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B.P.MUNDRA

Mundra House, 822-A, Shivaju Nagar, Civil Lines, jaipur-302006 9314501680, 9314501791


If any information belonging to ‎an assessee found during course of search at another party and Ld AO initiated ‎proceedings u/s 147/148 then the re-assessment proceedings passed u/s 148 ‎shall not stand and assessment framed by AO is null and void as the correct ‎course of initiation of proceedings is 153C and not u/s 147/148‎

B.P.Mundra > Income Tax > Cases Income tax > 147 > If any information belonging to ‎an assessee found during course of search at another party and Ld AO initiated ‎proceedings u/s 147/148 then the re-assessment proceedings passed u/s 148 ‎shall not stand and assessment framed by AO is null and void as the correct ‎course of initiation of proceedings is 153C and not u/s 147/148‎

admin November 16, 2019

147, 148, 153C, Pune Tribunal

Initiation of proceeding on third party for incriminating material

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PUNE TRIBUNAL on Oct 29, 2018 held that If any information belonging to ‎an assessee found during course of search at another party and Ld AO initiated ‎proceedings u/s 147/148 then the re-assessment proceedings passed u/s 148 ‎shall not stand and assessment framed by AO is null and void as the correct ‎course of initiation of proceedings is 153C and not u/s 147/148‎

