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Judgment
PER MANISH AGARWAL, AM:
This instant appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-31, New Delhi [CIT(A), in short] dated 12.12.2025 in Appeal No. CIT(A), Delhi-29/10066/2020-21 arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) dated 09.02.2023 for Assessment Year 2021-22 and the assessee has also filed the Cross Objections.
Brief facts of the case are that assessee is an individual and filed his return of income on 31.01.2022 declaring total income of Rs.34,86,238/-. A search and seizure action was carried out in the case of assessee by the Investigation Wing of Income Tax Department on 10.10.2021 in the case of the assessee. Thereafter the AO issued the notice u/s 143(2) on 28.06.2022 and proceeded to complete the assessment proceedings and passed the order u/s 143(3) by making various additions to the tune of Rs. 5,77,12,022/- to the total income of the assessee.
In first appeal, ld. CIT(A) has allowed part relief and majority of additions were deleted/ reduced substantially. Aggrieved by the said order, the revenue is in appeal before the Tribunal by taking various ground of appeal which are reproduced as below:
“1.Grounds of appeals On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,77,13,964/- made by the Assessing officer", on account of bogus purchases from Smt. Kusum Lata (Rs. g,52,36g1-).-Ms. Harleen Kaur (Rs. 2,17,0001-), M/s Hariom Traders (Rs.94,45,g46/-) and M/s R.N. Traders (Rs. 71,98,7501-), ignoring adverse Inspector reports, non-compliance of summons under section 131, sworn statements denying transactions and failure of the assessee to establish the identity and genuineness of the suppliers.
2.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting the disallowance relating to M/s SRD Impex (Rs. l,0l,go,iti-1and M/s Giriraj Ji Jewellers (Rs. 2,97,08,738/-) to only 3% thereby granting wrongful relief of approximately Rs. 3,87,01,118/-, despite categorical findings that the said parties were not traceable and their existence and genuineness could not be established.
3.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that disallowance of bogus purchases cannot be made in the absence of rejection of books of account under section 145(3),whereas the additions were based on independent incriminating evidence and not on estimation of profit.
4.The appellant craves leave to add, amend or modify any of the above grounds of appeal at or before the time of hearing.”
The assessee also filed the cross objection which are as under:
“1.On the facts and circumstances of the case, the notice issued under section 143(2) and assessment order passed under section 143(3) by the AO is illegal, invalid, without jurisdiction, barred by limitation and hence liable to be quashed.
2.On the facts and circumstances of the case, the notice issued under section 143(2) of the Income Tax Act, 1961 ("Act") and consequent assessment order under section 143(3) without complying with the statutory conditions and the procedure prescribed under the law are bad and liable to be quashed.
3.On the facts and circumstances of the case, the notice issued under Section 143(2) of the Income Tax Act, 1961 ("Act") and consequent assessment order under section 143(3) of the Act is invalid, vold-ab-initio, without jurisdiction as the same has been passed without following the specific provisions of section 148 of the Act.
4.On the facts and circumstances of the case, the assessment order passed by the AO under section 143(3) of the Act is invalid, illegal and unsustainable as the same has been passed without obtaining the valid prior statutory approval from prescribed authority under section 1488 of the Income Tax Act, 1961.
5.On the facts and circumstances of the case, the assessment order passed by the AO under section 143(3) is illegal, without jurisdiction, and unsustainable as the same has been passed on the basis of material collected at the back of the assessee, without providing adequate opportunity to the assessee to rebut the same in violation of statutory provision of section 142(3) of the Act.
6.On the facts and circumstances of the case, the assessment order passed under Section 143(3) of the Act is illegal, invalid and unsustainable as the same has been passed on the basis of borrowed satisfaction and without independent application of his own mind.
7.(i) On the facts and circumstances of the case, the approval obtained by the AO under section 119 of the Act while passing the impugned assessment order is illegal, invalid and without jurisdiction.
(ii)That the purported approval is illegal, mechanical in nature and has been given without application of mind.
8.On the facts and circumstances of the case, the assessment order passed under section 143(3) of the Act stands vitiated and liable to be quashed as the same has been passed under the directions of the Addl. CIT, Central Range -07, New Delhi.
9.On the facts and circumstances of the case, the assessment order passed stands vitiated and liable to be quashed as the Id. Assessing officer has failed to exercise his independent quasi-Judicial discretion and has abdicated his authority, thereby rendering the assessment proceedings illegal and without lawful justification.
10.(i) On the facts and circumstances of the case, the leamed CIT(A) has erred in sustaining the addition to the extent of Rs. 11,96,941/- as estimated additional profit being 3% of alleged purchases of Rs.3,98,98,059/- claimed by the assessee.
(ii)That the leamed CIT(A) has erred in confirming the abovesaid addition on an estimated basis, which is illegal, arbitrary, unjustified, and unsustainable in law. (iii) That the above said addition has been confirmed rejecting the detailed
submissions and explanations along with the evidences brought on record by the assessee in this regard.
11.On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the above said addition rejecting the settled position of law that when sales have not been doubted corresponding purchases cannot be treated as non-genuine.
12.On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the above said addition rejecting the contention of the assessee that the purchases were made in regular course of business and material so purchased was sold in the regular course of business.
13.On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the above said addition despite the fact that assessee has been maintaining regular books of accounts, stock register and financial statement are audited as per law and no defect has been pointed out by the AO.
14.On the facts and circumstances of the case, even otherwise, the disallowance/addition made in the assessment order in the absence of any incriminating material found during the course of search is illegal, without jurisdiction and unsustainable.
15.On the facts and circumstances of the case, even otherwise, the disallowance/addition made by the AO is illegal and unsustainable as the same has been made on the basis of statement of third parties recorded at the back of the assessee without providing the opportunity to cross examine those parties.
16.On the facts and circumstances of the case, even otherwise, the disallowance/addition made by AO is illegal and unsustainable as the same has been made by indulging in surmises and conjectures, on the basis of presumption and assumption without bringing on record any direct evidence against the assessee.
17.That the respondent craves leave to add, amend or alter any of the grounds of appeal.”
