TaxTMI 
TaxTMI 
2026 (1) TMI 473
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....in the nature of a writ of certiorari quashing the Notice of demand issued under section 156 of the Income -tax Act, 1961 by the Respondent dated: 30.09.2021 in respect of assessment year 2015-16, for the payment of Rs.99,15,732/- herein marked as Annexure-A3. d) Issue a writ of Certiorari and direction in the nature of a writ of certiorari quashing the Notice of penalty under section 274 read with section 271(1) (c) of the Income-tax Act, 1961 dated 03.09.2021 in respect of assessment year 2015-16 herein marked as Annexure-A4. e) Declare that the assessment order (Annexure-A1) passed under section 153C read with section 144 of the Income-tax Act, 1961 is without jurisdiction. f) And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity." 2. Heard learned Senior counsel for the petitioner and learned counsel for the respondents - revenue and perused the material on record. 3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior counsel for the petitioner submits that the impugned assessment order is illegal and arbitrary ....
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....ome Tax Act, 1961 was carried out in the case of Shri K Narayan Raju on 14.09.2017. The residence of Shri C R Rammohan Raju at No 24, Lakshmi Niwas, 4th Cross Road, KR Layout, J Nagar, 6th phase, Bangalore was also searched in this regard and various documents as per Panchanama dated 16.09.2017 were seized and statement u/s 132(4) of IT Act of Shri C R Rammohan Raju was recorded on 14.09.2017. In the statement, he was confronted with the documents seized during the course of the search. Further an amount of Rs.77,00,000/- was found and seized from locker belonging to Shri CR Rammohan Raju, as he was not able to explain the same. 2. During the course of assessment proceedings u/s. 153A in the case of Shri K Narayan Raju, upon examining the seized documents, the undersigned in the capacity of Assessing Officer of Shri K Narayan Raju, is satisfied in terms of section 153C of the Income-tax Act, 1961 that the said documents, fully described in the Annexure 'A' relate to and pertain to Shri CR Rammohan Raju. Hence, the documents seized as per Annexure 'A' is forwarded herewith to the Assessing officer of Shri C R Rammohan Raju. Sd/-. (PRAVEEN SINHA) Ass....
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....ing rental receipts 2015-16 to 2017-18 132/CRR/A/6 1 to 7 Unexplained investment details in farm house 2015-16 to 2017-18 132/CRR/A/9 1 to 98 Documents regarding land deals and cash payments made 2017-18 132/CRR/A/11 1 to 131 Cash payment of Rs.45 lakh for purchase of land 2018-19 132/CRR/A/12 105 to 130 Sale deed dated 12.09.2014 showing difference of Rs.87,50,000/- in sale consideration and guidance value 2015-16 8. It is an undisputed fact that in pursuance of the said satisfaction note, 1st respondent issued the impugned notices to the petitioner under Section 153C r/w 153A of the I.T.Act, which are assailed in the present petition. In this context, it is relevant to state that the satisfaction note indicates that it is M/s. Kalyani Group which has been searched and the same contains the name of K.Narayana Raju and the search was conducted in the residential premises of the petitioner who is none other than the Chairman and Managing Director of the said Kalyani Group; though, the search warrant and search panchanama shows the name of K.Narayana Raju as the person in whose name the warrant was issued, the name of the pe....
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....after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him." (Underlining Supplied) 14. The language employed under section 127 of the Act connotes providing reasonable opportunity to the assessee and passing Assessment Order based on reasons. Perusal of the writ papers and the arguments of learned Counsel appearing for the respondent-Revenue do not satisfy the ingredients of "fair play" as embodied under section 127(1) of the Act [See Punjab National Bank Ltd. v. All India Punjab National Bank Employees Federation 1960 (1) SCR 806]. I have also carefully noticed the observation made in impugned Order of Assessment and the impugned notices. Concluding part at paragraph 7.7 of Assessment Order dated 31st December, 2019 (Annexure-D1) passed under section 153C and Section 143(3) read with 153D of the Act, reads as under: "To summarise, the diaries and loose sheets that has been seized from the premise of Mr. Rajendran contain entries w....
