TMI Blog2021 (7) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt of material seized or requisitioned. This special procedure is a derogation from the regular procedure for assessment or reassessment and only some immunity has been carved out for completed assessments. Therefore, the concerned jurisdictional Assessing Officer, upon receipt of material seized or requisitioned, can only proceed under Section 153A or 153C and they cannot proceed with any other pending assessment or proceeding 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. 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. In the present case, the petitioner has raised the point of no jurisdiction and the ground of legal malice. As far as the jurisdiction is concerned, this Court is of an opinion that the lack of jurisdiction was not established by the petitioners. The application and implications of Section 153C of the Act was questioned - this Court is of an opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pounded materials and provide an opportunity to the assessee to defend their case. Such an adjudicatory process alone would provide justice to the parties to the lis and therefore, this Court is not inclined to interfere at the stage of 'show cause notice' as far as the present writ petitions are concerned. The factual controversies and intricacies involved are to be adjudicated elaborately for the purpose of culling out the truth and such an adjudication is the dictum of law and thus, this Court has opined that interference at this stage would cause prejudice to the due process of law to be undertaken by the authorities. Thus, the respondents are directed to proceed with the assessment / reassessment by following the procedures as contemplated and by affording opportunity to the petitioners and complete the same as expeditiously as possible. WP dismissed. - W.P.Nos.16686, 16758, 16689, 16692, 16693, 16695, 16698, 16710, 16716, 16719, 16760 and 16764 of 2020 - - - Dated:- 5-7-2021 - And W.M.P.Nos.20690, 20691, 20730, 20733, 20774, 20775, 20701, 20703, 20713, 20721, 20728, 20693, 20685, 20694, 20695, 20737, 20768, 20770, 20771, 20772, 20687, 20696, 20698 20699 of 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as DDIT (Inv) ] / the second respondent, at the premises of the buyer M/s.Agni Estates. It is stated that small note books were seized and statements were recorded from R.N.Jayaprakash, K.Narayanan and Dhileep Kumar. On 10.08.2018, the Assessing Officer of the petitioner received informations from DDIT (Inv) about 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. Consequently, on 20.08.2018, the Assessing Officer initiated proceedings against the petitioner under Section 148 of the Act and re-opened the assessment for AY 2014-15, with an allegation that a sum of ₹ 6,38,75,000/- (Rupees Six Crore Thirty Eight Lakh and Seventy Five Thousand only) had escaped assessment in AY 2014-15. In response, the petitioner filed a fresh return, reiterating the original return filed by him. Even before the time allowed for filing a fresh return had expired, the DDIT (Inv) filed a compliant on 12.09.2018 in EOC.No.266 of 2018, renumbered as CC No.15 of 2019 before the Special Court, alleging that the petitioner had contravened Section 271C and Section 277 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, the Chartered Accountant of the petitioner reiterated the request for information that had been sought earlier, but not provided by the Assessing Officer. Challenging the order dated 07.01.2020, passed in Crl.M.P.No.25634 of 2019, the petitioner filed Cr.R.C.No.510 of 2020 before the High Court of Madras on 18.05.2020. The petitioner states that without responding to the requests for information or without holding an enquiry, the Assessing Officer issued the impugned Show Cause Notice dated 21.10.2020, directing the petitioner to show cause why a sum of ₹ 6,38,75,000/- should not be brought to the tax in AY 2014-15 and AY 2015-16. 6. On 03.11.2020, the petitioner filed the present writ petitions, praying for various reliefs including the prayers to quash the Impugned First Notices dated 16.12.2019 and the Impugned Show Cause Notice dated 21.10.2020 for the Assessment Years AY 2014-15 and AY 2015-16. 7. This Court passed an interim order on 07.12.2020, directing the respondents to file their counter affidavits. This Court directed the petitioner to file reply to the Show Cause Notice without prejudice to the contentions in these writ petitions and an order of Status q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s.Agni Estates and Foundation Private Limited from 05.07.2018 till 09.07.2018. Certain evidences were procured in the form on small note books numbered from 1 to 175 seized vide Annexure ANN/ARS/AP/B D/S-1 during the search conducted under Section 132 in the premises of M/s.Agni Estates and Foundations Private Limited. Pursuant to the search, the second respondent communicated information relating to the search to the third respondent. It was intimated that the writ petitioner had arranged for cash payments in addition to the sale consideration in respect of the aforesaid three sale deeds. 