Court dismisses writ petition challenging tax notices, upholds jurisdiction, and allows assessment proceedings.

The court dismissed the writ petition challenging notices under Section 153C and a show cause notice, allowing assessment proceedings to proceed. The court rejected challenges to jurisdiction and upheld the validity of satisfaction notes, permitting the Income Tax Department to continue its inquiries. The petitioner's claims regarding delay in setting up the unit, shareholder exit, and provisional attachment were addressed, with the court ruling in favor of the respondents.

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Issues Involved:
1. Delay in setting up the unit and extension of time.
2. Shareholder exit and identification of a purchaser.
3. Summons under Section 131 of the Income Tax Act.
4. Provisional attachment under Section 132(9B).
5. Validity of notices under Section 153C.
6. Satisfaction note requirement under Section 153C.
7. Jurisdictional challenge and escapement of income.

Detailed Analysis:

1. Delay in Setting Up the Unit and Extension of Time:
The petitioner, a limited company involved in software development and other IT/ITES businesses, was allotted 11.12 acres of land by SIPCOT under a 99-year lease deed dated 11.05.2005. The setting up of the unit was delayed, and the petitioner sought extensions of time from SIPCOT. Despite efforts, the petitioner was unable to commercially exploit the premises even after a decade.

2. Shareholder Exit and Identification of a Purchaser:
In 2016, a group of shareholders, wishing to exit the business, authorized an individual to find buyers for the company. The individual was entrusted with original documents, including the lease deed and share certificates, for due diligence purposes. A draft MOU was prepared but left blank regarding the purchaser details.

3. Summons Under Section 131 of the Income Tax Act:
The petitioner received summons under Section 131, leading to the discovery that documents entrusted to the individual were seized from a third party during a search. The petitioner clarified its non-involvement with the third party and provided the necessary documents to the Income Tax Department. However, the enquiry did not proceed further.

4. Provisional Attachment Under Section 132(9B):
A provisional attachment order was issued under Section 132(9B) attaching the petitioner’s property. Despite objections, no action was taken to lift the attachment, leading to the filing of W.P.No.14023 of 2019. The counter filed by the respondents stated that the attachment had lapsed after six months, rendering the petition infructuous.

5. Validity of Notices Under Section 153C:
Notices under Section 153C were issued for various assessment years, calling for returns. The petitioner argued that the proceedings were without jurisdiction as there was no income escaping assessment. The petitioner requested the satisfaction note and other relevant documents, which were not initially provided. The court held that the question of escapement of income is a matter for the assessing officer to determine and declined to interfere with the assumption of jurisdiction.

6. Satisfaction Note Requirement Under Section 153C:
The petitioner contended that no satisfaction note was furnished, a precondition for initiating proceedings under Section 153C. The respondents later produced satisfaction notes dated 30.09.2019, confirming compliance with the statutory requirement. The court found that the satisfaction notes were recorded as required, rejecting the petitioner’s argument.

7. Jurisdictional Challenge and Escapement of Income:
The court held that the question of jurisdiction is closely linked with the issue of escapement of income, which is to be determined by the assessing officer. The petitioner’s challenge to the assumption of jurisdiction was therefore not entertained. The court also addressed the invalid notice dated 14.06.2019, stating that it does not vitiate the valid notice dated 30.09.2019.

Conclusion:
The court dismissed the writ petition, allowing the assessment proceedings to continue in accordance with the law. The challenge to the impugned notices under Section 153C and the show cause notice was rejected, and the connected writ miscellaneous petitions were closed with no order as to costs.

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