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TMI Blog2021 (7) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... olicitor General of India Assisted by Mr.A.P.Srinivas And Mr.A.N.R.Jayaprakash COMMON ORDER THE FACTS IN BRIEF SUBMITTED BY THE PETITIONER The facts in detail presented by the petitioners are that the petitioner / assessee filed his return of income for the Assessment Year [hereinafter referred to as 'AY'] 2014-15, disclosing fully and truly his income including the "capital gains" arising out of a sale of land in the Financial Year 2013- 14. The capital gains could be assessed only in AY 2014-15 by virtue of Section 45 of the Income Tax Act, 1961 [hereinafter referred to as 'Act']. The return was taken up for scrutiny assessment under Section 143 of the Act and the Assessing Officer completed the assessment under Section 143(3). Accordingly, the return of income was accepted in toto by the Assessing Officer, including the disclosed capital gains. 2. On 31.01.2014, 27.03.2014 and 27.03.2014 in Financial Year 2013-14 pertaining to AY 2014-15, the petitioner sold his land measuring 5.11 acres by three sale deeds to M/s.Agni Estates and Foundations Private Limited at the rate of Rupees three Crore per acre and received the entire consideration of Rs. 15.33 crore b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 6,38,75,000/-. 4. The petitioner filed an application on 26.11.2019 in Crl.M.P.No.25634 of 2019 under Section 245 of Cr.P.C. before the Special Court and sought for discharge of the petitioner from CC No.15 of 2019. Under these circumstances, the Assessing Officer on 16.12.2019, issued the impugned notice under Section 153C to the petitioner and directed the petitioner to file returns for a block of six assessment years AY 2013-14 to AY 2018-19. 5. The petitioner states that he sought for information from the Assessing Officer on 27.12.2019 and the said letter was not responded. It is contended that on 31.12.2019, proceedings under Section 148 lapsed due to expiry of the time allowed without any order of re-assessment. On 06.01.2020, the Assessing Officer furnished the reasons for initiating proceedings under Section 153C recorded by him. The reasons referred to the "Satisfaction note". He also stated that he was furnishing the copies of the "Sworn statements" and the seized materials. On 07.01.2020, the Special Court dismissed the Crl.M.P.No.25634/2019 filed by the petitioner for discharge. However, on 09.01.2020, the Chartered Accountant of the petitioner reiterated his req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material in the file to initiate proceedings under Section 153C. However, during the pendency of the present writ petitions, on 18.03.2021, the Assessing Officer referring to the proceedings under Section 153C, issued another Show Cause Notice, reiterating the proposal to tax Rs. 6,38,75,000/- in AY 2014-15 and proposing to tax Rs. 2,00,00,000 in AY 2015-16, Rs. 35,00,000 in AY 2017-18, Rs. 64,00,000 in AY 2018-19 and Rs. 21,00,000 in AY 2019-20 Total Rs. 3,20,00,000 9. On 20.03.2021, the petitioner through his Chartered Accountant, requested the Assessing Officer to await the outcome of the pending writ petitions before this Court. THE FACTS IN BRIEF AS PER THE RESPONDENTS: 10. The writ petitioner has sold three parcels of land (total extent of 5.11 acres) belonging to him through three sale deeds dated 31.01.2014, 27.03.2014 and 27.03.2014 to M/s.Agni Estates and Foundation Private Limited at the price of Rupees Three Crore per acre. However, in respect of the contiguous piece of land owned by Smt.Nalini Chidambaram, the land was sold at Rs. 4.25 Crores per acre. The writ petitioner had filed his return of income for the AY 2014-15 on 29.07.2014, declaring a tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. Thus, he has no jurisdiction to allow the said proceedings to lapse and initiate further proceedings under Section 153C of the Act. Thus, the action lacks jurisdiction and amounts to legal malice. (b) The alleged materials seized pertains to Rs. 6,38,75,000/- received allegedly as 'on money' in respect of the lands sold in Financial Year 2013- 14. The amount is to be taxed as 'capital gains'. Under Section 45 of the Act, capital gains can be taxed only in the relevant Assessment Year, which, in this case, is admittedly AY 2014-15. The materials seized has no "bearing on the total income" in respect of any other Assessment Year. Thus, the Assessing Officer has no jurisdiction to re-open the assessment in respect of any other Assessment Year and consequently, the impugned notices issued under Section 153C of the Act is beyond the scope of re-opening proceedings. (c) The proceedings under Section 148 of the Act admittedly lapsed on 31.12.2019. On such lapsing, in the absence of an order of re-assessment, the original return of income for AY 2014-15 is deemed to have been accepted and no further tax can be demanded for the said Assessment Year. (d) Allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 153C of the Act are one and the same and the materials are relating to the alleged payment of on cash by the buyer to the petitioner amounting to a sum of Rs. 6,38,75,000/-. When the materials and informations relied on for the purpose of initiation of reopening proceedings under Section 147 and notice under Section 148 and the impugned Show Cause Notice under Section 153C of the Act are same and such materials were within the knowledge of the Assessing Officer even at the time of initiation of re-opening proceedings under Section 148 of the Act. Thereafter, the Assessing Officer cannot reprobate and initiate further proceedings under Section 153C of the Act. It is contended that the limitation lapses on 31.12.2019 and knowing the fact that after the expiry of limitation, the return of income scrutinized and the assessment order deemed to became final, the Assessing Officer issued the impugned Show Cause Notice with an intention to extend the period of limitation and thus, the actions are nothing, but legal malice and amounts to tax terrorism. 