11. The second respondent, who was the officer, who conducted the search, vide two communications on 10.08.2018 and 20.08.2018, intimated the aforesaid communication to the third respondent. The third respondent had, based on the information so received, issued a notice dated 20.08.2018 under Section 148 of the Act, stating that he has reasons to believe that income had escaped assessment within the meaning of Section 147. Subsequently, the seized materials were received by the third respondent i.e., the Assessing Officer having jurisdiction over the searched person i.e., M/s.Agni E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to extend the limitation because under Section 153C read with Section 153B, the time limit was 30.09.2020 (at that time) which has been subsequently extended owing to the pandemic until 30.06.2021. (e) The same materials allegedly seized during the search of the buyer's premises, the Assessing Officer has three mutually contradictory cases: (i) that the alleged 'on money' of ₹ 6,38,75,000/- should be taxed in AY 2014-15; (ii) that the alleged 'on money' of ₹ 6,38,75,000/- should be taxed in two Assessment Years, AY 2014-15 and AY 2015-16; (iii) that the alleged 'on money' of ₹ 6,38,75,000/- should be taxed in AY 2014-15 and further, a total sum of ₹ 3,20,00,000/- (part of ₹ 6,38,75,000/-) should be taxed in four Assessment Years, namely, AY 2015-16, AY 2017-18, AY 2018-19, and AY 2019-20. An Assessing Officer has no jurisdiction to issue multiple notices containing contradictory cases and ask the noticee to answer them. A notice to show cause cannot be vague or contain contradictory allegations. The assessee will not know what is the allegation / case that he has to answer. Thus, the proceedings will b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final assessment order under Section 143(3) was passed on 30.12.2016. The learned Senior counsel reiterated that the search and seizer materials were very well within the knowledge of the Assessing Officer. Based on the said materials and informations, notice under Section 148 of the Act was issued, stating that the Assessing Officer has reason to believe that the income chargeable to tax for the AY 2014-15 has escaped assessment. The reasons for re-opening of assessment was furnished on 12.10.2018 and the attention of this Court is drawn with reference to the remarks of the Additional Commissioner of Income tax on the reasons recorded by the Assessing Officer is relied upon, wherein it is stated that it is a fit case for issue of notice under Section 148 on the reason 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and materials from the Investigation Wing of the Income Tax Department, relying on the said materials, further actions were taken, forwarded for completion of proceedings under Section 147 of the Act, but suddenly, the Assessing Officer cannot turn around and switch over to Section 153C for continuation of the reassessment proceedings beyond the expiry date i.e., 31.12.2019. The action results in clutching of jurisdiction and is impermissible. 19. The very intention and the manner in which the impugned notices issued are self-evident that the action was without jurisdiction and is a classic case of legal malice. 20. The learned Senior counsel for the petitioners reiterated that the impugned notices are issued to extend the period of limitation, more specifically, in the absence of any tangible materials. The materials relied upon for initiation of 148 proceedings and the materials from which, the Satisfaction Note is prepared with the Assessing Officer for issuing the impugned notices under Section 153C of the Act are one and the same and thus, the Assessing Officer to cover up his misdeeds converted the proceedings, which amounts to legal malice. Thus, the impugned no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity. There is nothing in its conduct which would justify the refusal of proper relief under Article 226. 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. In the present case we can find no reason for which relief should be refused. 29. We have therefore come to the conclusion that the Company was entitled to an order directing the Income Tax Officer not to take any action on the basis of the three impugned notices. 30. We are informed that assessment orders were in fact made on March 25, 1952, by the Income Tax Officer in the proceedings started on the basis of these impugned notices. This was done with the permission of the learned Judge before whom the petition under Article 226 was pending, on the distinct understanding that these orders would be without prejudice to the contentions of the parties on the several questions raised in the petition and without prejudice to the orders that may ultimately be passed by the Court. The fact that the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as 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. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. 19. Another Constitution Bench decision in Calcutta Discount Co. Ltd. v. ITO, Companies Distt. I [AIR 1961 SC 372 : (1961) 41 ITR 191] laid down: Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend Article 265 of the Constitution. 36 . We cannot lose sight of the fact that the failure or inability of the Revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made. In a cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. The Hon'ble Supreme Court of India barred the fresh assessment in the said case on the principles that it was a case of deemed acceptance of return of income furnished by the assessee. Similarly, in the present case, 148 proceedings initiated was allowed to be lapsed and consequently, the original assessment order issued under Section 143(3) became final and to be construed as deemed acceptance of return of income. Thus, any fresh assessment or reassessment under Section 153C of the Act is barred with reference to the principles settled. Admittedly, in the present case, the assessment was made in accordance with law and by following the procedures contemplated. After scrutiny assessment, the return of income was admitted and final assessment order was passed and tax paid. Thus, the assessment became final and any further action must be strictly in accordance with the provisions contemplated. However, in the present case, 147 proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April 1988 to 22nd June 1998 on 10th September 1999. The subject matter of the block assessment proceedings, as noted in the order dated 3rd August 2016 of the ITSC, was on the alleged bogus transactions in respect of the cinematographic films and the claim of depreciation. Further, the issue was additional income attributable to the business in cinematographic films. 