2024 (5) TMI 505 - HC - Income Tax

Writ petition challenging Section 153C assessment dismissed as alternate efficacious remedy available through appellate process

Delhi HC dismissed writ petition challenging assessment under Section 153C. Court held that writ jurisdiction cannot be exercised when alternate ... Violation of principles of natural justice - opportunity of hearing - recording of satisfaction for initiation of proceedings under section 153C - reasonableness of delay in initiating proceedings under section 153C - assessment under section 153C and addition as unexplained money under section 69A - writ jurisdiction under Article 226 and availability of alternate efficacious remedyOpportunity of hearing - assessment under section 153C and addition as unexplained money under section 69A - Whether an opportunity of hearing was given to the assessee and whether the Assessing Officer duly considered the assessee's reply before passing the impugned order - HELD THAT: - The Court identified the solitary determinative question as whether the assessee was afforded an opportunity to be heard and whether the AO considered her submissions. The record shows notices dated 04.03.2021 and a show-cause dated 06.04.2021 seeking explanation for the cash payment; a satisfaction note and annexures were provided to the assessee on 19.04.2021; the assessee filed replies on 14.04.2021 and 21.04.2021; and the assessment order dated 22.04.2021 records consideration of the assessee's objections and explains the reasons for rejecting them, treating the cash receipt as unexplained money under the relevant provisions. On this basis the Court concluded that an opportunity of hearing was afforded and that the AO applied his mind to the assessee's reply before making the addition. [Paras 11, 15]An opportunity of hearing was given and the AO duly considered the assessee's reply before passing the impugned order.Recording of satisfaction for initiation of proceedings under section 153C - reasonableness of delay in initiating proceedings under section 153C - Whether the delay of about four years between the search and initiation of Section 153C proceedings rendered the satisfaction or notice invalid - HELD THAT: - The Court examined the contention of inordinate delay and considered authorities addressing the temporal proximity required for issuance of notices after recording satisfaction. It observed that the jurisprudence treats the requirement of action 'immediately after' as governed by the principle of unreasonable or inordinate delay rather than a fixed literal timeframe; whether delay is inordinate is a question of fact dependent on circumstances. In the present case the Court found that satisfaction was recorded and the satisfaction note was supplied to the assessee, and therefore the precedents relied upon by the assessee were distinguishable. The Court was not persuaded that the delay in initiating proceedings was such as to vitiate the assessment. [Paras 16, 17]The delay did not warrant quashing of the proceedings; the satisfaction and initiation of proceedings were not invalidated on the ground of delay.Writ jurisdiction under Article 226 and availability of alternate efficacious remedy - violation of principles of natural justice - Whether the High Court should exercise writ jurisdiction in presence of alternate efficacious statutory remedy - HELD THAT: - The Court reviewed the established principles governing exercise of writ jurisdiction where alternate remedies exist, noting recognized exceptions (fundamental rights, breach of natural justice, lack of jurisdiction, challenge to vires). Applying those principles, the Court found no failure of natural justice, no lack of jurisdiction and no challenge to the vires of the statute; given that the AO had afforded hearing and applied his mind, the circumstances did not call for exercise of extraordinary writ jurisdiction. The assessee is therefore directed to pursue available statutory remedies. [Paras 19, 20]Writ jurisdiction is declined; the petition is not maintainable in view of the availability of alternate efficacious remedies and absence of any exception justifying Article 226 relief.Final Conclusion: The writ petition is dismissed: the Court held that the assessee was given opportunity of hearing and the AO considered her replies; the delay in initiating section 153C proceedings did not vitiate the assessment; and the High Court will not exercise Article 226 jurisdiction in the presence of alternate remedies. Issues Involved:1. Violation of principles of natural justice.2. Delay in initiating Section 153C proceedings.3. Maintainability of the writ petition in the presence of an alternate remedy.Summary:Issue 1: Violation of Principles of Natural JusticeThe petitioner (assessee) contended that the order dated 22.04.2021 u/s 153C of the Income Tax Act, 1961, adding Rs. 1,62,20,000/- to her total income for AY 2014-15, violated the principles of natural justice. The assessee argued that she was not given ample opportunity to respond and that the satisfaction note was provided belatedly on 19.04.2021, with the assessment order being passed on 22.04.2021. However, the court found that the assessee was given multiple opportunities to respond, starting from 04.03.2021, and that the Assessing Officer (AO) had duly considered her reply before passing the impugned order. The court emphasized that the satisfaction note, which included incriminating material, was provided to the assessee, and the AO had appropriately considered her objections.Issue 2: Delay in Initiating Section 153C ProceedingsThe assessee argued that there was an inordinate delay in initiating the Section 153C proceedings, as the search was conducted on 15.12.2016, and the notice was issued only on 22.12.2020. The court referred to the Supreme Court's decision in Calcutta Knitwears and other relevant cases, concluding that a delay of five months in issuing the notice was not unreasonable. The court highlighted that the proceedings were initiated within a reasonable period from the closure of the assessment of the searched person and that the delay was not fatal to the assessment.Issue 3: Maintainability of the Writ PetitionThe Revenue argued that the writ petition should not be entertained as the assessee had an alternate efficacious remedy available. The court referred to the principles laid down in various judicial pronouncements, including Radha Krishan Industries, which summarized the conditions under which writ jurisdiction can be exercised despite the availability of an alternate remedy. The court found that the present case did not meet any of these conditions, as the principles of natural justice were not violated, and the AO had duly applied his mind. Consequently, the court dismissed the writ petition, allowing the assessee to pursue any other alternate remedy available to her under the law.Conclusion:The court dismissed the writ petition, holding that the assessee was given ample opportunity to respond, the delay in initiating Section 153C proceedings was not unreasonable, and the writ petition was not maintainable in the presence of an alternate remedy. The assessee was advised to pursue other remedies as per the law.