S F Realty Ventures Private Limited Vs Assessing Officer (ITAT Mumbai)
Search-Based Information Requires Section 153C Route: ITAT Quashes Reassessment under Section 147
The Mumbai ITAT held that where the entire foundation of the reassessment is incriminating material seized during a search on a third party, the Assessing Officer cannot bypass the special machinery provisions of section 153C by invoking the general reassessment provisions under sections 147/148. In the present case, the reasons recorded for reopening were based exclusively on documents seized during the search conducted on the MAAD and AMEYA Groups, coupled with the satisfaction note forwarded by the jurisdictional Assessing Officer of the searched person alleging cash transactions of ₹1.50 crore involving the assessee. The Tribunal observed that the Assessing Officer himself had relied solely on the seized material while recording reasons to believe, making the search provisions directly applicable.
The Tribunal noted the divergence of judicial opinion, with the Revenue relying on the Delhi High Court decision in PCIT v. Naveen Kumar Gupta, while the assessee relied upon the Bombay High Court’s decision in Sejal Jewellery v. UOI and the Mumbai Bench decision in DCIT v. Ghanshyam Rashiklal Shah. Since the case fell within the territorial jurisdiction of the Bombay High Court, the Tribunal held itself bound by the ratio of Sejal Jewellery, which gives primacy to the special assessment mechanism under sections 153A/153C where proceedings are founded on search material. Accordingly, it held that the reassessment initiated under section 147 was without jurisdiction, quashed the reassessment proceedings, and allowed the assessee’s appeal without examining the merits of the addition under section 69C.
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