2020 (9) TMI 338 - ITAT CHANDIGARH

Validity of initiation of proceedings u/s 148 - dropping of proceedings under section 153A in the assessee’s case but the A.O. proceeded to issue notice under section 147 r.w.s 148 - As submitted reopening is based on borrowed satisfaction by entirely relying on unverified 3rd party information /material/statements which had already lost the evidentiary value on want of being material under section 142(3) of the Act and having no presumptive evidentiary value under section 292 C - HELD THAT:- Reopening in the assessee’s case by the A.O. was merely based on the borrowed satisfaction drawn from the cases of Shri Sanjay Singal, Smt. Aarti Singal, Shri Aniket Singal which was not sufficient for the purposes of sustaining any addition made u/s 147 r.w.s 148 .

In the instant case the A.O. in the reasons recorded has mentioned that the search conducted on numerous entry operators and their beneficiaries revealed that the assessee had received huge amount of accommodation entries in the garb of exempt LTCG - if any action was required to be done on the basis of certain documents found from other persons during the course of search then the assessment could have been framed under section 153C of the Act but no such action was taken in assessee’s case rather the action was taken indirectly under section 147 r.w.s 148 of the Act.

As decided in in the case of CIT Vs. Kelvinator of India Ltd. [2002 (4) TMI 37 - DELHI HIGH COURT] it is well settled principle of law that what cannot be done directly cannot be done indirectly

If any material was found relating to the assessee during the course of search on third parties then the correct course of action would have been to proceed against the assessee under section 153C of the Act and there was no justification for the A.O. to initiate the proceedings under section 147 r.w.s 148 of the Act. So respectfully following the case SHRI ADARSH AGRAWAL VERSUS THE INCOME TAX OFFICER, WARD-61 (1) , NEW DELHI [2020 (1) TMI 620 - ITAT DELHI] we are of the view that there was no justification on the part of the A.O. to initiate the reassessment proceedings under section 147 r.w.s 148 of the Act against the assessee. Accordingly the said order of the A.O. is set aside and quashed. - Decided in favour of assessee.