2021 (10) TMI 1158 - HC - Income Tax

Assessment u/s 153A - whether the seized material was under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A? - HELD THAT - Petitioner had filed their returns for the Assessment Year in question, which they thought was the true and correct return of income and that it contained all other particulars as prescribed. If respondent felt that was not enough and petitioner should file a fresh true and correct return of income because of the search, then respondent should certainly indicate in its notice what were the seized material under Section 132 or books of accounts or other documents or any assets requisitioned under Section 132A. Otherwise an assessee would file a copy of what it had filed earlier, which respondent anyways had in its file. Petitioner has also been seeking from respondent to make available copy of the alleged incriminating material found/seized during the search based on which the notice has been issued. Mr. Chhotaray states that such material has been given later. We are not going into that aspect at this stage because what we find is that the notice issued under Section 153A is bereft of any material. Nothing prevented respondent from mentioning in the notice the basis for issuing the notice under Section 153A so that petitioner could comply with the same as prescribed. The notice dated 29th November 2018 impugned in this petition is quashed and set aside. We do not make any observation on the merits of the case. Respondent may issue fresh notice under Section 153A and word it suitably, as advised so that petitioner may have some information reading that notice the basis on which such notice has been issued. All rights and contentions of the parties are kept open.

Summary

Issues:
Impugning a notice under Section 153A of the Income Tax Act, 1961 issued without jurisdiction.

Analysis:
The petitioner challenged a notice dated 29th November 2018 under Section 153A of the Income Tax Act, alleging it was issued without jurisdiction as there was no incriminating material in possession of the assessing officer. The notice lacked particulars and simply required the preparation of a true and correct return of income for the Assessment year 2012-13 within 30 days. The respondent argued that Section 153A mandates the assessing officer to call for returns of income for the earlier six assessment years once a search is conducted. The court acknowledged this mandatory requirement but emphasized that assessments under Section 153A must be based on seized material. The notice in question failed to mention whether seized material was involved, rendering it insufficient.

The court highlighted the importance of a show cause notice as a preliminary step to enable effective response by the party. Since Section 153A necessitates assessments based on seized material, the notice should have specified the basis for invoking the section, such as seized material under Section 132 or requisitioned assets under Section 132A. The absence of such details rendered the notice deficient. The petitioner had already filed returns they believed to be accurate, and the notice did not provide any indication of the need for a fresh return based on seized material. The court emphasized the necessity for the notice to contain relevant information to enable compliance by the assessee.

Consequently, the court quashed and set aside the notice dated 29th November 2018, without making any observations on the case's merits. The respondent was directed to issue a fresh notice under Section 153A, ensuring it includes the necessary particulars to inform the petitioner of the basis for the notice. The court kept all rights and contentions of the parties open for further proceedings. The petitioner's request for an amendment to the petition was noted, and the court scheduled the matter for directions on 30th November 2021.