complete order is as under:-‎
VIKRAM MUNISHWARLAL BAJAJ vs. INCOME TAX OFFICER
PUNE TRIBUNAL
ANIL CHATURVEDI, AM.‎
ITA No. 2552/PUN/2017‎
Oct 29, 2018‎
‎(2018) 54 CCH 0133 PuneTrib‎
Legislation Referred to
Section 139, 147, 148, 149, 151, 153‎
Case pertains to
Asst. Year 2005-06‎
Decision in favour of:‎ Assessee
It is seen that the re-opening was based on a search carried out at Marvel Group, ‎wherein documents pertaining to the assessee was found. AO had initiated re-‎assessment proceedings and had framed the assessment u/s 143(3) r/w s. 147. While ‎dealing with the similar issue, co-ordinate bench in the case of V.L. Khandge and others ‎has held that AO after receipt of information belonging to assessee that was found during ‎the course of search should have been initiated proceedings u/s 153C and not u/s ‎‎147/148. It was further held that in such a situation, the re-assessment proceedings ‎passed u/s 148 does not stand.‎
‎(Para 5)‎
Revenue has not pointed out any contrary binding decision in its support. Therefore, ‎following the decision of Pune Tribunal in the case of V.L. Khandge and others and ‎following the same reasoning hold that the re-assessment order passed u/s 148 in the ‎present case does not stand and thus, the assessment framed by the AO to be null and ‎void.‎
‎(Para 6)‎
V.L. Khandge and others in ITA No.1971 & 2057/PUN/2014, followed.‎
Conclusion
Where the provisions of section 153C of the Act are attracted in given set of facts and ‎the documents impounded during the course of search, then the proceedings have to be ‎initiated under section 153C of the Act as per prescribed procedure and no proceedings ‎can be initiated under section 147 / 148 of the Act.‎
In favour of
Assessee
Cases Referred to
Joshi Wadewale Hadapsar Vs. DCIT in ITA Nos.105 & 106/PUN/2016
Mrs. Vasundhara Shailesh Joshi Vs. DCIT in ITA Nos.95 & 96/PUN/2016‎
Counsel appeared:‎
M.R. Shirude for the Assessee.: Shabana Parveen for the Revenue
ANIL CHATURVEDI, AM.‎
‎1. This appeal filed by the assessee is emanating out of the order of Commissioner of ‎Income Tax (A) – 5, Pune dt.21.07.2017 for the assessment year 2005-06.‎
‎2. The relevant facts as culled out from the material on record are as under :-‎
‎2.1 Assessee is an individual and stated to be having income from other sources. ‎Assessee originally filed his return of income for A.Y. 2005-06 on 29.07.2005 declaring ‎total income of Rs.2,35,420/-. Thereafter, the case was re-opened by issuing notice u/s ‎‎148 of the Act dt.19.03.2012 and served on assessee on 21.03.2012. Thereafter, the ‎case was taken up for scrutiny and assessment was framed u/s 143(3) r.w.s. 147 of the ‎Act vide order dt.15.03.2013 and the total income was determined at Rs.9,00,420/-. ‎Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide ‎order dt.21.07.2017 (in appeal No.PN/CIT(A)-5/ITO-2(1), Pune/539/2013-14) dismissed ‎the appeal of assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal ‎before us and has raised the following grounds :‎
‎“1. In the fact, circumstances and position of law, learned CIT(A), erred in not annulling ‎the assessment framed u/s 143(3) r.w.s 148 of I.T. Act, 1961.‎
‎2. In the fact, circumstances and position of law, learned CIT(A), erred in confirming the ‎addition of Rs.6,65,000/- on account of alleged on money against purchase of flat.”‎
‎3. Before me, Ld.A.R. submitted that a search and seizure action u/s 132 of the Act was ‎carried out in the case of “Marvel Group”. One of the partner of Marvel Group in the ‎statement recorded u/s 132(4) of the Act had admitted that they have collected “on ‎money” from various flat purchasers and that amount was offered to tax by them. On ‎the basis of the details found during the course of action, it was noticed that assessee ‎had paid “on money” of Rs.6,65,000/-. The case was therefore re-opened u/s 148 of the ‎Act and in the assessment proceedings pursuant to re-opening, amount of Rs.6,65,000/- ‎was added u/s 69 of the Act. Aggrieved by the order of AO, assessee carried the matter ‎before Ld.CIT(A), wherein the assessee challenged the validity of the assessment framed ‎u/s 143(3) r.w.s. 147 of the Act and also challenged the addition made by the AO. ‎Ld.CIT(A) dismissed the appeal of the assessee by holding that notice issued u/s 148 of ‎the Act was justified and was as per law and that re-opening was validly initiated. On the ‎addition of Rs.6,65,000/-, Ld.CIT(A) upheld the order of AO. Aggrieved by the order of ‎Ld.CIT(A), assessee is now in appeal.‎
‎4. Before me, Ld.A.R. submitted that the addition has been made in the hands of ‎assessee on the basis of documents found from the search carried out at Marvel Group ‎and with which assessee has no connection and thereafter AO had recorded reasons for ‎re-opening for the assessment and issued notice of reopening the assessment u/s 148 of ‎the Act. Ld.A.R. submitted that the correct course of action was that the action should ‎have been initiated u/s 153C of the Act, as the proceedings were initiated on the basis of ‎the documents found during the course of search. He further submitted that where the ‎provisions of Sec.153C of the Act are attracted then the proceedings have to be initiated ‎u/s 153C of the Act as per the prescribed procedure and no proceedings should have ‎been initiated u/s 147/148 of the Act and for this proposition, he relied on the decision of ‎Pune Tribunal in the case of V.L. Khandge and others in ITA No.1971 and 2057/PUN/2014 ‎and order dt. 24.04.2018. He also placed on record the copy of the aforesaid decision. He ‎therefore submitted that since the proceedings u/s 147 / 148 of the Act were vitiated, the ‎assessment framed thereunder be set aside. Ld.D.R. on the other hand, took us through ‎the findings of the Ld.CIT(A) and supported the order of lower authorities.‎
