Reassessment under Section 147 is void if based on third-party seized material; proper procedure mandates initiation under Section 153C.

ORDER

PER M. BALAGANESH, A. M.:

1. The appeal in ITA No.2466/Del/2023 for AY 2017-18, arises out of the order of the ld. Commissioner of Income Tax (Appeals)-27, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. DIN & Order No: 27/11134/2016-17 dated 30.06.2023 against the order of assessment passed u/s 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 30.03.2022 by the Assessing Officer, DCIT, Central Circle-19, New Delhi (hereinafter referred to as „ld. AO‟).

2. The revenue has raised the following grounds of appeal before us:-

“1. Whether on the facts & circumstances of the case and in low, the Ld. CIT(A) has erred in differentiating the information received on the basis of seized material (as required u/s 148 of the Act) with seized material as per Section 153C of the Act?

2. Whether on the facts & circumstances of the case and in law, the Ld. CIT(A) has erred in the considering the fact that satisfaction note drawn by AO of the searched person is a necessary requirement for initiation of proceedings u/s 153C of the Act and information in this case was disseminated by investigation wing of the department?

3. Whether on the facts & circumstances of the case and in law, the Ld. CIT(A) has erred in overlooking the fact that no satisfaction note of the AO of the searched was sent to the AO of the assessee?

4. Whether on the facts & circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition ignoring the fact that there are no provisions in the Act that limit the scope of assessment/re-assessment u/s 147 of the Act in cases arising from information received on the basis of seized material?

5. (a) The Order of the Ld. CIT(A) is erroneous and not tenable in law and on facts.

(b) The appellant craves to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”

3. We have heard the rival submissions and perused the material available on record. The assessee is an individual and had filed his return of income for assessment year 2017-18 declaring total income of ₹3,54,72,680/-. This return was duly processed u/s 143(1) of the Act on 24.12.2017, accepting the return. A Search and seizure action was carried out on 18.10.2019 u/s 132 of the Act in the case of Alankit Group, its key promoter, Shri Alok K Agarwal, his son- Ankit Agarwal, and some of his close associates and key employees. During the course of search action, in the case of Alankit Group, digital data was seized from the laptop of one Sunil Kumar Gupta, who is employee and accountant of Shri Alok Kumar Agarwal, in which the name of the assessee was appearing in some list. This information was passed on by DDIT(Inv.)-7(4), New Delhi dated 15.03.2015 to the ld AO of the assessee. Based on the information, the ld AO of the assessee concluded that the assessee has received accommodation entry in the form of bogus Long-Term Capital Gains (LTCG)/ Short-Term Capital Gains (STCG) of ₹3,64,21,799/- from M/s Alankit Ltd through one entry operator namely Sri Alok Kumar Agarwal. Accordingly, ld AO sought to reopen the assessment for AY 2017-18 by issuance of notice u/s 148 of the Act on 28.03.2021, which was duly served on the assessee well within the prescribed time. In response to the above notice, the assessee filed his return of income on 26.04.2021, declaring total income of ₹3,54,72,680/- (which was the same as the original return of income). The assessee requested for providing copy of reasons recorded for reopening the assessment whi