Before us, ld. AR for the assessee, submits that in the instant case since the search was carried out on 10.10.2021, the search year would be FY 2021-22 relevant to Asstt. Year 2022-23 and as per Explanation 2(i) of section 148, the assessment year under appeal falls well within the period of three preceding assessment years, therefore, the assessment ought to have been completed after initiating the proceedings u/s 148 and could not be concluded u/s 143(3) of the Act. Ld. AR therefore requested that the assessment order passed u/s 143 (3) is bad in law, without Jurisdiction and liable to be quashed. The ld. AR also placed reliance relied upon the following judicial pronouncements:
Montage Enterprises Pvt. Ltd. v. DCIT: ITA No. 5458/Del/2025 (Delhi Tribunal)
Malbros International (P.) Ltd. v. DCIT: [2026] 183 taxmann.com 421 (Chandigarh Tribunal)
Miraj Products Pvt. Ltd. v. ACIT, Central Circle-1: ITA Nos. 461 & 421/Jodh/2025 (Jodhpur Tribunal)
On the other hand, the Ld. CIT-DR vehemently supported the order of the lower authorities and submitted that a search was carried out on 10.10.2021 and neither the return of income was filed by the assessee upto that date nor the date for issue of statutory notice u/s 143(2) was expired and, therefore, the AO has rightly completed the assessment proceedings u/s 143(3) of the Act and thus, requested for the confirmation of the order passed u/s 143(3) of the Act.
Heard the parties and perused the material available on record. As observed above, a search and seizure operation was carried out on the assessee u/s 132 of the Act on 10.10.2021. It was the claim of the assessee that the assessment for the year under appeal was completed u/s 143(3) of the Act however, when a search action was taken u/s 132 of the Act in the case of the assessee, therefore, in terms of Explanation 2 clause (i) to Section 148, the assessment proceedings should have been initiated u/s 148 of the Act and the assessment must be framed u/s 147 of the Act. At this juncture, it is necessary to refer the provisions of Explantion-2 to section 148 of the Act, which reads as under:
148. Issue of notice where income has escaped assessment.
Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice:
Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—
(i)any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;
(ii)any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or
(iii)any information received under an agreement referred to in section 90 or section 90A of the Act; or
(iv)any information made available to the Assessing Officer under the scheme notified under section 135A; or
(v)any information which requires action in consequence of the order of a Tribunal or a Court.
Explanation 2- for the purpose of this section:
(i)A search is initiated under section 132 or books of accounts, other documents or any assets are requisitioned on or after 1st day of April 2021 in the case of the assessee or
(ii)a survey is conducted under section 133A, other than under sub-section (2A) [***] of that section, on or after the 1st day of April, 2021, in the case of the assessee; or
(iii)the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or
(iv)the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee,
the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person.
Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.]
From the plain reading of the above explanation, it is conferred that the assessment ought to have been made under Section 148 of the Act where a search was conducted on or after 01.04.2021. Despite the search being conducted in the case of the assessee and the AO being fully aware of this fact, he had proceeded to conclude the assessment proceedings initiated by issued the notice u/s 143(2) on 28.06.2022. As per the Memorandum explaining the provisions of the Finance Bill, 2021, wherein it has been clarify that in cases where search is conducted on or after 01.04.2021, the assessment for the years immediately preceding the year of search are required to be undertaken under the provision of section 147, subject to the procedure prescribed u/s 147,148 and Section 148B.
Thus, under these circumstances proper course of action would be to initiate the proceedings u/s 148 as outlined in Explanation 2(i) to section 148 of the Act as there was deemed escapement of income. Failure to comply the statutory procedure as provided under the Act constitutes a jurisdictional defect. The Hon’ble Apex Court in the case of Babu Varghessee Vs Bar Council of Kerala reported in (1999) 3 SCC 422, wherein at paragraph 31 and 32, it is held as follows:
“31.It is the basic principal of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all. The origin of this rule is traceable to the decision in Taylor vs Taylor (1875) 1.Ch.D 426 which was followed by Lord Roche in Nazir Ahmed v King Emperor who stated as under :-
“where a power is given to do certain thing in certain way, the thing must be done in that way or not at all.”
32.This rule has since been approved by this court in Rao Shiv Bahadur Singh & Anr Vs State of Vindhya Pradesh and again in Deep Chand Vs state of Rajasthan 1962, (1) SCR =AIR 1961 SC 1527. These cases were considered by a three Judge Bench of this court in state of Uttar Pradesh vs Singhara Singh & Others and the rule laid down in nazir Ahmed’s case (Supra) was again upheld. This rule has since been applied to the exercise of jurisdiction by courts and also been recognized as statutory principal of administrative Law.
Therefore, the AO should have acted strictly in terms of the amended provisions of section 148 of the Act for the searches carried out on or after 01.04.2021. The coordinate Delhi bench of the Tribunal in the case of Montage Enterprises Pvt. Ltd. in ITA No. 5458/Del/2025 dt. 29.12.2025 by following the judgement of coordinate Chandigarh bench of Tribunal in the case of Homelife Buildcon (P.) Ltd. Vs. DCIT, reported in (2025) 176 taxmann.com 614 (Chandigarh - Trib.) and in case of Jamna Das Nikkamal Jain Saraf Pvt. Ltd. Vs DCIT in ITA No. 403/Chd./2025 dt. 04.11.2025 has held as under:
Heard both the parties. Case files perused.
