2023 (3) TMI 1408 - HC - Income Tax

Assessment u/s 153C - Period of limitation in issuing notice - Search conducted at third party - HELD THAT - As the impugned show-cause notice was issued to the petitioner on 04.02.2022, one year has already passed whereafter the present petition came to be filed. In absence of any plausable explanation as to delay and also in face of statutory remedy of objection available to the petitioner, which objection has also been filed, we do not consider it a fit case to offer any interference in exercise of extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. Without adjudicating the merits of the objection raised by learned counsel for the petitioner and leaving it open to the petitioner to press those objections first before the Assessing Authority, whereafter the matter may be entertained on merits, present writ petition is disposed of with a direction upon respondent no.1 to deal with the assessment proceedings strictly in accordance with law, keeping in mind the observations made above.

Summary

Issues involved:
Challenge to notice under Section 153-C of the Income Tax Act, 1948 for A.Y. 2015-16.

Judgment Summary:

1. Issue of Challenge to Notice:
The petitioner contested a notice dated 04.02.2022 issued by the Assessing Authority under Section 153-C of the Income Tax Act, 1948 for A.Y. 2015-16. The petitioner argued that they were not part of the search proceedings under Section 132 of the Act conducted in the case of Saloni Group, from which certain documents were received by the Assessing Officer of the petitioner on 27.10.2021. The petitioner relied on Section 153-C(3) of the Act and a decision of the Karnataka High Court to support their claim that the loose papers cannot be the basis for initiating proceedings under Section 153-C.

2. Interpretation of Section 153-C(3):
The revenue contended that Section 153-C(3) does not apply to the petitioner as it pertains to the person searched, which in this case is the Saloni Group. The revenue argued that the loose documents received could indicate concealed income and should be considered during the proceedings under Section 153-C(3).

3. Objection and Appeal Remedies:
The Court noted the objection raised regarding the availability of alternative remedies of objection and appeal, as well as the delay in filing the petition. Due to the delay of one year in filing the petition without a plausible explanation and considering the statutory remedy of objection available to the petitioner, the Court declined to interfere under Article 226 of the Constitution of India.

4. Disposition of the Petition:
The Court disposed of the writ petition without adjudicating on the merits of the objections raised by the petitioner, directing the Assessing Authority to proceed with the assessment strictly in accordance with the law, allowing the petitioner to raise objections before the Authority before further consideration.

This summary provides a detailed overview of the issues raised in the judgment, the arguments presented by both parties, and the Court's decision regarding the challenge to the notice under Section 153-C of the Income Tax Act, 1948.