2015 (8) TMI 230 - HC - Income Tax

Validity of assessment u/s 153A - reopening of assessment - Held that - In case where the requisition is made, the assessment of that particular year is required to be done and the assessing officer is not 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 year search is conducted or requisition is made. The income tax officer after making a valid requisition under Section 132A was to proceed and make an assessment in accordance with the procedure prescribed under Section 132B of the Act by making an assessment of that relevant assessment year under Section 153A of the Act but had no jurisdiction to reopen the assessment of the preceding years. Consequently, the notices dated 15th October, 2012 issued under Section 153A of the Act reopening the assessment proceedings for the year 2006-07 to 2011-12 are all quashed. Notice for making the assessment for the assessment year 2012-13 is valid. - Decided partly in favour of assessee.

Summary

Issues:
1. Validity of seizure of money by Magistrate and subsequent requisition by income tax department.
2. Legality of notices issued under Section 153A of the Income Tax Act for assessment years 2006-2007 to 2012-13.
3. Interpretation of the third proviso to Section 153A of the Act and its applicability in the case.

Analysis:
1. The petitioner, a contractor with Indian Railways, had money seized by the Magistrate, which was later requisitioned by the income tax department under Section 132A of the Income Tax Act. The department contended that the requisition and reopening of assessment proceedings were validly done in accordance with the procedure under Section 132A and Section 153A of the Act.

2. The High Court analyzed the provisions of the third proviso to Section 153A inserted by the Finance Act, 2012. It was noted that this proviso specified cases where the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for preceding years when a requisition is made. The Court held that the income tax officer, after a valid requisition under Section 132A, should proceed to make an assessment for the relevant assessment year under Section 153A but had no jurisdiction to reopen assessments of preceding years.

3. Consequently, the Court quashed the notices issued under Section 153A for the assessment years 2006-07 to 2011-12, as they were beyond the officer's jurisdiction to reopen assessments of preceding years. However, the notice for making the assessment for the year 2012-13 was deemed valid under the provisions of the Act.

4. In conclusion, the High Court partly allowed the writ petition, emphasizing the importance of following the prescribed procedures under the Income Tax Act for requisitions and assessments. The judgment clarified the limits of authority for assessing officers in such cases and upheld the validity of the notice for the assessment year 2012-13 while quashing the notices for preceding years.