Facts
The petitioner challenged a notice dated 31 March 2021 under Section 148 of the Income-tax Act, 1961, for AY 2014–15, and the order dated 28 December 2021 rejecting his objections to reopening
Source reference: p.1, para.1The reopening relied on material obtained in searches under Section 132 of two co-operative credit societies, which allegedly showed that the petitioner received amounts through banking channels after providing unaccounted cash
Source reference: pp.2–4, paras.2–4The Court found that the reopening was based exclusively on the search material and that no satisfaction note had been recorded; the Revenue’s affidavit also acknowledged that the reopening rested on the searches
Source reference: pp.5–6, paras.6–8Issues
Whether the Revenue could invoke Sections 147 and 148 to reopen the petitioner’s assessment on the basis of material found during searches of other persons, rather than following the statutory route under Section 153C
Source reference: pp.6–8, para.9; pp.10–11, paras.10–11Whether the absence of a satisfaction note and of any independent material provided grounds to quash the reassessment notice
Source reference: pp.6, 10–11, paras.8, 10–11Law Applied
Sections 147 and 148 of the Income-tax Act permit reassessment where the statutory conditions are met, but cannot be used to reopen an “other person’s” assessment solely on incriminating material found in a search of another person when the special search-assessment mechanism applies.
Source reference: pp.6–10, para.9Under Section 153C, the required satisfaction regarding material pertaining to the other person is a jurisdictional precondition; where that procedure is applicable, it cannot be bypassed by resort to Sections 147 and 148 on the same search material.
Source reference: pp.6–10, para.9The jurisdictional Assessing Officer may invoke Sections 147 and 148 on material from an independent source, rather than exclusively on the search material
Source reference: pp.10–11, paras.10–11Reasoning
The Court found that the reasons for reopening and the Revenue’s own affidavit established that the notice was founded exclusively on material recovered in searches of the two societies
Source reference: pp.5–6, paras.6–8No satisfaction note had been recorded, and the Revenue identified no other material from an independent source supporting the reopening
Source reference: pp.6, 10–11, paras.8, 11Applying the rule in *Paras Chandreshbhai Koticha*, the Court held that the Revenue could not use Sections 147 and 148 to bypass the statutory search-related procedure on those facts
Source reference: pp.10–11, paras.10–11Holding
The Court answered the issues in the petitioner’s favour and allowed the writ petitions.
It quashed and set aside the Section 148 notices dated 31 March 2021 in SCA Nos. 4812 and 4813 of 2022, and the notice dated 30 March 2021 in SCA No. 4744 of 2022, together with the respective orders dated 28 December 2021 rejecting objections
Source reference: p.12, para.12Acts & Sections Cited
9 provisions across 1 statute referred to in this judgment. Linked provisions open on LawLens.
Income Tax Act, 1961
Original Court PDF
JIGNESH KANUBHAI PATELvsDEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1)(1), AHMEDABAD
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