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....inistrative. It is not intended to take away from those authorities the powers and 22 1986 AC 240, 251: (1986) 1 All ER 199 23 (1982) 3 All ER 141, 154 discretions properly vested in them by law and to substitute the courts as the bodies making the decisions. It is intended to see that the relevant authorities use their powers in a proper manner (P. 1160)." In R. v. Panel on Takeovers and Mergers, ex P Datafin plc24, Sir John Donaldson, M.R. commented: "An application for judicial review is not an appeal." In Lonrho plc v. Secretary of State for Trade and Industry25, Lord Keith said: "Judicial review is a protection and not a weapon." It is thus different from an appeal. When hearing an appeal the Court is concerned with the merits of the decision under appeal. In Amin, Re26, Lord Fraser observed that: "Judicial review is concerned not with the merits of a decision but with the manner in which the decision was made.... Judicial review is entirely different from an ordinary appeal. It is made effective by the court quashing the administrative decision without substituting its own decision, and is to be contrasted with an appeal where the appellate tribunal....
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....e judgment and discretion of determining upon this skill, ability, learning and sufficiency to exercise and practise this profession is trusted to the College of Physicians and this Court will not take it from them, nor interrupt them in the due and proper exercise of it. But their conduct in the exercise of this trust thus committed to them ought to be fair, candid and unprejudiced; not arbitrary, capricious, or biased; much less, warped by resentment, or personal dislike." 79. To quote again, Michael Supperstone and James Goudie; in their work Judicial Review (1992 Edn.) it is observed at pp. 119 to 121 as under: "The assertion of a claim to examine the reasonableness been done by a public authority inevitably led to differences of judicial opinion as to the circumstances in which the court should intervene. These differences of opinion were resolved in two landmark cases which confined the circumstances for intervention to narrow limits. In Kruse v. Johnson3O a specially constituted divisional court had to consider the validity of a byelaw made by a local authority. In the leading judgment of Lord Russell of Killowen, C.J., the approach to be adopted by the cou....
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.... the local authority, it may still be possible to say that, although the local authority had kept within the four comers of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere. The power of the court to interfere in each case is not as an appellate authority to override a decision of the local authority, but as a judicial authority which is concerned, and concerned only, to see whether the local authority has contravened the law by acting in excess of the power which Parliament has confided in them.' This summary by Lord Greene has been applied in countless subsequent cases. "The modem statement of the principle is found in a passage in the speech of Lord Diplock in Council of Civil Service Unions v. Minister for Civil Service 'By "irrationality" I mean what can now be succinctly referred to as "Wednesbury unreasonableness". (Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. 31) It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sens....
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....s it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; and those provisions are to be found in Sections 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as under :- "34. Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability." 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of busi....
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....ent with it. Applying the above tests it must be held that the two spiral note books (MR 68/91 and 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are "books" within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MR 72/91 and MR 73/91).' (Underlining by me) 17. The Hon'ble Supreme Court in the case of Common Cause case (supra), at paragraphs 278 to 282 of the judgement, has observed thus: "278. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of "books of accounts" and has held that such entries in loose papers/sheets are irrelevant and not admissible under section 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down i....
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..... Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept'. 281. With respect to evidentiary value of regular account book, this Court....
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....e sheets are contrary to the law declared by the Hon'ble Apex Court. In that view of the matter, impugned notices issued under section 153C of the Act, based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ petitions, as the same are void and illegal. In this connection, it is relevant to deduce the law declared by the Hon'ble Apex Court in the case of ICICI Bank Ltd. v. Municipal Corporation of Greater Bombay AIR 2005 SC 3315 wherein it is held that, "The ratio and effect of the judgment is required to be ascertained with reference to the question of law as decided by the Court. The ratio of the judgment or the principle upon which the question before the Court is decided is alone binding as a precedent. The decision of the Supreme Court upon a question of law is considered to be a binding precedent and this must be ascertained and determined by analysing all the material facts and issues involved in the case." That apart, no opportunity was provided to the petitioner as required under section 127 of the Act inter alia the petitioner being "searched person" and not "Other person" as required under section 153C of the Act and in t....
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....ch reasons would render the decision making process null and void. Reasons substitute subjectivity by objectivity and therefore, the recording of reasons is the principle of natural justice and it ensures transparency and fairness in decision making [See Secretary & Curator Victoria Memorial Hall v. Howrah Ganatantrik Nagrik Samity (2010) 3 SCC 732]. At this juncture, it is useful to refer to the judgment of Hon'ble Apex Court in the case of Babu Verghese v. Bar Council of Kerala (1999) 3 SCC 422, wherein at paragraph 31 and 32, it is held as follows: '31. It is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any Statute, the act must be done in that manner or not at all. The origin of this rule is traceable to the decision in Taylor v. Taylor (1875) 1 Ch. D 426 which was followed by Lord Roche in Nazir Ahmad v. King Emperor who stated as under: "Where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all." 32. This rule has since been approved by this Court in Rao Shiv Bahadur Singh & Anr. v. State of Vindhya Pradesh and again in Deep Chan....
