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Case Number

I.T.A No. 148(Asr)/2010, (Assessment Year: 2006-07)

Attorney(S)

Appellant by: Shri Tarsem Lal, D.R
Respondent by: Shri Padam Behl, Adv.

Judges

H.L Karwa, V.P
Mehar Singh, A.M

Acts

s. 143(1) of the IT Act, 1961 (in short, 'the Act').

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Smart Summary

Tribunal Order Summary — Appeal by Revenue against CIT(A), Amritsar order dated 14.01.2010 (Asst. Yr. 2006-07)

Factual and Procedural Background

The assessee filed the return of income for assessment year 2006-07 on 31 October 2006, declaring income of Rs. 3,74,510, which was processed under section 143(1) of the Income-tax Act, 1961.

A search and seizure under section 132 was carried out on 28 March 2006 at the premises of M/s. Today Homes & Infrastructure (P.) Ltd., New Delhi. The Dy. CIT, Central Circle-22, New Delhi reported to the assessee's Assessing Officer (AO) on 19 February 2008 that certain incriminating documents relating to the assessee (Shri Arun Kumar Kapoor) and M/s. P.R. Infrastructure Ltd. were seized and furnished a report.

Based on the materials and the Dy. CIT's report, the AO recorded reasons and issued a notice under section 148, served on the assessee on 24 February 2008. The AO determined a break-up value of Rs. 1,525 per share for shares of M/s. P.R. Infrastructure Ltd. and made an addition of Rs. 1,51,50,000 as short-term capital gain on sale of shares sold by the assessee (10,000 shares sold for Rs. 1,00,000 on 6 September 2005).

On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)], Amritsar quashed the reassessment order passed under section 147/148, holding that assessment should have been initiated under section 153C read with section 153A because documents seized during the search belonged to a person other than the person referred to in section 153A and the procedure under section 153C was not followed. The Revenue appealed to the Tribunal which dismissed the Revenue's appeal.

Legal Issues Presented

Whether the reassessment proceedings initiated under sections 147/148 were valid when incriminating documents were seized during search in the premises of a third party and were reported to the AO — i.e., whether the procedure under section 153C (read with section 153A) ought to have been followed instead.
Whether the seized documents related to the assessee (Shri Arun Kumar Kapoor) or only to M/s. P.R. Infrastructure Ltd., such that proceedings under section 153C could only be initiated in the case of the company and not the assessee.
Whether the reasons recorded by the AO for initiating reassessment under section 148 were adequate and independent, and whether the AO had applied his mind before making reassessment.
Whether the CIT(A) erred in deleting the addition of Rs. 1,51,50,000 made by the AO and in the valuation of shares (AO's computation of Rs. 1,525 per share versus assessee's declared Rs. 10 per share).
Procedural challenge: whether the CIT(A) erred in admitting additional grounds of appeal without giving opportunity of hearing to the AO.

Arguments of the Parties

Revenue / Departmental Representative (Shri Tarsem Lal)

Contended that the documents seized at the premises of M/s. Today Homes pertained to M/s. P.R. Infrastructure Ltd. and not to the assessee; therefore, any proceedings under section 153C, if at all, should have been in respect of the company and not the assessee.
Maintained that the AO did apply his independent mind in initiating proceedings under section 147/148 and relied not merely on the Dy. CIT's information but on material he had considered (citing para 3.1.4 of the assessment order).
Pointed to earlier orders by the same Bench (ITA Nos. 380, 381 and 382/Asr/2009 dated 31 Dec 2009) in which assessments initiated on the basis of information from Dy. CIT, CC-22, New Delhi were confirmed to argue that quashing the assessment was perverse.
Argued that the AO's valuation (Rs. 1,525 per share) was based on break-up value considering assets and liabilities and should be upheld against the assessee's nominal face value declaration.

