Ashok Kumar Palresha Vs DCIT (ITAT Mumbai)
ITAT Mumbai allowed the appeal of Ashok Kumar Palresha for Assessment Year 2022-23 by holding that an assessment completed under section 143(3) after a search under section 132, without issuance of the mandatory jurisdictional notice under section 148, was bad in law and without jurisdiction. The assessee had filed his return of income on 03.11.2022 declaring total income of ₹1,17,49,740. A search and seizure action was subsequently conducted on 31.01.2023 in the case of the Cipla Group and connected persons, including the assessee. During search, cash of ₹4,08,000 and jewellery weighing 4,372.97 grams valued at ₹2,32,49,991 were found. The Assessing Officer thereafter selected the return for scrutiny by issuing notice under section 143(2), without issuing any notice under section 148, and completed assessment under section 143(3) on 25.06.2024. Cash and jewellery aggregating to ₹2,36,57,991 were treated as unexplained money/assets under section 69A. In appeal, the CIT(A) accepted the explanation relating to jewellery after considering wealth-tax returns, earlier search records, assessment proceedings, jewellery previously released by the Department and CBDT Instruction No. 1916, and consequently deleted the addition of ₹2,32,49,991. However, the cash addition of ₹4,08,000 was sustained.
Before the Tribunal, the assessee raised additional grounds challenging the jurisdiction of the Assessing Officer. The contention was that once a search under section 132 had taken place on 31.01.2023, the assessment for AY 2022-23 could not be initiated merely through section 143(2). Since the search was initiated after 01.04.2021 but before 01.09.2024, the statutory regime introduced by the Finance Act, 2021 governed the case. The Tribunal examined sections 147, 148 and Explanation 2 to section 148 and held that Parliament had shifted search-related assessments during this intermediate period into the reassessment framework. Explanation 2 created a statutory fiction under which initiation of a search under section 132 resulted in the Assessing Officer being deemed to possess information suggesting that income chargeable to tax had escaped assessment. Consequently, the search was not merely information that the Assessing Officer could choose to use either in ordinary scrutiny proceedings or reassessment proceedings. The statutory consequence attached to the search required jurisdiction to be assumed in the manner prescribed under sections 147 and 148. .