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.... Jaiswal AIR 1985 SC 1622, Hon'ble Supreme Court has held that where power is conferred to achieve a certain purpose, the power can be exercised only for achieving that purpose. It is useful to refer to paragraph 26 of the said judgment, which reads thus: '26. Where power is conferred to achieve a purpose it has been repeatedly reiterated that the power must be exercised reasonably and in good faith to effectuate the purpose. And in this context 'in good faith' means 'for legitimate reasons'. Where power is exercised for extraneous or irrelevant considerations or reasons, it is unquestionably a colourable exercise of power or fraud on power and the exercise of power is vitiated. If the power to acquire land is to be exercised, it must be exercised bona fide for the statutory purpose and for none other. If it is exercised for an extraneous, irrelevant or non-germane consideration, the acquiring authority can be charged with legal mala fides In such a situation there is no question of any personal ill- will or motive. In Municipal Council of Sydney v. Compbell (1) it was observed that irrelevant considerations on which power to acquire land is exercis....
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....as colourable exercise of power, namely, to satisfy the chagrin and anguish of the Sammelan at the coming up of a cinema theatre in the vicinity of its campus, which it vowed to destroy. Therefore, the impugned notification has to be declared illegal and invalid for this additional ground." 22. In the case of Sri Budhia Swain v. Gopinath Deb AIR 1999 SC 2089, Hon'ble Supreme Court, at paragraphs 8 and 9 of the judgment, held as follows: '8. In our opinion a tribunal or a court may recall an order earlier made by it if (i) the proceedings culminating into an order suffer from the inherent lack of jurisdiction and such lack of jurisdiction is patent, (ii) there exists fraud or collusion in obtaining the judgment, (iii) there has been a mistake of the court prejudicing a party or (iv) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all or had died and the estate was not represented. The power to recall a judgment will not be exercised when the ground for re-opening the proceedings or vacating the judgment was available to be pleaded in the original action but was not done or where a proper remedy in some other pr....
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.... Hon'ble Apex Court and same cannot be touched upon while conducting de novo enquiry afresh. 24. As regards the last limb of the argument advanced by the learned Additional Solicitor General that writ petitions are not maintainable on the ground of alternative remedy and delay and laches is concerned, taking into consideration the fact that the impugned notices and the orders passed by the respondent-Revenue are contrary to the law declared by the Hon'ble Apex Court referred to above, in that view of the matter, it is trite law that the acceptance of writ petitions, despite having alternative remedy, is a rule of practice and not of jurisdiction and in this regard, the Division Bench of this Court in the case of U.M. Ramesh Rao v. Union Bank of India [2021] 124 taxmann.com 59/2021 (3) AKR 345 at paragraphs 40 and 41 of the judgment has observed thus: "40. The following judgments of the Hon'ble Supreme Court on the aspect of maintainability of a writ petition under Article 226 of the Constitution in the face of an alternative remedy are referred to as under: (a) In Veerappa Pillai v. Raman and Raman Ltd.., [AIR 1952 SC 192], it was observed tha....
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....orporation), at paragraph 15, it was observed that under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But, the High Court has imposed upon itself certain restrictions, one of which is, if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But, the availability of an alternative remedy has been consistently held not to operate as a bar in at least four contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the said decision, reliance was also placed on Rashid Ahmad v. Municipal Board, Kairana, [AIR 1950 SC 163], (Rashid Ahmad), to observe that where alternative remedy existed, it would be a sound exercise of discretion to refuse to interfere in a petition under Article 226 of the Constitution. This proposition was, however, qualified by the significant words, "unless ther....
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....retion of the High Court to grant relief under Article 226 of the Constitution. At the same time, it cannot be lost sight of the fact that though the matter relating to an alternative remedy has nothing to do with the jurisdiction of the case, normally the High Court should not interfere if there is an adequate, efficacious, alternative remedy. If somebody approaches the High Court without availing the alternative remedy, the High Court should ensure that he has made out a strong case or that there exist good grounds to invoke the extraordinary jurisdiction. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted. The rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of compulsion and the Court must consider the pros and cons of the case and then may interfere. However, there are well recognized exceptions to the doctrine of exhaustion of statutory remedies. First is, when the proceedings are taken before the forum under a provision of law which is ultra v....
