Kashyap Kanaiyalal Mehta Vs DCIT (ITAT Mumbai)
The ITAT Mumbai quashed reassessment proceedings holding that once a search under Section 132 is conducted, the Assessing Officer must proceed under Section 153A and cannot invoke Section 147.
In this case, the AO reopened the assessment based on alleged bogus LTCG from penny stocks using investigation material that emerged from search proceedings. However, the Tribunal noted that the very basis of reopening was search-related information, thereby triggering the special provisions of Section 153A.
It was held that:
- Reassessment proceedings pending on the date of search automatically abate
- AO must complete assessment under Section 153A (special provision)
- Resorting to Section 147 (general provision) is legally impermissible
Further, the Tribunal reiterated that jurisdictional defects cannot be cured, and any assessment passed without proper jurisdiction is void ab initio. It also observed additional jurisdictional lapses such as:
- No valid order under Section 127 for transfer of jurisdiction
- No proper assumption of jurisdiction by the AO
Since the foundation itself (jurisdiction) was invalid, all additions including bogus LTCG and commission were rendered academic and not adjudicated.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present bunch of appeals has been filed by the assessee against the appellate orders passed by the learned Commissioner of Income Tax (Appeals)-52, Mumbai for Assessment Years 2011-12, 2012-13 and 2014-15 to 2018-19, whereby the reassessment orders passed by the Assessing Officer under section 143(3) read with section 147 for the AY 2011-12 and u/s 153A r.ws. 143(3) for the later Assessment years 2012-13, 2014-15 to 2017-18 and u/s 143(3) for the AY 2018-19 of the Income Tax Act, 1961 have been upheld. Since common issues permeate through all these appeals and the factual matrix giving rise to the dispute is substantially identical, these appeals were heard together and are being disposed of by way of this consolidated order. For the sake of convenience, the facts as emanating from AY 2012-13 are taken as the lead year for the assessments made u/s 153A and for the AY 2011-12, separate findings rendered therein shall apply mutatis mutandis to the remaining years as well.
