INCOME TAX ACT, 1961

Section 148

Reassessment - Notice under section 148 - Validity -

Search and survey proceedings were carried out and documents were seized under section 133A from various premises of Venus Group. One of the premises of the Venus Group, i.e., the Crystal Arcade situated at the C.G. Road, Ahmedabad was covered under section 132. During the course of search, various documents related to unaccounted cash transactions of Venus Group were seized. Upon due verification of all such seized documents, it was found that unaccounted cash transactions were first recorded on vouchers and thereafter in the day cash book. Seized documents reflected unaccounted cash transactions for the period between January, 2007 to March, 2015. The cash book was written in the coded form. Further details and documents were obtained from office of Sub-Registrar for the purpose of identifying beneficiaries in the transactions with the Venus Group and assessee was stated to be so. Accordingly, AO issued section 148 notice in assessee's case so as to reopen assessment. Assessee challenged the notice by way of writ petition. Held: The general principle is that once an assessment is completed it becoems final. The power of assessment or reassessment of any income chargeable to tax that has escaped assessment has been provided under section 147 read with section 148. If AO has the reason to believe that any income chargeable to tax has escaped assessment then AO may subject to the provisions of section 147 to 153 assess or reassess such income. Undisputably in the instant case, search was undertaken prior to 1-6-2015. If that be so then, it was clear that before issuing notice under section 153C primary condition to be fulfilled was that the money, bullion, documents etc., seized should belong to such other person. If this condition was not satisfied, no proceedings could be taken under section 153C. The seized docments did not belong to assessee but were seized from the premises of Venus Group. It was not the escase of revenue that the seized documents were in handwriting of the two writ applicants. In such circumstances, AO could not have initiated proceedings under section 153C but based on the information, could be said to be justified in reopening assessment because AO had analyzed voluminous material collected by revenue during search operations in connection with Venus Group. This material, prima facie suggested huge cash transactions in connection with sale of lands against the total declared sale consideration of Rs. 5.38 crore (rounded off). The material prima facie suggested that the total cash transactions of Rs. 9,07,26,000 had taken place. The material at the command of AO was sufficient to permit the process of reopening. Accordingly, section 148 notice was valid.

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