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....542], (Embassy Property), one of the preliminary questions that arose was whether the High Court ought to interfere under Article 226/227 of the Constitution, with an Order passed by the National Company Law Tribunal (NCLT) in a proceeding under the Insolvency and Bankruptcy Code, 2016 (IBC), ignoring the availability of a statutory remedy of appeal to the National Company Law Appellate Tribunal (NCLAT) and if so, under what circumstances. In the said case, there is an exposition on the well recognised exceptions to the self-imposed restraint of the High Courts, namely, in cases where a statutory alternative remedy of appeal is available, or there is lack of jurisdiction on the part of the statutory/quasi-judicial authority against whose order judicial review is sought. It was observed that an "error of jurisdiction" was always distinguished from "in excess of jurisdiction", till the judgment of the House of Lords in Anisminic Ltd. v. Foreign Compensation Commission [(1969) 2 WLR 163] (Anisminic). In Anisminic, the real question was not, whether, an authority made a wrong decision but whether they enquired into and decided a matter on which they had no right to co....
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....Article 226 of the Constitution without taking recourse to the appellate remedy under NCLAT. It was held that the judicial review was permissible and the High Court was justified in entertaining the writ petition assailing the order of the NCLT, directing execution of a supplemental lease deed for the extension of the mining lease. (d) Learned Senior counsel appearing for the respondent in Writ Appeal No. 538 of 2020 placed reliance on Authorised Officer, State Bank of Travancore and another v. Mathew K.C. [(2018) 3 SCC 85], (Mathew K.C.) wherein it was observed that SARFAESI Act is a complete Code by itself, providing for expeditious recovery of dues arising out of loans granted by financial institutions. The remedy of appeal by the aggrieved under Section 17 before the Debt Recovery Tribunal, followed by a right to appeal before the Appellate Tribunal under section 18 was adequately provided under the Act. Therefore, the High Court ought not to have entertained the writ petition in view of the adequate alternative statutory remedies available. In that case, an interim order granted by the High Court in exercise of jurisdiction under Article 226 of the Constitution, stayi....
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....CICI Bank Limited v Umakanta Mohapatra and others, [(2019) 13 SCC 497], (Umakanta Mohapatra), it was held, the writ petition was not maintainable and therefore, allowed the appeals. (g) In Authorised Officer, State Bank of India v. Allwyn Alloys Private Limited and others, [(2018) 8 SCC 120], the Hon'ble Supreme Court opined that Section 34 of the SARFAESI Act clearly bars filing of a civil suit. No civil court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or DRAT is empowered by or under the Act to determine and no injunction can be granted by any court or authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act." 25. Following the aforementioned judgment rendered by the Division Bench of this Court, I am of the opinion that since the impugned notices are issued under section 153C of the Act, are contrary to the judgment of the Hon'ble Apex Court, the writ petitions filed under Article 226 of the Constitution of India, in the instant case, are maintainable. 26. In the backdrop of the finding recorded above, it is useful to cite the law decl....
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....rises for consideration in these writ appeals, which are as under: (1) Whether 'Loose Sheets' and 'Diary' have any evidentiary value? (2) Whether Centralization is in violation of Section 127 of the Income-tax Act, 1961, is valid? (3) Whether the Notice under section 153C of the Income-tax Act, 1961 is valid herein? 30. As regards the further question as to (3) Whether the Notice under section 153C of the Income-tax Act, 1961 is valid herein: In this regard, it is relevant to refer to Section 153C of the IT Act, which reads thus: Assessment of income of any other person. "153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or asset....
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....f income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A." Thus, it transpires that the essential conditions to invoke Section 153C of the Income-tax Act, 1961 are: (i) There must exist primary person on whom search must be conducted. (ii) There must be discovery of documents found in the custody of the 'searched person' relating to the 'other person' (iii) Such documents found must be incriminating material to invoke proceedings against the 'other person' As the title enunciates, "Assessment of income of any other person", no search is sine qua non for issuance of proceedings un....
