2023 (4) TMI 490 - HC - Income Tax

Assessment u/s 153A OR 153C - abatement of proceedings - proceedings commenced for scrutiny would stand abated in view of the provisions of Section 153A - whether the proceedings against the petitioner would abate will be dependent on what would be the effective date? - HELD THAT - It is obvious from the aforesaid submissions that a prima facie opinion on abatement would be relevant for the purposes of considering the question of stay. This Court must opine that the first respondent, instead of just making a statement, while deciding on the merits of the petitioner's application for stay, should have examined the question of abatement mentioning the mentioning the necessary details, and expressed a prima facie opinion on whether the relevant date would be the date of search 10.10.2019 or the date of receipt of books of account or requisitioning the assets seized, if any in the search on 10.10.2019 -these questions must necessarily be addressed in the light of the undisputed fact that the petitioner is not just the Secretary of the aforesaid Trust but also an Assessee with his own income who has filed his returns. First respondent could justifiably prima facie opine that the provisions of Section 153C of the IT Act would apply or not and whether there would be abatement or not, he should have considered accordingly moderating the terms to be imposed while granting stay. In the absence of due consideration of these aspects by the first respondent, this Court must interfere with the impugned order and restore the proceedings for reconsideration directing the first respondent to consider the petitioner's petition for stay in the light of this Court's observations. Hence the following ORDER - The petition is allowed in part, and the impugned order dated 17.02.2023 Annexure-A is quashed restoring the proceedings to the first respondent for reconsideration in the light of this Court's observation as aforesaid. The petitioner to avail opportunity of due hearing, shall appear before the first respondent, without further Notice on 27.03.2023.

Summary

Issues:
1. Validity of the order directing payment of a disputed amount.
2. Interpretation of provisions under Section 153A and Section 153C of the Income Tax Act, 1961.
3. Consideration of abatement of assessment proceedings.
4. Prima facie opinion on abatement for granting stay.

Analysis:
1. The petitioner challenged an order directing the payment of a sum equivalent to 20% of the disputed amount by a specified date, failing which recovery proceedings could be initiated under the Income Tax Act. The High Court noted that the first respondent confirmed the Assessing Officer's order disposing of the petitioner's stay petition. The Court observed that the petitioner's status as the Secretary of an educational trust and an assessee with his own income must be considered while deciding on the payment directive.

2. The crux of the issue revolved around the interpretation of Sections 153A and 153C of the Income Tax Act. The petitioner contended that the assessment proceedings should have abated due to the search conducted at his premises. The Court acknowledged the arguments put forth by both parties regarding the applicability of the provisions and the relevant dates for determining abatement.

3. The Court delved into the specifics of the petitioner's case, highlighting that the assessment proceedings for the relevant year were pending at the time of the search. The petitioner's appeal against the assessment order was based on the claim that the proceedings should have abated under Section 153A of the Act. The Court emphasized the importance of considering whether abatement should be evaluated under Section 153A or Section 153C.

4. In determining whether the assessment proceedings abated, the Court stressed the need for a prima facie opinion on the abatement issue to guide the decision on granting a stay. The Court opined that the first respondent should have examined the abatement question thoroughly and expressed a clear opinion based on the relevant dates and provisions of the Income Tax Act. Consequently, the Court set aside the impugned order and directed a reconsideration, emphasizing the necessity of addressing the abatement issue while granting a stay.

In conclusion, the High Court allowed the petition in part, quashing the order and instructing a reconsideration by the first respondent. The petitioner was granted an opportunity for a hearing, and no precipitative action was to be taken until the matter was reconsidered. The petitioner was also given the liberty to raise additional grounds for an unconditional stay, subject to reconsideration by the first respondent.