21. It is not in dispute that the reasons for reopening of the assessment under Section 147 of the Act are more or less on the same grounds viz., the claim of depreciation on cinematographic films and income from lease rentals etc. In Ramballah Gupta v. ACIT (supra), it was held by the Madhya Pradesh High Court, that once a search was undertaken and a notice under Section 153A issued, then the question of issuing notice thereafter under Section 148 of the Act on the strength of the same material collected during the search did not arise. 25. In the facts and circumstances of the present case, the Court is satisfied that reopening of the assessment for AYs 1994-95 to 1996-97 by the impugned notices dated 31st May 2001 under Section 148 of the Act during the pendency of the block assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: 11. The Assessing Officer did not pass any order under section 154 of the I.T. Act and the proceedings for rectification were dropped. In other words, the Assessing Officer, after considering the submissions of the petitioner, in the reply to the show cause, was of the view that rectification of the Assessment Order was not called for. 12. However, the same officer issued the impugned notice dated 28th August, 2003 under section 148 of the I.T. Act for reassessment of income for the year in question under section 147 of the said Act, and called upon the petitioner to file a revised return. The impugned notice does not disclose the reasons for the belief that income had escaped assessment. 34. It is patently clear that assessment has been sought to be reopened on the basis of the same materials, on change of opinion. From the reasons, it is apparent that there were no new materials before the Assessing Officer wherefrom it could be deduced that the sum of ₹ 194.61 lacs, claimed as deduction or any part thereof was realized from customers. 39. As argued on behalf of the respondents, the Assessing Officer has jurisdiction under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re several grounds evolved by judicial decisions for saying that no subjective satisfaction is arrived at by the authority as required under the statute. The simplest case is whether the authority has not applied its mind at all; in such a case the authority could not possibly be satisfied as regards the fact in respect of which it is required to be satisfied. Emperor v. Shibnath Bannerji[AIR 1943 FC 75 : 1944 FCR 1 : 45 Cri LJ 341] is a case in point. Then there may be a case where the power is exercised dishonestly or for an improper purpose : such a case would also negative the existence of satisfaction on the part of the authority. The existence of improper purpose , that is, a purpose not contemplated by the statute, has been recognised as an independent ground of control in several decided cases. The satisfaction, moreover, must be a satisfaction of the authority itself, and therefore, if, in exercising the power, the authority has acted under the dictation of another body as the Commissioner of Police did in Commissioner of Police v. Gordhandas Bhanji [AIR 1952 SC 16 : 1952 SCR 135] and the officer of the Ministry of Labour and National Service did in Simms Motor Units Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of power - sometimes called colourable exercise or fraud on power and oftentimes overlaps motives, passions and satisfactions - is the attainment of ends beyond the sanctioned purposes of power by simulation or pretension of gaining a legitimate goal. If the use of the power is for the fulfilment of a legitimate object the actuation or catalysation by malice is not legicidal. The action is bad where the true object is to reach an end different from the one for which the power is entrusted, goaded by extraneous considerations, good or bad, but irrelevant to the entrustment. When the custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested the court calls it a colourable exercise and is undeceived by illusion. In a broad, blurred sense, Benjamin Disraeli was not off the mark even in law when he stated: I repeat . . . that all power is a trust - that we are accountable for its exercise - that, from the people, and for the people, all springs, and all must exist . Fraud on power voids the order if it is not exercised bona fide for the end designed. Fraud in this context is not equal to moral turpitude and embraces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notice under Section 7 thus appears to have been issued without any basis. The Assistant Custodian General who found no merit in the revisional application preferred by the appellant overlooked these aspects of the case. We are therefore unable to agree with the High Court that the Assistant Custodian General's order did not suffer from any error. 38. In the recent case of UMC Technologies Private Limited Vs. Food Corporation of India and another , reported in (2021) 2 SCC 551 , the Apex Court referred the said Nasir Ahmad case (cited supra) and held that if these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard. 39. Importantly, the case of Commissioner of Income Tax-III, Pune. Vs. Sinhgad Technical Education Society , reported in (2018) 11 SCC 490 , the Hon'ble Supreme Court of India laid down the principles, which reads as under: 14. At the outset, it needs to be highlighted that the assessment order passed by the AO on 7-8-2008 covered eight assessment years i.e. Assessment Year 1999-2000 to Assessment Year 2006-07. As noted above, insofar as Assessment Year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, the learned Senior Counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time-barred. 18. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of Assessment Years 2000-01 and 2001-02 was timebarred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy. 40. The learned Senior counsel relying on the said judgment, contended that as per the provisions of Section 153C of the Act, incriminating material, which were seized 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 4 Assessment Years. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loned copy of 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. The information in excel sheets contains the details of land sold amount of cheque receipt of ₹ 15,33,00,000/- and cash component of ₹ 6,38,75,000/-, which tallied with the statement of Mr.R.N.Jayaprakash, Director of M/s.Agni Estate Foundation Private Limited. 43. The above reasons furnished for re-opening of assessment under Section 147 of the Act would reveal that not only the information regarding the search and seizure operation, materials are made available to the Assessing Officer, but the Excel sheets as well as the Hard Disk and the other Electronic devices shared by the Enforcement Directorate with Investigation Wing were also made available to the Assessing Officer. Thus, it is apparently clear that the Assessing Officer was in possession of all the materials relating to the Search and seizure operations conducted on 05.07.2018 including the informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformations for the purpose of assessment / reassessment and mere satisfaction is insufficient to meet out the requirement of satisfactory note prepared under Section 153C of the Act. Thus, there was no material for invoking Section 153C of the Act and consequently, exercise of power under Section 153C is colourable exercise and lacking jurisdiction. 47. The learned Senior counsel reiterating the principles laid down in the case of Sinhgad Technical Education Society (cited supra) , said that as per the provisions of Section 153C 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. It is contended that the above principles would squarely apply with reference to the facts of the writs on hand. With reference to the AY 2016-17, AY 2017- 18 and AY 2018-19. There is no material available on record and admittedly, the entire sale transaction took place during the Financial Year 2013-14 and the AY is 2014-15. With reference to the said AY 2014-15, 148 proceedings were initiated for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Private Limited. When those materials were very much available with the hands of the Assessing Officer for initiation of re-opening proceedings under Section 147 of the Act, there is absolutely no reason for issuing the impugned Show Cause Notice under Section 153C of the Act at the later point of time, more so, during the fag end of the expiry of limitation period for completion of re-opening proceedings initiated under Section 148 of the Act i.e., 31.12.2019. 50. Thus, the abatement clause invoked by the respondents are nothing, but the colourable exercise of power, in order to cover up the misdeeds and therefore, the entire actions are motivated and amounts to legal malice. 51. The learned Senior counsel for the petitioner relied on the Satisfaction note and contended that the Satisfaction note refers to the same materials, which was in possession of the Assessing Officer at the time of re-opening of assessment under Section 148 of the Act. The amount stated in the Satisfaction note resulted in issuance of the impugned Show Cause Notice under Section 153C reveals that the materials for initiation of 147 proceedings and issuance of 153C impugned Show Cause Notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s.Agni Estates and Foundation Private Limited from 05.07.2018 till 09.07.2018. Certain evidences were procured in the form on small note books numbered from 1 to 175 seized vide annexure ANN/ARS/AP/B D/S-1 during the search conducted under Section 132 in the premises of M/s.Agni Estates and Foundations Private Limited. Pursuant to the search, the second respondent communicated information relating to the search to the third respondent / Assessing Officer. It was intimated that the writ petitioner had arranged for cash payments in addition to the sale consideration in respect of the aforesaid three sale deeds. 54. The second respondent, who was the officer, who conducted the search, vide two communications on 10.08.2018 and 20.08.2018, intimating the aforesaid communication to the third respondent. The third respondent had, based on the information so received, issued a notice dated 20.08.2018 under Section 148 of the Income Tax Act, stating that he has reasons to believe that income had escaped assessment within the meaning of Section 147. Subsequently, the seized material was received by the third respondent i.e., the Assessing Officer having jurisdiction over the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d were from the premises of the petitioner's company by the Enforcement Directorate. The informations at the first instance noticed was that with reference to the connected sale transactions, the mother of the writ petitioner Smt.Nalini Chidambaram had decided to take the entire sale consideration by cheque and her portion of land was registered for ₹ 4.25 Crore per acre, whereas the assessee in the present case is accepted the part and parcel of the balance sale consideration i.e., 1.25 Crore per acre. This exactly the informations received by the Enforcement Wing i.e., the Enforcement Directorate, which resulted in initiation of re-opening proceedings under Section 148 of the Act. In view of this reason, the Assessing Officer has reason to believe that there was a failure on the part of the assessee in not disclosing fully and truly all material facts necessary for completion of assessment. Thus, there was no error or lack of jurisdiction, for initiation of 147 proceedings. 