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....happen that the Assessing Officer of the searched person is different from the Assessing Officer of the other person and in the second eventuality, the Assessing Officer of the searched person and the other person is the same. Where the Assessing Officer of the searched person is different from the Assessing Officer of the other person, there shall be a satisfaction note by the Assessing Officer of the searched person and as observed hereinabove that thereafter the Assessing Officer of the searched person is required to transmit the documents so seized to the Assessing Officer of the other person. The Assessing Officer of the searched person simultaneously while transmitting the documents shall forward his satisfaction note to the Assessing Officer of the other person and is also required to make a note in the file of a searched person that he has done so. However, as rightly observed and held by the Delhi High Court in the case of Ganpati Fincap (supra), the same is for the administrative convenience and the failure by the Assessing Officer of the searched person, after preparing and dispatching the satisfaction note and the documents to the Assessing Officer of the other person, ....
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....dated 30th December, 2019 vide Annexure-C to C3 for the aforementioned Assessment Years. 33. The Revenue had conducted search action under section 132 of the Income-tax Act, 1961 on 02nd August, 2017 at the premises of the respondent/Sunil Kumar Sharma and similar search also took place at the premises of one Sri K. Rajendran at New Delhi. During the search at the premises of Sri K. Rajendran/respondent in W.A.No.834/2022, certain diaries and entries relating to the affairs of Sunil Kumar Sharma were recovered and statements of both of them came to be recorded. The main grievance of the petitioners in the writ petitions was that impugned notices under section 153C of the IT Act ought to be issued on "other person" and the petitioners being "searched person", the impugned notice under section 153C of the Act is not maintainable. Hence, petitioners had filed those writ petitions challenging the action of the Revenue as non-est and contrary to law. 34. In the aforesaid writ petitions, the respondent/Revenue entered appearance and filed objection, and contended that proceedings have been initiated against the petitioners under section 153C of the Act, based on the mat....
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....n the case of "searched person" belongs to "other person" and as the search has been conducted on the residence of the petitioner at Bengaluru and material has been seized as per panchanama making him as the "searched person" and not "other person". Hence it was submitted that the impugned notice issued under section 153C of the Act is bad in law. It was further argued that the respondent No. 1 failed to examine whether the papers or loose note sheets found during the course of search in the premises of Sri Rajendran are documents having evidentiary value to prove the fact of transaction. In this regard, he referred to Section 34 of Indian Evidence Act, 1872 to contend that the search action did not lead to discovery of unaccounted money, bullion, jewellery or valuable article and no books of account revealed undisclosed transactions of the assessee and the entire impugned proceedings revolved around scribbling of loose sheets seized from premises of another person (Sri Rajendran) and therefore, learned Senior Counsel argued that the action taken by respondent No. 1 is contrary to the law declared by the Apex Court in the case of V.C. Shukla (supra) and in the case of Common Cause ....
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....ing to assessee were found and seized - Consequently, Assessing Officer of searched person issued notice under section 153C against assessee for assessment years 2005- 2006 to 2010-2011 and a notice under section 143(3) for assessment year 2011-12 - Assessments were concluded and income of assessee was assessed - Tribunal set aside assessment order and held that there was no satisfaction recorded by Assessing Officer of searched person, which is mandatorily required for issuing a notice under section 153C - Whether since satisfaction note was not recorded by Assessing Officer of searched person, Tribunal had rightly quashed assessment on account of lack of jurisdiction - Held, yes (paras 45 and 49) (in favour of assessee)" 50. In the instant case, the first issue raised by the Revenue is as regards the addition of income made by the Assessing Officer based on loose sheets found in the house of a third party. However, we find that the Revenue has not established the said loose sheets to be considered as evidence in law by producing corroborative evidence supported by judgments and findings. Further, since the statement made by Shri K. Rajendran under section 132 of the IT A....
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....ingle Judge in W.P.Nos.9937/2022 C/w. W.P.Nos.9938/2022, 9939/2022, 9945/2022 and 9946/2022 is hereby confirmed. Before parting with this judgment, this Court places on record its deep appreciation for the able research and assistance rendered by its Research Assistantcum-Law Clerk, Mr.Pranav.K.B." 11. The said judgment of the Division Bench was confirmed by the Apex Court in Deputy Commissioner of Income Tax vs. Sunil Kumar Sharma in SLP (Civil) Diary NO(S). 23406 of 2024 dated 21.10.2024. 12. Further, the review petition filed by the revenue was also dismissed by the Apex Court in Review Petition (Civil) Diary No(S). 60856 of 2024 dated 08.04.2025. 13. So also, in IBC Knowledge Parks' case supra, the Division Bench of this Court held as under:- "B.V. Nagarathna, J. - These appeals, filed by the Revenue as well as the assessee, assail order dated 25/4/2014, passed by the Income Tax Appellate Tribunal (hereinafter referred to as "the Tribunal" for the sake of convenience), in ITA. Nos.903-905/Bang/2013 and C.O.Nos.103- 105/Bang/2013 dated 25/4/2014. By the said order, the Tribunal has confirmed the order of the Commissioner of Income Tax....
