The Indore Bench of Income Tax Appellate Tribunal (ITAT) has held that the order passed under Section 147 read with Section 143(3) of the Income Tax Act 1961 under reassessment proceedings initiated before the search and seizure procedure was void ab initio.
The assessee, Meha Jain’s regular assessment was completed under Section 143(3) of the Income Tax Act on 29.12.2010 and thereafter the assessment was reopened under Section 148 of the Income Tax Act on 22.03.2013.
The reassessment proceedings were pending and in the meantime, there was a search and seizure action under Section 132(1) of the Income Tax Act was carried out at the residence of the assessee on 16.05.2013 which was concluded on 31.05.2013.
Due to the search and seizure action, the reassessment proceedings were also centralized along with assessment under Section 153A of the Income Tax Act. The reassessment proceedings were completed on 19.02.2014 and thereafter the order was passed on 3rd July 2015 passed under Section 127 of the Income Tax Act.
The assessment under Section 153A r.w.s. 143(3) of the Income Tax Act of the Income for the block period A.Y.2008-09 to A.Y.2013-14 was finalized on 15.03.3016. In the meantime the assessee preferred an appeal against the order passed under Section 143(3) read with Section 147 Income Tax Act, the order was passed on 29.07.2019
P.D. Nagar, on behalf of the assessee, submitted that the validity of the assessment order passed under Section 147 read with Section 143(3) of the Income Tax Act as the assessment proceeding pending on the date of search and seizure action on 16.05.2013 stood abated in view of 2nd Proviso to section 153A(1) of the Income Tax Act.
He further contended that the assessment order passed under Section 143(3) read with Section 147 of the Income Tax Act on 19.02.2014 was invalid and liable to be quashed.
Ashish Porwal, who appeared on behalf of the revenue, relied upon the orders of the authorities below.
The Bench held that once the reassessment proceedings initiated vide notice under Section 148 of the Income Tax Act dated 22.03.2013 stood abated by virtue of search and seizure action under Section 132(1) of the Income Tax Act carried out on 16.05.2013 then the reassessment order dated 19.02.2014 passed by the AO under Section 147 read with Section 143(3) of the Income Tax Act was illegal and void ab initio and liable to be quashed.
The two-member Bench of Vijay Pal Rao, (Judicial Member) and B.M. Biyani, (Accountant Member) allowed the appeal and quashed the impugned order.
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