ARISTOCRAT RESIDENCES LLP ,KOLKATA V. INCOME TAX OFFICER WARD 34 (1), KOLKATA

ITA 1118/KOL/2024

AI Insights

The case involves Aristocrat Residences LLP, which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2013-14. The primary contention was the validity of the reopening of the assessment under Section 147 read with Section 148 of the Income Tax Act, 1961, based on an invalid notice issued under Section 148. The reopening was based on information from a search and seizure operation related to the Banka Group, which allegedly involved transactions with shell companies. The Tribunal found that the specific provisions of Section 153C, applicable due to the nature of the information and the entities involved, were not adhered to, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473865 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Other Referred Cases: Sejal Jewellary and Anr. Vs. Union & Ors, Shyam Sunder Khandelwal Vs. ACIT, Sri Dinakara Suvarna Vs. DCIT, Abhisar Buildwell P. Ltd. Vs. Income Tax, Kabul Chawla Vs. Commissioner of Income Tax, Central-III, Phool Chand Bajrang Lal Vs. Income Tax
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H. ROBINDRO SINGH
• Assessee Lawyers: KAPIL GOEL
• Keywords: Set aside; Invalid notice; Transfer pricing; International transaction; Reassessment proceedings; Unexplained cash credit; Depreciation; Reopening of assessment; Search and seizure; Accommodation entries; Block assessment; Loose papers; Bogus
• Section: 147; 148; 142(1); 153; 132; 153A; 68; 13; 139; 153C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI SONJOY SARMA, JM ITA No.1118/KOL/2024 (Assessment Year:2013-14) Aristocrat Residences LLP 2 Oswal Chambers Church Lane BBD Bagh, Kolkata-700001 West Bengal Vs. Income Tax officer, Ward 34(1) Aaykar Bhavan, Kolkata-700107 West Bengal (Appellant) (Respondent) PAN No. AAVFA9997R Assessee by : Dr. Kapil Goel, AR Revenue by : H. Robindro Singh, DR Date of hearing: 06.02.2025 Date of pronouncement : 01.04.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 06.05.2024 for the AY 2013-14. 02. The assessee has challenged the appellate order passed by the ld. CIT (A) on various legal issues as well as on merit. 03. The first legal issue raised by the assessee is as under:- (i) That the assessment order dated 30.03.2022 passed u/s 147/144B of the Income-tax Act, 1961 (the Act) being based on invalid notice issued u/s 148 of the Act dated 31.03.2201, which is in violation of provisions of Section 153C of the Act. Page | 2 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 04. The facts in brief are that the assessee filed the return of income for the impugned assessment year, declaring total income at ₹17,230/-. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 31.03.2021, after the ld. AO received information from DDIT (Investigation) Unit, 1 (3), Kolkata vide letter dated 01.03.2019, in which it was stated that during search and seizure action in the case of Banka Group on 21.05.2018, it was found on the basis of the seized material that there are certain shell / bogus companies being controlled and managed by Shri Mukesh Bunka. In the statement recorded during search , it was categorically accepted by Shri Mukesh Bunka that the paper/ shell companies were being controlled and managed by him for the purpose of providing accommodation entries in the nature of bogus unsecured loans or in other forms. The letter stated that the assessee had the transactions worth ₹1,00,00172/- through the account of shell company M/s Funidea Promoters Limited, one of the Bunka group of companies. Accordingly, the ld. AO came to the conclusion that income to that extent has escaped assessment. The assessee did not file any return of income. Thereafter, the assessee was issued notice u/s 142(1) of the Act along with questionnaire on various occasions and on few occasions, there was no compliance, however the assessee filed the details/ evidences as called for by the ld. Assessing Officer. The ld. AO noted that the assessee has received unsecured loans from Funidea Promoters Limited of ₹1.00 Cr during the year. Finally, the ld. AO treated the unsecured loan of ₹1.00 Cr as an unexplained cash credit u/s 68 of the Act and added the same to the income of the assessee. 05. In the appellate proceedings, the appeal was dismissed on legal issue by the ld. CIT (A) by holding that the d AO has received information that assessee has received an unsecured loan of ₹1.00 Cr from the Page | 3 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 shell company which is paper company and has no real existence and accordingly, the case of the assessee was reopened based on that information and therefore, justified the reopening of assessment. 06. The ld. AR vehemently submitted before us that the reopening of assessment by the ld. AO u/s 147 read with section 148 of the Act is invalid and void ab initio as the source of so-called credible information was the search action u/s 132 of the Act conducted on Shri Mukesh Banka and his group of companies, which were managed and operated by shri Mukesh Bunka. The ld. AR submitted that it is only on the basis of records/ materials found and seized during the course of search that contained the information qua the assessee having been beneficiary of the bogus unsecured loans of ₹1.00 crores. The ld. AR therefore, prayed that in this case, the special provision has been provided in the Act to initiate the assessment proceedings and to frame the assessment order which is contained in section 153C of the Act. The ld. AR submitted that the provisions of Sections 153C of the of the begins with non-obstante, which provides that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the AO is satisfied that-(a) any money, bullion, jewellery or other valuable article or thing, seized or 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 u/s 153C and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Page | 4 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 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. The ld. counsel therefore, prayed that in this case a special provisions have been provided in the statute and therefore, the reopening of assessment in the case of assessee u/s 147 of the Act by issuing notice u/s 148 of the Act is invalid and void ab initio and the assessment was framed by the AO may kindly be quashed. In defense of his argument the ld. AR relied on the decision of Hon'ble Bombay High Court in case of Sejal Jewellary and Anr. Vs. Union & Ors and Others in Writ Petition No. 3057 of 2019 and Others vide order dated 18.02.2025, wherein similar issue has been decided in favour of the assessee by the Hon'ble High Court. The ld. AR also relied on the decision of Rajasthan High Court in case of Shyam Sunder Khandelwal Vs. ACIT Civil Petition No. 18363 of 2019 dated 19.03.2024, decision of Karnataka High Court in case of Sri Dinakara Suvarna Vs. DCIT (2022) 143 taxmann.com 362 (Karnataka). 