2018 (1) TMI 544 - HC - Income Tax

Validity of assessment u/s 153A - cash seized during the course of search of the vehicle of the petitioner - issuance of notices by the competent authority - Held that - Admittedly, the cash amounting to ₹ 2,76,35,500/- was seized on 19.5.2015 during the course of search of the vehicle of the petitioner. The amount was in the possession of the petitioner though the petitioner claimed that it was the money belonging to the company. At this stage, there is no material on record to establish the truthfulness of the assertion of the petitioner except reliance has been placed on the statement of the petitioner recorded under Section 132(4) of the Act or the sale deed executed by the company. The petitioner from whose possession the money was seized has been issued notice under Section 153A for the assessment years 2010-11 to 2015-16 and under Section 143(2) of the Act for the assessment year 2016-17 where he would get sufficient opportunity to establish his version. The warrant of the authorization was in the name of the petitioner and the seizure was also from his possession of cash amounting to ₹ 2,76,35,500/-. In such circumstances, the issuance of notices by the competent authority under Sections 153A and 143(2) of the Act as noticed above cannot be held to be without jurisdiction so as to be amenable to challenge under Articles 226/227 of the Constitution of India.

Summary

Issues Involved:
1. Quashing of search and seizure proceedings.
2. Validity of consequential assessment proceedings initiated by notices under Sections 153A and 143(2) of the Income Tax Act.
3. Direction for the release of seized cash amounting to ?2,76,35,500/-.
4. Availability of alternative statutory remedy and the appropriateness of writ jurisdiction under Articles 226/227 of the Constitution of India.

Detailed Analysis:

1. Quashing of Search and Seizure Proceedings:
The petitioner sought to quash the search and seizure proceedings initiated under Section 132(1) of the Income Tax Act, claiming that the assets sold belonged to the company and not to him personally. The court noted that the petitioner, as the Director of M/s Amit Overseas Pvt. Limited, was intercepted with ?2.80 crores in cash, which was part of the sale consideration received from M/s C.G. Foods India Pvt. Limited. The petitioner admitted this in his statements recorded under Sections 131(1A) and 132(4) of the Act. The court found no material on record to establish the petitioner's assertion that the money belonged to the company, except for his statements and the sale deed. Therefore, the court held that the search and seizure proceedings were validly initiated.

2. Validity of Consequential Assessment Proceedings:
The petitioner challenged the notices issued under Sections 153A and 143(2) of the Act for various assessment years. The court observed that the petitioner had sufficient opportunity to establish his version during the assessment proceedings. The warrant of authorization and the seizure were both in the petitioner's name, and the notices were issued by the competent authority. Consequently, the court found that the issuance of these notices could not be held to be without jurisdiction and thus not amenable to challenge under Articles 226/227.

3. Direction for Release of Seized Cash:
The petitioner requested the release of the seized cash amounting to ?2,76,35,500/-. The court noted that the cash was seized during a search of the petitioner's vehicle, and at this stage, there was no material to establish that the cash belonged to the company. The court did not find sufficient grounds to interfere with the seizure, leaving the petitioner to address this issue during the assessment proceedings.

4. Availability of Alternative Statutory Remedy:
The court cited the Supreme Court's decision in *Commissioner of Income Tax and others vs. Chhabil Dass Agarwal*, which emphasized that non-entertainment of writ petitions when an efficacious alternative remedy is available is a rule of self-imposed limitation. The court noted that the petitioner had not exhausted the statutory remedies available under the Income Tax Act. The court also referenced its own decision in *Larsen and Toubro Limited v. The State of Haryana and others*, which outlined the principles for entertaining writ petitions without insisting on statutory remedies, such as enforcement of fundamental rights, failure of natural justice, or proceedings being wholly without jurisdiction. The court found that the petition did not fulfill any of these criteria.

Conclusion:
The court dismissed the writ petition, stating that there were no grounds to interfere under Articles 226/227 of the Constitution of India. The petitioner was advised to raise all the pleas before the competent authority in accordance with the law.