2014 (5) TMI 362 - HC - Income Tax

Validity of petition u/s 153C of the Act - Validity of Reference made to DVO Valuation of immovable properties Held that - At this stage no interference is called for - Section 153C of the Act pertains to assessment of income of persons other than one who is subjected to search - Subsection (1) of section 153C provides that where any AO 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 AO having jurisdiction over such other person and that AO 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. In context of section 158BD of the Act Relying upon CIT v. Calcutta Knitwears 2014 (4) TMI 33 - SUPREME COURT the contention that notice u/s 153C of the Act could not have been issued after search operations were over cannot be accepted. Relying upon Indo Asahi Glass Co. Ltd. v. ITO 2001 (9) TMI 5 - SUPREME Court the petition cannot be entertained in view of the availability of statutory remedies - no opinion on the validity of the reference is expressed - it would be open for the petitioner to raise all contentions with respect to the validity of the notice u/s 153C as well as the reference made to the DVO before the appropriate forum Decided against Assessee.

Summary

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

Analysis:
The petitioner, a civil construction firm, challenged a notice issued under section 153C of the Income Tax Act, 1961, and a reference to the District Valuation Officer for valuation of properties. The notice was based on a search operation on Rajhans group of companies, where unaccounted income was disclosed. The satisfaction note recorded by the respondent indicated that the unaccounted income belonged to the petitioner, justifying the notice. The petitioner contended that the satisfaction lacked evidence and was recorded after the search, making the notice invalid. The court noted that section 153C allows assessment of income of persons other than the searched individual, and the notice could be issued post-search. Citing precedents, the court declined to interfere at this stage, emphasizing the availability of statutory remedies.

The court referenced the Supreme Court's stance on the validity of notice under section 153C, highlighting the need to exhaust statutory remedies before seeking judicial intervention. The court cited cases where writ petitions were dismissed due to premature filing without exhausting alternative remedies. Emphasizing the importance of following statutory procedures, the court declined to entertain the writ petition, directing the petitioner to address concerns through appropriate statutory channels. The court clarified that the petitioner could raise objections regarding the notice and reference before the relevant forum, without expressing an opinion on their validity. The petition was disposed of, with interim relief vacated, maintaining the need to follow statutory procedures and exhaust available remedies before seeking judicial intervention.