Case Note & Summary
The Bombay High Court disposed of a batch of writ petitions challenging notices issued under Section 148 of the Income-tax Act, 1961 for the assessment year 2012-13. The petitioners were entities belonging to a group that was subjected to a search and seizure action under Section 132 on 4 October 2018. The search pertained to the financial year 2018-19 (A.Y. 2019-20). Based on incriminating material found during the search, the Assessing Officer issued notices under Section 148 for A.Y. 2012-13, alleging that income had escaped assessment. The petitioners objected, arguing that the assessment could only be made under Section 153C, which is the specific provision for assessment of income found during search for years other than the search year. The Assessing Officer overruled the objections, stating that the search was relevant only for A.Y. 2019-20 and not for earlier years. The court framed the issue as whether the Assessing Officer had jurisdiction to issue Section 148 notices based on a search action for a year prior to the search year. The court held that Section 153C overrides Section 147 for search-related assessments, and the Assessing Officer could not resort to Section 148 for A.Y. 2012-13 when the search was conducted in 2018. The impugned notices were quashed, and the petitions were allowed.
Headnote
A) Income Tax - Reassessment - Section 148 Notice Based on Search Action - Section 153C Overrides Section 147 - The court considered whether a notice under Section 148 of the Income-tax Act, 1961 could be issued for A.Y. 2012-13 based on a search conducted on 04.10.2018, which pertains to A.Y. 2019-20. Held that Section 153C is the exclusive provision for assessment of income found during search for years not covered by the search year, and Section 147 cannot be invoked for such years. The Assessing Officer lacked jurisdiction to issue the impugned notice. (Paras 2-10)
B) Income Tax - Search and Seizure - Assessment Procedure - Sections 132, 153C, 147, 148 - The court examined the interplay between search-related provisions and reassessment provisions. Held that when a search is conducted, the assessment for years prior to the search year must be made under Section 153C, not under Section 147, as the latter is a general provision and the former is a special provision for search cases. (Paras 8-10)
Issue of Consideration
Whether the Assessing Officer was correct in law in issuing a notice under Section 148 of the Income-tax Act, 1961 on the basis of a search action under Section 132, for assessment year 2012-13, which is prior to the year of search (2018-19).
Final Decision
The court allowed the petitions and quashed the impugned notices under Section 148 of the Income-tax Act, 1961 for A.Y. 2012-13, holding that the Assessing Officer lacked jurisdiction to issue such notices based on a search action under Section 132, as the assessment should have been made under Section 153C.
Law Points
- Section 148 notice based on search action is invalid if assessment year is prior to the year of search
- Section 153C overrides Section 147 for search-related assessments
- Reassessment under Section 147 cannot be used for years not covered by search
Case Details
2025 LawText (BOM) (02) 288
Writ Petition No. 3057 of 2019 with connected petitions
G. S. Kulkarni, Advait M. Sethna
Mr. Naresh Jain, Ms. Aarti Debnath, Mr. Mahaveer Jain, Ms. Neha Anchlia, Shobhit Mishra for the petitioners; Mr. Suresh Kumar for the respondents
Sejal Jewellary & Anr., Shineshilpi Jewellers Pvt. Ltd., Shilpin Khyalilal Tater, Khyalilal Mohanlal Tater, Symphony Pvt. Co., Rekha Rajneesh Mehta, Neelam Promod Mehta, Ashokkumar Bhanwarlal Tated, Pramod Surendra Kumar Mehta, Unitouch creations LLP
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Nature of Litigation
Writ petitions challenging notices issued under Section 148 of the Income-tax Act, 1961 for reassessment of income for A.Y. 2012-13 based on a search action under Section 132 conducted on 04.10.2018.
Remedy Sought
Quashing of the impugned notices under Section 148 and the reassessment proceedings.
Filing Reason
The petitioners contended that the Assessing Officer lacked jurisdiction to issue Section 148 notices for A.Y. 2012-13 based on a search conducted in 2018, as the assessment should have been made under Section 153C.
Previous Decisions
The Assessing Officer passed an order dated 11 October 2019 disposing of the petitioners' objections, rejecting the contention that Section 153C overrides Section 147.
Issues
Whether the Assessing Officer had jurisdiction to issue a notice under Section 148 of the Income-tax Act, 1961 for A.Y. 2012-13 based on a search action under Section 132 conducted on 04.10.2018, which pertains to A.Y. 2019-20.
Whether Section 153C overrides Section 147 for assessment of income found during search for years prior to the search year.
Submissions/Arguments
Petitioners argued that the assessment could only be made under Section 153C, not under Section 147, as the search was conducted on 04.10.2018 and the impugned notice was based on incriminating material found during the search.
Respondents argued that the search was relevant only for A.Y. 2019-20 and not for earlier years, and therefore Section 147 was applicable.
Ratio Decidendi
When a search is conducted under Section 132 of the Income-tax Act, 1961, the assessment for years prior to the search year must be made under Section 153C, which is a special provision that overrides the general reassessment provisions under Section 147. The Assessing Officer cannot resort to Section 148 for such years.
Judgment Excerpts
The question which falls for consideration is whether in the facts and circumstances of the case, respondent no. 3 was correct in law in issuing a notice to the petitioner under Section 148 of the Income-tax Act, 1961 on the basis of a search action under section 132 of the I.T. Act, which is relevant to the entire group of these petitioners.
In view of above, it is evident that Section 153C overrides all other sections, including Section 147, 148, 149 & 151 of the Act.
Procedural History
The petitioners filed returns for A.Y. 2012-13 on 28 September 2012. A search under Section 132 was conducted on 4 October 2018. On 29 March 2019, the Assessing Officer issued notices under Section 148 for A.Y. 2012-13. The petitioners objected on 16 April 2019 and were furnished reasons on 11 September 2019. The Assessing Officer disposed of objections on 11 October 2019. The petitioners then filed writ petitions challenging the notices.
Acts & Sections
- Income-tax Act, 1961: Section 132, Section 147, Section 148, Section 153C, Section 153B, Section 153D, Section 151
