Prasad Shet Vs DCIT (ITAT Bangalore)
Wrong Section, Wrong Assessment: Bangalore ITAT Annuls Section 143(3) Order Passed After Search
The Bangalore ITAT quashed an assessment where the Assessing Officer, despite a search under section 132, proceeded to complete the assessment under section 143(3) and made an addition of ₹37.49 lakh under section 69A towards unexplained cash. The Tribunal held that once a search is conducted, the assessment years falling within the prescribed search period must be dealt with under the special reassessment mechanism of sections 147/148, after complying with the statutory requirements and approvals contemplated therein.
Relying on the Delhi Tribunal decisions in Montage Enterprises Pvt. Ltd. and Jamna Das Nikkamal Jain Saraf Pvt. Ltd., the Tribunal observed that the post-Finance Act, 2021 scheme treats search cases differently and that the Assessing Officer cannot continue with the normal scrutiny route under section 143(3) when search-triggered provisions are attracted. The Tribunal emphasized the principle that a special provision overrides a general provision (generalia specialibus non derogant) and held that the assessment should have been framed under the search-related reassessment framework rather than the regular scrutiny provisions.
Accordingly, the assessment order passed under section 143(3) was held to be without jurisdiction and unsustainable in law, leading to its quashing. Since the assessee succeeded on this preliminary legal issue, the Tribunal did not examine the additions on merits and treated those grounds as infructuous. The appeal was thus partly allowed in favour of the assessee.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
