2012 (6) TMI 810 - HC - Income Tax

Validity of assessment - best judgment assessment - violating section 158B(a) - denial of natural justice - Held that - In view of the second proviso to section 144(1), in a case where notice under section 142(1) has been issued, it is not necessary for the assessing officer to give an opportunity of hearing to tire assessee as provided in section 144(1), prior to making a best judgment assessment. As already seen in the preceding paras, this is a case where notice under section 142(1) was issued to the petitioner and it has also been found that such notices were properly served. Therefore, this case is covered by the second proviso to section 144(1) of the Act and hence there is no substance in the complaint that best judgment assessment was completed without affording an opportunity of hearing to the petitioner. The petitioner has miserably failed to prove that any documents were sought for by him or that on account of refusal to furnish the same, any prejudice was caused to him to sustain a plea of violation of the principles of natural justice. Unable to accept the case of the petitioner that in finalising the assessment under section 144 of the Act, natural justice was violated. In this case, since proceedings for assessment were initiated following a search under section 132, the special procedure as provided in Chapter XTV-B has to be followed. In such a case, the assessment to be completed has to be for the block period as defined in section 158B(a) and the block period includes the period upto the date of commencement of search, in addition to the six assessment years preceding the previous year in which the search was conducted. Insofar as this case is concerned, apart from contending that the assessment under section 144 is beyond the six years, petitioner does not have a case that the assessment for 2009-2010 has been completed violating section 158B(a) of the Act. Therefore, Writ Petn. where Ext. P17 is challenged has to be dismissed.

Issues Involved:
1. Validity of assessment orders under sections 144, 153C, and 153A of the IT Act, 1961.
2. Proper service of notices under sections 153C and 142(1) of the IT Act.
3. Requirement of the Assessing Officer's satisfaction before initiating proceedings under sections 153C and 158BD.
4. Compliance with principles of natural justice in the assessment process.
5. Legality of the assessment for the year 2009-2010 under section 153A.

Issue-Wise Detailed Analysis:

1. Validity of Assessment Orders:
The petitioner sought to quash the assessment orders for the years 2003-2004 to 2009-2010, issued under sections 144, 153C, and 153A of the IT Act, 1961. The respondent clarified that the assessments were based on documents seized during a search at the Mohtisham Group's premises, which revealed the petitioner's undisclosed income. The assessments were completed under section 144 due to the petitioner's non-cooperation.

2. Proper Service of Notices:
The petitioner contended that notices under sections 153C and 142(1) were not validly served, as they were received by individuals not authorized to accept them on his behalf. The court found that the petitioner's own correspondence acknowledged the receipt of the notices, and service on the petitioner's wife was deemed valid under section 282(b) of the Act read with Order V, Rule 15 of the CPC. The court held that the petitioner could not dispute the service of notices after having acted upon them.

3. Requirement of Assessing Officer's Satisfaction:
The petitioner argued that the Assessing Officer did not record the necessary satisfaction before initiating proceedings under sections 153C and 158BD. The court noted that the petitioner had only requested a copy of the satisfaction note but did not claim that such satisfaction was not recorded. The respondent stated that the satisfaction was recorded and could be produced if directed by the court. The court found no evidence to suggest that the satisfaction was not recorded, thus dismissing the petitioner's contention.

4. Compliance with Principles of Natural Justice:
The petitioner claimed that the assessment under section 144 violated principles of natural justice, as he was not given adequate opportunity to present his case. The court observed that multiple opportunities were provided to the petitioner to furnish details, which he failed to utilize. The court also noted that under the second proviso to section 144(1), no further opportunity was required if a notice under section 142(1) had been issued. Therefore, the court concluded that the assessment was completed in compliance with the principles of natural justice.

5. Legality of Assessment for 2009-2010:
The petitioner contended that the assessment for 2009-2010 was illegal as it exceeded the six assessment years limit under section 153A. The court referred to section 158B(a), which includes the period up to the date of the search in the previous year. The court found that the assessment for 2009-2010 was within the permissible period under section 158B(a) and thus was valid.

Conclusion:
The court dismissed the writ petitions, finding no merit in the petitioner's contentions. The assessments for the years 2003-2004 to 2009-2010 were upheld as valid, and the principles of natural justice were deemed to have been complied with. No costs were awarded.

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