Ashok Commercial Enterprises v. ACIT (2023)459 ITR 100 /154 144 / 334 CTR 757 (Bom) (HC) www.itatonline .org .

S. 153C: Assessment – Income of any other person – Search- Business of financing- Loan not repaid- Treated as bad-debts- Search on the premises of debtors- Subsequently, notice issued to- Assessing Officer is not justified in assuming jurisdiction where assessment has not been abated where no incriminating material was found- Best judgement assessment- Notice under section 143(2) is mandatory -Reassessment – Change of opinion- Issues dealt with during original assessment-Full and true disclosure of information-No new tangible material – Reassessment is bad in law- No failure to comply with notice under section. 142 – Best judgement assessment is bad in law – CBDT Circular -Binding on Revenue – Assessment order issued without bearing Document Identification Number (DIN)- Order is invalid. [S.36(1)(vii) 119, 132,133A, 143(2)(2) 144, 147 , 148, 153A, Art. 226]

The Petitioner is partnership firm engaged in the business of financing. The Assessing Officer .had issued notice to petitioner for furnishing details regarding huge bad debts claimed as deduction by the assessee. The assessee, filed a reply explaining the bad debts. The Assessing Officer  was   satisfied with the reply and passed an order allowing the deduction. Subsequently, a search was conducted in the premises of the creditor which resulted in a survey proceeding under section 133A of the Act in the premises of the assessee to verify the ledger books. The Hon’ble Bombay High court held that Assessing officer cannot assume jurisdiction under section 153A/ 153C of the Income tax Act, 1961 where assessment proceedings have not been abated and no incriminating material have been found against assessee.  The Court held that provisions of 153C of the Income tax Act, 1961, cannot override the condition precedent required to reassess income. The  court held that reassessment was nothing but change in review as different view was being taken without any new tangible material being found. Further, the court observed that there was no failure of assessee to disclose full and true information. Thus, reassessment order was bad in law . There was no failure to comply with notice under section. 142 hence the best judgement assessment is bad in law .CBDT circular is binding on Revenue . Circular No  19 of 2019 , dated 14 -8 -2019 (2019) 416 ITR 140 (St).Court also held that   the assessment orders did not have computer generated  Document Identification Number  (DIN) which was contrary to the law. Thus, reassessment order was held to be invalid.  (AY. 2011-12 to 2017-18)(  W.P. 2595 of 2021 & Ors ,    dated September 4, 2023 )