15. The learned Senior counsel elaborated the scope of implications of Section 153A and 153C of the Act. Section 153A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seizure operation was conducted under Section 132 of the Act on 05.07.2018 in the case of M/s.Agni Estates and Foundation Private Limited. Thus, the Assessing Officer was aware of the search and seizure operations in the premises of the buyer M/s.Agni Estates on 05.07.2018. Further, the informations were also received from DDIT (Inv) on 10.08.2018, the sale price and the alleged on cash transactions were also within the knowledge of the Assessing Officer. This apart, the statements recorded from Mr.R.N.Jayaprakash (Director of M/s.Agni Estate and Foundation Private Limited) and the note book as referred and all other materials in connection with the search and seizure operations were available and within the knowledge of the Assessing Officer and based on the materials, the Assessing Officer formed an opinion that he has "reason to believe" that the tax chargeable escaped assessment and accordingly, issued Notice under Section 148 of the Act. Even the statements of the Director of M/s.Agni Estates namely Mr.R.N.Jayaprakash was extracted in the order dated 12.10.2018, furnishing reasons for re-opening. Thus, the Assessing Officer ought to have proceeded with 148 proceedings and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive and amounts to legal malice. 21. The learned Senior counsel regarding the abatement Clause contemplated under Section 153-A said that, the abatement is an inapplicable concept as far as the facts of the case on hand is concerned. The Doctrine of abatement in the present case is alien, in view of the fact that the materials relied upon for re-opening of assessment under Section 148 forms the same basis for issuance of impugned Show Cause Notices under Section 153C of the Act. Thus, the abatement clause has no application. 22. The learned Senior counsel relied on the judgment of the Constitution Bench of the Hon'ble Supreme Court of India in the case of Calcutta Discount Company Limited Vs. Income Tax Officer, reported in AIR 1961 SC 372 and the relevant paragraphs are extracted hereunder: "27. Mr Sastri mentioned more than once the fact that the Company would have sufficient opportunity to raise this question viz. whether the Income Tax Officer had reason to believe that underassessment had resulted from non-disclosure of material facts, before the Income Tax Officer himself in the assessment proceedings and if unsuccessful there before the appellate officer or the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m continuing such action. The Constitution Bench made an observation that when the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. 24. Relying on the said observations, the learned Senior counsel made a submission that the point of maintainability raised by the respondents deserves no merit consideration as it is a classic case of legal malice and without jurisdiction and applying the principles of Constitution Bench cited, the writ petition is maintainable. 25. The Constitution Bench judgment of the Hon'ble Supreme Court of India is followed in the case of Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and others, reported in (1998) 8 SCC 1 and the relevant paragraphs are extracted hereunder: "14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction without any legal foundation." 26. The Hon'ble Supreme Court of India in the said case observed that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. The observations in paragraph 15 reiterates that the alternative remedy cannot be a bar in at least three 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. 27. Relying on the above principles, the learned Senior counsel is of an opinion that the case on hand is a classic case of no jurisdiction, legal malice and violation of the provisions of the Income Tax Act and therefore, the writ petition is maintainable and the impugned orders are to be set aside. 28. In the case of Commissioner of Bhopal Vs. Shelly Products and another, reported in (2003) 5 SCC 461, the Hon'ble Supreme Court of India made significant observations in Paragraphs 35 and 36 and the same are extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice of the authority concerned in a case when refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by Section 240 of the Act, an obligation is cast upon the Revenue to refund the amount to the assessee without his having to make any claim in that behalf. In appropriate cases therefore, it is open to the assessee to bring facts to the notice of the authority concerned on the basis of the return furnished, which may have a bearing on the quantum of the refund, such as those the assessee could have urged under Section 237 of the Act. The authority concerned, for the limited purpose of calculating the amount to be refunded under Section 240 of the Act, may take all such facts into consideration and calculate the amount to be refunded. So viewed, an assessee will not be placed in a more disadvantageous position than what he would have been, had an assessment been made in accordance with law." 29. Relying on the above paragraph 35, the learned Senior counsel reiterated that in the present case, the Assessing Officer miserably failed to conclude the re-opening of assessment proceedings initiated under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Year falls on 2014-15. Therefore, the Show Cause Notice issued for the Assessment Year 2015-16 is directly in violation of Section 45 of the Act. The capital gains pertaining to the sale transaction of the Financial Year 2013-14 falls under the AY 2014-15 and thus, the Show Cause Notice issued for AY 2015-16 is without jurisdiction. 31. The learned Senior counsel referred the Calcutta Discount Company Limited (cited supra) again and pointed out that the writ petition is maintainable. The learned Senior counsel referred the Shelly Products (cited supra) case and reiterated the contentions raised by the learned Senior counsel Dr.Abhishek Singhvi. Apart from the said judgments, the learned Senior counsel Mr.Viswanathan cited the judgment of the High Court of Delhi in the case of South Asian Enterprises Ltd., and another Vs. Commissioner of Income Tax and another, in W.P.