07. The ld. DR on the other hand relied on the order of the ld. lower authorities by submitting that in this case the credible information was received from the investigation wing that assessee is a beneficiary of bogus unsecured loans, accommodation entries to the tune of ₹1.00 crore and accordingly, the reopening of assessment was made u/s 147 read with section 148 of the Act which is rightly been upheld by the ld. CIT (A). Therefore, the legal ground raised by the assessee is devoid of any merit and kindly be dismissed. 08. After hearing the rival contentions and perusing the materials available on record, we find that undisputedly, the source of Page | 5 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 information for reopening of assessment of the assessee u/s 147 of the Act was the material seized by the investigation wing during the course of search u/s 132(1) of the Act in case of Mukesh Banka and his related companies, which revealed that assessee was one of the beneficiary of accommodation entry in the form of unsecured loan to the extent of ₹1.00 crore. Therefore, we find merit in the contention of the ld. AR that where there is a specific provisions existing in the Act overriding all the provisions then the proceeding should be initiated and culminated in consonance with those specific provisions. In this case, the information was found during the course of search u/s 132 of the Act on Mukesh Bunka and his group concerns relating to the assessee and therefore, the special provisions as contained in the provisions of Section 153C of the Act should have been invoked .We have carefully perused the provisions of Section 153C of the Act and find that the said provisions begin with the non-obstante clause , overriding all other provisions and consequently, proceeding should be initiated u/s 153C of the Act after following the procedure laid down in the section itself. Therefore, it is not open to the department to resort to the provisions of Section 147 read with section 148 of the Act to assess the escaped income which has come to the notice of the department during the course of search u/s 132(1) on some other person. The case of the assessee find force from the decision of the Hon'ble Bombay High Court in case of Sejal Jewellary and Anr. Vs. Union & Ors and Others (supra), wherein the Hon'ble court has held as under:- “12. We have heard learned counsel for the parties and with their assistance, we have perused the record. At the outset, we may observe that the jurisdiction of the Assessing Officer to issue the impugned notice would be required to be considered on the basis of the departmental record and on such basis, the relevant provisions of law which would govern the facts and circumstances of the case in the hands of the Assessing Officer. In the present case, the impugned notice under Section 148 of the IT. Act was issued to the petitioner on 29 March, 2019. The petitioner received a copy Page | 6 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 of 'reasons to believe' furnished by respondent no. 3 on 11 September, 2019, which were objected by the petitioner. On such objection, an order was passed by the Assessing officer rejecting the objections as raised by the petitioners, so as to proceed to reassess the income of the petitioner under Section 147 of the Act. 13. As clearly seen from the record, to which, we have made a reference in the aforesaid paragraphs, it appears to be quite clear that there was a search and seizure action on 4 October, 2018 on the business premises of one 'Shilpi Jewellers Pvt. Ltd., which has been the basis for the reopening of the petitioner's assessment, as also recorded in the reasons for reopening, which inter alia state that there were certain incriminating evidences, in the form of various loose papers and data back-ups of various electronic devices, as found and seized. The search action was against Shilpi Jewellers Pvt. Ltd., its associate concerns, as well as the key individuals of the Group. Thedepartment asserts that the materials elicited during the search action revealed, that all these persons had accepted large unsecured loans from various shell/paper companies/entities during the year ended on 31 March 2012. On further enquiries being made, the profiling of the loan creditor companies in ITD application, indicated that the loan creditor companies/entities who advanced huge loans to Shilpi Jewellers Pvt. Ltd. and its associate concerns, as well as the key individuals of this group, did not have any creditworthiness for extending such huge loans. It was, particularly, recorded that the petitioner/assessee was part of said group, which had shown loan receipts during the year ended on 31 March, 2012 from a company, viz. M/s. Green Valley Gems Pvt. Ltd., which was reported to be a shell/paper company, engaged in providing accommodation entries to the beneficiary parties. The reasons for reopening of the assessment were set out in detail, referring to such material and further enquiry which was undertaken in that regard, including materials being gathered in regard to M/s.Green Valley Gems Pvt. Ltd. from whom the petitioners had alleged to have taken accommodation entries. It is on the basis of such information, which was certainly not the information borne out or gathered from the return of income, which was filed and/or any material thereunder, the Assessing Officer reached to a conclusion to reopen the assessment, on the ground that the assessee had not explained such loan receipttransactions. Such opinion was formed by the Assessing Officer on the basis that M/s. Green Valley Gems Pvt. Ltd. was a shell/paper company. It is on such premise that the Assessing Officer was of the view that income had escaped assessment within the purview of Clause (c) of Explanation 2 of Section 147 of the LT. Act and such escapement had occurred due to the assessee's failure to disclose true, proper and complete facts in the return of income, filed for the subject assessment year. Accordingly, notice under Section 148 was issued. 