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2021 (7) TMI 393 - HC - Income TaxValidity of assessment u/s 153A r.w.r.153C - proceedings under Section 148 of the Act admittedly lapsed - Addition of Capital gain arising out of a sale of land - HELD THAT - The recourse u/s 153A and Section 153C is a special procedure that gets triggered upon receipt of incriminating material post any search or requisition. The normal course of assessment and reassessment is fundamentally altered when a search or requisition takes place under Section 132/132A and the moment, the seized materials are received by the Assessing Officers, the special procedure laid out under Section 153A or Section 153C shall come into effect. The use of the non-obstante clause coupled with the abatement mechanism contained in the provisions makes it clear that the legislative intent was for Assessing Officers to proceed only under Section 153A or Section 153C upon receipt of material seized or requisitioned. This special procedure is a derogation from the regular procedure for assessment or reassessment and only some immunity has been carved out for completed assessments. Therefore, the concerned jurisdictional Assessing Officer, upon receipt of material seized or requisitioned, can only proceed under Section 153A or 153C and they cannot proceed with any other pending assessment or proceeding This Court is of an opinion that the scope of Section 147/148 and Section 153A and 153C are not comparable. These two sets of provisions contain different set of procedures as contemplated under the Act. This Court is of an opinion that the scope of Section 147/148 and Section 153A and 153C are not comparable. These two sets of provisions contain different set of procedures as contemplated under the Act. In the present case, the petitioner has raised the point of no jurisdiction and the ground of legal malice. As far as the jurisdiction is concerned, this Court is of an opinion that the lack of jurisdiction was not established by the petitioners. The application and implications of Section 153C of the Act was questioned - this Court is of an opinion that no malafide or lack of jurisdiction is identifiable nor established and thus, the point raised in this regard stands rejected. Thus, the judgments relied upon in this regard are of no avail to the petitioner u/s 147 proceedings were initiated for a particular Assessment Year and only after invoking Section 153C, the Assessing Officer could able to prepare Satisfaction Note and 5 assessment years are reopened. If at all, the petitioner is disputing the actions in this regard, he has to defend his case before the competent authority in the manner known to law. Such an adjudication with reference to the transactions, seizure and impounded materials cannot be undertaken by the High Court under Article 226 of the Constitution of India. It is for the assessee to defend his case before the competent authority by submitting the documents and evidences and establish his case both based on the provisions of the Act and on facts. At the stage of Show Cause Notice, High Court would not enter into the venture of conducting an adjudication of disputed facts. It is the duty of the fact finding authority to adjudicate the facts and arrive a conclusion. Under these circumstances, the ground of legal malice is not established by the petitioners, so as to set aside the impugned Show Cause Notice. This Court has considered the procedures contemplated under the Act. However, the disputed facts are to be adjudicated. In the present case, the petitioner is the such other person . The Satisfaction Note along with the relevant materials from the Assessing Officer of M/s.Agni Estates and Foundations Private Limited was received on 28.11.2019 by the third respondent under Section 153C of the Act as the Assessing Officer of the petitioner assessee / other person. The date of search for the proceedings under Section 153C of the Act in the present case, is 28.11.2019, on which date, the reopening proceedings under Section 147 of the Act was pending. Thus, the said proceedings stood abated on initiation of assessment / reassessment proceedings under Section 153C of the Act on 16.12.2019. Under these circumstances, it cannot be construed as a lapse. It stood abated pursuant to the Proviso clause to Section 153C of the Act. Thus, the ground of legal malice is not established by the petitioners The authority competent must be allowed to scrutinize the searched and impounded materials and provide an opportunity to the assessee to defend their case. Such an adjudicatory process alone would provide justice to the parties to the lis and therefore, this Court is not inclined to interfere at the stage of 'show cause notice' as far as the present writ petitions are concerned. The factual controversies and intricacies involved are to be adjudicated elaborately for the purpose of culling out the truth and such an adjudication is the dictum of law and thus, this Court has opined that interference at this stage would cause prejudice to the due process of law to be undertaken by the authorities. Thus, the respondents are directed to proceed with the assessment / reassessment by following the procedures as contemplated and by affording opportunity to the petitioners and complete the same as expeditiously as possible. WP dismissed.