Assessee (Shri Padam Behl, CA — counsel for assessee)

Reiterated submissions made before lower authorities, supporting the CIT(A)'s conclusion that the AO should have followed the procedure under section 153C read with section 153A and that the reassessment under section 147/148 was invalid because the statutory procedure for third-party documents was not followed.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
CBDT Circular No. 7 of 2003, para 65.9 ([2003] 184 CTR (St) 33)	Explains section 153C: where seized books/documents/ assets belong to a person other than the person referred to in section 153A, they must be handed over to the AO having jurisdiction over that other person, who shall proceed under section 153A.	The Tribunal relied on this exposition to explain the operation of section 153C and to support the conclusion that section 153C supersedes sections 147/148 where applicable.
Jindal Stainless Ltd. v. Asstt. CIT [2009] 122 TTJ (Del.) 902 : [2009] 19 DTR (Del.)(Trib.) 345	Held that where the procedure under section 153C has not been followed, the assessment would not be valid and such defect is jurisdictional and cannot be cured by section 292B of the IT Act.	The Tribunal cited this decision to support the principle that failure to follow the mandatory procedure under section 153C renders the assessment invalid.
Manish Maheshwari v. Asstt. CIT [2007] 208 CTR (SC) 97 : [2007] 289 ITR 341 (SC)	Held that if the procedure laid down in section 158BD (the predecessor provision in block assessment context) is not followed, block assessment proceedings would be illegal. The decision was applied as analogous to section 153C.	The Tribunal applied the Supreme Court's reasoning mutatis mutandis to section 153C, holding that failure to follow the procedure under section 153C renders reassessment invalid.
Bench orders — ITA Nos. 380, 381 and 382/Asr/2009 (31 Dec 2009)	Bench had earlier confirmed assessments in cases where proceedings were initiated on the basis of information received from Dy. CIT, Central Circle-22, New Delhi.	These orders were relied on by the Departmental Representative to argue that quashing the assessment was perverse. The Tribunal, however, distinguished the facts and rejected the Department's reliance on those orders for the present facts.

Court's Reasoning and Analysis

The Tribunal first reviewed the factual record and the assessment order. It noted that:

The Dy. CIT, Central Circle-22, New Delhi reported seizure of documents relating to the assessee and forwarded copies to the AO in Amritsar, requesting appropriate action under law.
The assessment order itself (paras 2.1, 3.1.1(a), 3.1.1(b) and 3.1.3) recited specific seized material linking the assessee to transactions: a receipt dated 3 Aug 2005 signed by Arun Kumar Kapoor acknowledging receipt of Rs.51 lakhs by cheque and Rs.7 lakhs in cash as part payment towards sale consideration (total sale consideration Rs.12.25 crores), and an undertaking/affidavit dated 14 Aug 2005 showing receipt of further Rs.42 lakhs — cumulatively showing receipts of Rs.1 crore as part payment for the land sale. The assessment order also recorded that the assessee transferred 10,000 shares at face value while market value per share was determined (from seized papers) at Rs.2,041, giving rise to escaped income.
On these facts, the Tribunal concluded that incriminating documents relating to the assessee were indeed found during the search; therefore, the procedure of section 153C was triggered.

The Tribunal then analysed the statutory scheme. It observed that section 153C expressly provides that where books, documents or assets seized at the premises searched belong to a person other than the person referred to in section 153A, such materials must be handed over to the AO having jurisdiction over that other person who shall proceed under section 153A. Section 153C, the Tribunal held, operates notwithstanding provisions of sections 139, 147, 148, 149, 151 and 153 and thus ousts the applicability of sections 147/148 in such factual situations.

Applying binding and authoritative precedents cited in the record (Manish Maheshwari and Jindal Stainless), and the CBDT Circular explaining section 153C, the Tribunal concluded that the statutory procedure under section 153C is mandatory and jurisdictional. Because the AO did not follow the procedure (i.e., did not issue notice under section 153C and frame assessment under section 153C read with section 153A) and instead proceeded under section 148/147, the reassessment was invalid and void ab initio.