58. The learned Additional Solicitor General of India distinguishing the reasons furnished for re-opening proceedings, drawn the attention of this Court with reference to the Satisfaction Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration at ₹ 4.25 Crore per acre was paid by way of cheque. 60. It is contended that the above materials provided a cause to proceed with the action under Section 153C and regarding the contentions raised on behalf of the writ petitioner that the different Assessment Years. The ground raised by the petitioner that the relevant Assessment Year is AY 2014-15 and the impugned notices issued for subsequent Assessment Years are no way connected with the said sale transactions occurred during the Financial Year 2013-14. In this regard, the learned Additional Solicitor General drawn the attention with reference to the Satisfaction Note again, wherein Answer to Question No.16 asked with Mr.K.Narayanan, Accountant and Cashier of Flame Advertising company Private Limited of Agni Groups. 61. The said Mr.Narayanan deposed that there are regular cash payment entries made to Shri.Karti Chidambaram. He confirms that there are regular cash payments made to Shri.Karti Chidambaram and the details of the same were noted down by him as seen from his answers to Question Nos.11,12 13 and also from the notebooks numbered from 1 to 175 seized vide annexure ANN/ARS/AP/B D/S-1, duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 9,01,00,000/-(2.12*4.25 Crores) while Shri.Karti and Smt.Srinidhi's portions were registered for ₹ 15.33 Crores (5.11*3 Crores) and ₹ 3.54 Crores (1.18*3 Crores) respectively and the balance consideration was paid in cash on various dates. 63. The said Mr.S.Dhilip kumar, Assistant General Manager, on 09.07.2018, has stated in his sworn statements that the cash component paid to Shri Karti Chidambaram on various dates are maintained by his staff name Shri.Dhilip and Shri.K.Narayanan. Based on these materials, the Show Cause Notices under Section 153C of the Act was issued. Thus, there is no violation of Principles of Natural Justice. The authorities applied their mind carefully with reference to the facts and circumstances and therefore, the writ petitions are devoid of merits. 64. In respect of the Show Cause Notices issued for various Assessment Years from the Assessment Year AY 2014-15 to AY 2018-19, the learned Additional Solicitor General of India reiterated that the cash components were paid to Mr.Karti Chidambaram from 07.10.2014 to 30.06.2018 on various dates, covering all the above mentioned Assessment Years. The Sale deeds were executed on 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this reasons, the notices were issued for the relevant Assessment Years falling upto AY 2018-19 and therefore, there is no infirmity or perversity as such. 67. The contention of the petitioners that the respondents have issued Show Cause Notice dated 18.03.2021 after issuance of the Status quo order is not in violation of the interim order granted by this Court. The learned Additional Solicitor General of India made a reference to the interim order passed by this Court, wherein this Court directed the petitioner to submit their replies to the impugned Show Cause Notice before the respondent without prejudice to the contentions in their case. Thus, the subsequent Show Cause Notice dated 18.03.2021, providing the particulars regarding various Assessment Years are not in violation of the interim order passed by this Court and the respondents have not proceeded further and awaiting for the orders of this Court in these writ petitions. 68. The learned Additional Solicitor General of India referred the order dated 17.03.2021 passed by the High Court of Madras in W.P.No.35076 of 2019 etc., batch filed by M/s.Agni Estates Foundations Private Limited, challenging the Notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on the judgment of the High Court of Delhi in the case of Commissioner of Income Tax Vs. Anil Kumar Bhatia , reported in [2012] 24 taxmann.com 98 (Delhi) , and the relevant paragraphs are extracted hereunder: 16 . We now proceed to discuss the correctness of the conclusion of the Tribunal that the Assessing Officer had wrongly invoked Section 153A of the Act. This Section was introduced into the Act by the Finance Act, 2003 w.e.f. 1.6.2003 along with Sections 153B and 153C. Section 153A provides for assessment in case of search or requisition . It runs as follows: 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassess the total income of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the total income of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. 20 . A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining 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. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee's total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cases to only be directory and not mandatory. Further, the said clause is not applicable to the petitioner and the other person assessment under Section 153C is depending upon the date of record of satisfaction and not on the search dates and or handing over of seized materials. The Madras High Court in the case of the very same searched person Agni Estates and Foundations by order dated 17.03.2021 in W.P.Nos.35076, 13209, 13218, 13368, 35082, 35084, 35086, 35088 35090 of 2019, held that the handing over of seized materials beyond 60 days will not vitiate the assessment. 