14. Thus, on the perusal of such reasons, it is quite clear that the provisions of Section 153A providing for \"Assessment in case of search or requisition\" and the provisions of Section 153C, which provide for \"Assessment of income of any other person\", which ordain that recourse be taken to the provisions of Section 153A stand attracted for an assessment to be undertaken. 15. As the controversy revolves around the applicability of Section 153A and more particularly, as to whether Section 153A read with Section 153C vis-a-vis the provisions of Section 147 of the IT. Act, it will be appropriate to extract the said provisions, which reads thus: Page | 7 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 \"147. Income escaping assessment. If the Assessing Officer has reason tobelieve that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the lossor the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2. For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E] (c) where an assessment has been made, but- Page | 8 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed; (ca) where a return of income has not been furnished by the assessee or a return of income has been furnished by him and on the basis of information or document received from the prescribed income-tax authority, under sub-section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss. deduction, allowance or relief in the return; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4. For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012 (23 of 2012), shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. 153A. Assessment in case of search or requisition. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021]. the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), inthe prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; Page | 9 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate: Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso). specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income 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: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and(c)the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1. For the purposes of this sub-section, the expression \"relevant assessment year\" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, \"asset\" shail include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. Page | 10 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation. For the removal of doubts, it is hereby declared that, i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.\" 153C. Assessment of income of any other person. (1) Notwithstanding anything contained in section 139, 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, seized or 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 erson 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: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person: Page | 11 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 Provided further that the Central Government may by rules30 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income 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 as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- Page 19 of 31 18 February, 2025 (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A (3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April. 2021. 16. On a plain reading of Section 153A, it is clear that it begins with a non-obstante' clause, when it provides that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31 May. 2003 but on or before 31 March, 2021, the Assessing Officer shall have jurisdiction to issue notice to such person to furnish the return of income as specified in the notice or assess or reassess the total income as provided by the provision. Section 153C also begins with a non-obstanteclause, when it provides that notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, to provide that, in a situation which may fall under Section 153C insofar as assessment of income of any other person is concerned, the Assessing Officer shall proceed against such other person and issue notice and assess or reassess the income of other persons in accordance with the provisions of Section 153A, if he is satisfied Page | 12 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 that the books of account or document or assets seized or requisitioned have a bearing on the determination of the total income of such person for a period as specified in the said provision and after compliance of other provisions as mandated. On the other hand, Section 147 provides for \"Income escaping assessment\", can be invoked when any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year. In such situation, the Assessing Officer may subject to the provisions of Sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year and for which a prior notice under Section 148 would be required to be issued. Section 147 does not contemplate an eventuality which Section 153A or Section 153C contemplates, the basis of which is inter alia a search action under Section 132 being resorted as noted hereinabove. Thus. both these provisions are quite compartmentalized although the deeming effectof both the provisions, may be the same. However, the situations in which such provisions operate are required to be invoked are completely different. This is clear from the bare reading of the provisions, hence would not warrant any elaborate discussion. 