(C).No.4623 of 2001 and the relevant paragraphs are extracted hereunder: "19. The facts of the case as already noted show that the impugned notices under Section 147 of the Act were issued to the Petitioners consequent upon the search and seizure operations and subsequent to the issuance to them of the notices un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The reasons recorded for re-opening of assessment under Section 148 were furnished to the petitioner and the said reasons clearly indicates that all the materials were made available to the Assessing Officer at the time of initiation of proceedings under Section 147/148 of the Act. Therefore, after initiation of 147/148 proceedings by issuing notice, thereafter the respondents cannot clutch the jurisdiction and initiate further action under Section 153C of the Act, more specifically, based on the same materials relied upon for initiation of re-opening proceedings under Section 147/148 of the Act. Thus, the impugned Show Cause Notice is without jurisdiction and thus, the writ petition is maintainable. Once the assessment became final with reference to the Financial Year 2014-15 and the final assessment order was passed, and based on search and seizure information provided by the Investigation Wing of the Department, the re-opening proceedings were initiated under Section 147/148 of the Act, thereafter, the Assessing Officer cannot reprobate and issue Notice under Section 153C of the Act, which is not only impermissible, but without jurisdiction and the manner in which the actions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning assessment. Assessment cannot be re-opened merely on change of opinion, as has apparently been done in this case. The Assessing Officer on being satisfied that there was no apparent error in computation of income, on the basis of existing records, dropped the rectification proceedings. In the absence of any new and/or fresh materials and in the absence of any reason for formation of belief that even otherwise, income had escaped assessment even though there was no apparent mistake or error, the Assessing Officer lacked jurisdiction to issue the impugned notice." 34. In the case of Khudiram Das Vs. The State of West Bengal and others, reported in (1975) 2 SCC 81, the Hon'ble Supreme Court of India ruled as follows: "9. But that does not mean that the subjective satisfaction of the detaining authority is wholly immune from judicial reviewability. The courts have by judicial decisions carved out an area, limited though it be, within which the validity of the subjective satisfaction can yet be subjected to judicial scrutiny. The basic postulate on which the courts have proceeded is that the subjective satisfaction being a condition precedent for the exercise of the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which the satisfaction is to be reached. They must be relevant to the subject-matter of the inquiry and must not be extraneous to the scope and purpose of the statute. If the authority has taken into account, it may even be with the best of intention, as a relevant factor something which it could not properly take into account in deciding whether or not to exercise the power or the manner or extent to which it should be exercised, the exercise of the power would be bad. Pratap Singh v. State of Punjab [AIR 1964 SC 72 : (1964) 4 SCR 733] . If there are to be found in the statute expressly or by implication matters which the authority ought to have regard to, then, in exercising the power, the authority must have regard to those matters. The authority must call its attention to the matters which it is bound to consider." 35. As laid down, in the present case also, the power is exercised dishonestly and for the improper purpose and thus, the case is to be construed as colourable exercise of power. 36. In the case of State of Punjab and another Vs. Gurdial Singh and others, reported in (1980) 2 SCC 471, the learned Senior counsel relied on paragraph 9 of the judgment, which reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e particulars on which the case against the appellant was based. It was essential to state the particulars to enable the appellant to answer the case against him. Clearly therefore the notice did not comply with Rule 6 and could not provide a foundation for the proceedings that followed. 5. What is said in the preceding paragraph makes it plain that the authority concerned did not apply his mind to the relevant material before issuing the notice. The same thing is apparent from another fact. It has been stated that on November 29, 1952 the Deputy Custodian, Deoria, dropped the proceeding seeking to declare the appellant an intending evacuee and that on the same day he directed the initiation of a proceeding under Section 7. Section 7 requires the Custodian to form an opinion that the property in question is evacuee property within the meaning of the Act before any action under that section is taken. Also, under Rule 6 the Custodian has to be satisfied from information in his possession or otherwise that the property is prima facie evacuee property before a notice is issued. On November 29, 1952 no evidence was found to support a declaration that the appellant was an intending eva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 153-C of the Act was raised for the first time before the Tribunal and the Tribunal permitted the assessee to raise this additional ground and while dealing with the same on merits, accepted the contention of the assessee. 17. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153-C of the Act, incriminating material which was seized had to pertain to the assessment years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four assessment years. Since this requirement under Section 153-C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153-C of the Act. Para 9 of the order of the ITAT reveals that ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to the principles laid down by the Hon'ble Supreme Court of India in Sinhgad Technical Education Society case (cited supra) would provide a clear view that the invocation of Section 153C is beyond the scope of jurisdiction vested on the respondents and the cogent facts would reveal that the actions are legal malice and colourable exercise of power. 