73. The petitioner has erred in rushing to this Hon'ble Court through these writ petitions under Article 226, when he could have instead followed the statutory appeal process. The instant writ petition involves complicated question of law and fact and therefore, the exercise of extraordinary writ jurisdiction at this stage may not be appropriate. The agitation of the petitioner that only the Assessment Years to which the seized material has any direct nexus must be reopened and other Assessment Years must be quashed ought to be agitated before the Appellate Forum under the Act against the Final assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The petitioner's representative vide letter dated 19.09.2018 filed on 24.09.2018, sought copy of the reasons and the satisfaction on the basis of which proceedings u/s 148 were initiated, to respond to the notice u/s 148. The reasons were furnished on 12.8.2018. (ii) The petitioner s representative vide letter dated 09.11.2018, filed on 12.11.2018, stated that his client is perusing the reasons recorded for the reopening of assessment as well as the certified copy of the voluminous documents that were marked as prosecution documents and made available to his client by the Additional Chief Metropolitan Magistrate, Egmore, Chennai. Further, the petitioner's representative stated as below: Also, since the notice under section 148 was issued on 20.08.2018, i.e. FY 2018-19, the time limit for passing the reassessment order under section 153 of the Income Tax Act is 31st December 2019, viz. 9 months from the end of the financial year in which the notice under section 148 was issued. It is therefore requested that you kindly await my client s response to your letter referred to above and not pass any reassessment order until receipt of my client's response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marked documents. We are yet to receive the prosecution documents marked and approved by the Court Further, the petitioner's representative sought copies of the information received from DDIT(lnvestigation) dated 10.08.2018, 20.08.2018, Statements of Shri.K.Narayanan. R.N.Jayaprakash. and copies of two alleged excel sheets, which were furnished vide this office letter 05.11.2019. Thus, it could be seen that the delay in the conclusion of the reopened assessment proceedings was solely on account of the time sought by the petitioner referring to the court proceedings time and again. Presumption of conclusion of the assessment proceedings before any order being passed without any adverse findings is not factually and legally tenable. Hence, the assertions of the petitioner are deliberate misleading of this writ proceedings before this Hon'ble Court. 76. In view of the fact that the petitioner through his conduct adopted delay tactics by getting frequent adjournments throughout the proceedings and finally on initiation of proceedings under Section 153C of the Act raising a point that the authorities, there was a legal malice. When the petitioner himself contributed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 may make suitable additions or disallowances based on the scrutiny assessment. Alternatively, if the assessee did not furnish return under Section 139 or did not respond to a notice under Section 143(2) or 142(1) or fails to comply with a direction under Section 142(2A), the Assessing officer may make a best judgment assessment under Section 144 based on materials available to the Assessing Officer. 81. Section 147/148 provides for a mechanism for assessment or reassessment in cases, where the assessing officer has a reason to believe that any income chargeable to tax has escaped any assessment from any assessment year. There is a further caveat given under the 1st Proviso to Section 147, wherein any assessment made under Section 143(3) cannot be reopened after expiry of 4 years from the date of assessment unless it is shown that the assessee did not fully and truly disclose all material facts for his assessment for that assessment year. An assessing Officer may issue a notice under Section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 materials seized by the Assessing Officer, shall stand abated. 83. Therefore, upon a conspectus of the relevant provisions, it is clear that the recourse under Section 153A and Section 153C is a special procedure that gets triggered upon receipt of incriminating material post any search or requisition. The normal course of assessment and reassessment is fundamentally altered when a search or requisition takes place under Section 132/132A and the moment, the seized materials are received by the Assessing Officers, the special procedure laid out under Section 153A or Section 153C shall come into effect. The use of the non-obstante clause coupled with the abatement mechanism contained in the provisions makes it clear that the legislative intent was for Assessing Officers to proceed only under Section 153A or Section 153C upon receipt of material seized or requisitioned. This special procedure is a derogation from the regular procedure for assessment or reassessment and only some immunity has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 followed under Section 153A and 153C. 89. In the present case, the authorities concerned after conducting search in the premises of M/s.Agni Estates and Foundations Private Limited, handed over the seized materials to the Assessing