Reassessment order quashed: 153C vs 147
Assessment on the basis of a search conducted in case of a third party could have been made only under section 153C, not under section 147. Successfully represented the Assessee in this case.
Remesan Puthanpurakal Nair v. ITO: ITA 4556/MUM/2026 (Mumbai ITAT)
Link to the decision
A search and survey action was conducted in the case of a property developers and its group concerns, and in the course of search proceedings, certain incriminating materials like diaries/loose papers containing details of on-money, cash expenses, cash receipts, etc., were said to have been seized. Based on the said materials, the assessment in the case of the assessee was reopened on the ground that the assessee had purchased a flat and had made certain payment in cash, and therefore, the Assessing Officer arrived at a conclusion that the assessee had made on-money payment over and above the purchase cost of the flat. Accordingly, reassessment order under section 147 was passed, making an addition under section 69 of the Act qua the alleged cash payment.
We argued before the Hon’ble Tribunal that since the assessment of the assessee was reopened based on search proceedings on a third party, the assessment in the case of the assessee should have been made only under section 153C and not under section 147 of the Act. Therefore, the assessment framed by the Assessing Officer in the case of the assessee under section 147 read with section 143(3) of the Act was bad in law and liable to be quashed.
Accepting the said argument, the Hon’ble Tribunal quashed the reassessment order in its entirety.