The Tribunal explicitly rejected the Departmental Representative's contention that the seized documents related only to M/s. P.R. Infrastructure Ltd. and not to the assessee, observing that this contention was "factually incorrect and contrary to the available records of seized documents specifically mentioned in the assessment order dated 30th Dec, 2008." Because the reassessment was quashed on procedural grounds, the Tribunal declined to examine the substantive merits of the valuation and the addition.

Holding and Implications

Holding: The Tribunal upheld the order of the CIT(A) quashing the reassessment. The appeal filed by the Revenue was dismissed. The core ruling is emphasized as:

DISMISSED

Implications:

Direct effect on the parties: The reassessment order passed under sections 147/148 of the Act was held invalid and void ab initio because the mandatory procedure under section 153C (read with section 153A) was not followed. Consequently, the addition of Rs. 1,51,50,000 made by the AO was not sustained by the Tribunal since the reassessment itself was quashed; the Tribunal did not decide the substantive correctness of the valuation or the addition because it found the reassessment procedurally invalid.
Legal principle applied: The Tribunal applied existing authorities and the CBDT Circular to reaffirm that section 153C is mandatory and, where applicable, ousts sections 147/148; failure to follow the section 153C procedure renders the assessment invalid and is a jurisdictional defect.
No new legal precedent was created by this order; the Tribunal applied and followed the reasoning of the cited authorities (including the Supreme Court decision in Manish Maheshwari and tribunal decision in Jindal Stainless) and the CBDT Circular in reaching its conclusion.

Order date and bench: The order records that H.L. Karwa, Vice-President, heard the appeal and the Tribunal dismissed the Revenue's appeal (the CIT(A) order dated 14.01.2010 was upheld). The Tribunal also recorded that because it quashed the reassessment on procedural grounds, it deemed it unnecessary to decide the valuation and other substantive issues raised by the Revenue.

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Income Tax Officer, Ward 1(1), Amritsar v. Anil Kumar Kapoor

ORDER

H.L. Karwa, Vice-President - This appeal filed by the Revenue is directed against the order of the CIT(A), Amritsar dt. 14th Jan., 2010, relating to the asst. yr. 2006-07.

2. In this appeal, the Revenue has taken the following grounds :

"1. On the facts and in the circumstances of the case the learned CIT(A) has erred in admitting the additional grounds of appeal without according an opportunity of being heard to the AO.

2. On the facts and in the circumstances the learned CIT(A) has erred in not appreciating the fact that proceedings in this case were initiated under s. 148 on the basis of the Dy. CIT, CC-22, New Delhi. It is not a case where the Dy. CIT, CC-22, New Delhi, has recorded satisfaction regarding certain seized documents belonging to the assessee Shri Arun Kumar Kapoor and the original seized documents have been handed over to ITO, Ward 1(1), Amritsar, having jurisdiction upon Shri Arun Kumar Kapoor, the assessee to proceed against him by issue of notice under s. 153C.

3. On the facts and in the circumstances of the case the learned CIT(A) has erred in not appreciating the fact that the only requirement for initiating proceedings under s. 148 was to record reasons to believe on the basis of material available before him in the form of the report of the Dy. CIT, CC-22, New Delhi, supported by other documents. This requirement has been fulfilled and has been upheld by learned CIT(A), Amritsar, vide para 6 of the order.

4. On the facts and in the circumstances of the case the learned CIT(A) has erred in not appreciating the fact that the seized documents relied (upon) by the Dy. CIT, CC-22, New Delhi, in his report forwarded to ITO, Ward 1(1), Amritsar which is the plank of reasons under s. 148 were pertaining to the deal of land belonging to M/s. P.R. Infrastructure Ltd. by Shri Arun Kumar Kapoor. Therefore, the seized documents as referred to in the report of Dy. CIT, CC-22, New Delhi were in no way containing any direct information regarding transfer of shares of the assessee and suppression of capital gain thereon, if any. Proceedings under s. 153C if at all were to be initiated on the basis of these documents; then could have been in the case of M/s. P.R. Infrastructure Ltd. only and not in the case of this assessee Shri Arun Kumar Kapoor.