Officer of the searched person i.e., M/s.Agni Estates. Under Section 153A of the Act, at the first instance, the searched materials must be handed over to the Assessing Officer of the searched person. Once, the materials seized are handed over to the Assessing Officer of the searched person (in the present case M/s.Agni Estates), then the Assessing Officer has no option, but to issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years. Thus, the procedures are cogent and after completion of search and seizure within a period of 60 days, (under Section 132(9A), all such materials shall be handed over to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 under Section 147 of the Act. Even under Section 147 of the Act, the assessee by mistake, omission or commission, left out any income chargeable to tax at the first instance, gets an opportunity to rectify the same in a true and genuine manner. On initiation of 147 proceedings, second opportunity is given to the assessee to file the return of income. Even at that point of time, an assessee gets an opportunity to file return of income truly and fully and with further details, if any. If the return of income filed on reopening of assessment is found to be true and full, then the authorities would pass reassessment order and determine the tax payable. 93. Beyond these two procedures contemplated for the benefit of the assessees and trusting the conduct of the assessees, the third set of procedures are contemplated, wherein the Department has strong informations regarding the concealment of facts and materials by the assessee, then search operations are conducted. Onc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of Section 153A, if, that Assessing Officer is satisfied. Section 153C contemplates certain conditions to the Assessing Officer for initiation and issuance of notice. Based on the search or seizure, the Assessing Officer cannot proceed against the other persons, who are not connected with the search or seizure operations. In order to initiate proceedings to assess or reassess under Section 153C of the Act, the Assessing Officer mandatorily should possess the seized materials and other books of accounts etc., Section 153C unambiguously stipulates that the assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such person. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 communicated to the Assessing Officer of the petitioner. Admittedly, certain informations were provided by the DDIT (Inv), and based on which proceedings under Section 147/148 was initiated. 102. Even in such circumstances, if at all the Assessing Officer erroneously proceeded under Section 147/148 of the Act, thereafter, on handing over of complete materials seized or impounded during the search operation to the jurisdictional Assessing Officer, he is empowered to invoke Section 153C of the Act as there is an abatement clause contemplated under Section 153A and 153C. The very purpose and object of abatement clause is to ensure that on receipt of materials during the interregnum period, more specifically, during the pendency of reopening proceedings, the Assessing Officer, if satisfied, shall issue notice under Section 153C of the Act and proceed for assessment or reassessment. This being the constructive interpretation to be adopted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The said cover contained the proceedings No.DDIT/Unit3(2)/KPC/2018-19 dated 10.08.2018. The said letter is with the knowledge of the petitioners and they have also submitted the letter. The said letter reveals that search and seizure operations was conducted under Section 132 of the Act on 05.07.2018 in the case of M/s.Agni Estates Foundations Private Limited. The letter would further reveal that the statement of one Mr.R.N.Jayaprakash, Director of M/s.Agni Estates and Foundation Private Limited was recorded. However, in the said letter, there is no mentioning regarding the statements obtained from Mr.S.Dhilip Kumar, Assistant General Manager of M/s.Agni Estates. The letter reveals that the statement was obtained from the Director of M/s.Agni Estates Mr.R.N.Jayaprakash. The Sworn statement recorded under Section 131 of the Income tax Act from Shri.R.N.Jayaprakash is enclosed along with the said letter, which contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.1, Ranjit Road, Kotturpuram, Chennai 600 085. (f) Item No.6 contains 23 documents from Mr.S.Dhilip Kumar, No.110, Old Mahabalipuram Road, West Mambalam, Chennai 600 033. (g) Item No.7 indicates 8 documents from Mr.Jayachandran Padmaja, No.7/9, Diwan Rama Road, Purasaivakkam, Chennai 7. (h) Item No.8 contains 18 documents of Mr.S.Santhosh Kumar, No.18, Anna Street, Kanagam, Taramani, Chennai 600 113. (i) Item No.9 provides 16 documents from Mr.T.G.Balaji, No.22/10, Balaji Nagar 4th Street, Royapettah, Chennai 600 014. (j) Item No.10 contains 6 documents from Mr.P.Jenardhan Menon, No.126, F-Block, 6th Street, Anna Nagar East, Chennai 102. (k) Item No.11 contains 7 documents from Mr.M.Ashok Kumar, No.14/33, Kothari Ornate Apartments, Tana Street, Purasaivakkam, Chennai 600 007. (l) Item No.12 contains 6 documents from Mr.Sathish Kuamr, No.14/19, Appasamy Street, Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 unambiguous terms in Chapter XIV of the Income Tax Act, the cogent reading and constructive interpretation are of paramount importance in order to uphold the very purpose and object of the contemplation of procedures in Chapter XIV under the Income Tax Act. 113. Based on certain informations and documents communicated, actions are initiated under Section 147 of the Act. However, handing over of the seized materials to the Assessing Officer of the other person (petitioner) would be the requirement for initiation of proceedings under Section 153C of the Act. Thus, in the present case, the initial informations, details and materials communicated to the Assessing Officer made him to initiate 147 proceedings as he has reason to believe . However, after handing over of the seized materials in entirety in proceedings dated 22.11.2019, the Assessing Officer formed an opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome 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 Mr.R.N.Jayaprakash, Director of M/s.Agni Estate Foundation Private Limited and the statement of Mr.Narayanan, Cashier were made available before the Assessing Officer at the time of initiation of proceedings under Section 147/148. 