S. 148 : Reassessment-Income of any other person-Search-Search material pertains to third party-Notice of reassessment under Section 148 is held without jurisdiction-Section 153C and not section 148 is to be resorted to- Notice of reassessment is quashed and set aside. [S. 132, 147, 151(1), 153A, 153C, Art. 226]
The petitioner, a partnership firm engaged in manufacturing and trading gold and diamond jewellery, filed its return of income for AY 2012-13 on 28.09.2012. On 04.10.2018, a search under Section 132 was conducted at the premises of Shilpi Jewellers Pvt. Ltd., during which incriminating materials, including loose papers and electronic data, were seized. No direct incriminating material was found against the petitioner. The AO issued a notice under Section 148 on 29.03.2019, alleging escapement of income for AY 2012-13 and initiated reassessment proceedings. The primary objection raised by the petitioner was to the effect that the assessment could have been made only under Section 153C and not under Section 147 since the notice was based on search material from a third party. The petitioner also dealt with each of the reasons on merits, to contend that no case was made out for reopening of the assessment on such materials It was contended that the reopening under Section 147 was without jurisdiction and violated legal provisions. The AO rejected the objections, stating that since the search was conducted in AY 2019-20, Section 153A did not apply to AY 2012-13, and proceeded under Section 147.On writ the Bombay High Court, relying on the Supreme Court’s decision in PCIT v. Abhisar Buildwell Pvt. Ltd. (2023) 149 taxmann.com 399/293 Taxman 141/ 444 ITR 212 (SC), Shyam Sunder Khandelwal v. ACIT (2024) 161 taxmann.com 255 (Raj)( HC) Sri Dinakara Suvarna v. Dy. CIT (2022) 143 taxmann.com362 / 454 ITR 21 (Karn)(HC) and held that when search material forms the basis of reassessment, proceedings must be initiated under Section 153C, not Section 147. The Court held that the AO lacked jurisdiction under Section 147, rendering the notice invalid. Consequently, the court quashed and set aside the notice under Section 148 and allowed the petition. (WP No. 3057 of 2019 & others dt. 18-02-2025) (AY. 2012-13)
Sejal Jewellery & Others v. UOI (Bom)(HC) www.itatonline.org
(Coram : Hon’ble Shri Justice G. S. Kulkarni & Hon’ble Shri Justice Advait M. Sethna)