2019 (6) TMI 446 - HC - Income Tax

Assessment u/s 153C - entertained the factual aspect in Writ Petition - HELD THAT - We would not like to carry out thread bare inquiry by going into the factual aspects of sufficiency of material in order to initiate proceedings u/s 153C or of co-relating the incriminating material found during search on the basis of which additions are made in the assessment orders. The assessment orders prima facie would suggest that the Assessing Officer is silent on this issue of co-relation between addition made and the material found during such search. In the case of Commissioner of Income Tax V/s. Vijaybhai N. Chandrani 2013 (7) TMI 740 - SUPREME COURT Supreme Court reversed the Judgment of the High Court observing that the High Court ought not to have entertained the Writ Petition and should have directed the Assessee to file Reply to the Notices and upon receipt of a decision from the assessing authority, if for any reason it is aggrieved by the said decision, to question the same before the forum provided under the Act. Having perused the material on record and in particular the orders of assessment passed by the Assessing Officer pursuant to the Notices u/s 153C, while relegating the Petitioner to the appeal remedy, we would like to make an interim formula in the peculiar facts of the case. It would be open for the Petitioner to file Appeals against the assessment orders. If such Appeals are filed before 25th June, 2019, the same shall be entertained on merits without having reference to limitation.

Summary

Issues:
Challenge to Notice under Section 153C of the Income Tax Act, 1961

Analysis:
The judgment pertains to a challenge against a Notice issued by the Deputy Commissioner of Income Tax under Section 153C of the Income Tax Act, 1961. The Petitioner, a limited company engaged in manufacturing and trading, contested the Notice on the grounds that no incriminating material was found during a search operation against another individual, and thus, the assessment in their case was invalid. The Petitioner had previously raised objections, which were dismissed by the Assessing Officer. Despite pending objections, assessment orders were passed, leading to the present challenge. The Petitioner argued that assessments made without incriminating material were invalid, citing relevant case law to support their contention.

The Department opposed the Petitions, asserting that the Assessing Officer acted based on available materials found during the search against the Petitioner. They argued that the Petitioner could raise objections in appeal, and hence, the Court should not intervene at this stage. Upon perusing the impugned notices and assessment orders, the Court noted that the Assessing Officer did not address the issue of correlating incriminating material with the additions made in the assessment orders. Referring to a Supreme Court case, the Court highlighted that factual inquiries into the existence of incriminating material should be addressed through the statutory appeal process rather than a Writ Petition.

Considering the assessment orders were already passed, the Court decided to relegate the Petitioner to the appeal remedy, in line with the Supreme Court's stance on preferring statutory appeal remedies in tax matters. The Court directed the Petitioner to file Appeals against the assessment orders by a specified date, ensuring that the Department refrains from recovery until the disposal of the appeals. The judgment emphasized cooperation in the appeal process and kept all contentions of the Petitioner open for further consideration. Ultimately, the Court disposed of the Writ Petitions with the outlined directions, providing a framework for the appeal process while maintaining the Petitioner's rights and options open for future proceedings.