Brijesh Vs ITO (ITAT Agra)
Summary: ITAT Agra considered a group of appeals arising from the same search operation concerning assessment years 2018-19, 2019-20 and 2020-21. The common jurisdictional issue was whether the Assessing Officer could initiate reassessment proceedings under section 147 when the information forming the basis of reassessment emanated from material seized during a search on a third party and consequently attracted the special assessment mechanism under section 153C. A search and seizure operation was conducted on P N Group, Guna on 09.01.2020. According to the Revenue, seized documents and subsequent enquiries indicated that cash was deposited in the assessee’s bank account and immediately transferred to Shri Vinod Rathore of P N Group as an unsecured loan of Rs.20,00,000. Proceedings were initiated under section 148A, followed by notice under section 148, and reassessment was ultimately completed under section 147 read with section 144B by making an addition of Rs.20,00,000 as unexplained investment under section 69.
The Tribunal observed that the reassessment proceedings were initiated pursuant to the search conducted on P N Group and on the basis of documents pertaining or relating to the assessee found during that search. It therefore held that the proper statutory course available to the Revenue was to proceed under section 153C rather than section 147. In reaching this conclusion, the Tribunal followed Paras Chandreshbhai Koticha & Ors Vs ITO (Gujarat High Court), which examined the interplay between sections 147/148 and the special search assessment provisions under sections 153A and 153C. The Gujarat High Court had held, inter alia, that where incriminating material concerning an “other person” is found in the course of search, the statutory mechanism under section 153C must be followed and the general reassessment provisions cannot be used on the same search material merely because the statutory requirements of section 153C were not followed. The judgment also discussed the Supreme Court ruling in Abhisar Buildwell (P.) Ltd. and several High Court authorities concerning the relationship between search assessments and reassessment proceedings. Respectfully following the Gujarat High Court ruling, ITAT Agra held that the Assessing Officer’s assumption of jurisdiction under section 147 was flawed and quashed the reassessment proceedings. Consequently, all remaining factual and legal grounds became academic and were left open. All the assessee’s appeals were allowed.