42. With reference to the documents, the learned Senior counsel Mr.R.V.Easwar referred the Notice issued under Section 148 of the Act on 20.08.2018 and relied on the reasons furnished in proceedings dated 12.10.2018. The learned Senior counsel vehemently contended that receiving of information from DDIT (Inv) in vide letter dated 10.08.2018 being one aspect of the matter, which provides details regarding search and seizure operations conducted under Section 132 of the Income Tax Act on 05.07.2018 in the case of M/s.Agni Estates and Foundations Private Limited. Importantly, the statements given by the Director of M/s.Agni Estates namely Mr.R.N.Jayaprakash was extracted in the said proceedings dated 12.10.2018 and not stopping with that, the respondents elaborated the reasons by stating that the DDIT (Inv), Unit-3(2), C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Karti Palaniappan Chidambaram has failed to disclose his taxable of income., i.e., receipt of on-money pertaining to the sale of immovable property at Muttukadu. In view of the above, I am satisfied that the seized records also pertain to Shri.Karti Chidambaram and the seized papers have bearing on the taxable income for the AY 2014-15 & 2015-16. The information gathered from seized records, that is on-money receipt of Rs. 6,38,75,000/- has not been disclosed by Shri.Karti Palaniappan Chidambaram in his return of income. Hence, this is a fit case for assessment/reassessment under Section 153C of the Income Tax Act, 1961. 46. By drawing contradictions, the learned Senior counsel Mr.R.V.Easwar contended that absolutely there was no "Satisfaction note" for the AY 2016-17, AY 2017-18 and AY 2018-19. When there is no "Satisfaction note" with reference to those assessment years, question of invoking Section 153C of the Act does not arise at all and beyond the scope of jurisdiction. Thus, it is to be construed that the mandatory requirement of "Satisfaction" has not been complied with and thus, the Show Cause Notice issued under Section 153C of the Act is liable to be set aside. Satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment within the meaning of Section 147 of the Act. Pursuant to the 148 Notice dated 20.08.2018, the reasons were furnished. The reasons furnished would reveal that "information in the possession of the "AO" reveals that the assessee had received 'on money' payment in cash over and above the registered value, which was not disclosed in the "ROI" filed or during the course of 143(3) proceedings. It is a failure on the part of the assessee in not disclosing fully and truly all material facts, which has a bearing on the taxable income of the assessee. Hence, it is a fit case for reopening under Section 148 of the Act". 49. The learned Senior counsel relying on the reasons furnished for re-opening of assessment under Section 148, contended that in the present case also, the Assessing Officer was in possession of the search and seizure materials pursuant to the informations provided by DDIT (Inv) vide letter dated 10.08.2018. The letter dated 20.08.2018 would reveal that the Investigation Wing forwarded the copy of two Excel sheets titled Muttu Agni 2015 and the said Excel sheets shows the details of land sold amount of cheque receipt of Rs. 15,33,00,000/- and cash component ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal principles settled by the Hon'ble Supreme Court, and with reference to the application of facts in the present writ petitions. Thus, it is relevant to consider the dates and events. 53. The writ petitioner sold three parcels of land (total extent of 5.11 acres) belonging to him through three sale deeds dated 31.01.2014, 27.03.2014 and 27.03.2014 to M/s.Agni Estates and Foundation Private Limited at the price of Rupees Three Crore per acre. However, in respect of the contiguous piece of land owned by Smt.Nalini Chidambaram, the land was sold at Rs. 4.25 crores per acre. The writ petitioner had filed his return of income for the AY 2014-15 on 29.07.2014, declaring a total income of Rs. 45,18,430/- The case was selected for scrutiny under CASS and an order under Section 143(3) was passed on 30.12.2016. By this order, The Assessing Officer, ACIT, Non-Corporate Circle-3, Chennai, assessing an income of Rs. 70,36,366/- on account of income from the sale of coffee and pepper. An appeal was preferred against CIT (A)-4 and the said appeal was allowed vide order dated 26.09.2017. The said order was accepted by the Department in view of the low tax effect. Subsequently, a search was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax Vs. Vijaybhai N.Chandrani, reported in 357 ITR 713(SC), categorically states that notice issued under Section 153C cannot be challenged in writ petitions. 56. The learned Additional Solicitor General of India elaborating the scheme of assessment / reassessment, contended that informations and materials available on the particular date are distinguished. M/s.Advantage Strategic Consulting Private Limited is a company owned by the petitioners and therefore, perusal of the informations recorded, materials available are to be distinguished for the purpose of initiation of proceedings under Section 153C of the Act. 57. Referring the reasons furnished for re-opening of assessment under Section 148 of the Act in proceedings dated 12.10.2018, the learned Additional Solicitor General of India contended that the reasons relied on by the petitioners regarding Hard Disk and other Electronic Devices shared by the Enforcement Directorate with Investigation Wing. The said Hard Disk and other electronic devices were seized from the premises of M/s.Advantage Strategic Consulting Private Limited by the Enforcement Directorate during the course of search. Thus, the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dhilip kumar dated 08.07.2018. 59. It is contended that the verification of the satisfaction note and the seized records received, it was noticed that there was a search in the case of M/s.Agni Estates and Foundations Private Limited (AAACA7990C) group of cases on 05.07.2018 under Section 132 of the Income Tax Act, 1961. The company was incorporated in the year 1992 by Shri.Rajan Jayaprakash Narasimulu, who is a Director and the main person operating Agni group of companies. Consequently, there was search at the premises of M/s.Agni Plots, Old No:30, New No.16, Conran Smith Road, Gopalapuram, Chennai from where small note books vide annexure:ANN/ARS/AP/B&D/S and loose sheets containing sale agreements vide annexure:ANN/ARS/AGP/LS/S-2 were seized. During the course of search, it was found that M/s.Agni Estates & Foundation Private Limited, had purchased immovable property in Muttukadu from Shri.Karti Chidambaram, Smt.Srinidhi Karti Chidambaram and Smt.Nalini Chidambaram at Rs. 4.25 Crore per acre. However, in the case of Shri.Karti Chidambaram and Smt.Srinidhi Chidambaram, the properties were registered at the guideline value of Rs. 3 Crore per acre and the balance was paid in cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be trusted. He confirmed that the cash payments to Shri.Karti Chidambaram and his wife Smt.Srinidhi by M/s.Agni Estates and Foundations Private Limited and the transactions are not reflected in the books of accounts of M/s.Agni Estates and Foundations Private Limited. Further, he has deposed that the cash was handed over by him to Shri.Karti Chidambaram based on the directions of his MD Shri.Jayaprakash. He confirmed that the sale price fixed for the property was Rs. 4.25 Crore per acre against the guideline value of Rs. 3 Crore. The total consideration was Rs. 21,71,75,000/- (5.11 acre, 4.25 Crores per acre) for Shri.Karti Chidambaram; Rs. 9,01,00,000/- (2.12 acre, 4.25 Crores per acre) for Smt.Nalini Chidambaram and Rs. 5,01,50,000/- (1.18 acre, 4.25 Crores per acre) for Smt.Vasanthi Rangarajan. Further, Mr.S.Dhilip kumar has stated that Smt.Nalini Chidambaram desired the entire consideration to be paid in cheque and hence, wanted her portion of land to be registered for Rs. 4.25 Crores per acre, while Shri.Karti and Smt.Srinidhi Karti insisted on registering only on the guideline value of Rs. 3.00 Crores per acre. Accordingly, Smt.Nalini Chidambaram's portion was regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoked Section 153C of the Act in order to assess / reassess the income escaped assessment. 66. The contention raised by the petitioners that these entire sale transactions concluded during the Financial Year 2013-14 and the relevant Assessment year would be AY 2014-15 and the subsequent alleged payment of cash on hand pursuant to the materials seized are no way connected with the sale transactions and it is unbelievable that a buyer will pay cash to the seller after completion of the entire sale transaction is unsustainable. Such an inference has no basis, in view of the fact that the respondents have not formed any opinion nor arrived any such conclusion. The materials available on record and its sufficiency were considered by the authorities for invoking the powers under Section 153C of the Act and therefore, such factual inferences formed by the petitioners are mere personal opinions and the authorities have never formed any such opinion and they are open to consider the explanations / objections, if any to be submitted by the petitioners in this regard. The assessee is bound to explain the reasons and the transactions regarding the 'on cash' payments. For this reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the name of Handhold Ventures Private limited. 8. On the basis of the above intel, action under Section 132 was conducted in the case of the petitioner company, its affiliates and connected personnel from 05.07.2018 to 09.07.2018, covering in all, 21 premises. As per the counter, substantial material including 175 small note books indicating unaccounted cash payments and investments in foreign entities and banks in Mauritius, Seychelles, Hong Kong, the British Virgin Islands and Singapore were found. Serious allegation are made in regard to the alleged escapement of income and assets to tax. 26.As regards the main contention of the petitioner in regard to delay in handing over the seized materials to R1, R2 confirms that the seized materials were handed over by him to R1 on 22.08.2019 and R1 was thus in possession of the same when he issued the notices under Section 153A. This, according to the revenue, satisfies the statutory prescription in this regard." 69. Based on the above findings, the writ petitions filed by M/s.Agni Estates and Foundations Private Limited are dismissed. 70. The learned Additional Solicitor General of India relied on the judgment of the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd proviso to sub-section (1), shall stand revised with effect from the date of receipt of the order of such annulment by the Commissioner. Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.- For the removal of doubts, it is hereby declared that- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. This is a significant departure from the ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the second proviso to sub section (1) of Section 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the total income of the assessee, which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. 72. Relying on the said judgment, and the scheme of assessment under the Income Tax Act, it is contended that the proceedings under Section 147/148 abated and did not lapse as Section 147 proceedings were pending as on the date of receipt of seized materials by the Assessing Officer having jurisdiction over the petitioner. Regardless of whether the proceedings abated, owing to the Non-Obstante clause contained in Section 153C, upon receipt of seized material, the Assessing Officer could only proceed under Section 153C. The date of receipt of seized material, at the time of issuing notice under Section 153C, proceedings under Section 147/148 were not complete and therefore, the proceedings never achieved finality when notice was issued under Section 148. The 60-day time period prescribed under Section 132(9A) has been held in a plethora of cases to only be directory and not mandatory. Further, the said clause is not applicable to the petitioner and the other perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 147 abated upon issuance of notice under Section 153C on 16.12.2019. 75. The conduct of the petitioner post issuance of notice under Section 148 must also to be considered. The writ petitioner undertook earnest efforts in order to ensure the proceedings under Section 147/148 could not be completed. The petitioner periodically sought adjournments throughout the proceedings and the details and nature of the same are also elaborated in the counter filed by the respondents, more specifically, in Paragraph 15 of the counter affidavit of the third respondent, which reads as under: "15. I submit in reply to para 17, that, the petitioner's representative sought adjournment periodically referring to the non-receipt of copies of marked documents from the Additional Chief Metropolitan Magistrate Court, EO-II, Egmore, Chennai referring to the trial In E.O.C.No.266 of 2018 filed against the Petitioner under Sections 276C and 277 of the Act. The petitioner sought not to proceed further on the re-assessment proceedings vide various letters as below: (i) The petitioner's representative vide letter dated 19.09.2018 