Abharan Jewellers Vs ACIT (Karnataka High Court)
Abharan Jewellers, a partnership firm, challenged the reassessment proceedings initiated u/s 147 r.w.s 148 for A.Y. 2013-14. AO had issued notice dated 01-08-2016 u/s 148 & completed assessment u/s 143(3) r.w.s 147 on 29-12-2017, raising demand & initiating penalty. Assessee contended that the reopening was entirely founded on material seized during a search on a third party, & therefore, the only proper course available to the Revenue was to invoke the special procedure prescribed u/s 153C & not the general provision of s.147.
Assessee relied upon the coordinate Bench decision in W.P. No. 8577/2018 dated 29-10-2024 (same group case), while the Department did not dispute that the issue stood covered by that ruling.
Justice Nagaprasanna noted that the coordinate Bench had already examined identical facts & held that when the Revenue seeks to reopen an assessment based solely on documents or evidence seized during search on another person, the proceedings must be under s.153C, since s.153A & 153C-both beginning with non-obstante clauses overriding ss.139, 147, 148, 149 & 151-constitute a special code for search-based assessments.
The Court endorsed the principle laid down in Dinakara Suvarna v. DCIT (ITA 16/2015) & the Rajasthan HC ruling in Shyam Sundar Khandelwal v. ACIT [2024] 161 Taxmann.com 255 (Raj.), that when incriminating material is seized from another person’s premises, the AO must follow s.153C procedure & cannot resort to s.147, as the latter stands overridden by the special provisions.