2.We notice at the outset that there arises the first and foremost issue of validity of the impugned section 143(3) assessment itself framed by the learned DCIT, Central Circle-II, Noida as per the assessee's pleadings in its appeal ITA No.5458/Del/2025. A combined perusal of both these case files indicates that the assessee/appellant is engaged in the business of manufacturing and sale of flexible packaging material etc. It has filed its return for the impugned assessment year 2022-23 on 29.10.2022, declaring loss of Rs.64,53,88,702/-. And the same was taken for scrutiny. The learned departmental authorities thereafter carried out section 132 search action as well as section 133A survey in its case on 21.02.2023. There is further no dispute that the learned Assessing Officer then proceeded to frame the impugned assessment on 30th March, 2024 in its case inter alia making various disallowances/additions etc., involving varying sums, which stand partly upheld in the CIT(A)'s lower appellate discussion. 3. It is in this factual backdrop that the assessee seeks to raise it's precise question challenging validity of the impugned assessment for the sole reason that the same ought to have been framed under section 148 with approval under section 148B of the Act in light of Homelife Buildcon (P.) Ltd. Vs. DCIT, (2025) 176 taxmann.com 614 (Chandigarh - Trib.) as relied in Jamna Das Nikkamal Jain Saraf Pvt. Ltd. Vs DCIT (ITA No. 403/Chd./2025) decided on 04.11.2025, adjudicating the very issue against the department as under:
"11.4In conclusion, it was submitted that since the year under appeal formed part of the three assessment years immediately preceding the year in which search was conducted, the assessment ought to have been framed under section 148 with approval u/s 148B. The framing of the assessment u/s 143(3) and approval taken only for the purposes of section 143(3) was thus asserted to be fundamentally defective, non-compliant with statutory mandate, and consequently void ab initio. On these grounds, following the ratio in Homelife Buildcon Pvt. Ltd., it was prayed that the impugned assessment be quashed.
12.The Ld. CIT-DR Shri Manav Bansal opposed the contention, stating that the return for A.Y. 2022-23 was filed prior to the date of search, and validly selected for scrutiny under CASS. The AO was competent to complete the assessment u/s 143(3).
12.1He contended that section 148B applies only to "re- assessment" and not to "regular assessments." The AO's approval from Addl. CIT, being in line with the CBDT Instruction No. 7/2022 dated 15.07.2022, fulfils the supervisory requirement. The DR also submitted that Homelife Buildcon is distinguishable, as the AO therein relied on third-party search data, whereas the present case is based on assessee's own seized material.
13.We have carefully considered the rival submissions and perused the record. It is undisputed that search u/s 132 was conducted on 24.11.2022, relevant to A.Y. 2023-24. Thus, A.Y. 2022- 23 is one of the three preceding years under Explanation 2(iv) to section 148. The Explanation reads that if a search is initiated, "the Assessing Officer shall be deemed to have information suggesting escapement of income for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated."
13.1Therefore, the only permissible statutory course was to issue notice u/s 148 and obtain prior approval u/s 148B before passing assessment order.
13.2As the Assessing Officer completed the assessment under section 143(3) of the Act without issuing the notice under section 148 of the Act. Therefore, the question before us is whether the assessment proceedings initiated under section 143(3) of the Act can be validly continued and completed after a search under section 132 has been conducted in the case of the same assessee, without following the procedure prescribed under section 148 (Explanation 2) of the Act.
13.3In our considered opinion, the answer lies in the scheme of the Act itself. Section 143 provides the general framework for regular assessment, whereas sections 147-148 (post-2021 regime) deal with reassessment based on information suggesting escapement of income, including that unearthed during a search.
13.4A plain reading of section 143(2) shows that such notice can be issued only when a return of income is furnished under section 139 or in response to a notice under section 142(1). It empowers the Assessing Officer to scrutinize that return if he considers that income has been understated or tax underpaid. However, when a search under section 132 takes place and materials are found indicating possible escapement of income, the statute envisages a different route for carrying out assessment or reassessment under section 147 read with section 148, which is the special mechanism for bringing to tax the income discovered in consequence of a search.
13.5Although section 148 (inserted w.e.f. 01.04.2021) does not begin with a non-obstante clause similar to the erstwhile section 153A, its context and Explanation 2 make it clear that where a search is initiated, the jurisdiction thereafter must flow through this special channel, subject to prior satisfaction and approval of the Principal Commissioner or Commissioner. The legislative intent is to ensure that when a search is carried out, the assessment is framed under the specific provisions meant for such cases and not under the general provision of section 143(3). Further we may mention that no notice under section 143(2) could have been issued after 3 months from the end of the financial year in which the return is furnished. In the present case the original return of income was filled on 4/11/2022 for the assessment year 202223 and 143 (2) was issued on 21/6/2023 , therefore also the assessment was framed under 143(3) of the Act is not sustainable. In other words the time required for issuing the notice under 143(2) had already expired, and the revenue can not be allowed to issue issue 143(2) on 21.6.2023 after the search was carried out and notice had been issued on 21.6.2023 and assessment was framed under 143(3) of the Act. The relevant portion of section 143(3) reads as under:-
143(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce any evidence on which the assessee may rely in support of the return:
Provided that no notice under this sub-section shall be issued after the expiry of three months from the end of the financial year in which the return is furnished.
13.6This position finds substantial support from the ratio of various decisions of Hon'ble High Court and Hon'ble Supreme Court. The Courts unanimously held that once a search has been conducted and proceedings are triggered under section 153A, the Assessing Officer cannot continue parallel proceedings under section 143(3) or section 147 for the same assessment year, because the entire assessment for that year stands merged in the search assessment. The Courts emphasized that the existence of a special procedure for assessment consequent to a search is a complete code in itself; therefore, ordinary assessments abate and cannot coexist with the search-based assessment.
13.7Drawing this analogy to the current regime, it is evident that when a search takes place and information is unearthed suggesting escapement of income, the Assessing Officer must act under section 148 (which now performs the role formerly assigned to section 153A) rather than continuing with a pending section 143(3) proceeding. The legislative intent remains the same -- to prevent multiplicity of proceedings and ensure that only one comprehensive order is passed, factoring in both the pre-search and post search materials.
13.8The rationale is further reinforced by the well-settled principle of generalia specialibus non derogant -- the special provision overrides the general. Section 148 (as a special provision triggered by search information) must prevail over section 143 (the general provision for regular scrutiny). Allowing the Assessing Officer to continue and conclude proceedings under section 143(3) after a search would defeat this legislative scheme and render the safeguards, such as prior approval of the Principal Commissioner, redundant.
13.9Accordingly, we hold that once a search is initiated under section 132 and material is found relating to the assessee, the pending assessment under section 143(3) cannot validly continue, as the time for issuing the 143(2) in response to original return of income had already expired, therefore the Assessing Officer must necessarily proceed in accordance with the special provisions contained in section 148 of the Act."
4.Learned CIT(DR) representing the Revenue vehemently supports the impugned assessment that the Assessing Officer had rightly finalized the same under the normal provision once the entire issue was pending before him as on the date of search.
