Reassessments under s.147 void ab initio post-search if proceedings pending and escapement >Rs.50L in relevant years; s.153A additions invalid absent incriminating material from assessee's premises – requires s.153C for third-party search material.

ORDER PER BENCH:

ITA No. 6197/Mum/2024

The present bunch of appeals has been filed by the assessee against the appellate orders passed by the learned Commissioner of Income Tax (Appeals)-52, Mumbai for Assessment Years 2011-12, 2012-13 and 2014-15 to 2018- 19, whereby the reassessment orders passed by the Assessing Officer under section 143(3) read with section 147 for the AY 2011-12 and u/s 153A r.ws. 143(3) for the later Assessment years 2012-13, 2014-15 to 2017-18 and u/s 143(3) for the AY 2018-19 of the Income Tax Act, 1961 have been upheld. Since common issues permeate through all these appeals and the factual matrix giving rise to the dispute is substantially identical, these appeals were heard together and are being disposed of by way of this consolidated order. For the sake of convenience, the facts as emanating from AY 2012-13 are taken as the lead year for the assessments made u/s 153A and for the AY 2011-12, separate findings rendered therein shall apply mutatis mutandis to the remaining years as well.

2. The assessee in the various grounds of appeal and additional grounds raised before us has primarily challenged the legality of the reassessment proceedings initiated under section 147 of the Act for the AY 2011-12 and the consequential additions made by the Assessing Officer. The grievance of the assessee, in substance, is that the reassessment proceedings initiated by the Assessing Officer are without jurisdiction and void ab initio. According to the assessee, the very basis of the reopening of assessment emanates from investigation material which arose in the context of search related proceedings and therefore, the assessment of such alleged escapement of income could only have been undertaken within the statutory framework governing search assessments. The assessee has further challenged the additions made on merits on account of alleged bogus long term capital gains and the consequential addition of commission expenditure.

3. Brief facts borne out from the record are that the assessee had filed his return of income under section 139(1) of the Act on 30.09.2011 declaring total income of Rs. 66,83,960/-. The said return was processed under section 143(1) of the Act and no scrutiny assessment was framed thereafter. Subsequently, information was received from the Directorate of Investigation, Kolkata indicating that the assessee had allegedly booked accommodation entries in the nature of long-term capital gains through certain penny stock companies. Based on the said information, the assessment was reopened by issuance of notice under section 148 dated 06.03.2017. In the reassessment proceedings that followed, the Assessing Officer treated the long-term capital gain declared by the assessee on sale of shares of M/s Shree Nath Commercial & Finance Ltd. as bogus and made an addition of Rs.5,20,78,411/- under section 68 of the Act. Besides the said addition, the Assessing Officer also made an addition of Rs.29,24,005/- under section 69C of the Act on account of alleged commission stated to have been paid for arranging the said accommodation entries.

4. The aforesaid additions were confirmed by the learned Commissioner of Income Tax (Appeals). The assessee carried the matter in appeal before the Tribunal in ITA No.1236/Mum/2019. In