2022 (8) TMI 1170 - HC - Income Tax

Assessment u/s 153A r.w.s. 153C - Block period - Period of limitation - HELD THAT - Section 153B sets out the time limit for completion of assessment u/s 153A and under the first proviso states that in cases of assessment under Section 154C, the period of limitation for completion of assessment/re-assessment shall be nine months from the end of financial year in which books of accounts/documents/assets seized or requisitioned are handed over under Section 153C to the Assessing Officer having jurisdiction over the other person, the petitioners herein, whichever is later. Notwithstanding that the limitation expires on 31.12.2018, a further period of one year or till such time information was received by the Assessing Officer pursuant to request made to the competent authority would be available to the officer to complete the assessment. Since the language used in Clause (xii) above is that the limitation is to be determined with respect to the 'date on which the information requested is last received', the file was called for to determine the specific nature of information called for and when the relevant information was received. On verification of the file, that the information has been received in two installments, the later installment on 16.08.2019. Thus, in this case as well, the period of one year is seen to be available to the respondent and the completion of assessment on 31.12.2019 is found to be in order. Where two assessments may result, in the case of a searched entity and the related person, both emanating from the same search, but relating to two different sets of assessment years. This certainly cannot be the intention of the Legislature. In fact, the decisions of the Delhi High Court are dated 30.10.2015 and 17.08.2017 and this, perhaps, would have been the reason for insertion of the portion within parenthesis in Section 153C(1). That is, and in the interests of clarity, the block period as applicable to a noticee under Section 153C will be the same as the years constituting the block in the case of the noticee under Section 153A. The two periods are aligned. This issue is accordingly answered, adverse to the petitioner. It is apparent that there has been proper application of mind by the officer at the time of recording of satisfaction. That apart, the Assessing officers, both of the searched person as well as the other person, in this case, the petitioner, are one and the same. There is no difference of opinion on this fact. The satisfaction recorded contains all required references to the seized materials and no infirmity is made out in regard to the same. This argument is also rejected. Challenge to the validity of the search - The petitioner has been seeking copies of panchanama as well as documents on the basis of which the impugned assessments have been made. Copies of panchanama have been supplied that indicate prima facie, certain defects therein. For instance, the first column in the Panchanama, column A, is to contain the name of the entity in whose case the warrant was issued. Column A contains the name of the entity as M/s.RK Power Gen Pvt. Limited . It is an admitted position that no warrant has been issued in the name of RKM Power Gen Private Limited and it is upon the strength of the warrant under Section 132 in the name of Sri.VR.Venkatachalam and Ramachandra University Trust, that the impugned assessments have been framed. This error is seen to percolate through all four warrants issued, dated 24.11.2015, 09.12.2015 13.01.2016 in the case of RKM Power Gen Limited Chennai and 24.11.2015 in the case of RKM power Gen in its premises at Chattisgarh. In the present case, the warrant issued stands in the name of VR.Venkatachalam and Ramachandra University and contains an endorsement obtained from the Company Secretary and the Assistant General Manager of RKM Power Gen Private Limited dated 24.11.2015. There is no endorsement thereupon by any official of RK Power Gen Pvt. Ltd., Chennai. Prima facie, this may well vitiate the search and assessments made in the case of RK Power Gen Pvt. Ltd. There are, admittedly, absolutely no pleadings in regard to this aspect of the matter and the petitioner has not challenged the veracity of the search. Learned Senior Standing Counsel points out that it is only upon receipt of the copy of the Panchanama that the above factual position had been noticed by the Court. Be that as it may, and seeing as these matters pertain to assessment years 2010-11 to 2014-15 and have been hanging fire before this Court from 2019 onwards, we are not inclined to keep these matters pending any further to await completion of yet another round of pleadings. Appellate authority can well consider this argument and would also be in a better position to appreciate the facts, since the entirety of the records would be before him. No other legal infirmities are pointed out in the orders impugned apart from those elucidated and answered above. Faced with this position, the petitioner seeks, and is granted liberty to approach the first appellate authority by way of statutory appeals. The petitioner is permitted to raise all grounds, barring those of limitation and challenge to validity of the satisfaction note, that have been decided adverse to it. Barring the aforesaid two issues, any other observation made in regard to the merits of the issues that have been dealt with under this order are only for adjudication of these Writ Petitions and will not bind the appellate authority in the disposal of the appeals. Let the appeals be filed within a period of four (4) weeks from date of receipt of a copy of this order in which event they shall be taken on file without reference to limitation.

Summary

Issues Involved:
1. Bar of limitation
2. Violation of principles of natural justice
3. Challenge to the satisfaction recorded by the Assessing Authority
4. Challenge to the validity of the search

Detailed Analysis:

1. Bar of Limitation:
The petitioner argued that the assessments were barred by limitation. The court considered and rejected this argument, noting that the limitation period for completion of assessment under Section 153B was extended due to the time taken for exchange of information with overseas authorities. The court found that the extended period of one year was applicable, and the assessments completed on 31.12.2019 were within the permissible time frame. The court also addressed the argument that certain assessments fell outside the block of six years under Section 153C, concluding that the block period was correctly constructed and included the contested years.

2. Violation of Principles of Natural Justice:
The petitioner contended that there was insufficient time for the completion of assessment and that show cause notices were received too close to the assessment date. The court rejected this argument, stating that any deficiency in this regard could be cured by the Commissioner of Income Tax (Appeals), who has wide powers co-terminus with those of the Assessing Officer.

3. Challenge to the Satisfaction Recorded by the Assessing Authority:
The petitioner challenged the adequacy of the satisfaction note recorded by the Assessing Officer at the time of transferring the seized material for assessment under Section 153C. The court referred to the Supreme Court judgment in the case of Super Malls (P) Ltd. v. Principal Commissioner of Income Tax, which held that the satisfaction note only needs to state that the seized documents belong to another person. The court found that the satisfaction note in this case contained all required references to the seized materials and showed proper application of mind by the officer.

4. Challenge to the Validity of the Search:
The petitioner argued that the search was invalid due to defects in the panchanama and the name on the warrant. The court noted that the petitioner had not challenged the veracity of the search in their pleadings and that the appellate authority would be in a better position to appreciate the facts. The court granted the petitioner liberty to approach the first appellate authority by way of statutory appeals, allowing them to raise all grounds except those of limitation and the validity of the satisfaction note. The court also stayed the recovery of disputed demands for six months or until the disposal of the appeals.

Conclusion:
The writ petitions were dismissed with liberty to the petitioner to approach the appellate authority. The court directed that the appeals be filed within four weeks and stayed the recovery of disputed demands pending the appeals. No costs were awarded, and connected miscellaneous petitions were also dismissed.