2023 (11) TMI 1290 - HC - Income Tax

Assessment proceedings u/s 153B - notice u/s 142(1) not replied in the absence of the relevant documents and information, which are available in the computer system of the petitioner seized by the Department - petitioner submits that the respondents be directed to provide copies of the required documents, pen-drives etc. of the information stored in the computer system seized from the petitioner and thereafter, the petitioner be granted at least four weeks time to file reply HELD THAT - Writ petition is disposed of with direction to the petitioner to move an application before the Department for supply of copies of relevant documents within a period of ten days from today. If such an application is moved, the Department should supply copies of the relevant documents and pen-drives to the petitioner within a period of fifteen (15) days from the date of receipt of such application, to enable the petitioner to file proper reply to Ext.P4 notice for undertaking further proceedings. After the petitioner is given copies of the relevant documents on charge basis as above, the petitioner should file his reply to Ext.P4 notice within a period of four weeks from the date of receipt of copies of the relevant documents from the Department. Further proceedings in respect of Ext.P4 notice should commence after four weeks from the date of supply of copies of relevant documents to the petitioner.

Summary

Issues:
1. Assessment proceedings deferred until documents returned
2. Completion of investigations and release of seized records

Analysis:

Issue 1: Assessment proceedings deferred until documents returned

The petitioner, engaged in the Gold jewellery business, filed a writ petition seeking to defer assessment proceedings until all seized documents from the business premises were returned. The petitioner, an assessee under the Income Tax Act, had multiple entities involved in the business. Following a search and seizure operation, notices under Sections 153C and 142(1) of the Act were issued for assessment years 2015-16 to 2020-21. The petitioner, willing to cooperate, faced challenges in responding to the notices due to relevant documents being seized by the Department. The petitioner requested copies of required documents and pen-drives from the seized computer system to provide a proper reply. The petitioner also agreed not to challenge the final assessment order on the ground of limitation if provided with necessary documents. The Senior Standing Counsel for the Income Tax Department agreed to supply relevant documents on a payment basis, allowing the petitioner to file a reply and proceed with assessment.

Issue 2: Completion of investigations and release of seized records

The petitioner sought completion of investigations against related entities and the release of seized records in a time-bound manner. The court directed the petitioner to apply for relevant documents within ten days, with the Department obligated to provide copies and pen-drives within fifteen days of the application. The petitioner was given four weeks from receipt of documents to file a reply to the notice, after which further proceedings would commence. Failure to apply for documents or to respond within the stipulated time would result in the Department proceeding with the notice. The court clarified that if the petitioner filed a reply within four weeks of receiving relevant documents, the final assessment order would not be challenged on the grounds of limitation. Interlocutory applications were dismissed, and further proceedings were to be kept in abeyance to facilitate the aforementioned steps.