5.We have given our thoughtful consideration to the assessee's and the Revenue's foregoing vehement submissions. We find merit in the assessee's legal ground herein once the impugned search had taken place in its case, no normal assessment under section 143(3) of the Act could have been framed in light of the tribunal's foregoing twin decisions going against the department. We thus adopt the above extracted reason mutatis mutandis to quash the impugned assessment framed by the learned Assessing Officer on 30th March, 2024 in very terms.
Recently the coordinate Mumbai bench of Tribunal in the case of Rajesh Kumar Jain Vs. DCIT in ITA Nos. 3023 & 3039 vide order dt. 18.08.2026 has held as under:
“7.We have heard the rival submissions and have carefully considered the material placed before us. Since the additional grounds challenge the very assumption of jurisdiction, it becomes necessary, before examining the validity of the course adopted by the Assessing Officer, to first ascertain the statutory regime which governed an assessment year preceding the year of search where the search under section 132 was initiated on 31.01.2023. This assumes significance because the law governing assessments consequent upon search underwent a fundamental legislative change with effect from 01.04.2021. Prior thereto, section 153A constituted a self-contained machinery for assessment in the case of a person searched under section 132. The provision opened with a non obstante clause overriding, inter alia, sections 139, 147, 148, 149, 151 and 153 and required the Assessing Officer, upon initiation of search, to issue notice calling for returns for the prescribed block of assessment years preceding the year of search and thereafter assess or reassess the total income of those years. However, the Finance Act, 2021 consciously marked the terminus of this regime for searches initiated after 31.03.2021. Section 153A, Rajesh Kumar Jain as amended, itself confined its operation to cases where search under section 132 was initiated, or requisition under section 132A was made, "on or before the 31st day of March, 2021." Thus, for a search initiated on 31.01.2023, as in the present case, the Assessing Officer could not have resorted to the erstwhile machinery under section 153A. This is not merely an inference drawn from the amendment; the legislative material accompanying the Finance Act, 2021 makes it explicit that assessment or reassessment in cases where search or requisition was initiated or made on or after 01.04.2021 was brought within the new procedure governing income escaping assessment. The legislative change, therefore, did not leave a vacuum after the cessation of section 153A for post-31.03.2021 searches; it simultaneously relocated such assessments within the newly recast framework of sections 147 to 151. The subsequent legislative material also describes the Finance Act, 2021 as having restricted sections 153A and 153C to searches/requisitions initiated on or before 31.03.2021.
8.The starting point of the substituted regime is section 147. As substituted by the Finance Act, 2021 with effect from 01.04.2021, section 147 empowers the Assessing Officer, where income chargeable to tax has escaped assessment for any assessment year, subject to sections 148 to 153, to assess or reassess such income and also any other income Rajesh Kumar Jain chargeable to tax which has escaped assessment and comes to his notice subsequently in the course of proceedings. What is material for the present controversy is that the power under section 147 is expressly made subject to sections 148 to 153. The authority to assess escaped income and the statutory conditions governing the assumption and exercise of that authority thus operate together. Section 148, in turn, provides the jurisdictional mechanism by which proceedings under section 147 are set in motion. In its material part applicable to the statutory regime under consideration, it provided that before making assessment, reassessment or recomputation under section 147, and subject to section 148A, the Assessing Officer shall serve upon the assessee a notice requiring him to furnish a return for the relevant assessment year. The statutory command is therefore sequential: there must first exist the jurisdictional foundation contemplated by the reassessment provisions; the notice prescribed under section 148 must thereafter be issued in accordance with law; and the assessment or reassessment under section 147 follows upon valid assumption of such jurisdiction. A notice under section 148 is thus not an interchangeable procedural formality. It is the statutory instrument through which the jurisdiction contemplated by section 147 is invoked.
Rajesh Kumar Jain 8.1. The significance of section 148 for a post-01.04.2021 search becomes even clearer from Explanation 2 thereto, which, insofar as relevant, provided:
"Explanation 2.--For the purposes of this section, where,--
(i)a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or
(ii)a survey is conducted under section 133A, other than under sub-section (2A) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or
(iii)the Assessing Officer is satisfied, with the prescribed prior approval, that money, bullion, jewellery or other valuable article or thing seized or requisitioned in the case of another person belongs to the assessee; or
(iv)the Assessing Officer is satisfied, with the prescribed prior approval, that books of account or documents seized or requisitioned in the case of another person pertain to, or information contained therein relates to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee..."
8.2.Thus, Parliament itself identified initiation of a search under section 132 on or after 01.04.2021 as a circumstance giving rise to the statutory deeming of information suggesting escapement of income. The provision is of considerable Rajesh Kumar Jain importance because it demonstrates the legislative bridge between a post-01.04.2021 search and the reassessment machinery. Under the earlier law, search itself activated section 153A. Under the substituted regime, section 153A ceased to apply to a search initiated after 31.03.2021 and Explanation 2 to section 148 brought the specified search circumstances within the jurisdictional architecture of reassessment. The Finance Act, 2021 Memorandum likewise explained that assessments/reassessments/recomputations in searches initiated after 31.03.2021 would fall under the new procedure.
9.At this stage, it is equally necessary to notice section 148A, because the architecture of the substituted law cannot be correctly understood by reading section 148 in isolation. Section 148A introduced a pre-notice enquiry and opportunity mechanism before issuance of notice under section 148. Broadly stated, it contemplated enquiry, if required, with prior approval; issuance of show-cause notice to the assessee; consideration of the assessee's reply; and an order deciding whether it was a fit case for issuance of notice under section 148. However, the Legislature itself carved out specified cases from this pre-notice procedure. In the statutory regime relevant to the search before us, the proviso to section 148A excluded, inter alia, a case where a search was initiated under section 132 in the case of the assessee on or after Rajesh Kumar Jain 01.04.2021. Therefore, the legal consequence of a search in the assessee's own case after 01.04.2021 was not that the reassessment regime became inapplicable; rather, the consequence was that the preliminary enquiry contemplated under section 148A was dispensed with in the specified search cases because the search itself supplied the statutory foundation contemplated by Explanation 2 to section 148. This distinction is material. The exception from section 148A cannot be read as an exception from section 148 itself. To do so would conflate two different stages of the statutory scheme. Section 148A dealt with the preliminary enquiry preceding the notice; section 148 was the provision for issuance of the notice through which proceedings under section 147 were initiated. Thus, where the Legislature intended to dispense with the pre-notice enquiry in search cases, it said so expressly; but the statutory framework did not, on that account, convert a preceding assessment year into an ordinary scrutiny assessment capable of being initiated solely under section 143(2). This distinction becomes particularly relevant in the present case because the assessee does not found his jurisdictional challenge upon non-compliance with section 148A; the challenge is more fundamental, namely that section 148 itself was never invoked.
10.The legislative scheme is further fortified by sections 149 and 151. Section 149 prescribes the limitation within which a Rajesh Kumar Jain notice under section 148 may be issued and, therefore, places a temporal boundary upon the jurisdiction to reopen an assessment. Section 151, in the statutory framework then applicable, identifies the "specified authority" whose approval is contemplated at the relevant stage of the reassessment proceedings. These provisions assume importance not because we are presently called upon to determine whether the limitation under section 149 had actually expired or whether a particular authority under section 151 did or did not grant approval in the assessee's case. No such wider enquiry is necessary at this stage. Their relevance lies in demonstrating that Parliament did not confer an unstructured power to reopen years preceding a post- 01.04.2021 search. Once the assessment of such preceding year travels through the reassessment regime, the jurisdiction is circumscribed by the statutory conditions accompanying that regime, including the notice prescribed under section 148, limitation under section 149 and approval of the specified authority wherever statutorily required. Indeed, section 149 itself preserved the distinction between the old and new search regimes by providing separately for cases where notices under sections 153A/153C were required in relation to searches initiated on or before 31.03.2021. The legislative architecture, therefore, consistently recognises 31.03.2021/01.04.2021 as the dividing line between the Rajesh Kumar Jain erstwhile section 153A search-assessment mechanism and the substituted reassessment regime.
11.The statutory position was further rationalised by the Finance Act, 2022. Of particular relevance is the insertion, with effect from 01.04.2022, of section 148B, captioned "Prior approval for assessment, reassessment or recomputation in certain cases". The provision, as applicable, reads:
"148B. No order of assessment or reassessment or recomputation under this Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, in respect of an assessment year to which clause (i) or clause (ii) or clause (iii) or clause (iv) of Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director."
11.1.The Memorandum explaining the Finance Bill, 2022 also stated that the proposed provision was intended to require prior approval for an assessment, reassessment or recomputation in an assessment year to which any of the four clauses of Explanation 2 to section 148 applied. This provision is important for two reasons. First, by expressly referring to each of the four clauses of Explanation 2 to section 148, section 148B reinforces that assessment years arising from the specified post-01.04.2021 search circumstances were being administered within the statutory framework built around section 148. Secondly, Parliament Rajesh Kumar Jain imposed an additional institutional safeguard at the stage of passing the assessment order where the Assessing Officer was below the rank specified therein. The safeguard under section 148B is conceptually distinct from the approval contemplated in relation to issuance of notice under section 148 read with section 151. One operates at the stage and in the manner contemplated for assumption/initiation of reassessment jurisdiction; section 148B operates at the stage of passing the eventual assessment, reassessment or recomputation order in the specified cases. The two cannot be collapsed into one another.
11.2.It is equally necessary to keep this distinction in view while examining the present assessment. As noticed earlier, the assessment order records that it was passed with prior approval of the Additional Commissioner of Income Tax, Central Range-I, Mumbai. We shall, therefore, not proceed on any assumption that the final order lacked every species of approval contemplated by the statute. The anterior question is different: whether the existence of an approval at the stage of passing the final order can substitute the statutory mode by which jurisdiction over the preceding assessment year was required to be assumed in the first place. That question shall be examined separately while applying the statutory scheme to the facts of the present case.
12.On a conjoint reading of the above provisions, the legislative progression becomes discernible. Until 31.03.2021, a search under section 132 attracted the special machinery contained in section 153A, which itself overrode the ordinary reassessment provisions. The Finance Act, 2021 drew a statutory line at that date: sections 153A and 153C continued for searches/requisitions initiated or made on or before 31.03.2021, whereas searches initiated thereafter were brought within the redesigned reassessment architecture. Section 147 supplied the substantive power to assess or reassess escaped income; section 148 prescribed the notice preceding such assessment or reassessment; Explanation 2 to section 148 statutorily treated the specified post-01.04.2021 search circumstances as information suggesting escapement of income; section 148A prescribed a preliminary enquiry but expressly dispensed with that preliminary stage in specified search cases; section 149 imposed the applicable limitation upon issuance of notice; section 151 supplied the approval architecture wherever attracted; and, from 01.04.2022, section 148B introduced a further safeguard before the passing of an assessment/reassessment/recomputation order by an Assessing Officer below the prescribed rank in cases falling within Explanation 2 to section 148. The official explanatory material accompanying the Finance Act, 2021 described the change in the same terms, and the subsequent explanatory material records that after the Finance Act, 2021, Rajesh Kumar Jain assessment or reassessment in search cases for relevant years prior to the search year was made under section 147.
What emerges from this statutory transition is that the Legislature did not merely change the nomenclature of a search assessment. It changed the jurisdictional route through which an assessment of the preceding years consequent upon a post-01.04.2021 search was to be undertaken. The conditions embedded in that route cannot be treated as dispensable merely because the assessee had already filed a return under section 139 or because such return was otherwise capable of being selected for scrutiny. Whether, notwithstanding this statutory scheme, the Assessing Officer could validly select the assessee's return for Assessment Year 2022-23 under the compulsory scrutiny category, issue only a notice under section 143(2), and complete the assessment under section 143(3), is the precise question which we now proceed to examine.
Having delineated the statutory framework, we now revert to the facts before us. The chronology assumes significance. The assessee had already filed his return of income for Assessment Year 2022-23 on 29.12.2022 declaring total income of Rs.2,40,15,770/-. Thereafter, search under section 132 was initiated on 31.01.2023. The search thus fell in the previous year relevant to Assessment Year 2023-24, whereas Rajesh Kumar Jain the year before us, namely Assessment Year 2022-23, is a year preceding the assessment year relevant to the previous year in which search was initiated. The Assessing Officer did not invoke section 147 and admittedly no notice under section 148 was issued. Instead, as the assessment order itself records, the return was selected for complete scrutiny under the "compulsory category" by placing reliance upon para 2.2 of the revised guidelines dated 26.09.2022 applicable to cases in which search and seizure action/requisition under sections 132/132A had been conducted on or after 01.04.2021. Notice under section 143(2) dated 28.06.2023 was thereafter issued and the proceedings culminated in the order dated 26.06.2024 passed specifically under section 143(3). These are not disputed facts; indeed, they emanate from the assessment order itself. The question, therefore, is not whether the Assessing Officer possessed information arising from the search, nor whether the case could otherwise attract examination by the Department. The question is anterior and jurisdictional: having regard to the statutory regime applicable to a search initiated on 31.01.2023, could jurisdiction for Assessment Year 2022-23 be assumed merely by selecting the existing return for compulsory scrutiny and issuing notice under section 143(2), without invoking section 147 and issuing notice under section 148?
In our considered opinion, the answer has to be in the negative. The distinction between selection of a return for scrutiny and assumption of jurisdiction consequent upon a search is fundamental and cannot be effaced. Section 143(2) operates upon a return furnished under section 139 or in response to a notice under section 142(1) and enables the Assessing Officer, where he considers it necessary or expedient to ensure that the assessee has not understated income, computed excessive loss or underpaid tax, to require the assessee to attend and produce evidence in support of the return. It is thus part of the ordinary assessment machinery. Sections 147 and 148, on the other hand, operate upon the statutory premise that income chargeable to tax has escaped assessment and prescribe the jurisdictional mechanism for bringing such escaped income to assessment or reassessment. In a case falling within Explanation 2(i) to section 148, Parliament itself has attached a specific legal consequence to initiation of search under section 132 on or after 01.04.2021: the Assessing Officer "shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment." Once the statute itself identifies a post-01.04.2021 search as the event giving rise to deemed information of escapement and places such event within section 148, it would be incongruous to hold that, for an assessment year preceding the search year, the Assessing Officer may disregard that statutory route altogether and Rajesh Kumar Jain achieve the same consequence merely by selecting the existing return for scrutiny under section 143(2). Such an interpretation would render the deliberate placement of post- 01.04.2021 searches within Explanation 2 to section 148 substantially otiose.
There is another facet which fortifies this conclusion. Under the pre-amendment regime, Parliament had enacted section 153A as a special machinery dealing with assessment consequent upon search. That provision expressly displaced, inter alia, sections 147 and 148 and prescribed its own jurisdictional route. With effect from 01.04.2021, Parliament consciously restricted section 153A to searches initiated on or before 31.03.2021 and, simultaneously, incorporated searches initiated on or after 01.04.2021 into the newly substituted section 148 through Explanation 2. The significance of this legislative transition cannot be diluted by treating it as a mere administrative rearrangement. If, despite the withdrawal of the section 153A regime for searches after 31.03.2021 and the simultaneous incorporation of such searches into Explanation 2 to section 148, the Assessing Officer could nevertheless assess the preceding years simply by issuing an ordinary notice under section 143(2), the legislative migration from one special jurisdictional mechanism to another would lose much of its content. The statutory provisions must be read so as to give meaningful Rajesh Kumar Jain operation to the change consciously brought about by Parliament. The new regime did not leave the Assessing Officer without authority in consequence of a post-01.04.2021 search; it identified the source and manner of exercising that authority differently. Therefore, the question is not whether income detected pursuant to such search could be brought to tax it undoubtedly could, subject to law but through which jurisdictional channel Parliament authorised it to be brought to tax.
This also answers the reliance placed in the assessment order upon the revised guidelines dated 26.09.2022 for compulsory selection of search cases. There can be no quarrel with the proposition that administrative guidelines may prescribe categories of returns which are required to be taken up for scrutiny and may regulate the internal process of selection. But such guidelines operate within the four corners of the statute. They cannot create a jurisdiction which the Act requires to be assumed in another manner; nor can an administrative prescription dispense with a statutory condition governing assumption of jurisdiction. There is a conceptual difference between a guideline which tells the Department which case should be examined and a statutory provision which determines the legal authority and manner in which that examination can be undertaken. The former regulates administrative selection; the latter constitutes the Rajesh Kumar Jain source and conditions of jurisdiction. The assessment order records that the case was selected for complete scrutiny under the compulsory category precisely because search had been conducted after 01.04.2021. But the very event which occasioned such compulsory selection namely the search dated 31.01.2023 is an event for which Parliament had already prescribed a specific consequence in Explanation 2 to section 148. An administrative guideline cannot be construed in a manner which permits that statutory consequence to be bypassed. If the guidelines are capable of operating consistently with the Act, they must necessarily be so read; they cannot become an alternative source of jurisdiction.
We also find substance in the assessee's contention that the defect cannot be regarded as one merely of form or nomenclature. Had the Assessing Officer invoked section 147 by issuing a valid notice under section 148 and thereafter, upon completion of proceedings, merely employed an inaccurate description or omitted reference to one of the enabling provisions in the caption of the final order, an entirely different question might have arisen. That is not the factual situation before us. Here, the jurisdictional proceeding contemplated under section 148 was never initiated at all. No notice under section 148 was issued; there was consequently no return in response thereto; and the Assessing Officer proceeded throughout on the footing that the assessee's Rajesh Kumar Jain existing return could be subjected to ordinary compulsory scrutiny under section 143(2). The distinction is substantive because the reassessment framework carries with it statutory conditions concerning initiation, limitation and approval. Section 149 places the exercise of jurisdiction under section 148 within legislatively prescribed temporal boundaries, while section 151 identifies the specified authority for the approval contemplated by the reassessment framework as applicable. Thus, issuance of notice under section 148 is not a dispensable ceremonial step which can be replaced by a notice under section 143(2). The two notices perform different statutory functions. A notice under section 143(2) cannot perform the office of a notice under section 148, just as participation in scrutiny proceedings cannot retrospectively supply the jurisdiction which the statute required to exist at their inception.
The Revenue's reliance upon the approval of the Additional Commissioner recorded in the assessment order does not, in our view, answer this fundamental defect. We have already noticed that paragraph 9 of the assessment order records that the order was passed with prior approval of the Additional Commissioner of Income Tax, Central Range-I, Mumbai. We, therefore, do not rest our conclusion upon an assumption that no approval of any nature was obtained before passing the final order. Equally, however, the existence Rajesh Kumar Jain of such approval cannot be transposed backwards so as to supply an altogether absent assumption of jurisdiction under sections 147 and 148. Section 148B, as applicable from 01.04.2022, operates at the stage of passing the order in an assessment year falling within clauses (i) to (iv) of Explanation 2 to section 148 where the Assessing Officer is below the stipulated rank. The approval mechanism governing the initiation/issuance of notice under the reassessment provisions and the safeguard contained in section 148B operate at distinct stages and serve distinct statutory purposes. Compliance at a later stage cannot dispense with a jurisdictional requirement which ought to have been fulfilled at the threshold. Put differently, approval validates an act only within the jurisdiction which the statute otherwise permits to be exercised; approval by itself is not the source of that jurisdiction. Therefore, even assuming that the approval recorded in the assessment order satisfied the requirement operating at the stage of passing the final order, it cannot cure the anterior absence of proceedings initiated under section 148.
The aforesaid construction also finds support from the decisions of the Coordinate Benches relied upon by the learned counsel. In Pilot Industries Ltd. v. DCIT, ITA Nos.6124 & 6125/Del/2025, the Delhi Bench was confronted with assessments of years preceding the assessment year Rajesh Kumar Jain relevant to the search and examined the effect of the amended provisions governing post-01.04.2021 searches. After noticing Explanation 2 to section 148 and the statutory regime comprising sections 148, 148B and 151, the Coordinate Bench held that assessments framed directly under section 143(3) for the preceding years, without following the prescribed reassessment procedure, could not be sustained. The relevant conclusion reproduced in the assessee's written submissions records that the assessments under section 143(3) were held to be bad in law because the assessment ought to have proceeded under the special statutory provisions governing section 148 and the prescribed approval mechanism. The assessee has also relied upon Deepak Agarwal v. DCIT, Montage Enterprises Pvt. Ltd. v. DCIT/ACIT, Malbros International Pvt. Ltd. v. DCIT, Jamna Dass Nikkamal Jain Saraf Pvt. Ltd. v. DCIT and Homelife Buildcon Pvt. Ltd. v. DCIT, which are stated to have taken a similar view and were also noticed in Pilot Industries. We do not consider it necessary to reproduce extensive passages from each of these decisions, for the conclusion which we have reached flows principally from the statutory scheme itself. The decisions relied upon reinforce that construction rather than constitute its foundation.
At this juncture, it is necessary to clarify the precise ambit of our conclusion. We are not laying down an abstract Rajesh Kumar Jain proposition that the expression "section 143(3)" can under no circumstances find place in an order ultimately made pursuant to reassessment proceedings, nor is the validity of an assessment to be determined merely from the label placed upon the final order. The infirmity in the present case lies much deeper. There was no invocation of section 147 and no notice under section 148 at all. The assessment was conceived, initiated and completed as an ordinary scrutiny assessment on the premise that compulsory selection of the existing return under the administrative guidelines was sufficient to confer jurisdiction. It is this course which cannot be reconciled with the statutory scheme governing the assessment of a preceding year consequent upon a search initiated after 31.03.2021. Likewise, we are not holding that proceedings were invalid because the Assessing Officer failed to undertake the preliminary enquiry under section 148A. As explained earlier, the statutory regime itself carved out specified search cases from that preliminary procedure. The jurisdictional defect is the failure to invoke section 148 itself, not the absence of an enquiry which the Legislature had otherwise dispensed with in the relevant category of search cases. This distinction is material because it confines our decision to the precise statutory infirmity arising on the undisputed facts before us.
Viewed cumulatively, therefore, the statutory position admits of little ambiguity in the facts of the present case. The search was initiated on 31.01.2023; section 153A was no longer the governing provision for such a search; Assessment Year 2022-23 preceded the assessment year relevant to the previous year in which search was initiated; Explanation 2(i) to section 148 expressly treated such post-01.04.2021 search as giving rise to deemed information suggesting escapement of income; and the Act provided the jurisdictional machinery through sections 147 and 148, subject to the attendant statutory requirements applicable to that machinery. Yet the Assessing Officer did not invoke that jurisdiction at all. He instead proceeded from an administrative selection under the compulsory-scrutiny guidelines directly to a notice under section 143(2) and ultimately to an assessment under section 143(3). What has been omitted, therefore, is not an ancillary procedural formality capable of being viewed independently of the jurisdiction exercised. The statutory gateway itself was never entered. Once Parliament has prescribed the manner in which jurisdiction consequent upon a specified event is to be assumed, the authority exercising that jurisdiction must act within that prescription. Administrative convenience, participation by the assessee, or approval obtained at a subsequent stage cannot substitute the jurisdictional act which the statute required at the inception. We accordingly hold that the assessment proceedings for Assessment Year Rajesh Kumar Jain 2022-23, having been initiated without issuance of notice under section 148 and by resorting directly to section 143(2), cannot be sustained in law.
There is yet another reason why the aforesaid conclusion is important in the context of the statutory safeguards built into the amended regime. To treat the course adopted by the Assessing Officer as permissible would mean that, whenever a return for a preceding year happens to be available for scrutiny, the Revenue could choose between two parallel jurisdictional routes after a search--one under sections 147 and 148 carrying the conditions, limitation and approval architecture enacted by Parliament, and another through ordinary scrutiny under section 143(2) merely because the return was capable of selection. Nothing in the statutory scheme confers such an election. An interpretation producing such a result would make compliance with the reassessment safeguards dependent upon the fortuitous circumstance whether a return remained amenable to scrutiny and would permit an administrative mode of selection to determine whether statutory safeguards enacted specifically in the context of post-01.04.2021 searches are attracted. Such a construction cannot be accepted. The provisions have to operate harmoniously: section 143 continues to govern ordinary assessment of returns within its field, whereas sections 147 and 148, read with Explanation 2 and the allied Rajesh Kumar Jain provisions, govern assumption of jurisdiction over escaped income in the circumstances legislatively identified therein. In the peculiar and undisputed facts before us, the Department itself traces the selection of Assessment Year 2022-23 to the search conducted on 31.01.2023. Once that is so, the jurisdictional consequence statutorily attached to that search cannot be severed from the very assessment sought to be made pursuant thereto. The assessment framed by bypassing that statutory route is therefore legally unsustainable.
