Viru Textile Mills Pvt. Ltd. Vs ITO (ITAT Ahmedabad)
Where reopening is based solely on incriminating material seized during search on a third party, the Revenue must proceed under section 153C and cannot bypass the special search assessment code by invoking sections 147/148.
In Viru Textile Mills Pvt. Ltd. Vs ITO, the ITAT Ahmedabad considered reassessment proceedings initiated under Sections 147/148 for AYs 2016-17 and 2017-18 based on material seized during a search conducted on the Sanjay Tibrewal Group. The assessee challenged the reopening on multiple legal and factual grounds, including that the Assessing Officer should have proceeded under Section 153C instead of Sections 147/148 because the alleged incriminating material belonged to a third-party search case. The Tribunal relied on the Gujarat High Court decision in Paras Chandreshbhai Koticha and held that where reassessment is based solely on search material seized from a third party, proceedings must be initiated under Section 153C after recording the mandatory satisfaction note. Since no satisfaction note was recorded and no independent post-search material existed, the Tribunal held that the Assessing Officer could not bypass Section 153C and invoke Sections 147/148. Accordingly, the reassessment orders passed under Section 147 read with Section 144B for both assessment years were held to be without jurisdiction, void ab initio, and quashed. Other legal and factual issues were treated as academic after quashing the reassessment proceedings.
