2014 (5) TMI 1141 - HC - Income Tax

Validity of assessment u/s 153C - alternate remedy - availability of statutory remedies - Held that - We are of the opinion that at this stage no interference is called for. Section 153C as is well known, pertains to assessment of income of persons other than one who is subjected to search. Subsection (1) of section 153C provides that where any Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belonged 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 such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A of the Act. Section 158BD of the Act makes similar provisions for block assessment of undisclosed income of persons other than the searched person. Under the circumstances, the petitioner s contention that notice under section 153C of the Act could not have been issued after search operations were over cannot be accepted. We are not inclined to entertain the writ petition in view of the availability of statutory remedies. Since we relegate the petitioners to remedies under the statute, at this stage, we express no opinion on the validity of the reference.

Summary

Issues:
Challenge to notice under section 153C of the Income Tax Act, 1961 and reference to District Valuation Officer for property valuation.

Analysis:

The petitioner, a civil construction firm, challenged a notice dated 1.8.2007 issued by the Deputy Commissioner of Income Tax under section 153C of the Income Tax Act, 1961. The notice was based on search operations conducted on the Rajhans group of companies, where unaccounted income was admitted by a managing partner. The satisfaction note recorded by the respondent indicated that unaccounted income of the petitioner belonged to the assessee group, leading to the issuance of the impugned notice. The petitioner argued that the satisfaction lacked evidence and was recorded after the search, rendering the notice invalid. However, the court found no interference necessary at this stage, emphasizing that section 153C allows for assessment of income of persons other than the searched individual.

Regarding the validity of the notice, the court cited the Supreme Court's decisions in CIT v. Vijaybhai N. Chandrani and CIT v. Chhabil Dass Agarwal, highlighting the need to exhaust statutory remedies before challenging such notices. The court declined to examine the notice's validity, reiterating the importance of following statutory procedures. The judgment emphasized that the petitioner could raise concerns about the notice and the reference to the District Valuation Officer before the appropriate forum, indicating that statutory remedies should be pursued first before resorting to writ petitions.

In conclusion, the court disposed of the petition without interference, vacating interim relief. The judgment underscored the significance of following statutory procedures and exhausting available remedies before challenging legal notices, emphasizing the need to adhere to established legal principles and avenues for redressal.