2021 (5) TMI 290 - HC - Income Tax

Assessment u/s 153C - denial of natural justice - statement of Mr. Prasesh Arya, Chief General Manager of the JBM Group of companies, qua which search was being carried out under Section 132 of the Act, was not furnished - HELD THAT - As perused the record, the petitioner has, according to us, at least at this stage, established a prima facie case in his favour concerning infraction of the principles of natural justice by the revenue. The record shows that the petitioner was served with only an extract of the statement made by Mr. Prasesh Arya. Mr. Sharma, in this behalf, when queried, submitted that the crucial part of the statement was furnished to the petitioner, and therefore, the petitioner can have no grievance. Even if we assume that, the stand taken by Mr. Sharma is sustainable, what concerns us at this stage, is the absence of any material furnished to the petitioner, which would link Mr. Mathur to him. In our view, the matter requires further examination.Accordingly, issue notice. Mr. Sharma accepts service on behalf of the revenue. Counter-affidavit will be filed within four weeks. Rejoinder thereto, if any, will be filed before the next date of hearing.

Summary

Issues Involved:
Challenge to assessment order under Section 153C and 143(3) of the Income Tax Act, 1961 based on breach of natural justice principles.

Analysis:
1. The petitioner challenged the assessment order dated 22.04.2021, arguing that there were flaws in the order, specifically emphasizing a breach of natural justice principles. The petitioner pointed out several deficiencies, including the non-furnishing of the statement of Mr. Prasesh Arya and discrepancies in the satisfaction notes provided to the petitioner.

2. The petitioner's counsel highlighted that an addition of ?4.50 crores was made to the declared income of the petitioner for the assessment year 2010-2011. This addition was based on allegations of receiving funds to influence court decisions, but the petitioner was not provided with substantial evidence linking the funds to him.

3. The petitioner relied on the Supreme Court judgment in Manish Maheshwari vs. ACIT to argue that the power under Section 153C must be exercised with care and caution, further supporting the claim of a breach of natural justice.

4. The respondent argued that the petitioner's factual contentions should not be entertained through a writ petition, suggesting that the petitioner should seek redress through the appellate forum first. However, the court found a prima facie case in favor of the petitioner regarding the breach of natural justice by the revenue.

5. The court noted that the petitioner was only provided with an extract of Mr. Prasesh Arya's statement, raising concerns about the lack of material linking Mr. Mathur to the petitioner. The court deemed further examination necessary, issuing notice to the respondent and directing the filing of a counter-affidavit within four weeks.

6. The court ordered a stay on the operation of the impugned assessment order dated 22.04.2021 until the next hearing on 05.08.2021. Additionally, the respondent was instructed to confirm whether assessment orders had been passed regarding the JBM Group and/or SIPL, indicating the complexity and seriousness of the issues raised in the case.