5. The learned CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,51,50,000 made to the income shown by the assessee on account of under-statement of sale value of the shares of M/s. P.R. Infrastructure Ltd. to M/s. Today Homes & Infrastructure (P.) Ltd.

6. The learned CIT(A) has erred in not appreciating the value per share computed by the AO at Rs. 1,525 per share as per facts and material brought on record by him against the value of Rs. 10 only per share shown by the assessee.

7. That order passed by learned CIT(A) is prayed to be set aside and addition of Rs. 1,51,50,000 computed by the AO may kindly be restored.

8. That the appellant craves leave to add or amend the grounds of appeal before the appeal is hard and disposed of."

3. As regards ground Nos. 1 to 4 of the appeal, the facts available on record are that the return of income for the asst. yr. 2006-07 was filed on 31st Oct., 2006 declaring an income of Rs. 3,74,510, which was processed under s. 143(1) of the IT Act, 1961 (in short, 'the Act'). Subsequently, the AO received information from Dy. CIT, Central Circle-22, New Delhi, vide letter dt. 19th Feb., 2008 wherein it was reported that a search and seizure action under s. 132 was carried out in the case of M/s. Today Homes & Infrastructure (P.) Ltd., 8th Floor, Statesman House, Connaught Place, New Delhi on 28th March, 2006 in which certain incriminating documents relating to the assessee and M/s. P.R. Infrastructure Ltd. were seized. On the basis of evidence seized during the course of search in the case of M/s. Today Home & Infrastructure (P.) Ltd. and subsequent assessment proceedings in its case, the cost price of each share of M/s. P.R. Infrastructure Ltd. was determined at Rs. 2,041 as against the transfer price at face value of Rs. 10 by the directors of M/s. P.R. Infrastructure Ltd. In the report of Dy. CIT, Central Circle-22, New Delhi, it was stated that M/s. P.R. Infrastructure Ltd. had transferred the shareholding of the directors along with management of the company to M/s. Today Home & Infrastructure (P.) Ltd. for a total consideration of Rs. 12.25 crores. The AO, therefore, recorded the reason and issued notice under s. 148 which was served on the assessee on 24th Feb., 2008. The assessee was one of the directors in M/s. P.R. Infrastructure Ltd. holding 10,000 shares. This company was incorporated on 5th April, 2005 and purchased an agricultural land measuring 10,618 sq. yards at Batala Road, Amritsar for a total consideration of Rs. 79,63,350 on 14 July, 2005. The assessee sold 10,000 shares of M/s. P.R. Infrastrucure Ltd., an unlisted company and the face value of Rs. 10 each to M/s. Today Homes & Infrastructure (P.) Ltd. for a total consideration of Rs. 1,00,000 on 6th Sept., 2005. These shares had been acquired earlier by the assessee at the face value only. As per the report of Dy. CIT, Central Circle-22, New Delhi, M/s. P.R. Infrastructure Ltd. has transferred its total shareholding of 60,000 shares at the face value of Rs. 10 to M/s. Today Homes & Infrastructure Ltd. and its group family members and the company was taken over by M/s. Today Homes & Infrastructure (P.) Ltd. for Rs. 6 lacs only though the value of land owned by the company was of Rs. 12.25 crores as per papers seized during search and seizure action. Thus, the market value of M/s. P.R. Infrastructure Ltd. was worked out at Rs. 2,041 per share. The control and management of the company was taken over by M/s. Today Homes & Infrastructure (P.) Ltd. through transfer of shares. In the assessment, the AO, however, worked out the value of each share at Rs. 1,525 by break-up value method considering the assets and liabilities of M/s. P.R. Infrastructure Ltd. and thereby made addition of Rs. 1,51,50,000 in the hands of the assessee as short-term capital gain on sale of shares.

