Re-Assessment become Void If it was made on the basis of Incriminating Materials found During Search of 3rd Party: ITAT

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the re-assessment passed under section 147/ 148 of the Income Tax Act becomes null and void since the assessment under section 153C is applicable on such cases on the basis of the incriminating materials from the third party.

A search was carried on the premises of Surendra Kumar Jain group of cases wherein after scrutiny of the incriminating documents seized during the course of search. After the search, the authorities noted that the said group was involved in providing accommodation entries to the persons who were named in the Report. The Assessee was also figured in the list as one of the beneficiaries of the accommodation entries provided by the Group based on which, the Assessing Officer initiated the re-assessment under Section 148 of the Act.

Based on the past decisions, the Tribunal held that “this issue has already been adjudicated and decided in favor of the assessee by holding that on the basis of incriminating materials found, once the re-assessment proceedings were initiated on the basis of incriminating materials found in the search of 3rd party then the provisions of section 153C of the I.T. Act were applicable which exclude the application of section 147 and 148 of the I.T. Act and notice u/s. 148 of the Act and proceeding u/s. 147 are illegal and void ab initio. Therefore, respectfully following the aforesaid order of the Tribunal dated 08.08.2017, the re-assessment in question is accordingly quashed. Since I have already quashed the reassessment, there is no need to adjudicate the other grounds. Ld. DR has not brought to my notice any contrary decision on exactly similar facts and circumstances of the case mentioned in para no. 8 of the Tribunal order dated 08.08.2017, as reproduced above.”