2016 (12) TMI 1195 - HC - Income Tax

Assessment u/s 153A validity - Held that - The matter pertains to factual determination of the issue and as such this Court cannot assume the power of appellate court, moreover, it is not that there is no other efficacious alternative remedy available to the petitioner assessee, ground on which the jurisdiction of this Court under Article 226 of the Constitution of India is to be invoked, taking into consideration the fact that there is availability of alternative remedy of appeal, we thought it proper not to interfere with the issue since only notice U/s.153-A has been issued to the petitioner with a direction to satisfy the authority, moreover, the search and seizure was conducted on 11.09.2014, well within the knowledge of the petitioner assessee, but he has not challenged the authority of the jurisdiction under the Act fairly for a period of more than two years and it is only after the notice U/s.153-A of the Act, 1961 issued, this writ petition has been filed. Hence we are of the considered view that this is not the appropriate stage to entertain the writ petition for the reasons discussed herein above. Accordingly the writ petition is dismissed, however reserving liberty to the petitioners that if they chose to avail the alternative remedy of appeal, they may avail the same by raising all points which are available to them and in that situation the authority concerned will take decision in accordance with law.

Issues Involved:
1. Legality of the notice issued under Section 153-A of the Income Tax Act.
2. Validity of the search and seizure operations conducted under Section 132 of the Income Tax Act.
3. Availability and appropriateness of alternative remedies.
4. Requirement of issuing a notice under Section 131(1A) before invoking Section 132.

Issue-wise Detailed Analysis:

1. Legality of the Notice Issued Under Section 153-A:
The petitioners challenged the notice issued under Section 153-A for assessment years 2009-10 to 2014-15, arguing it lacked legal sanctity as it was issued without fulfilling the pre-conditions of Section 132(1)(a), (b), or (c). The court noted that the Income Tax Department conducted a survey and search, finding no undisclosed assets or income, yet issued the notice under Section 153-A. The court held that the notice under Section 153-A was valid as it followed the search and seizure operations conducted under Section 132, which were based on the subjective satisfaction of the competent authority.

2. Validity of the Search and Seizure Operations:
The petitioners argued that the search and seizure operations conducted under Section 132 were illegal as they were carried out without proper authorization and reasons. The court examined the statutory provisions of Sections 132, 131(1A), and 133(A) and found that the competent authority had the necessary information and reasons to believe that the petitioners were concealing income. The court emphasized that the reasons for the search need not be disclosed to the assessee during the assessment. The search and seizure operations were deemed valid as they were based on the competent authority's satisfaction and followed the legal requirements.

3. Availability and Appropriateness of Alternative Remedies:
The court addressed the argument about alternative remedies, noting that the petitioners should have approached the appellate authorities instead of invoking the extraordinary jurisdiction of the High Court under Articles 226 and 227 of the Constitution of India. The court held that the availability of alternative remedies, such as appeals, was sufficient and appropriate for addressing the grievances of the petitioners. The court emphasized that it would not interfere at this stage, especially since the search and seizure were not challenged earlier.

4. Requirement of Issuing a Notice Under Section 131(1A):
The petitioners contended that a notice under Section 131(1A) should have been issued before invoking Section 132. The court clarified that Section 131(1A) does not stipulate a precondition for issuing a notice before invoking Section 132. The court explained that issuing a notice would defeat the purpose of search and seizure as it would allow the assessee to destroy evidence. Therefore, the absence of a notice under Section 131(1A) did not invalidate the search and seizure operations.

Conclusion:
The court dismissed the writ petition, holding that the notice under Section 153-A was valid and the search and seizure operations were legally conducted under Section 132. The court emphasized the availability of alternative remedies and clarified that a notice under Section 131(1A) was not a precondition for invoking Section 132. The petitioners were advised to avail the alternative remedy of appeal to address their grievances.

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