147, 148, 153C, Pune Tribunal
121 total views
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.