4. On appeal, the CIT(A) quashed the assessment order holding that the proceedings initiated by the AO under s. 148 are illegal and void ab initio. The relevant observations of the CIT(A) are as under :

"6. I have considered the submissions of learned counsel for the appellant and gone through the material placed before me including the assessment order and judicial rulings relied on by the appellant. The learned counsel has vehemently argued that the assessment order passed by the AO under s. 143(3) r/w s. 147 of the Act is illegal and void ab initio as the order ought to have been passed under s. 153C of the Act. The CBDT in para 65.9 of Circular No. 7 of 2003 [(2003) 184 CTR (St) 33] has explained the provisions of s. 153C as under :

'The new s. 153C provides that where an AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in s. 153A, then the books of account, or documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed against such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of s. 153A.'

Sec. 153C in fact, corresponds to earlier s. 158BD relating to assets, documents etc. of any other person found during search or requisition as per Chapter-XIVB. In such a case, books, documents etc. have to be handed over to the AO having jurisdiction over such third person who will initiate and issue a notice to such a person under s. 153C of the Act. In the case of Jindal Stainless Ltd. v. Asstt. CIT [2009] 122 TTJ (Del.) 902 : [2009] 19 DTR (Del.)(Trib.) 345 , it was held that where the procedure laid down under s. 153C has not been followed, the assessment would not be valid and such defect was jurisdictional in nature and would not be cured by s. 292B of IT Act. The Hon'ble Supreme Court in this case of Manish Maheshwari v. Asstt. CIT [2007] 208 CTR (SC) 97 : [2007] 289 ITR 341 (SC) has held that if procedure laid own in s. 158BD is not followed, the block assessment proceedings would be illegal. The provisions of s. 153C are exactly similar to the provisions of s. 158BD under block assessment proceedings. As such the decision of the Supreme Court referred to above shall apply mutatis mutandis to the provisions of s. 153C of the Act as well. Keeping in view the decision of Supreme Court in the case of Manish Maheshwari (supra) the assessment order passed by the AO by resorting to the provisions of s. 148 of the Act is invalid and without jurisdiction. The AO has grossly erred in not issuing notice under s. 153C and in not making assessment under s. 153C r/w s. 153A of the Act. The provisions of s. 153C specifically exclude the applicability of provisions of s. 148 of the Act. Accordingly, the order passed by AO is quashed. The additional ground taken up by the appellant on the issue of not initiating the proceedings under s. 153C of the Act is allowed.

As regards the ground of reasons recorded by the AO, it is correct that reasons have been recorded on the basis of report of Dy. CIT, Central Circle-22, New Delhi. The mention regarding the sale consideration of property, transaction of money and transfer of land in the reasons was to substantiate at that stage the fact that shares by the appellant were transferred at a price higher than the recorded amounts. Since the ultimate conclusion from the report was that the shares were transferred by the appellant, for which the reasons were recorded appropriately, I do not find any infirmity in the reasons recorded by the AO. Hence, this ground of appeal is dismissed."

5. Before us, Shri Tarsem Lal, the learned Departmental Representative submitted that the learned CIT(A) did not appreciate that the search documents, which were found at the premises of M/s. Today Home & Infrastructure (P.) Ltd. pertained to M/s. P.R. Infrastructure Ltd. and not to the assessee. Action under s. 153C, if any, could only be taken in the case of M/s. P.R. Infrastructure Ltd. and not in the case of the assessee. He further submitted that the proceedings under s. 147 were initiated by the AO in the case of the assessee on the basis of information received by him from the Dy. CIT, Central Circle II, New Delhi and it is highly pertinent to mention here that the AO was not led by the information supplied by the Dy. CIT, Central Circle II, New Delhi but had reached an independent decision, as is clear from para 3.1.4 at p. 2 of the assessment order, which reads as under :

"I have considered all the material/evidences and have reasons to believe that on account of assessee's failure to furnish complete and correct particulars of income, to the extent of Rs. 1,02,10,000 charged to income-tax has been under-assessed for the asst. yr. 2006-07."