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....Rs.1.91 crores cannot be disallowed as held by the Assessing Officer despite the same not been reflected in the Balance Sheet and no particulars having been furnished recorded a perverse finding, not supported by materials? (iv) Whether the Tribunal was correct in holding that the claim of Rs.1,29,08,375/- shown as construction management fee is allowable to the extent of 25% even though no evidence has been adduced in support of the claim when this expense related to the property constructed by the assessee was let-out and rental income was received under the head 'Income from House Property' and the question of earning expenses did not arise and the same could be capitalized? Whether the Tribunal was correct in allowing depreciation on elevators, DG sets, Transformers and fixtures without appreciating that the assessee is not in the business of leasing out any of these assets and these fixtures are affixed with the building and were part of the leased are part of the leased building which do not have any independent existence and that no independent receipt/fees/ maintenance charges were received against these facilities/services and therefore, they are ....
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....ssment years immediately preceding the assessment year relevant to previous year in which search was conducted or requisition was made. 42. As far as the assessment year 2004-05 was concerned, the Tribunal noted that as on the date the search was conducted i.e., on 17/06/2008, no assessment proceeding for that year was pending and the additions made for the assessment year under Section 153A r/w Section 153C are identical to the ones made in the assessment order dated 27/12/2006 for the said year. As no undisclosed income was detected, the assessment made under Section 153A r/w Section 153C of the Act was quashed by the Tribunal. 43. As far as assessment year 2005-06 was concerned, though order under Section 143(3) was not passed, an intimation under Section 143(1) was issued on 28/03/2007 which fact is noted in the order 31/12/2010 passed under Section 153A r/w 153C of the Act. The Tribunal held that for the purpose of Section 153A r/w 153C of the Act, an intimation under Section 143(1) is also an order of assessment, and therefore, the argument of the assessee was not accepted. In the circumstances, cross-objection of the assessee was partly allowed for the asse....
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....ction 139. The Assessing Officer can assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. However, assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. The explanation states, save as otherwise provided in Sections 153A, 153B and 153C, all other provisions of the Act shall apply to the assessment made under Section 153A. Section 153B speaks about time-limit for completion of assessment under Section 153A. 46. 153C is relevant for the purposes of this case. Sub-section (1) of Section 153C begins with a non-obstante clause and it states that notwithstanding anything contained in Sections 139, 147, 148, 149, 151 and 153, where the Assessing Officer is satisfied that any valuable assets, seized or requisitioned, belongs to, or any books of account or documents, seized or requisitioned, pertains or pertain ....
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....30/06/1995. Section 158B(b) defines 'undisclosed income' to include any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property, which has not been or would not have been disclosed for the purposes of this Act or any expense, deduction or allowance claimed under this Act which is found to be false. Section 158BA deals with assessment of undisclosed income as a result of search, while Section 158BB deals with computation of undisclosed income of the block period. Block period is defined in Section 158B(a) to mean the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted under Section 132 or any requisition was made under Section 132A and also includes the period up to the date of commencement of such search or date of such requisition in the previous year in which the said search was conducted or requisition was made. The proviso is not....
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....ng Officer has to issue notice to the assessee i.e., the person searched for the purpose of assessment or reassessment of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. Section 153C as already noted, deals with assessment of income of any other person, when the Assessing Officer is satisfied that the books of account or documents or valuable assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to under sub-section(1) of Section 153A of the Act. In such a case, the Assessing Officer has to issue notice to assess or reassess income of other person under Section 153A of the Act. Thus, the fact that search has been conducted would not justify issuance of notice under Section 153A. If it is only during a valid search when certain incriminating materials are detected, notice could be issued. 50. Chapter XIV-B which deals with special procedure for assessment of search cases deals with undisclosed income as a result of search, the computation thereof and such other provisions.....