‎5. I have heard the rival submissions and perused the material on record. The issue in the ‎present ground is with respect to the validity of the assessment framed u/s 143(3) r.w.s. ‎‎147 of the Act. It is an undisputed fact that the case of assessee was re-opened on the ‎basis of a document found during search and seizure action u/s 132 of the Act in the case ‎of “Marvel Group” wherein one of the partner had admitted to have collected ‘on money’ ‎from various flat purchasers. As per those details, it was noted that assessee had also ‎paid “on money” of Rs.6,65,000/-. Thus, it is seen that the re-opening was on the basis ‎of search carried out at Marvel Group, wherein the documents pertaining to the assessee ‎was found. AO had initiated re-assessment proceedings and had framed the assessment ‎u/s 143(3) r.w.s. 147 of the Act. It is assessee’s contention that AO should have ‎proceeded u/s 153C of the Act instead of Sec.147 / 148 of the Act. I find that identical ‎issue arose in the case of V.L. Khandge and others in ITA No.1971 & 2057/PUN/2014 and ‎others, wherein the Co-ordinate Bench of the Tribunal has held that AO after receipt of ‎information belonging to assessee that was found during the course of search should ‎have been initiated proceedings u/s 153C of the Act and not u/s 147/148 of the Act. It ‎was further held that in such a situation, the re-assessment proceedings passed u/s 148 ‎of the Act does not stand. The relevant observation of the Tribunal in the case of V.L. ‎Khandge and others (supra) read as under :‎
‎“8. The issue which arises before us is whether in such facts and circumstances of the ‎case, where the basis of making investigation and assessment thereafter in the hands of ‎assessee is on the basis of information unearthed during the course of search action on ‎the premises of Shri Ganesh Khandge on 12.02.2013, then whether proceedings are to be ‎initiated under section 148 or under section 153C of the Act. The perusal of provisions of ‎section 153C of the Act reflects that in case any document relating to any other person is ‎found during the course of search on a person, then the said document is to be ‎forwarded to the Assessing Officer in-charge of the person other than the person ‎searched. The proceedings have to be initiated against such person on the basis of such ‎document found and impounded. Section 153C of the Act very clearly provided that ‎where the conditions as mentioned in the said section prevail, then provisions of said ‎section have to be applied notwithstanding anything contained in sections 139, 147, 148, ‎‎149, 151 and 153 of the Act. The requirement of section 153C of the Act is the first ‎satisfaction of Assessing Officer that any money, bullion, jewellery or other valuable ‎article or thing or books of account or documents or assets belongs to a person other ‎than the person referred in section 153A of the Act, then the books of account or ‎documents or assets seized or requisitioned, shall be handed over to the Assessing ‎Officer having jurisdiction over such other person and that Assessing Officer shall ‎proceed against such other person and issue notice of assessment or re-assessment of ‎the income of other person in accordance with provisions of section 153A of the Act. The ‎Assessing Officer has to record satisfaction that books of account or assets seized or ‎requisitioned, have a bearing on determination of the total income of such other person. ‎The said provisions are notwithstanding anything contained in sections as mentioned ‎above including sections 147 / 148 of the Act. In other words, where the provisions of ‎section 153C of the Act are attracted in given set of facts and the documents impounded ‎during the course of search, then the proceedings have to be initiated under section 153C ‎of the Act as per prescribed procedure and no proceedings can be initiated under section ‎‎147 / 148 of the Act. The said proposition has been held by the Pune Bench of Tribunal in ‎the case of Joshi Wadewale Hadapsar Vs. DCIT in ITA Nos.105 & 106/PUN/2016, relating ‎to assessment years 2009-10 & 2010-11 with lead order in the case of Mrs. Vasundhara ‎Shailesh Joshi Vs. DCIT in ITA Nos.95 & 96/PUN/2016, relating to assessment years ‎‎2009-10 & 2010-11, vide consolidated order dated 27.03.2018. The relevant findings of ‎the Tribunal are as under:-‎
‎28. The first issue which arises is whether the assessment in such circumstances was to ‎be made under section 153C or 148 of the Act and connected issue is whether such an ‎issue of assessment being completed under a particular section was valid or not, can be ‎raised while deciding the issue of levy of penalty under section 271(1)(c) of the Act ‎against the income assessed in the hands of assessee. In this regard, the learned ‎Authorized Representative for the assessee has pointed out that the issue stands covered ‎by the ratio laid down in ITO Vs. Shri Shailendra B. Agrawal (supra) and in bunch of ‎appeals with lead order in ACIT Vs. Shamsundar Laxman Jagtap (supra). The relevant ‎provisions of the Act to which reference is being made is section 153C of the Act which ‎provides as under:-‎
‎“153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, ‎section 149, section 151 and section 153, where the Assessing Officer is satisfied that ‎any money, bullion, jewellery or other valuable article or thing or books of account or ‎documents seized or requisitioned belongs or belong to a person other than the person ‎referred to in section 153A, then the books of account or documents or assets seized or ‎requisitioned shall be handed over to the Assessing Officer having jurisdiction over such ‎other person and that Assessing Officer shall proceed against each such other person and ‎issue such other person notice and assess or reassess income of such other person in ‎accordance with the provisions of section 153A:‎
Provided that in case of such other person, the reference to the date of initiation of the ‎search under section 132 or making of requisition under section 132A in the second ‎proviso to sub-section (1) of section 153A shall be construed as reference to the date of ‎receiving the books of account or documents or assets seized or requisitioned by the ‎Assessing Officer having jurisdiction over such other person …..‎
