2021 (3) TMI 1172 - HC - Income Tax

Assessment u/s 153A - Time limit for authorizations for search under Section 132 or for requisition under Section 132A - whether the provisions of Section 132(9A) are mandatory or directory? - HELD THAT - The provisions of Section 153B set out the limitation by when an order of assessment under Section 15A is to be passed as being twenty-one months from the end of the month when the last of the authorizations for search under Section 132 or for requisition under Section 132A was executed. The period set out under Section 132(9A) is a measure to enable the respective parties to adhere to the process in an orderly fashion facilitating the completion of the assessment in time. It is relevant to note that there is no time stipulated for the issuance of notice under Section 153A and instances are rife when notices are issued long after the seized material is handed over to the AO. The integrity of the assessment process would thus be dependent upon the principles of natural justice being observed and proper sequence of procedure being followed. Time limits set out under Section 132 (9A) are not only for the purposes of Section 132 (8) (9) but also to facilitate reasonable time to the AO to complete the assessment where the identity of the IO and AO is different. The undisputed position in this case is that the IO and AO are not one and the same. The last of the authorisations in this case is on 04.09.2018 and the seized materials ought to have been handed over, in terms of Section 132(9A) on or before 03.11.2018. Admittedly, the handing over has been only on 20.08.2019, more than nine months beyond the stipulated date. Though this constitutes a gross procedural irregularity, it does not, in my considered view, vitiate the notices issued, as assuming a situation where the handover had been within time, the notices might still have been issued only on 01.11.2019. Thus, the jurisdiction assumed cannot be faulted on this score.

Issues Involved:
1. Validity of search and seizure operation under Section 132 of the Income Tax Act.
2. Retention of documents beyond the period stipulated under Section 132(9A).
3. Recording of statements under duress and coercion.
4. Validity of notices issued under Section 153A for assessment years 2013-14 to 2018-19.
5. Compliance with the provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
6. Provision of seized documents to the petitioner.

Issue-wise Detailed Analysis:

1. Validity of Search and Seizure Operation under Section 132:
The petitioners challenged the jurisdiction of the search conducted on their premises under Section 132 of the Income Tax Act, citing illegal detention, violation of human rights, and procedural irregularities. The court noted that while serious allegations were made regarding the conduct of the search, these were not seriously pursued during the hearing. Consequently, the court chose not to interfere with these disputed matters and confined its order to the legal issues raised.

2. Retention of Documents Beyond the Period Stipulated under Section 132(9A):
The petitioners argued that the retention of documents beyond the 60-day period stipulated under Section 132(9A) vitiates the process of assessment. The court acknowledged that the Investigating Officer (IO) admitted to handing over the seized documents to the Assessing Officer (AO) beyond the prescribed period. However, the court concluded that this procedural lapse does not invalidate the notices issued under Section 153A, as the period of sixty days is not critical to the legality of the notices.

3. Recording of Statements under Duress and Coercion:
The petitioners alleged that statements were recorded under duress and coercion during the search. The court noted that these allegations were refuted by the respondents and were not seriously pursued by the petitioners during the hearing. Therefore, the court did not render findings on these disputed matters.

4. Validity of Notices Issued under Section 153A:
The legal issue centered on the validity of the Section 153A notices dated 01.11.2019 for the assessment years 2013-14 to 2018-19. The court examined whether the delay in handing over the seized documents to the AO vitiated the process of assessment. The court referred to various judgments, including K.V. Krishnaswamy Naidu and Co Vs. CIT, and concluded that while the delay constituted a gross procedural irregularity, it did not vitiate the notices issued under Section 153A. The court emphasized that the time limits set out under Section 132(9A) are not critical to the legality of the notices.

5. Compliance with the Provisions of the Black Money Act:
The petitioners sought the return of seized documents to comply with notices issued under the Black Money Act. The court directed the respondents to furnish the requested documents to the petitioners within a specified period, noting that the provisions of the Black Money Act do not impose any bar on providing copies of seized materials to the assessee.

6. Provision of Seized Documents to the Petitioner:
The petitioners alleged that the documents sought had not been supplied by the respondents. The court recorded the assurance of the respondents to furnish the remaining documents and directed the petitioners to approach the respondents with a list of required documents. The court permitted the petitioners to collect the documents from the respondents within a specified period.

Conclusion:
The court dismissed the writ petitions challenging the validity of the search and seizure operation and the notices issued under Section 153A. The court directed that the proceedings for assessment continue and be completed in accordance with the extended periods of limitation. The court also directed the respondents to furnish the remaining seized documents to the petitioners within a specified period. The connected miscellaneous petitions were closed with no order as to costs.

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