2016 (3) TMI 1212 - HC - Income Tax

Reopening of assessments - whether since action under Section 158BC (a) is already taken in pursuance to search and seizure operations, no parallel proceedings can be started under Section 147 in relation to the same issue? - Held that - The validity of the said search proceedings and the consequential notices issued to the Petitioners was the subject matter of WP which was dismissed by this Court 2006 (12) TMI 77 - HIGH COURT, DELHI and against the said order, SLP was filed by the Petitioners 2016 (4) TMI 1133 - SUPREME COURT , in which notice was issued by the Supreme Court and it was directed that the audit under Section 142 (2A) of the Act may go on, but no final assessment order shall be passed. It is stated that Civil Appeal arising out of the aforementioned SLP is likely to be heard finally in the near future. In the present petition, while issuing Rule DB on 16th July 2002, further proceedings under Section 147 of the Act against the Petitioners was stayed.Since the outcome of the above appeal in the Supreme Court will have a bearing on the aforementioned ground urged in the present petition, it is considered appropriate to await the decision of the Supreme Court.

Summary

Issues:
Reopening of assessments for AYs 1994-95, 1995-96, and 1996-97 under Section 147/148 of the Income Tax Act 1961 based on material recovered during search proceedings under Section 158 BC of the Act. Challenge to the reopening on grounds of parallel proceedings and validity of search proceedings.

Analysis:
The judgment discusses the challenge to the reopening of assessments for the Assessment Years (AYs) 1994-95, 1995-96, and 1996-97 under Section 147/148 of the Income Tax Act 1961. The Petitioner's counsel argued that the reasons for reopening referred to material recovered during search proceedings under Section 158 BC of the Act on 22nd June, 1998. It was contended that since action under Section 158BC (a) was already initiated following the search and seizure operations, parallel proceedings under Section 147 of the Act on the same issue were impermissible.

The counsel further highlighted that the validity of the search proceedings and the notices issued to the Petitioners were previously challenged in WP (C) No.4685/2000, which was dismissed by the Court in December 2006. Subsequently, an appeal was filed in the Supreme Court, and it was directed that while the audit under Section 142 (2A) of the Act could continue, no final assessment order should be passed. The pending appeal in the Supreme Court, Civil Appeal No.2667/2007, arising from the Special Leave Petition (SLP), was expected to be heard in the near future.

In the current petition, a 'Rule DB' was issued in 2002, staying further proceedings under Section 147 of the Act against the Petitioners. Given the potential impact of the Supreme Court's decision on the grounds raised in the present petition, the High Court deemed it appropriate to await the outcome of the pending appeal. Consequently, the matter was listed for consideration in the category of 'After Notice Miscellaneous Matters' on a specified date in April 2016.

This detailed analysis of the judgment outlines the key issues surrounding the reopening of assessments, the challenge based on parallel proceedings, the history of the search proceedings, and the implications of the pending appeal on the current petition. The Court's decision to await the Supreme Court's ruling demonstrates a cautious approach to ensure a comprehensive and informed resolution of the legal matters at hand.