17. The purport and effect of these provisions had fell for consideration of the Supreme Court in Abhisar Buildwell P. Ltd. (supra), wherein the scope of assessment under Section 153A of the 1.T. Act was considered. In this case, the Revenue's contention was to the effect that the Assessing Officer was competent to consider all the materials which were available on record. including the materials found during search so as to make an assessment of the total income. Some of the High Courts had accepted such propositions. However, the assessee had contended that there were also decisions of the High Courts to the effect that if assessment proceedings were not pending on the date of initiation of the search, the Assessing Officer needs to consider only the incriminating material found during the search, and was precluded from considering any other material derived from any other source. It is in such context, the Supreme Court considering the purport of the provisions of Section 153A of the IT. Act, vis a vis its applicability qua the provisions of Section 147, and the applicability of Section 132, 132A and notably thedecision of the Delhi High Court in Commissioner of Income Tax, Central-III vs. Kabul Chawla inter alia held that the provisions of Section 153A(1) need to be mandatorily resorted once a search takes place. The Supreme Court held as under: \"7.1 In the case of Kabul Chawla (supra), the Delhi High Court, while considering the very issue and on interpretation of Section 153A of the Act. 1961, has summarized the legal position as under Summary of the legal position 38. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under. i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. Page | 13 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. ili. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six AYs \"in which both the disclosed and the undisclosed income would be brought to tax\". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment \"can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material.\" v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment of reassessment can bemade. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.\" 18. The Supreme Court held that it was in complete agreement with the view taken by the Delhi High Court in Kabul Chawla (supra) and of the Gujarat High Court in Principal Commissioner of Income Tax-4 vs. Saumya Construction taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 19. Insofar as the present proceedings are concerned, the following observations made by the Supreme Court in the context of Section 147 and 148 of the IT. Act need to be noted: \"11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six Page | 14 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re assessment, if any,relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub- section (2) of Section 153A, if any proceeding initiated or any oeder of assessment or reassessment made under sub-section (1) has been ansalted in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sab section (1), shall stand revived with effect from the dare of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the 'total income' for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any scriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act. 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the boral income taking into consideration the incriminating material collected during the search and other material which would include income declared in the requrns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/anak assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under Sections 147/148 of the Act, subject to fulfillment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under Sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and roquution under Sections 132 and 132A of the Act. The object of Section 1538 a to bring under sax the undisclosed income which is found duringthe course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the Page | 15 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and sub section (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permissible under the law.\" 20. It is thus clear that in the event any incriminating material is found during the search, the Revenue necessarily would be required to take recourse to the provisions of Section 153A and in the event no incriminating material found during the search, then the power of the Revenue to have the reassessment under Sections 147/148 of the I.T. Act stands saved, failing which, the Revenue would be left without remedy. It is on such observations the conclusions as rendered by the Supreme Court and which are relevant to the case in hand, are required to be noted, which reads thus: \"14. In view of the above and for the reasons stated above, it is concluded as under i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated: iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income taking into consideration the incriminating material unearthed during the search and the other materialavailable with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.\" 21. The Rajasthan High Court in Shyam Sunder Khandelwal s/o. Late Damodar Lal Khandelwal vs. Assistant Commissioner of Income Tax, Central Circle-2, Jaipur (supra) also had taken a similar view when the issue which had arisen before the Court was in regard to the notice issued under Section 148 of the I. T. Act, the basis of issuance of such notice was the material seized during search. The contention of the assessee was to the effect that in the said circumstances, the proceedings ought to have been initiated under Section 153C of the IT. Act. The Division Bench referring to the decision of Supreme Court in Abhisar Buildwell P. Ltd. (supra) as also the decision of Karnataka Page | 16 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 High Court in Sri Dinakara Suvarna (supra) allowed the petitions observing that the department had not set up a case, that for initiating proceedings underSection 148, it had material other than the material seized during the search of a related party. The relevant observations of the Division Bench are required to be noted, which reads thus: \"23. The reasons supplied in case in hand for initiation of proceedings under Section 147/148 are based on the incriminating material and documents including Pen Drives seized during the search carried out of the Manihar Group and the statements recorded during proceedings. From the information received the AO noticed that the loan advanced and interest carned thereon were unaccounted. In other words the basis for initiation of Section 148 proceedings is the material seized relating to or belonging to the petitioner, during the search conducted of Manihar Group. 