities and concluded, relying upon the search material and statements, that a sum of ₹7,15,22,797/- constituted unexplained cash credit u/s. 68. Additionally, interest expenditure amounting to ₹1,90,68,140/-was disallowed as unexplained expenditure u/s. 69C of the Act. CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Bombay High Court in Sejal Jewellery v. Union of India held in no uncertain terms that where the Revenue proceeds against an assessee based solely on material found during the search of another person, recourse must be had to Sections 153A/153C, and not Sections 147/148.
Held that the Assessing Officer erred in invoking jurisdiction under Section 147 of the Act when the correct legal recourse was under Section 153C of the Act. The statutory scheme does not admit of an alternative pathway where the pre-conditions of Section 153C are satisfied. Consequently, the entire reassessment proceedings initiated by issuance of notice under Section 148, culminating in the reassessment order under Section 147, are rendered void-ab-initio and are liable to be quashed for want of jurisdiction. Accordingly, the additional ground raised by the assessee is allowed. The reassessment proceedings for A.Y. 2018-19 are hereby quashed.
