2022 (11) TMI 547 - HC - Income Tax

Validity of search u/s 132 - highhandedness of the officials - whether the conditions of section 132 have been met? - possession of information leading to a reason to believe - assessee contended that, search was initiated on the basis of a newspaper report - HELD THAT - The issue of a warrant by a Commissioner is neither a judicial nor a quasi-judicial act. The Commissioner were enjoined to issue such warrant only based upon information in his possession in consequence of which he forms the necessary belief, the matter is not subject to scrutiny by the Court. - on the whole, the search was not established to be malafide, oppressive or excessive. So too in this case. The Bench held further that even if a search had been illegal, the evidence seized can be validly used in the assessments to follow. The files relating the recording of information and reasons to believe were called for and I find that the officer has recorded cogent reasons for the initiation of the search itself. The records reveal that the officer has had information in his possession to lead to the belief that action under Section 132 was warranted. The challenge to the search is rejected and all writ petitions on this score, are dismissed. Necessary response or urgency in the medical emergency leading to hospitalization of one of the children of the petitioner - HELD THAT As the Hon ble Supreme Court has observed in the case of Pooran Mal 1973 (12) TMI 2 - SUPREME COURT search and seizure, by its very nature, is bound to cause some dislocation to the parties concerned. Some of this dislocation is also intended as a conscious measure to intimidate. There are limits that must be adhered to and in the present case, the exacerbation of the medical condition of the person concerned is a matter of hospital record. As does not dispute the medical record. His attempt is to state that the child had a pre-existing medical condition and thus, the Department cannot be held responsible for the sudden distress needing hospital attention. There has been a specific allegation by the petitioner in regard to the delay in permitting the family to seek medical assistance. Though denied in general terms, unconvinced that the respondents did exercise necessary measures, as warranted, in such a situation. The necessity for speculation in such a situation could have been avoided had the footage from CCTV cameras been available. In light of the discussion as above, we do find that the response of the officials in the medical emergency as above, is wanting, and leaves something to be desired. In CCIT V. State of Bihar through Chief Secretary 2012 (2) TMI 116 - PATNA HIGH COURT the Patna High Court has held that where appropriate, the assessee may also choose to approach the human rights authority seeking redressal of its grievances. To be noted that similar allegations have been made by the petitioner in regard to his relative, that have not been, in my view, been established and thus call for no directions from this Court. Transfer of cases u/s 127 - centralization of assessments - HELD THAT - in the present circumstances, where the petitioners have been afforded opportunity to respond and have, in all but one case, not so responded, so grave as to go to the root of the matter and vitiate the proceedings totally. Relevantly, the petitioners have, by virtue of the present challenge demonstrated that there has been no prejudice caused to them by the non-service of the centralization orders as their grievances in that regard are being effectively aired and heard. In any event, the learned standing counsel is directed to issue the orders to the petitioners forthwith. Moreover, the reasons for centralization do reveal that the consolidation proposed is for reasons of administrative efficiency and convenience and there has been no denial of this aspect of the matter by the petitioners. In light of the discussion above, these writ petitions are dismissed. Assessment u/s 153A - Validity of notice issued - HELD THAT - the only pre-condition for issuance of the notice u/s 153A is the search itself. Thus unable to accept the argument of the petitioners to the effect that the transfer of the seized material is a pre-condition to the issuance of the notice u/s 153A as such a conclusion would tantamount to re-writing of the provision to read in such a condition, which is legally impermissible. As the Audit has recommended, it is necessary that the Legislature or the Board, administratively, fix such timelines, for the purpose of integrity of procedure, including compliance with the provisions of natural justice as well as to ensure quality in the framing of assessments in a timely manner. This is protect against, and prevent a situation where the notices are issued too proximate to the expiry of limitation leading to a hurried framing of assessment and that the assessment is not based upon incriminating material. Such arguments are indeed available to assessees, but subsequent to the framing of the assessment itself, that would enable an examination of the material brought on record in order to test such submissions.The challenge to notices issued under Section 153A is rejected. Challenge to notices in terms of Section 153C - The provisions of Section 153C require the receiving officer, that is, the jurisdictional assessing officer of the assessee concerned, to issue notice,if he is satisfied that the books of account/documents/assets seized or requisitioned have a bearing on the determination of total income of such other person for the block period. The satisfaction recorded must state that the seized materials relate or pertain to such other person, and to the period in question, that is, the block of six years as stipulated under Section 153A. The sample satisfaction note extracted is detailed and in our considered view, complies with all the statutory requisites. With this, the ingredients of Section 153C stand satisfied.The challenge to notices in terms of Section 153C is decided against the petitioners. Attachment of property - Challenge to notices under Section 281B - The provisions of Section 281 provide for an attachment of properties of an assessee to protect the interests of the revenue, pending proceedings for assessment, re-assessment or imposition of penalty. Subsection (2) of Section 281 B states that every provisional attachment shall have effect only for a period of 6 months from date of order of provisional attachment, though the proviso permits the period to be extended for reasons to be recorded in writing. Such extensions, in total, are not to exceed two years pending proceedings or 60 days after the date of order of assessment/reassessment, whichever is later. Though the parties would agree that there has been some extension of the orders passed originally, there is lack of clarity on the number of extensions and the periods that such extensions covered. Thus, and in light of the aforesaid ambiguity, as would merely reiterate the provisions of Section 281B. As no material has been placed before the Court to the effect that the extensions are contrary to statute, the submissions of the petitioners are rejected. These Writ Petitions are dismissed.

