Chandran Somasundaram Vs Principal Director of Income Tax (Madras High Court)
The Madras High Court delivered a common order covering a batch of writ petitions arising from search and assessment proceedings under the Income Tax Act, 1961 involving companies engaged in the brewing and distilling business, their associated entities, suppliers, transporters, and other connected persons. The proceedings originated from searches conducted under Section 132 between 6 August 2019 and 11 August 2019, followed by centralisation of assessments, issuance of notices under Sections 153A and 153C, provisional attachment orders under Section 281B, and assessments under Section 143(3).
The Court identified six principal issues for determination: (i) validity of the search under Section 132, (ii) validity of centralisation of assessments under Section 127, (iii) validity of notices under Section 153A, (iv) validity of notices under Section 153C, (v) validity of provisional attachment orders under Section 281B, and (vi) validity of notices under Section 143(2) and assessment orders passed under Section 143(3).
Regarding the challenge to the search, the petitioners contended that the searches were unwarranted and illegal as their books of account and returns fully disclosed their income. They alleged that the searches were triggered by a newspaper report concerning a proposed acquisition involving one of the group companies and claimed that business rivals instigated the action. They also referred to earlier searches conducted in 2012 and 2016 and questioned the necessity for another search.