filed on 24.09.2018, sought copy of the "reasons" and the "satisfactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on my client's assessment proceedings, we wish to peruse the same before making any further submissions before this authority. It is therefore requested that the hearing scheduled for 17th December 2018 be adjourned to any date during the third week of January, 2019, pending receipt of the marked documents by my client". (v) The petitioner's representative vide letter dated 04.10.2019, stated that, "Vide letter dated 26.11.2018, my client had informed you that we were yet to receive all the documents from the Hon'ble Court of the Addl Chief Metropolitan Magistrate, Egmore, Chennai and sought an adjournment of 4 weeks. The case was posted for hearing on 17.12.2018. On 17.12.2018, we had informed you that the Income Tax Department had sought time till 02.01.2019 to produce further documents before the Hon'ble Court and that such documents would be made available to my client only after marking and approval by the Hon'ble Court. We had requested that the hearing be adjourned by 4 weeks, pending receipt of marked documents. We are yet to receive the prosecution documents marked and approved by the Court" Further, the petitioner's representative sought copi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling of returns and procedure for conduct of assessment are contained in Chapter XIV of the Income Tax Act, 1961. Chapter XIV is titled "Procedure of Assessment" and comprises of all sections starting from Section 139, which deals with return of income till Section 158, which deals with "Intimation of assessment of Firm". 80. An assessee will have to file their return in the manner and form prescribed under Section 139. The filing of returns must be done prior to the due date or under any extended period of time permitted under Section 139. Assessment procedure is contained in Section 143 and from AY 1989-90, the return filed under Section 139 can be accepted without any strict scrutiny under Section 143(1). The return filed by the assessee under Section 139(1) can be accepted subject to certain adjustments that have been specifically provided for under Section 143 by the Assessing Officer. Alternatively, the return filed under Section 139 can be subject to scrutiny assessment under Section 143(3) by issuing a notice under Section 143(2). The CBDT released certain parameters based on which the Assessing Officer may decide to take up cases for scrutiny and the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate over the relevant assessment years then the Assessing Officer may either assess/reassess for each of the preceding 6 Assessment Years immediately preceding the Assessment Year, in which, search has been conducted and for the relevant Assessment Year / years. Section 153C shall apply to cases where, pursuant to a search or requisition under Section 132 & 132A, the assessing Officer is satisfied that any money bullion jewellery or other valuable article or thing seized or requisitioned, belongs to or any books of accounts or documents pertains or pertain to a person other than the person referred to in Section 153A, then the material must be handed over the Assessing Officer having jurisdiction over such "other person" and the Assessing Officer may issue a notice along the same lines as under Section 153A if he is satisfied that such material has a bearing on the determination of total income of such persons. Apart from the Section containing a non-obstante clause, Section 153A and 153C also provides for a mechanism whereby all pending proceedings and assessments, as on date of receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or control of any person in the course of a search, it may be presumed - (i) that such books of account, other documents, money, bullionjewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents, which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. 87. Section 132(9A) contemplates procedure for handing over of the materials seized to the Assessing Officer having jurisdiction over such person within a period of 60 days from the date on which the last of the authorisations for search was executed. 88. Keeping in mind the search procedures contemplated under the Act under Section 132 of the Act, let us now consider the further procedures to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall stood abated. 91. The very purpose and object of the non-obstante clause as well as the abatement clause is to ensure that no parallel proceedings are allowed with reference to the same cause of action. In the event of two actions in respect of the same allegations of income escaping assessment, then such an action would hit the principles of 'double-jeopardy' and therefore, the Statute provides an abatement clause, so as to nullify the pending proceedings as the proceedings under Section 153A is comparatively stringent than that of the reassessment proceedings under Section 147 of the Act. 92. The procedures contemplated under Chapter XIV of the Act is holistic. The Income Tax Act trusts every assessee unless contrary facts are made available to the Income Tax Department. The assessee is expected to file return of income truly and fully. The return of income filed by the assessee is scrutinized and assessment orders are passed. Thus, the procedures under Chapter XIV trusts the assessee at the first instance at the time of filing of return of income. Thereafter, if any information is received by the Department, the Department is initiating re-opening proceedings unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e chargeable to tax has escaped assessment, he can reopen the assessment". The term "has reason to believe" is wider enough to cover various circumstances including informations, materials under assessment etc. Thus, Section 147 may be invoked, if the Assessing Officer "has reason to believe". 97. Section 153A contemplates where a search is initiated under Section 132 or books of account, other documents or any assets seized or requisitioned under Section 132A, the Assessing Officer shall issue notice to such person, requiring him to furnish within such period may be specified in the notice, the return of income. Thus, based on the search, the Assessing Officer shall issue notice to such person (i.e., Searched person). As far as the searched persons are concerned, Section 153A contemplates that search and seizure would be sufficient to issue notice to the assessee. Once search is conducted and notice is issued, then all pending proceedings initiated under Section 147/148 shall stood abated, in view of the Second Proviso Clause. 