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....ut before search, as long as they relate to any year covered in the block. Thus, a block assessment is justified only on the basis of evidence found during search and the materials or information relatable thereto. Section 153C is in pari materia with Section 158BD conferring jurisdiction over third parties to a search providing certain conditions before the Assessing Officer having jurisdiction over a third party can assume jurisdiction. Materials such as books of account, documents or valuable assets found during a search should belong to a third party which would lead to an inference of undisclosed income of such third party. Such an inference should be recorded by the Assessing Officer having jurisdiction over the searched persons and communicated to the Assessing Officer having jurisdiction over such third party along with the seized documents and other incriminating materials on the basis of which the Assessing Officer having jurisdiction over such third party would issue notice under Section 153C. On receipt of the aforesaid material, the Assessing Officer having jurisdiction over such third party would proceed against the said third party. Thus, where no material b....
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....atisfaction, which is mandatory; nor had he transferred the case to the Assessing Officer having jurisdiction over the matter. Therefore, the judgment of the High Court was set aside and the appeals were allowed. 52. The decisions relied upon by the learned Senior Counsel appearing for the assessee are as under: (a) In CIT v. Calcutta Knitwears [2014] 362 ITR 673/223 Taxman 115 (Mag.)/43 taxmann.com 446 (SC), the Hon'ble Supreme Court considered the question, as to at what stage of the proceedings under Chapter XIV-B, the Assessing Authority was required to record his satisfaction for issuing notice under Section 158BD of the Act. In that case, the facts were that a search operation under Section 132 of the Act was carried out in two premises of the Bhatia Group, namely M/s. Swastik Trading Co., and M/s. Kavita International Co., on 5/2/2003 and certain incriminating documents pertaining to the assessee-firm i.e., Calcutta Knitwear were traced in the said search. After completion of the investigation by the investigating agency and handing over of the documents to the assessee to the Assessing Authority, the latter had completed the block assessments in the ca....
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....oceedings for completion of the assessments under section 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched under Section 132 or the books of account were requisitioned under Section 132A of the Act. This is in contrast to the provisions of section 148 of the Act where recording of reasons in writing are a sine qua non. Under Section 158BD, the existence of cogent and demonstrative material is germane to the Assessing Officers' satisfaction in concluding that the seized documents belong to a person other than the searched person is necessary for initiation of action under Section 158BD. The bare reading of the provision indicates that the satisfaction note could be prepared by the Assessing Officer either at the time of initiating proceedings for completion of assessment of a searched person under Section 158BC of the Act or during the stage of the assessment proceedings. It does not mean that after completion of the assessment, the Assessing Officer cannot prepare the satisfaction note to the effect that there exists income-tax belonging to any person other than the searched person in respect of whom a....
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.... the same accounts of the assessee were reassessed by making further investigations, which was impermissible, as the same would amount to reopening of a concluded assessment, without there being any additional material found at the time of search. Otherwise, it would give the Revenue a second opportunity to reopen a concluded assessment, which is impermissible in law. Merely because a search is conducted in the premises of the assessee, would not entitle the Revenue to initiate the process of reassessment, for which, there is a separate procedure prescribed in the statute. It is only when the conditions prescribed for reassessment are fulfilled that a concluded assessment can be reopened. The very same accounts which were submitted by the assessee, on the basis of which assessment had been concluded, cannot be re-appreciated by the Assessing Officer merely because a search had been conducted in the premises of the assessee. (c) In Jai Steel (India) v. Asstt. CIT [2013] 36 taxmann.com 523/219 Taxman 223 (Raj.), it was held that no doubt the Assessing Officer is free to disturb income, expenditure or deduction de hors any incriminating material, while making an assessment un....
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....criminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word "assess" in Section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word "reassess" to completed assessment proceedings. (vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the finding of the search and any other material existing or brought on record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The Delhi High Court further held that in the cases before it on the date of the search the assessment already stood conclude....
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....nder Section 158BD, for transferring a file under Section 153C, there is no need to examine whether the books of account or other evidence or materials seized in the course of search of an assessee represents or proves undisclosed income of another assessee. On the other hand, for transferring the file to the Assessing Officer of such other assessee, all that is required to be considered is whether the materials or books of account or evidence recovered relates to another assessee, which may or may not lead to an assessment in the case of the other assessee after transfer of the file to his Assessing Officer. This is only an internal arrangement to be made between two Departmental Officers and in this regard the only fact that needs to be verified is whether the assessee whose books of account or materials are recovered in the course of search of any other assessee, is a regular assessee before another Officer, and if so, to transfer the file to such other Officer for his consideration and for passing orders, whether assessment or penalty or such other order permissible under the Act by that Officer. (e) In Canara Housing Development Co. v. Dy. CIT [2014] 49 taxmann.com 98....
