2022 (2) TMI 1151 - HC - Income Tax

Reopening of assessment u/s 147 - correctness and validity of the reason to believe - Petition filed by the petitioners assailing the search and seizure proceedings followed by the assessment carried out and the demand raised by the respondent-authorities - HELD THAT - Petitioners in the matter including assessment and the demand notices, we find that the search and seizure was carried out way back in the year 2018 which culminated in passing the orders of assessment in the year 2021 - Petitioners have filed appeal before the Appellate authority exercising their right of appeal. While the appeal is pending for last many months, the petitioners seek to invoke the jurisdiction of this Court. While the jurisdiction of this Court to examine the correctness and validity of the order cannot be disputed, at the same time, we are not inclined to exercise our discretionary jurisdiction to entertain the dispute brought before us for the reason that there is not only an alternative remedy available to the petitioners under the law but that remedy has been invoked by the petitioners and the appeal is pending consideration. The argument of petitioners that the explanation to the provision contained in Section 132 may not allow the Appellate authority to dwell into the reasons on which the authority initiated the search and seizure proceedings, in our opinion, would not in any manner affect the jurisdiction of the Appellate authority to examine the legality and validity of the order of assessment and demands on its own merits and decide the same in accordance with law. We are not inclined to go into the merits of the dispute raised in this petition. We leave it to the petitioners to pursue the appeal which is pending consideration before the Appellate authority. We are inclined to direct the Appellate authority to decide the petitioners appeal within a period of three months from the date of receipt of the copy of this order. The contention made by the petitioners before this Court including the challenge to the aspect of reason to believe and satisfaction shall be examined as permissible under the law.

Summary

Issues:
Challenge to search and seizure proceedings, validity of assessment order, jurisdiction of Writ Court, alternative remedy available to petitioners, discretion to entertain dispute, jurisdiction of Appellate authority, examination of legality and validity of assessment order, direction to decide appeal within a specified period.

Analysis:
The petitioners filed a writ petition challenging the search and seizure proceedings, assessment, and demand raised by the respondent-authorities. The petitioners contended that the order passed by the authorities resulted from a search and seizure conducted in violation of Section 132 of the Income Tax Act, 1961. They argued that the Appellate authority may not entertain the correctness and validity of the "reason to believe" and filed an appeal to avoid objections regarding the limitation period for challenging the assessment order. Citing various legal precedents, the petitioners urged the Writ Court to set aside the assessment order and demands due to illegal proceedings and violations of the law.

The High Court acknowledged the jurisdiction to examine the correctness and validity of the order but declined to entertain the dispute as an alternative remedy was available to the petitioners through the pending appeal before the Appellate authority. The Court noted that the search and seizure occurred in 2018, with assessment orders issued in 2021, and the petitioners had already filed an appeal. Despite the argument that the Appellate authority may not delve into the reasons for initiating the search and seizure proceedings, the Court emphasized that the Appellate authority could assess the legality and validity of the assessment order and demands independently.

Therefore, the High Court refrained from delving into the merits of the dispute raised in the petition and directed the Appellate authority to decide the appeal within three months. The Court clarified that the petitioners' contentions, including the challenge to the "reason to believe and satisfaction," would be examined as permissible under the law. Ultimately, the appeal was disposed of accordingly, with the Appellate authority directed to address the petitioners' appeal promptly within the specified timeline.