98. Section 153C contemplates that a person other than a person referred to in Section 153A, then the books of account or document or assets, seized or re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andatory. Such a satisfaction must be recorded in writing and if the satisfaction recorded is sufficient enough, then the Assessing Officer shall proceed to assess or reassess under Section 153C of the Act. The assessee will get an opportunity during the process of assessment or reassessment to defend their case. 101. The comparative understanding of Section 147/148 and 153A and 153C would reveal that even in case, based on the informations from the Investigation Wing of the Income Tax Department, actions are initiated under Section 147/148 and during the pendency of the reopening proceedings, if the seized materials were handed over to the Assessing Officer, on receipt of the seized materials, he is empowered to proceed, issue notice and assess or reassess, if the Assessing Officer is satisfied. No matter when the search was conducted in such cases against the other persons, in view of the fact that the search is no way connected with the assessee with reference to Section 153C of the Act. In the present case, the search was conducted on 05.07.2018. Informations were provided to the Assessing Officer of the petitioner. However, all those materials seized and impounded were not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The cogent understanding of the procedures contemplated under Chapter XIV of the Income Tax Act would provide a clear picture that the legislatures thought fit that the assessment and reassessment in case of search operations are to be conducted in a different manner and accordingly, Section 153A and Section 153C are enacted. The abatement clause is provided in order to avoid parallel proceedings. Thus, once the seized materials are handed over to the Assessing Officer having jurisdiction, then the Assessing Officer shall have no option, but to issue notice under Section 153A in respect of searched person and 153C in respect of other persons. On the date of receipt of the searched materials by the jurisdictional Assessing Officer, non-obstante clause would come into operation and accordingly, all other proceedings, if any pending on that date under Section 147/148 shall stood abated. DETAILS AVAILABLE IN THE DEPARTMENT FILE: 105. The original files produced before this Court by the Income Tax Department would reveal that one Shri.K.Rohan Raj, I.R.S., [Deputy Director of Income Tax (Inv)] sent a Tapal addressed to DCIT, Central Circle, 2(1), Chennai - 34 on 13.08.2018. 106. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been Centralised to the Deputy Commissioner's jurisdiction vide letter dated 06.05.2019, the materials seized and impounded during the Search operations along with the Search folders, Seized materials and other files as listed are handed over to the Deputy Commissioner of Income tax on 22.08.2019. 109. The said list of materials seized and impounded would reveal that large number of documents and materials were communicated to the Assessing Officer through the said letter dated 22.08.2019. 110. (a) Item No.1 provides 32 documents relating to Agni Estates & Foundations Private Limited, No.76, Temple Towers, 3rd floor, North Mada Street, Mylapore, Chennai - 4. (b) Item No.2 provides 11 documents of Agni Estates & Foundations Private Limited, No.24/46, 1st & 3rd Floor, Agni Business Centre, K.B.Dasan Road, Alwarpet, Chennai - 18. (c) Item No.3 undertakes 8 documents from Mr.M.Samiappa, Plot No.28A, Agni Fairy Land, 3rd Street, ICL Home Town, Thandalam, Chennai - 77. (d) Item No.4 provides 25 documents of Vagas Aqua Private limited, Sunnyside, Shafee Mohammed Road, Nungambakkam, Chennai - 6. (e) Item No.5, 21 documents are enclosed with reference to Mr.R.N.Jayaprakash, No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said materials on 22.08.2019, prepared the "Satisfaction Note" in respect of the petitioners and forwarded the "Satisfaction Note" along with the seized materials in proceedings dated 28.11.2019 and thereafter, the Show Cause Notice was issued on 16.12.2019. 112. This being the details found in the original files produced by the respondents, this Court is of the considered opinion that the sequences of events and the handing over of the seized materials to the Assessing Officer of the petitioners, the "Satisfaction note" was prepared and thereafter, the impugned Show Cause Notices are issued. Thus, the question of legal malice or otherwise would not arise at all. Even in such circumstances, in the absence of complete materials, if re-opening proceedings under Section 147/148 was initiated and during the pendency of the reopening proceedings, if all the seized materials were communicated to the Assessing Officer of the other person, then the Assessing Officer shall proceed to assess or reassess, if he is satisfied. In such circumstances, the pending proceedings initiated under 147/148 stands abated, in view of the Proviso clause. This being the procedures contemplated in unambig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prompted the respondents to initiate action under Section 153C of the Act are one and the same. Thus, the intention of the respondents was to extend the time limit for the purpose of re-assessment as the time limit for completion of 148 proceedings expired on 31.12.2019. However, the impugned notices were issued on 16.12.2019, which is self-evident that the very initiation of action under Section 153C amounts to legal malice. 