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.... of incriminating material is a must for disturbing the assessment already made and concluded. But, at the same time, such can be at three stages: one, at the stage when the reassessment is initiated, the second, at the stage during the course of reassessment and third, at a stage where the reassessment is altered by a different assessment in respect of searched person or in respect of third party. In this regard, reference may be made to the decision of Apex Court in case of M/s. Calcutta Knitwear (supra) and based on the said decision, the CBDT has also issued circular dated 31.12.2015 vide No.24/2015.The relevant extract of the circular for ready reference can be extracted as under: 'The issue of recording of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation. 2. The Hon'ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No.3958 of 2014 dated 12.3.2014(available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of Section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he trans....
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....ot think that such can be the correct position of law. 56. Further, in the judgments referred to by the learned counsel for the Revenue, where incriminating material leading to undisclosed income of another assessee was detected in a search operation, in those cases, reopening of the concluded assessment have taken place. There has been no single decision cited by the learned counsel for the Revenue where the assumption of jurisdiction of the Assessing Officer is in the absence of any incriminating material or undisclosed income having been detected during the course of search leading to reopening of a concluded assessment. In the instant case, though documents belonging to the assessee were seized at the time of search operation, there was no incriminating material found leading to undisclosed income. Therefore, assessment of income of the assessee was unwarranted. Consequently, no satisfaction was recorded in the case of the assessee. We answer substantial question of law No.2 by holding that the Tribunal was not correct in holding that the assessment under Section 153C was valid despite there being no satisfaction recorded to the effect that the documents found....
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....I pass the following:- ORDER (i) Petition is hereby allowed. (ii) The impugned Notices at Annexures-A1 to A8 issued by the 1st respondent to the petitioner for the assessment years 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 under Section 153C of the Income Act, 1961 and all further proceedings pursuant thereto, are hereby quashed. 6. In the instant case, a perusal of the panchanama will indicate that the warrant was issued in relation to the petitioner's premises and consequently, in the light of the aforesaid judgment of this Court in C.R. Ram Mohan Raju's case supra, the impugned assessment order and all further proceedings pursuant thereto deserve to be quashed. 7. Learned Senior counsel for the petitioner is also correct in his submission that the due date for passing the impugned assessment order was 30.09.2021 and though the said order is purported to have been passed on that day, since the said order did not leave the control of the respondents as can be seen from the postal track report, which indicates that the impugned order was booked and dispatched by the respondents only on 05.10.2021 and not on the last date i.....
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....chased copra during the years 1961-62 and 1962-63. The law, as it then stood, did not serve the purpose of bringing to tax the purchases of copra. The Kerala State Legislature, therefore enacted the Kerala Sales Tax (Levy and Validation) Act, 1965 to validate the levy of tax on copra during the said two years, among others and to enable assessments to be made where non-existed. Section 3 of the Act, which was to operate retrospectively from 1st April, 1958, imposed a liability on every dealer to pay tax on his turnover relating to purchase of copra. Section 4(1)(iv) which operated from 27th September, 1965, enabled assessments to be made within three years (extended by subsequent amendment to five years) of the date of publication of the Validation Act in cases where the tax payable on the purchase of copra had not been assessed under the General Sales Tax Act. By virtue of this provision, as amended, the assessing authority could assess the tax due on the purchases of copra within five years from 27th September, 1965, i.e., before 27th September, 1970. The assessments in question for the two years 1961-62 and 1962-63 were made on 23rd September, 1968; but the orders were served on....
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....made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. This should be done within the prescribed period, though the actual service of the order may be beyond that period. This aspect of the matter had not come up for consideration in the cases of Viswanaihan Chettiar [1954] 25 ITR 79 (Mad.) and Laxmidas & Co. [1969] 72 ITR 88 (Bom) where the only question dealt with was whether service of the order after the prescribed period rendered it invalid. Unless, therefore, the order of the Deputy Commissioner in this case had been so issued from his office within the period prescribed, it has to be held that the proceedings are barred by limitation. This question has not been considered by the Tribunal. The Tribunal, which passed the order, apparently did not have the benefit of the decision in Malayil Mills case (T. R. C. Nos. 15 and 16 of 198....