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2024 Supreme(Online)(ITAT) 2780
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
SHRI SHAMIM YAHYA, A.M, SHRI KUL BHARAT, J.M
Revenue – Appellant
Versus
Mr. Yogesh Gambhir – Respondent
ITA No.3018/Del/2023
For the Appellants/Petitioners: Shri Ved Jain, Adv., Ms. Uma Upadhyay, CA, Ms. Kirti Gupta, CA
For the Respondents: Ms. Sapna Bhatia, CIT(DR)
The Income Tax Act requires compliance with correct provisions (Section 153C) when assessing third-party information, rendering assessments under Section 147 void if improperly invoked.
Headnote:(A) Income Tax Act, 1961 - Sections 147, 148, and 153C - Reassessment - Revenue challenged CIT(A)'s order quashing reassessment on grounds it was not conducted under correct provisions - Court held that the CIT(A) was correct in determining that proceedings should have been initiated under Section 153C due to the nature of the information seized - Noting that incorrect procedure led to void assessment. (Paras 5.6.1, 5.6.2, 5.6.3)
(B) Legal Principle - For proper assessment under the Income Tax Act when obtaining information via third party during search operations, correct section must be invoked as per findings of the CIT(A) - Reassessment under Section 147 deemed invalid when procedures under Section 153C are not adhered to.
Facts of the case:
Revenue's appeal against CIT(A) decision which granted relief to the assessee by quashing reassessment based on information not obtained lawfully as per Section 153C.
Findings of Court:
CIT(A) upheld that assessment must follow provisions under Section 153C when information pertains to a third party.
Issues: Whether CIT(A) erred in determining the process of reassessment under the Income Tax Act.
Ratio Decidendi: The assessing officer's actions were considered void as the proper legal framework was not followed in this case under the Income Tax Act regarding the treatment of seized materials.
Result: Appeal of the Revenue dismissed.
| Table of Content |
|---|
| 1. this appeal by the revenue is directed against order of ld. cit(a). (Para 1 , 2) |
| 2. cit(a) granted relief to the assessee, establishing the need for assessment under section 153c. (Para 3 , 4) |
| 3. the assessment framed was found to be based on incorrect provisions, confirming the cit(a)'s finding. (Para 5) |
| 4. court heard both parties' arguments regarding the correct sections applicable. (Para 6 , 7) |
| 5. the appeal of the revenue is dismissed, upholding the cit(a)'s order. (Para 8) |
ORDER
PER SHAMIM YAHYA (A.M):
This appeal by the Revenue is directed against order of ld. CIT(A) dated 02.08.2023 and pertains to A.Y. 2017-18.
2. Grounds of appeals read as under:-
Whether on the facts and circumstances of the case Ld. CIT(A) has erred in differentiating the information concluded on the basis of seized material(as required u/s 148 of the Act) as per section 153C of the Act.
Whether on the facts and circumstances of the case Ld. CIT(A) has erred in considering the fact that satisfaction note by AO of the searched person is a necessary requirement for proceedings u/s 153C of the Act.
Whether in facts and circumstances of the case, Ld. CIT(A) has erred in overlooking the fact that no satisfaction note was sent to the AO of the assessee.
2. Brief facts of the case are that in this case assessment was done pursuant to the reopening of the case an assessment was framed u/s. 147/143(3) of the I.T Act, 1961. In the assessment, AO held that it is clear that the assessee has received accommodation entry in the form of bogus LTCG/STCG of Rs. 4,03,21,009/- from M/s. Alankit Ltd. through one entry operator namely Shri Alok Kumar Agarwal. Therefore, AO held that an amount of Rs. 4,03,21,009/- is added back to the total income of the assessee for the year under consideration as unexplained cash credit u/s. 68 of the I.T Act, 1961.
3. Against the above order, assessee appeal before the ld. CIT(A).
4. The Ld. CIT(A) granted relief to the assessee by holding that assessment should have been done in this case u/s. 153C and not by way of reopening u/s. 147 of the I.T Act, 1961. The order of the Ld. CIT(A) in this regard, reads as under:-
“5.4 Before arriving at any conclusion, it is important to examine the provisions of Section 153C of the Act, which are as under:
"153C.(1) Notwithstanding anything contained in, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,—
(a) any money, bullion, jewellery or other valuable article or thing, seizedor requisitioned, belongs to; or
(b) 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, 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 notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A:"
5.5 Analysis:
5.5.1 The paper on the basis of which addition has been made pertains to the appellant as It has the name of the appellant i.e. Mr. Yogesh Gambhir
It relates to transactions of security (Alankit Limited) on National Stock Exchange (NSE).
The details as per contract note issued by M/s Rajgul Securities Pvt Ltd to the appellant in this regard matches with details on this seized sheet.
5.5.2 The seized paper has some extra details other