5.1 Shri Tarsem Lal, the learned Departmental Representative pointed out that there is clear application of mind by the AO while initiating proceedings under s. 147 and as such the same is foolproof. He also submitted that this Bench of the Tribunal had confirmed the making of assessments in the cases of Dr. Poonam Sinigh, Dr. Balwinder Singh and Smt. Saroj Rani Gupta, vide its order in IT Appeal Nos. 380, 381 and 382/Asr/2009 dt. 31st Dec., 2009 respectively in which cases assessment proceedings were initiated on the basis of the information received from Dy. CIT, Central Circle II, New Delhi. He, therefore, submitted that quashing of the assessment is perverse. It was also submitted by Shri Tarsem Lal, the learned Departmental Representative that in the case of Dr. Balwinder Singh (supra), relief had been allowed by the Tribunal in ITA No. 381/Asr/2007 qua being a shareholder and not a director. It skipped the notice of the Tribunal that Dr. Balwinder Singh is a director. Therefore, the ratio of the Tribunal's order in the case of Dr. Balwinder Singh (supra) cannot be applied to the case of the assessee.

6. Shri Padam Behl, chartered accountant, the learned counsel for the assessee, reiterated the submissions made before the lower authorities.

7. We have heard the rival submissions and have perused the relevant material available on record.

7.1 The contention of the learned Departmental Representative is contrary to the facts narrated in the assessment records. From paras 2.1, 3.1.1(a) and (b) and 3.1.3 of the assessment order, it is crystal clear that incriminating documents relating to the assessee were found during the course of search. Paras 2.1, 3.1.1(a) and (b) and 3.1.3 read as under :

"2.1 On the basis of evidence found during the course of search and assessment proceedings, the cost price of each share of M/s. P.R. Infrastructure Ltd. was determined at Rs. 2,041 as against the transfer cost price at face value of Rs. 10 by the directors of that company. In the report, it was elaborated that M/s. P.R. Infrastructure Ltd. had transferred the shareholding of the directors along with management of the company to M/s. Today Home & Infrastructure (P.) Ltd. for a total consideration of Rs. 12.25 crores.

3.1.1 During the course of search and seizure conducted on M/s. Today Homes & Manufacturing (P.) Ltd. certain documents were seized and it is found that:

(a) Receipt dt. 3rd Aug., 2005 issued and signed by Sri. Arun Kumar Kapoor director of M/s. P.R. Infrastructure Ltd. shown that they have received Rs. 51 lacs by cheque and Rs. 7 lacs in cash from M/s. Today Homes & Infrastructure (P.) Ltd. as part-payment on account of sale consideration of land at Rs. 12.25 crores.
(b) As per undertaking/affidavit signed by Sh. Arun Kapoor director of M/s. P.R. Infrastructure Ltd. on 14th Aug., 2005, it was further found that M/s. P.R. Infrastructure Ltd. has received further sum of Rs. 42 lacs from M/s. Today Homes & Infrastructure (P.) Ltd. towards the part-payment of sale consideration of Rs. 12.25 crores. Thus, till 14th Aug., 2005, Sh. Arun Kapoor had received Rs. 1 crore in cheque and in cash as part-payment of total sale consideration of land at Rs. 12.25 crores.

3.1.3 Sh. Arun Kapoor had transferred 10,000 shares of M/s. P.R. Infrastructure Ltd. owned by him at face value of Rs. 10 whereas market value of each share was determined at Rs. 2,041. Assessee has not shown any capital gain on account of transfer of shares in his return of income for assessment. As such income to the tune of Rs. 2,02,10,000 (20,41,00,000 sale price-1,00,000 cost price) has thus escaped assessment for the asst. yr. 2006-07."