24. In the case where search or requisition is made, the AO under Section 153A mandatorily is required to issue notices to the assessee for filing of income tax return for the relevant preceding years. The AD asumes jurisdiction to assess/reassess 'total income by passing separate order for cach assessment 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition, the AO has to proceed under Section 153C. The two pre-requisites are that the A dealing with the assessee on whom search was conducted or requisition made, being satisfied that seized material belongs or relates to other assessee shall hand over it to AO having jurisdiction of such assessee. Thereafter, the satisfaction of AO receiving the seized material that the material handed over has a bearing for determination of total income of such other person for the relevant preceding years. On fulfillment of twin conditions the AO shall proceed in accordance with the provisions of Section 153A 26. Special procedure is prescribed under Section 153A to 153D for assessment in cases of search and requisition. There cannot be a quibble with the proposition that the special provision shall prevail over the general provision. To say it differently the provisions of Section 153A to 153D have prevalence over the regular provisions for assessment or reassessment under Section 143 & 147/148. 27. Section 153A and 153C starts with non-obstante clause. The procedure for assessment/reassessment in Section 153A, 153C in cases of search or requisition has an overriding effect to the regular provisions for assessment or reassessment under Sections 139, 147, 148, 149, 151 & 153. 28. The language of explanation 2 to new Section 148 is akin to Section 153A and Section 153C, Corollary being that after seizing of operationalperiod of Section 153A to 153D, the cases being dealt thereunder were circumscribed in the scope of newly substituted Section 148.\" We are in complete agreement with the view taken by the Division Bench of Rajasthan High Court in the aforesaid decision. 22. Applying the principles of law as discussed hereinabove, we are of the clear opinion that the foundation of the present case was certainly a search action which was undertaken by the Revenue against one Shilpi Jewellers Pvt. Ltd. and in such search Page | 17 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 and seizure action, materials were seized and such materials were further explored and enquired. Such enquiry revealed significant information in regard to M/s. Green Valley Gems Pvt. Ltd., which according to the Revenue had provided accommodation entries to the petitioner, in which it was also revealed that Green Valley Gems Pvt. Ltd. was a shell company. We do not find that the record would indicate something which is not on the basis of such new materials gathered under the search and seizure action under Section 132. If this be the case, then certainly the provisions of Section 153C read with Section 153A would be applicable, as held by the Supreme Court in Abhisar Buildwell P. Ltd. (supra) when the Court interpreted the effect and purport of Section 153C and 153A, as also held by the Rajasthan High Court in Shyam Sunder Khandelwal (supra). 23. Insofar as Mr. Suresh Kumar's contention supporting the proceedings under Section 147 and 148 of 1.T. Act are concerned, for the aforesaid reasons, such contention would in fact go contrary to the intention of the legislature as depicted by the provisions of Section 153A and 153C of the I.T. Act. There would not be any difficulty in accepting the proposition as canvassed by Mr. Suresh Kumar, referring to the decision of the Supreme Court in Phool Chand Bajrang Lal (supra), however, the facts in the present case are distinct. There cannot be any doubt on the position in law when the Revenue intends to proceed purely on materials relevant for an action under Section 148 read with Section 147. We have already observed that the provisions of Sections 147, 148 vis-a-vis Section 153A and Section 153 are quite compartmentalized. To avoid any overlapping of these provisions, the legislature in its wisdom has thought it appropriate to provide for an independent effect, to be given under Section 153A read with Section 153C by incorporating the \"non-obstante\" clause, in these provisions, which carves out an exception to any normal/regular action being resorted under Section 147. 24. In this view of the matter, we are of the clear opinion that the impugned notice under Section 147 of the IT. Act and all actions consequent thereto are required to be held to be without jurisdiction and bad in law. The petition isaccordingly allowed in terms of prayer clauses (a) and (b). 25. Learned counsel for the parties are ad idem that the aforesaid observations would cover the other companion matters, which also stand allowed in terms of our aforesaid reasoning and the operative order passed in Writ Petition No. 3057 of 2019. The said petitions hence stand allowed in terms of prayer clauses (a) and (b) of each of these petitions. 26. Rule is made absolute in the aforesaid terms. No costs.” 09. The case of the assessee is also squarely covered with various other decisions as referred to above. Therefore, we are inclined to quash the proceeding-initiated u/s 147 of the Act and consequent order framed by the ld. AO. The appeal of the assessee is allowed on legal issue. Page | 18 ITA No.1118/KOL/2024 Aristocrat Residences LLP; A.Y. 2013-14 010. The other issues raised by the assessee on legal points as well as on merit are not being adjudicated at this stage and are being left open to be decided if need arises for the same at a later date. 011. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 01.04.2025. Sd/- Sd/- (SONJOY SARMA) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 01.04.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "