- 1 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 8578 OF 2018 (T-IT) BETWEEN: ABHARAN JEWELLERS A PARTNERSHIP FIRM UNDER THE PARTNERSHIP ACT, 1932 NO.192, OPP:ISKCON WEST OF CHORD ROAD MAHALAXMI LAYOUT BENGALURU – 560 086 REPRESENTED BY ITS GPA HOLDER SRI PRATAP M.KAMATH. …PETITIONER (BY SRI GURUMURTHY, M., ADVOCATE) AND: 1. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 6(2) BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, KORAMANGALA BENGALURU – 560 095. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-6(2)(1) BMTC BUILDING, 80 FEET ROAD 6TH BLOCK, KORAMANGALA Digitally signed by NAGAVENI Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 BENGALURU – 560 095. …RESPONDENTS (BY SRI E.I.SANMATHI, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICE ISSUED UNDER SEC. 148 BEARING NO.AABFA768K/DCIT-C-6(2)(1)/148/2016-17 DATED 01.08.2016 BY R-2 VIDE ANNEX-A1 FOR THE A.Y. 2013-14 AS BAD IN LAW; b) QUASH THE ORDER OF ASSESSMENT PASSED BY R-2 UNDER SEC. 143(3) R.W.S 147 OF THE ACT, DATED 29.12.2017 VIDE ANNEX-A2 FOR THE A. Y. 2013-14 AS ONE WITHOUT JURISDICTIION; c)QUASH THE NOTICE OF DEMAND ISSUED UNDER SEC. 156 OF THE ACT PURSUANT TO THE ABOVE IMPUGNED ASSESSMENT ORDER PASSED 143(3) R.W.S.147 OF THE ACT, BY R-2 ON 29.12.2017 FOR THE ASSESSMENT YEARS 2013-14 AT ANNEX-A3; d) QUASH THE NOTICE OF PENALTY ISSUED U/S 274 R.W.S. 271 OF THE ACT PURSUANT TO THE ABOVE IMPUGNED ASSESSMENT ORDER PASSED 143(3) R.W.S. 147 OF TEH ACT, BY THE R-2 ON 29.12.2017 FOR THE ASSESSMENT YEARS 2013-14 VIDE ANNEX-A4; (e) DECLARE THAT THE R-2 ERRED IN LAW IN INVOKING THE PROVISIONS OF SEC. 143(3) R.W.S. 147 OF THE ACT ON MERE SURMISES, CONJECTURES AND SUSPICION WITHOUT HAVING ANY REASONS TO BELIEVE AS CONTEMPLATED UNDER THE PROVISIONS OF SEC. 143(3) R.W.S. 147 OF THE ACT. - 3 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER Petitioner is before this Court seeking the following prayers: “(a) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice issued under section 148 dated: 1.8.2016 NO. AABFA 768K/DCIT-C-6(2)(1)/148/2016-17 by Respondent No.2 marked as Annexure-A1 for the A.Y.2013-14 as bad in law. (b) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the order of assessment passed by Respondent No.2 under section 143(3) r.w.s 147 of the Act, dated 29.12.2017 marked as Annexure-A2 for the A.Y.2013-14 as one without jurisdiction. (c) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice of demand issued u/s 156 of the Act pursuant to the above impugned assessment order passed 143(3) r.w.s 147 of the Act, by the Respondent No. 2 on 29.12.2017 for the assessment years 2013-14 marked as Annexure-A3. (d) Issue a writ of Certiorari or direction in the nature of a writ of certiorari quashing the notice of penalty issued u/s 274 r.w.s 271 of the Act pursuant to the above impugned assessment order passed 143(3) r.w.s 147 of the Act, by the Respondent No. 2 on - 4 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 29.12.2017 for the assessment years 2013-14 marked as Annexure-A4. (e) Declare that the Respondent No. 2 erred in law in invoking the provisions of section 143(3) r.w.s 147 of the Act on mere surmises, conjectures and suspicion without having any reasons to believe as contemplated under the provisions of section 143(3) r.w.s 147 of the Act (f) And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity.” 2. Heard Sri Gurumurthy M, learned counsel appearing for petitioner and Sri E I Sanmathi, learned counsel appearing for respondents. 3. Learned counsel for petitioner submits that the petition be disposed in terms of an order passed by the coordinate bench of this Court in W.P.No.8577 of 2018 dated 29-10-2024. 4. Learned counsel Sri E I Sanmathi would not dispute the position, as is laid down by the coordinate bench. 5. The coordinate bench in W.P.No.8577 of 2018, by its order dated 29-10-2024, has held as follows: - 5 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 “…. …. …. 8. With regard to question No.2, the relevant provision of Section 147 of the Act as it was before amendment, which is applicable to the present case and Sections 153C & 153A of the Act read as under: "Income escaping assessment. 147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereinafter in this section and in sections 148 to 153 referred to as the relevant assessment year)" Section 153C of the Act, reads as follows: Assessment of income of any other person. 153C. (1) Not withstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [ for six assessment years immediately preceding the assessment year relevant - 6 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A]. Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to [sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person: Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately proceeding the assessment year relevant to the previous year in which search is conducted or requisition, is made [and for the relevant assessment year or years as referred to in sub-section (1) of section 153A] except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub- section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or - 7 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A. (3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April, 2021. Section 153A of the act, reads as follows: Assessment in case of search or requisition 153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, [but on or before the 31st day of March, 2021], the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b), 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; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made [and for the relevant assessment year or years]: - 8 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years [and for the relevant assessment year or years]: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] referred to in this [sub-section] pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate: Provided also that the Central Government may by rules made by it and published in the Official Gazettee (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made [and for the relevant assessment year or years] Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakhs rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.- For the purposes of this sub- section, the expression "relevant assessment year" shall mean an assessment year preceding the - 9 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 assessment year relevant to the pervious year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.- For the purpose of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) If any proceeding initiated or any order of assessment or reassessment made under sub- section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the [Principal Commissioner or] Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation. - For the removal of doubts, it is hereby declared that- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 9. Perusal of the aforementioned provisions shows that the above Sections 153C and 153A of the Income Tax Act, 1961 start with non obstante clause 'notwithstanding anything contained in Sections 139, 147, 148, 149, 151 and 153', which means irrespective of the said Sections when incriminatory material is seized during a search operation, the revenue is having the power to reopen the assessment and when the said incriminatory - 10 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 material is seized from the premises of the assessee himself, proceedings as contemplated under Section 153A of the Act has to be followed and when the same is seized from the premises of any third party, procedure as contemplated under Section 153C of the Act has to be followed. Thus, the proceedings contemplated under Sections 153A and 153C of the Act is different from the proceedings contemplated under Section 147 of the Act. The High Court of Rajasthan while examining the similar matter in the case of Shyam Sundar Khandelwal vs. Assistant Commissioner of Income-tax reported in [2024] 161 taxmann.com 255 (Rajasthan) in paragraph Nos.26, 27, 28, 38 and 40 has held as under: "26. Special procedure is prescribed under section 153A to 153D for assessment in cases of search and requisition. There cannot be a quibble with the proposition that the special provision shall prevail over the general provision. To say it differently the provisions of section 153A to 153D have prevalence over the regular provisions for assessment or reassessment under section 143 & 147/148. 27. Section 153A and 153C starts with non-obstante clause. The procedure for assessment/reassessment in section 153A, 153C in cases of search or requisition has an overriding effect to the regular provisions for assessment or reassessment under sections 139, 147, 148, 149, 151 & 153. 28. The language of explanation 2 to new section 148 is akin to section 153A and section 153C. Corollary being that after seizing of operational period of section 153A to 153D, the cases being dealt thereunder were circumscribed in the scope of newly substituted section 148. 38. The petitioner relied upon the decision of the Karnataka High Court in the case of Sri.Dinakara Suvarna (supra). It would be relevant to quote Para-10: 10.Admittedly no proceedings were initiated under section 153C of the Act. Thus, there is patent non-application of mind. It is relevant to note that the author of the diary Smt.Soumya Shetty had passed away prior to the date of search. It was argued on behalf of the Revenue - 11 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 that Shri.Ashok Kumar Chowta had offered tax on lump-sum income. 40. In view of above discussion the notices issued under section 148 and the impugned orders are quashed. However, the respondents shall be at liberty to proceed against the petitioners in accordance with law". 10. Our High Court in the case of "Sri. Dinakara Suvarna vs. Deputy Commissioner of Income Tax" reported in ITA No.16/2015 has formulated one of the questions of law, as follows: "b) Whether Tribunal erred in law in not holding that there was no reason to believe that income escaped assessment and all mandatory conditions to reopen the assessment under Section 147 of the Act were not satisfied on the facts and circumstances of the case?" and while answering the same in paragraph Nos.5 and 10, has held as under: "5. The sum and substance of Shri.Chandrashekar's argument is, Revenue ought to have followed the procedure contemplated under Section 153C because, it's case is based on material found during the search of the premises of one Shri.Ashok Kumar Chowta. 10. Admittedly no proceedings were initiated under Section 153C of the Act. Thus, there is patent non-application of mind. It is relevant to note that the author of the diary Smt.Soumya Shetty had passed away prior to the date of search. It was argued on behalf of the Revenue that Shri.Ashok Kumar Chowta had offered tax on lump- sum income". 11. Perusal of the aforementioned judgments goes to show that when the revenue wants to reopen the assessment solely based upon the materials seized during search operation conducted on a third party premises, as in the instant case, the proceedings have to be initiated as contemplated under Section 153C of the Act and it is not open for them to proceed under Section 147 of the Act. - 12 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 12. With regard to question No.3, as the impugned order passed is without jurisdiction, mere availability of an alternative remedy is not a ground to dismiss the writ petition. 13. As the impugned order has been passed under erroneous provisions of law and not under Section 153C of the Act as it is warranted under the given facts and circumstances the case, the same is liable to be set aside..” 6. In view of the issue in the case at hand standing answered by the coordinate bench as afore-quoted, I pass the following: ORDER i) The notice issued under Section 148 of the Income Tax Act dated 01.08.2016 for the Assessment Year 2013-14 by respondent No.2 (Annexure-A1) to the writ petition is hereby set aside; ii) The order of assessment passed under Section 143(3) read with Section 147 of the Act, dated 29.12.2017 for the assessment year 2013-14 by respondent No.2 (Annexure-A2) is hereby set aside; iii) The notice of demand issued under Section 156 of the Act pursuant to the impugned assessment order passed under Section - 13 - HC-KAR NC: 2025:KHC:34934 WP No. 8578 of 2018 143(3) read with Section 147 of the Act, dated 29.12.2017 for the assessment year 2013-14 by respondent No.2 (Annexure-A3) is hereby set aside; iv) The notice of penalty issued under Section 274 read with Section 271 of the Act dated 29.12.2017 by respondent No.2 (Annexure- A4) for the assessment year 2013-14 is hereby set aside; v) However, liberty is reserved to the respondents to proceed against the petitioner in accordance with law; vi) Accordingly, Writ Petition is disposed of. Sd/- (M.NAGAPRASANNA) JUDGE BKP List No.: 1 Sl No.: 30