115. To substantiate the said contentions on behalf of the petitioners, Annexure to the reason for re-opening of assessment under Section 147 of the Act furnished by the respondents in proceedings dated 12.10.2018 were elaborately read over and relied upon. Importantly, the informations received from DDIT (Inv) vide letter dated 10.08.2018, revealed that the search and seizure operation conducted under Section 132 of the Income Tax Act on 05.07.2018 in the case of M/s.Agni Estates and Foundations Private Limited. In the said letter received by the Assessing Officer from the Investigation Wing, provides all informations regarding the sale of property by the petitioners as well as the sale consideration and the payments received. Pertinently, the statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he M/s.Agni Estates and Foundations Private Limited were received by the Assessing Officer only on 22.08.2019. Thus, only after receipt of all those materials upon which the Assessing Officer arrived a satisfaction, recorded satisfaction. In other words, on 28.11.2019, satisfaction was recorded in the case of the searched person for forwarding seized material and satisfaction dated 16.12.2019 in the case of the petitioner for assessment under Section 153C and Notice under Section 153C was issued on 16.12.2019. 119. The learned Additional Solicitor General of India reiterated that the seized materials were received by the Assessing Officer, having jurisdiction over the searched person on 22.08.2019. Thus, the third respondent could initiate proceedings under Section 153C of the Act only thereafter. Any proceedings pending to the assessment year(s) falling within the period of six assessment years, pending on the date of initiation of search shall abate as per the provisions of Section 153A. For the purpose of Section 153C, the proceedings under which shall be in accordance with the provisions of Section 153A of the Act, the date of initiation of search shall be construed as refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer to initiate proceedings under Section 153C of the Act. The mandatory requirement under Section 153C of the Act is that on handing over of the seized materials to the Assessing Officer having jurisdiction over such other person, then alone, he is empowered to record satisfaction and shall issue notice to the other person. Therefore, in the present case, on receipt of information vide letter dated 10.08.2018 and 20.08.2018, the Assessing Officer initiated 147 proceedings and on receipt of the seized materials as required under Section 153C of the Act, he recorded satisfaction and issued notice under Section 153C of the Act. Ultimately, the opportunities contemplated under the Act is to be availed of by the assessee for the purpose of defending his case. Therefore, the initial materials and informations provided to the Assessing Officer, made him to initiate 147 proceedings and on receipt of the seized materials officially in accordance with Section 153C of the Act, the Assessing Officer recorded satisfaction and issued notice under Section 153C of the Act. 121. The course adopted by the Assessing Officer is that on receipt of informations vide letter dated 10.08.2018 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d material, the searched person was centralised with the third respondent on 06.05.2019 vide Notification No.3/19-20 by the Principal Commissioner of Income Tax-I, Chennai. Therefore, the progress made on account of certain facts, events and procedures, which all are otherwise contemplated under the provisions of the Act, cannot be construed as without jurisdiction nor be termed as legal malice. Thus, the third respondent / Assessing Officer could able to initiate actions under Section 153C of the Act only after the receipt of the seized materials from the Assessing Officer of the searched person. Thus, the abatement clause contemplated under the Proviso to Section 153A would come into operation and consequently, the third respondent issued notice under Section 153C of the Act pertaining to the assessment year (s) falling within the period of six assessment years. 122. Undoubtedly, the informations communicated to the third respondent through DDIT (Inv) vide letter dated 10.08.2018 and 20.08.2018 were the informations collected pursuant to the search conducted on 05.07.2018 in the premises of M/s.Agni Estates and Foundations Private Limited. However, in the absence of handing over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood abated as per the proviso clause. Thus, the very arguments raised on behalf of the petitioner that the Assessing Officer ought to have passed an order of reassessment based on the re-opening proceedings under Section 147 or in alternate, the Assessing Officer would have passed an order of reassessment under Section 144 of the Act i.e., best judgment assessment, deserves no merit consideration. 124. This Court is of an opinion that the scope of Section 147/148 and Section 153A and 153C are not comparable. These two sets of provisions contain different set of procedures as contemplated under the Act. Generally, the procedures contemplated for assessment under these provisions may be divided in three parts: for better understanding. The first procedure is return of income filed by the assessee and secondly, in case of availability of any informations or materials, or if any received by the Assessing Officer and he has "reason to believe" that any income chargeable to tax has escaped assessment, he is empowered to proceed under Section 147/148 of the Act. Thirdly, in the event of search operations under Section 132 of the Act, and the searched materials are handed over to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking Section 153C, the Assessing Officer could able to prepare "Satisfaction Note" and 5 assessment years are reopened. If at all, the petitioner is disputing the actions in this regard, he has to defend his case before the competent authority in the manner known to law. Such an adjudication with reference to the transactions, seizure and impounded materials cannot be undertaken by the High Court under Article 226 of the Constitution of India. It is for the assessee to defend his case before the competent authority by submitting the documents and evidences and establish his case both based on the provisions of the Act and on facts. At the stage of Show Cause Notice, High Court would not enter into the venture of conducting an adjudication of disputed facts. It is the duty of the fact finding authority to adjudicate the facts and arrive a conclusion. Under these circumstances, the ground of legal malice is not established by the petitioners, so as to set aside the impugned Show Cause Notice. This Court has considered the procedures contemplated under the Act. However, the disputed facts are to be adjudicated. 127. In this regard, the purpose of Section 153C, the proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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