‎(2) Where books of account or documents or assets seized or requisitioned as referred ‎to in sub-section (1) has or have been received by the Assessing Officer having ‎jurisdiction over such other person after the due date for furnishing the return of income ‎for the assessment year relevant to the previous year in which search is conducted ‎under section 132 or requisition is made under section 132A and in respect of such ‎assessment year—‎
‎(a) no return of income has been furnished by such other person and no notice under ‎sub-section (1) of section 142 has been issued to him, or
‎(b) a return of income has been furnished by such other person but no notice under sub-‎section (2) of section 143 has been served and limitation of serving the notice under ‎sub-section (2) of section 143 has expired, or
‎(c) assessment or reassessment, if any, has been made, before the date of receiving the ‎books of account or documents or assets seized or requisitioned by the Assessing Officer ‎having jurisdiction over such other person, such Assessing Officer shall issue the notice ‎and assess or reassess total income of such other person of such assessment year in the ‎manner provided in section 153A.‎
‎29. Section 153C of the Act very clearly lays down that notwithstanding anything ‎contained in sections 139, 147, 148, 149, 151 and 153 of the Act, where the Assessing ‎Officer is satisfied that any money, bullion, jewellery or other valuable article or thing ‎seized or requisitioned, belongs to; or any books of account or documents, seized or ‎requisitioned, pertains or pertain to, or any information contained therein, relates to, a ‎person other than the person referred to in section 153A, then, such books of account or ‎documents or assets, seized or requisitioned shall be handed over to the Assessing ‎Officer having jurisdiction over such other person and the Assessing Officer shall proceed ‎against such other person and issue notice and assess or reassess the income of other ‎person in accordance with provisions of section 153A of the Act. Section thus, very ‎clearly lays down the procedure to be followed when during the course of search on a ‎person any money, bullion, jewellery or valuable article or thing, or any books of ‎account or documents or any information contained therein pertains to or relate / relates ‎to other than the person searched; then first, all the said assets or information is to be ‎handed over to the Assessing Officer, who is incharge of the person other than the ‎person searched and then the Assessing Officer has to proceed and determine the ‎income of the other person in accordance with provisions of section 153C of the Act. The ‎said section very clearly also lays down that the provisions of section 153C of the Act ‎are to be applied notwithstanding anything contained in sections 139, 147, 148, 151 and ‎‎153 of the Act. Applying the said provisions to the facts of the present case, wherein ‎certain documents were found during the course of search at the residence of partners of ‎assessee firm on the basis of which, additional income was to be assessed in the hands ‎of partnership firm i.e. one of the assessees before us, then for making aforesaid ‎addition, recourse which was open to the Assessing Officer was to initiate proceedings ‎under section 153C of the Act. Where the provisions of said section are to be applied, ‎then no proceedings can be initiated under section 147, 148, 151 and 153 of the Act. ‎Accordingly, we hold that when during the course of search under section 132 of the Act ‎at the residence of Mrs. Vasundhara S. Joshi and Shri Shailesh Joshi, loose paper bundle ‎Nos.6, 7, 8 and 9 were found, which depicted the receipts and expenditure relating to ‎different outlets being run under the partnership firms and the additional income was ‎also offered by the persons searched on behalf of partnership firms, in which he was ‎partner, on the basis of such documents found during the course of search, then for ‎making addition in the hands of partners, provisions of section 153C of the Act are ‎attracted. Once the said provisions are so attracted, then there is no question of ‎initiating any proceedings under section 147 / 148 of the Act. Accordingly, we hold that ‎proceedings initiated under section 147 / 148 of the Act are thus, not correctly initiated.‎
‎9. The issue raised in the present appeal is squarely covered by the issue before the ‎Tribunal in Joshi Wadewale Hadapsar Vs. DCIT (supra) and following the same parity of ‎reasoning, we hold that re-assessment proceedings initiated against the assessee under ‎section 147 / 148 of the Act are not warranted. The Assessing Officer after receipt of ‎information belonging to the assessee should have invoked provisions of section 153C of ‎the Act and not section 147/148 of the Act. Accordingly, we hold so. Consequently, ‎reassessment order passed under section 148 of the Act does not stand. The Assessing ‎Officer is thus, directed to cancel the same. Consequently, the additional ground of ‎appeal raised by the assessee is allowed and we hold that assessment framed by the ‎Assessing Officer is null and void. Consequently, the issue raised on merits by the ‎assessee and the Revenue becomes academic in nature and the same are dismissed.”‎
‎6. Before me, Revenue has not pointed out any contrary binding decision in its support. I ‎therefore following the decision of Pune Tribunal in the case of V.L. Khandge and others ‎‎(supra) and following the same reasoning hold that the re-assessment order passed u/s ‎‎148 of the Act in the present case does not stand and therefore the assessment framed ‎by the AO to be null and void. Since I have held herein that the assessment framed by ‎the AO u/s 143(3) r.w.s. 147 of the Act to be null and void, the issues raised on merits ‎have become academic in nature and therefore not adjudicated Thus, the grounds of ‎assessee are allowed.‎
‎7. In the result, the appeal of the assessee is allowed.‎
Order pronounced on the 29th day of October, 2018.‎

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