Issues Involved:
1. Jurisdiction of the Assessing Officer to initiate proceedings under Section 153C of the Income Tax Act. 2. Validity of the reassessment proceedings under Section 147/148 of the Income Tax Act. 3. Alleged legal malice and colorable exercise of power by the Assessing Officer. 4. Application of the abatement clause under Section 153A of the Income Tax Act. 5. Maintainability of the writ petitions challenging the show cause notices. Issue-wise Detailed Analysis: 1. Jurisdiction of the Assessing Officer to initiate proceedings under Section 153C of the Income Tax Act: The court examined whether the Assessing Officer had the jurisdiction to initiate proceedings under Section 153C. It was found that the Assessing Officer received the seized materials from the searched person (M/s. Agni Estates) and then issued the notice under Section 153C after recording satisfaction. The court noted that the procedures under Section 153C were followed correctly, including the mandatory requirement of handing over seized materials to the Assessing Officer having jurisdiction over the other person (the petitioner). Therefore, the initiation of proceedings under Section 153C was within the jurisdiction of the Assessing Officer. 2. Validity of the reassessment proceedings under Section 147/148 of the Income Tax Act: The court analyzed whether the reassessment proceedings under Section 147/148 were valid. It was noted that the Assessing Officer initially received information from the DDIT (Inv) and initiated proceedings under Section 147/148 based on the "reason to believe" that income had escaped assessment. However, upon receiving the complete seized materials, the Assessing Officer recorded satisfaction and issued notices under Section 153C. The court concluded that the initial proceedings under Section 147/148 were validly initiated based on the information available at that time, and the subsequent initiation of proceedings under Section 153C was also valid upon receiving the complete seized materials. 3. Alleged legal malice and colorable exercise of power by the Assessing Officer: The petitioners argued that the initiation of proceedings under Section 153C was a colorable exercise of power to extend the limitation period. The court found no evidence of legal malice or improper purpose. It was noted that the Assessing Officer acted in accordance with the statutory provisions and the procedures contemplated under the Income Tax Act. The court held that the actions of the Assessing Officer were not motivated by malice and were within the scope of the law. 4. Application of the abatement clause under Section 153A of the Income Tax Act: The court examined the application of the abatement clause under Section 153A, which provides that any pending proceedings relating to the assessment year(s) falling within the period of six assessment years shall abate upon initiation of proceedings under Section 153A or 153C. It was found that the reassessment proceedings under Section 147/148 stood abated upon the initiation of proceedings under Section 153C, as the seized materials were handed over to the Assessing Officer, and satisfaction was recorded. The court held that the abatement clause was applicable, and the proceedings under Section 147/148 were correctly abated. 5. Maintainability of the writ petitions challenging the show cause notices: The court considered whether the writ petitions challenging the show cause notices were maintainable. It was noted that writ petitions against show cause notices are generally not entertained unless there is a lack of jurisdiction or malafide. In this case, the court found that the petitioners failed to establish a lack of jurisdiction or legal malice. The court emphasized that the petitioners should avail themselves of the opportunity to defend their case before the competent authority. Therefore, the writ petitions were dismissed as not maintainable. Conclusion: The court dismissed all the writ petitions, holding that the initiation of proceedings under Section 153C was within the jurisdiction of the Assessing Officer, the reassessment proceedings under Section 147/148 were validly initiated, there was no evidence of legal malice or colorable exercise of power, the abatement clause under Section 153A was applicable, and the writ petitions were not maintainable. The respondents were directed to proceed with the assessment/reassessment by following the procedures and by affording an opportunity to the petitioners.
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