|The Tax Publishers2020 TaxPub(DT) 5593 (Del-Trib)
INCOME TAX ACT, 1961
Section 147 and 143(2)
Where during the course of search, incriminating material was found against the assessee on the basis of which assessment under section 143(3) was framed, but it was quashed by CIT(A) on technical reason that notice under section 143(2) had not been served upon the assessee, since reasons for reopening of assessment were recorded within period of limitation, there was no bar on revenue to use same material obtained in search to tax the escaped income.
Reassessment - Validity - Reopening based on same seized material found in search - Assessment earlier set aside due to non-issuance of notice under section 143(2)
Assessee was subject to a scrutiny assessment arising out of certain evidence unearthed in a search and thus was saddled with additions. On higher appeal, it was held that the said search/scrutiny assessment was held to be void ab initio by the Commissioner (Appeals) as no valid notice under section 143(2) was issued within the limitation. The departmental appeal was pending before the ITAT on the same points. Meanwhile, the AO initiated reassessment proceedings on protective basis to safeguard revenue based on the same search evidences well within time under sections 147 and 148. The assessee questioned the validity of this reassessment before the Commissioner (Appeals) who upheld the views of the AO. Held: The reassessment proceedings were valid for the following reasons : (i) Pendency of departmental appeal in the earlier order was no bar to claim validity of the reassessment. (ii) Merely because the same evidences and facts were used in the reassessment, it cannot be held invalid. (iii) The normal assessment and the reassessment are separate proceedings. (iv) Material obtained in the search can be put to use in different assessments, there is no bar on revenue to use it thus. (v) The limitation for reassessment was very much alive and active.
REFERRED : Pooran Mal v. Director of Inspection (Investigation), Income Tax (1974) 93 ITR 505 (SC) : 1974 TaxPub(DT) 0353 (SC); Krishna Developers & Company v. Dy. CIT (2018) 400 ITR 260 (Guj.) : 2017 TaxPub(DT) 2073 (Guj-HC); Pr. CIT v. M/s. Delco India (P) Ltd. ITA Nos. 2453, 2952 & 2926/Del/2013 : 2015 TaxPub(DT) 2750 (Del-Trib); Smt. Anchi Devi v. CIT 2008 TaxPub(DT) 1827 (P&H-HC); Metro Auto Corporation v. ITO & Ors. (2006) 286 ITR 618 (Bom.) : 2006 TaxPub(DT) 1767 (Bom-HC); Vijay Kumar Aggarwal v. ACIT [ITA No. 1182/Del/2011, dt. 12-5-2017]; Vijay Kumar Aggarwal v. ACIT [ITA No. 1182/Del/2011, dt. 17-2-2017]; Shri Pandoo P. Naig v. ACIT 2016 TaxPub(DT) 4261 (Mum-Trib); DCIT v. Delco India (P) Ltd. & Ors. 2016 TaxPub(DT) 1499 (Del-HC); M/s. Krishna Developers & Co. v. Dy. CIT (2018) 254 Taxman 125 (SC) : 2018 TaxPub(DT) 0691 (SC)
FAVOUR : Against the assessee.
A.Y. : 2006-07
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