Summary

Issues Involved:
1. Validity of search under Section 132.
2. Centralization of assessments under Section 127.
3. Notices issued under Section 153A.
4. Notices issued under Section 153C.
5. Validity of attachment orders under Section 281B.
6. Challenge to notices under Section 143(2) and orders of assessment under 143(3).

Analysis of the Judgment:

Issue 1: Validity of Search under Section 132
The petitioners challenged the search on grounds that the searches were unwarranted, illegal, and based on a newspaper report. They alleged inhuman treatment and violation of human rights during the search, including illegal detention and lack of medical care. The court, after examining the records, found that the search was conducted based on credible information and the reasons to believe were properly recorded. The court dismissed the challenge but noted the inadequate response to a medical emergency during the search, granting liberty to the petitioners to seek compensation in civil courts.

Issue 2: Centralization of Assessments under Section 127
The petitioners argued that the centralization orders were not served upon them and that they were not given a reasonable opportunity to be heard. The court found that show cause notices were issued to the petitioners, and in most cases, there was no response. The court held that the non-service of the orders constituted a procedural irregularity but did not vitiate the proceedings. The challenge to centralization was dismissed, and the court directed the respondents to serve the orders to the petitioners forthwith.

Issue 3: Notices Issued under Section 153A
The petitioners contended that the notices were issued without the seized materials being handed over to the jurisdictional Assessing Officer, rendering them premature and invalid. The court held that Section 153A mandates the issuance of notice to an assessee who was subject to a search, irrespective of whether the seized materials were received. The court rejected the challenge, stating that the issuance of notices under Section 153A is mandatory and not contingent upon the receipt of seized materials.

Issue 4: Notices Issued under Section 153C
The petitioners challenged the notices on the grounds that the seized materials must be relatable to each assessment year for which notices were issued. The court examined the satisfaction notes and found that they complied with the statutory requisites. The court held that the issuance of notices for all six years is mandatory upon recording satisfaction that the seized materials relate to the third party. The challenge to notices under Section 153C was decided against the petitioners.

Issue 5: Validity of Attachment Orders under Section 281B
The petitioners argued that the attachment orders were bad in law as the proceedings upon which they were based were contrary to law and extended beyond the statutory time frame. The court found no material to support the claim that the extensions were contrary to statute. The challenge to the attachment orders was rejected.

Issue 6: Challenge to Notices under Section 143(2) and Orders of Assessment under 143(3)
The petitioners challenged the notices and orders of assessment on the basis that they were issued following the invalid search and notices under Sections 153A and 153C. The court, having dismissed the challenges to the search and notices under Sections 153A and 153C, found no legal infirmity in the impugned notices and orders of assessment. The challenge was dismissed.

Summary of Conclusions:
1. The challenge to the search under Section 132 is rejected.
2. The challenge to the centralization of assessments is dismissed.
3. The challenge to notices under Section 153A is rejected.
4. The challenge to notices under Section 153C is decided against the petitioners.
5. The challenge to attachment orders under Section 281B is dismissed.
6. The challenge to notices under Section 143(2) and orders of assessment under 143(3) is dismissed.

The court appreciated the well-arranged and instructive submissions of the parties, which facilitated the disposal of the batch of writ petitions.