Writ petition dismissed for challenging Section 153A assessment order involving Section 69A unexplained unsecured loans additions

The AP HC dismissed a writ petition challenging an assessment order under Section 153A involving additions under Section 69A for unexplained unsecured loans. The court held that despite availability of alternative appellate remedy under Section 246A, writ jurisdiction under Article 226 could be exercised in exceptional circumstances like lack of jurisdiction or violation of natural justice. However, the petitioner failed to establish such exceptional circumstances. The assessing officer had issued notices under Section 142(1) seeking details of unsecured loans and creditor confirmations, but the petitioner failed to provide adequate responses or evidence to discharge the burden of proof. The court found no jurisdictional error or natural justice violation, dismissing the petition while granting liberty to approach the appellate authority.

---

---

Issues Involved:
1. Validity of the assessment order under Section 143(3) read with Section 263 of the Income Tax Act, 1961.
2. Jurisdiction of the assessing officer regarding the admissibility of xerox copies of promissory notes.
3. Maintainability of the writ petition despite the availability of an alternative remedy of appeal under Section 246(A) of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of the assessment order under Section 143(3) read with Section 263 of the Income Tax Act, 1961:
The petitioner, Managing Director of M/s. Raki Avenues Pvt. Ltd., faced a search and seizure operation on 10.01.2020 under Section 132 of the Income Tax Act, 1961. Subsequent notices under Section 153A were issued, and the petitioner filed returns for assessment years 2016-17 to 2019-20. The assessments were completed on 28.09.2021, accepting the returned income. However, the Principal Commissioner of Income Tax, exercising jurisdiction under Section 263, revised these assessments, deeming them prejudicial to the interests of the Revenue. The assessing officer then issued notices under Section 142(1), which led to the addition of unexplained money based on unsecured loans.

2. Jurisdiction of the assessing officer regarding the admissibility of xerox copies of promissory notes:
The petitioner contended that the additions under Section 69A were based solely on xerox copies of promissory notes, claimed to be bogus and resultant from fraud by ex-employees. The petitioner argued that the onus was on the department to establish the taxability of the said income. The assessing officer, however, required the petitioner to provide details of the ex-employees involved in the alleged fraud, which the petitioner failed to furnish. Consequently, the assessing officer completed the assessment based on the material available, adding unsecured loans as unexplained money under Section 69A.

3. Maintainability of the writ petition despite the availability of an alternative remedy of appeal under Section 246(A) of the Income Tax Act, 1961:
The petitioner argued that the writ petition was maintainable as the assessing officer's order was without jurisdiction, particularly regarding the admissibility of xerox copies of promissory notes. The petitioner relied on the Supreme Court's decision in M/s. Godrej Sara Lee Ltd. vs. The Excise and Taxation Officer Cum Assessing Authority & Ors, which states that the availability of an alternative remedy does not oust the jurisdiction of the High Court under Article 226. The petitioner also cited exceptions where writ jurisdiction could be invoked, such as violation of fundamental rights, principles of natural justice, orders without jurisdiction, or challenges to the vires of an Act.

Court's Findings:
The court considered the rival submissions and focused on the preliminary issue of the writ petition's entertainability. It noted that the impugned assessment order was a consequence of the Principal Commissioner's order under Section 263, which had become final. The court emphasized that the alternative remedy of appeal under Section 246(A) is not an absolute bar but is subject to certain limitations, such as orders without jurisdiction or in violation of natural justice. The court found that the petitioner failed to demonstrate any exceptional situations warranting interference under Article 226. The court held that the assessing officer's actions were within jurisdiction and not in violation of natural justice principles.

Conclusion:
The court dismissed the writ petition, granting liberty to the petitioner to approach the appellate authority under Section 246(A) of the Income Tax Act. The observations made were for the purpose of deciding the present petition and would not affect the appellate authority's adjudication. No order as to costs was made, and pending interlocutory applications were closed.

---