Before parting with the jurisdictional issue, we may briefly deal with the contention that the assessee had participated in the assessment proceedings pursuant to the notice issued under section 143(2) and had furnished the details called for by the Assessing Officer. In our opinion, such participation does not alter the conclusion reached hereinabove. The objection before us is not founded upon any irregularity in service of a notice which the Assessing Officer was otherwise competent to issue in exercise of the jurisdiction validly assumed by him. The objection goes to the anterior question whether the jurisdiction which was required to be assumed under the statutory framework governing a post-01.04.2021 search was ever assumed at all. Once the statute prescribed recourse to sections 147 and 148 for the assessment of the preceding year in the circumstances contemplated by Explanation 2 to section 148, participation in proceedings Rajesh Kumar Jain initiated under a different statutory route cannot supply the jurisdiction which was never assumed in the manner contemplated by law. Nor can the fact that the assessee had originally filed a return under section 139 enlarge the scope of section 143(2) so as to make it a substitute for the jurisdictional notice contemplated under section 148. The two provisions operate at different stages and for different statutory purposes. What is material here is that the very foundation upon which Assessment Year 2022-23 was taken up by the Assessing Officer was the search conducted on 31.01.2023; indeed, the assessment order itself records that the case was selected under the compulsory category because search and seizure action had been conducted after 01.04.2021. The Revenue cannot, therefore, draw jurisdictional consequences from the search for selecting and assessing the preceding year, and at the same time detach that assessment from the statutory regime which Parliament had specifically enacted for such post-01.04.2021 searches.
We accordingly hold, on the peculiar and undisputed facts of the present case, that for Assessment Year 2022-23, which precedes the assessment year relevant to the previous year in which search under section 132 was initiated on 31.01.2023, the Assessing Officer could not have assumed jurisdiction merely by selecting the return for compulsory scrutiny and issuing notice under section 143(2). The legislative scheme Rajesh Kumar Jain brought into force from 01.04.2021 had confined the erstwhile section 153A regime to searches initiated on or before 31.03.2021 and had brought searches initiated thereafter within the redesigned reassessment framework. Explanation 2(i) to section 148 expressly treated initiation of search under section 132 on or after 01.04.2021 as a circumstance in which the Assessing Officer was deemed to possess information suggesting that income chargeable to tax had escaped assessment. The jurisdiction for the preceding year was, therefore, required to be assumed under sections 147 and 148, subject to the statutory conditions and safeguards forming part of that regime. Admittedly, no notice under section 148 was issued in the present case. The assessment was initiated only through notice under section 143(2) and was ultimately completed under section 143(3). The prior approval of the Additional Commissioner recorded in the final assessment order does not cure this anterior defect, because an approval obtained at the stage of passing an order cannot retrospectively create a jurisdiction which was required to be assumed at the inception of the proceedings. Equally, the compulsory-scrutiny guidelines could regulate administrative selection of cases, but could neither supplant nor dispense with the jurisdictional machinery enacted by Parliament. We, therefore, hold that the assumption of jurisdiction in the manner adopted by the Assessing Officer was not in accordance with the statutory Rajesh Kumar Jain scheme applicable to the search in question and, consequently, the assessment order dated 26.06.2024 cannot be sustained.
Once the assessment itself is held to be legally unsustainable for want of valid assumption of jurisdiction, the additions made therein cannot survive independently of the assessment from which they emanate. We accordingly allow the additional grounds raised by the assessee and set aside the impugned order of the learned CIT(A) to the extent it sustains the assessment and the additions arising therefrom. Consequently, the assessment order dated 26.06.2024 passed for Assessment Year 2022-23 is quashed. In view of our decision on the jurisdictional issue, it is neither necessary nor appropriate for us to enter upon the merits of the two additions which survive after the order of the learned CIT(A), namely, Rs.12,88,400/- out of the addition based upon the loose paper found during search and Rs.4,30,144/-representing the cash treated as unexplained under section 69A. Those grounds have become academic and are therefore left open. Our decision should not be understood as expressing any opinion upon the explanation of the assessee regarding the marriage-related receipts, the interpretation of the notings contained in the seized loose paper, the effect of the statement recorded during search, the alleged duplication of Rs.10,00,000/-, or the explanation and reconciliation Rajesh Kumar Jain furnished in respect of the cash found. Those matters do not call for adjudication once the assessment in which the additions were made is held to be unsustainable at the threshold.
To sum up, the additional grounds raised by the assessee are admitted and allowed. The assessment framed under section 143(3) for Assessment Year 2022-23, consequent upon the search initiated under section 132 on 31.01.2023 but without invocation of section 147 and issuance of notice under section 148, is held to be unsustainable in law and is accordingly quashed. The grounds challenging the additions on merits are rendered academic and require no separate adjudication. Accordingly, the appeal of the assessee is allowed.
In the result, appeal of the assesse is allowed.
12.In view of above discussion, and by respectfully following the judgements of coordinate benches of Tribunal as referred herein above, we are of the considered view that the assessment for the impugned assessment year i.e. for AY 2021-22 ought to have been completed u/s 147 of the Act after following the procedure as provided in section 148 and 148B of the Act which has not been done in the instant case. Therefore, the assessment order so passed u/s 143(3) is invalid order and is hereby quashed. The cross objections No. 1 to 4 are thus allowed.
13.Since we have allowed the legal objections raised by the assessee and quashed the assessment order, the appeal of the revenue on the merits of the addition become infructuous and also other cross objections raised become academic and thus not adjudicated.
In the result, the appeal of the Revenue is dismissed, and the Cross Objection of the assessee are partly allowed.