2023 (12) TMI 588 - HC - Income Tax

Validity of assessment proceeding u/s 153A - as argued no incriminating document or materials have been found in course of search and seizure and impugned assessment proceeding relating to assessment year 2010-11 is barred by limitation on the basis of search and seizure held on 13th April, 2019 - HELD THAT - Income Tax Authority could not satisfy with his submission or from record that any incriminating documents or materials were found against the petitioner in course of search and seizure in question or that the impugned assessment proceeding has been initiated before the expiry of limitation as provided under Section 153A explanation 1 of the Income Tax Act, 1961 and he also could not distinguish both the aforesaid judgments upon which Mr. Mazumder has relied either on facts or law. Considering the facts and circumstances of the case as appears from record and submission of the parties the impugned proceeding under Section 153A of the Act and all subsequent proceedings relating to assessment year 2010-11 on the basis of search and seizure dated 13th April, 2019 is not sustainable in law and accordingly the same were quashed.

Summary

Issues involved:
The issues involved in the judgment are the challenge to the initiation of assessment proceedings under Section 153A of the Income Tax Act, 1961 and the notice under Section 142(1) issued in relation to assessment year 2010-11 on the grounds of lack of incriminating documents/materials found during search and seizure, and the bar of limitation based on the date of search and seizure.

Challenge to initiation of assessment proceedings:
The petitioner challenged the initiation of the assessment proceedings under Section 153A on the grounds that no incriminating documents or materials were found during the search and seizure process. The petitioner's senior advocate relied on a decision of the Supreme Court in the case of Principal Commissioner of Income Tax vs. Abhisar Buildwell P. Ltd. The respondents did not specifically deny the petitioner's claim of lack of incriminating documents/materials, instead justifying their action based on pre-existing documents and materials.

Bar of limitation:
Regarding the challenge that the assessment proceedings were barred by limitation, the petitioner relied on a judgment of the Madras High Court. The respondent Income Tax Authority opposed this by stating that they did not accept the Madras High Court's decision and intended to challenge it by filing a Special Leave Petition, which had not been done at the time of the judgment. The respondent could not provide evidence of incriminating documents/materials found during the search and seizure, nor could they prove that the assessment proceedings were initiated within the limitation period as per Section 153A of the Income Tax Act.

Judgment and Conclusion:
After considering the submissions and judgments cited by both parties, the Court concluded that the assessment proceedings under Section 153A and all subsequent proceedings related to the assessment year 2010-11 were not sustainable in law. Therefore, the Court quashed the impugned proceedings. The writ petition was disposed of with these observations and directions.