116. It is further contended by the petitioners that, even the copy of two Excel Sheets, Hard Disk and other Electronic devices shared by the Enforcement Directorate with the Investigation Wing of Income Tax Department were also available. This being the factum, conversion of Section 147 proceedings to Section 153C proceedings is impermissible and the theory of abatement propounded by the respondents are not applicable to the facts of this case. The abatement clause must have certain relevance with reference to the facts as well as the sequences of incidents occurred. In the present case, the entire materials relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 reference to 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, as per the first proviso to Section 153C of the Act. In the above proceedings, the petitioner is such other person . The Satisfaction Note along with the relevant materials from the Assessing Officer of M/s.Agni Estates and Foundations Private Limited was received on 28.11.2019 by the third respondent, under Section 153C of the Act as the Assessing Officer of the petitioner assessee. Hence, all pending proceedings pertaining to the assessment year(s) falling within the period of six assessment years as on 28.11.2019 shall abate. The date of search for the proceedings under Section 153C of the Act in the case of the petitioner assessee is 28.08.2019, on which date, the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing 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 20.08.2018, he has reason to believe that the tax chargeable to income escaped assessment. Based on the informations, the Assessing Officer initiated re-opening proceedings under Section 147. The Assessing Officer had the knowledge about the search conducted in the premises of the buyer in the present case namely M/s.Agni Estates and Foundations Private Limited. However, mere informations about the search and the details provided through letter dated 10.08.2018 and 20.08.2018, made him to act under Section 147 of the Act. But, the seized materials in entirety were not handed over to the Assessing Officer of the petitioner at that point of time. The DDIT (Inv) provided certain informations to the Assessing Officer. But such informations are insufficient to institute action under Section 153C of the Act as the mandatory requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin 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 of the searched materials as per the procedures contemplated under the provisions of the Act, it would be improper on the part of the Assessing Officer to initiate proceedings under Section 153C of the Act. Thus, on receipt of the informations from DDIT (Inv), the Assessing Officer has initiated proceedings under Section 147 of the Act, knowing the fact that the informations are collected pursuant to the search conducted in the premises of M/s.Agni Estates. However, at that point of time, the Assessing Officer could not able to initiate any action under Section 153C of the Act as the procedure mandates handing over of all seized materials to the Assessing Officer. After handing over and receipt of the entire seized materials, the Assessing Officer could prepare Satisfaction Note and initiated Section 153C proceedings. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Assessing Officer of the searched person, issue notice to the searched person and if the materials seized are handed over to the Assessing Officer of the other person, issue notice to the other person under Section 153C of the Act. 125. While following these procedures, if any error is committed by the Assessing Officer, Courts are not expected to quash the entire proceedings of assessment / reassessment. Courts are bound to consider, whether procedures followed is in consonance with the procedures contemplated under the Act or not and in the event of any error, whether such errors caused any prejudice to the interest of the assessee or not. Rectification of errors are always permissible. However, in the present case, the seized materials were not handed over to the Assessing Officer of the petitioner, as contempla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 which shall be in accordance with the provisions of Section 153A of the Act, the date of initiation of search shall be construed as reference to 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, as per the first proviso to Section 153C of the Act. In the present case, the petitioner is the such other person . The Satisfaction Note along with the relevant materials from the Assessing Officer of M/s.Agni Estates and Foundations Private Limited was received on 28.11.2019 by the third respondent under Section 153C of the Act as the Assessing Officer of the petitioner assessee / other person. 128. The date of search for the proceedings under Section 153C of the Act in the present case, is 28.11.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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