In view of the above, we reject the contention of the learned Departmental Representative that no incriminating documents relating to the assessee were found during the course of search.

7.2. The undisputed facts are that a search was conducted under s. 132 of the Act in the case of M/s. Today Homes & Infrastructure (P.) Ltd. on 28th March, 2006, during the course of which certain incriminating documents were allegedly seized. It is also a matter of record that the Dy. CIT, Central Circle-22, New Delhi intimated the AO of the assessee about seizure of certain documents pertaining to the assessee during search and enclosed copy of those documents requesting him to take appropriate action under s. 153C/148 of the Act. It is after that that during the course of appellate proceedings before the CIT(A) the assessee took an additional ground of appeal to the effect that the reassessment proceedings initiated by the AO under s. 148 are illegal and void ab initio. In the instant case, the learned CIT(A) has correctly observed that the AO should have issued notice under s. 153C of the Act and should have framed the assessment under s. 153C r/w s. 153A of the Act. Sec. 153C of the Act reads as under :

"153C. Notwithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, where the AO is satisfied that any money, bullion or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in s. 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of s. 153A."

8. On a perusal of the above provisions, it would be clear that the provisions of s. 153C of the Act were applicable, which supersedes the applicability of provisions of ss. 147 and 148 of the Act. As we have already noted hereinabove that the documents were seized during the search under s. 132 of the Act and the same were sent to the assessee's AO at Amritsar by the officer at Delhi in our view, the learned CIT(A) has correctly observed that only the provision in which any assessment could be made against the assessee in the IT Act was s. 153C r/w s. 153A of the Act. It is also apparent from the record that the officer at Delhi has mentioned in his letter that the necessary action may be taken as per law under s. 153C/148 of the Act. Hence, notice issued under s. 148 of the Act and proceedings under s. 147 of the Act by the AO are illegal and void ab initio. In view of the provisions of s. 153C of the Act, s. 147/148 stands ousted. In the instant case, the procedure laid down under s. 153C has not been followed by the AO and, therefore, assessment has become invalid. We also observe that the CIT(A) was justified in following the ratio laid down by the Hon'ble Supreme Court in the case of Manish Maheshwari v. Asstt. CIT [2007] 289 ITR 341 / 159 Taxman 258 wherein it has been held that if the procedure laid down in s. 158BD is not followed, block assessment proceedings would be illegal. The CIT(A) has correctly observed that the provisions of s. 153C are exactly similar to the provisions of s. 158BD of the Act in block assessment proceedings. Thus, considering the entire facts and the circumstances of the present case, we hold that the CIT(A) was fully justified in quashing the reassessment order. We also do not find any merit in the submissions of the learned Departmental Representative that during the course of search, it was found at premises of M/s. Today Homes & Infrastructure (P.) Ltd. pertaining to M/s. P.R. Infrastructure Ltd. and not the assessee. In this regard, we may point out that the contention raised by the learned Departmental Representative is factually incorrect and contrary to the available records of seized documents specifically mentioned in the assessment order dt. 30th Dec, 2008. In view of the above factual discussion, we do not find any merit and substance in the contention of the learned Departmental Representative. Therefore, we uphold the order of the CIT(A) and dismiss the ground Nos. 1 to 4 of the appeal.

9. Since we have upheld the order of the CIT(A) in quashing the reassessment order and, therefore, we do not think it necessary to go into the merits of the case.

10. In the result, the appeal of the Department is dismissed.

Income Tax Officer, Ward 1(1), Amritsar v. Anil Kumar Kapoor

Tribunal Order Summary — Appeal by Revenue against CIT(A), Amritsar order dated 14.01.2010 (Asst. Yr. 2006-07)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Revenue / Departmental Representative (Shri Tarsem Lal)

Assessee (Shri Padam Behl, CA — counsel for assessee)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Income Tax Officer, Ward 1(1), Amritsar v. Anil Kumar Kapoor

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