Case Law Details
Bhupinder Singh Kapur Vs ITO (Punjab and Haryana High Court)
The Punjab and Haryana High Court considered writ petitions challenging notices issued under Section 153C of the Income-tax Act, 1961, and subsequent notices under Section 142(1), on the ground that they were issued without jurisdiction. The petitioner contended that the search was conducted on 28.01.2021, assessments of the searched person were completed under Section 153A in September 2022, but the satisfaction note initiating proceedings against the petitioner was prepared only on 31.10.2023, making it contrary to CBDT Circular No. 24/2015 and the Supreme Court’s decision in Calcutta Knitwears. It was argued that the satisfaction note should have been prepared at the time of initiation, during, or immediately after completion of the assessment of the searched person. The petitioner also contended that proceedings for Assessment Years 2015-16, 2016-17, and 2017-18 were beyond the prescribed six-year limitation.
The High Court found that, after completion of the assessment of the searched person in September 2022, the Assessing Officer recorded the satisfaction note on 07.06.2023 and forwarded the seized documents to the jurisdictional Assessing Officer, who recorded his satisfaction on 31.10.2023 before issuing notices under Section 153C on 30.03.2024. The Court held that the expression “immediately after the assessment proceedings” in the Supreme Court’s observations and CBDT Circular No. 24/2015 cannot be interpreted to mean within a day, two days, or any fixed period. The Assessing Officer is required to examine the seized documents and pass a reasoned satisfaction note, which cannot be treated as a mechanical exercise. Accordingly, the Court rejected the contention that there was any delay in recording the satisfaction note.
Regarding the limitation objection under the first proviso to Section 153C, the Court observed that the petitioner had not raised this issue before the Assessing Officer. Since the Assessing Officer had not been given an opportunity to examine or decide the objection, the Court left it open to the petitioner to raise the limitation issue before the Assessing Officer at the appropriate stage.
The Court further observed that proceedings under Section 153C are comprehensive in nature and that the noticee should raise all objections before the Assessing Officer and await the final decision. Since the Court found no jurisdictional defect warranting interference at this stage, it declined to entertain the writ petitions. Consequently, all the petitions, along with the pending applications, were dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. The petitioner by way of present pe itions assails the notices dated 30.03.2 024 issued to him under section 153C of the Income Tax Act 1961 (‘ the Act’) and the notices dated 2 the Act on the ground that the same have 23 .08.2024 under section 142(1) o been issued without jurisdiction.
2. Learned counsel for the petitioner submits that a search under section of the Act was conducted on 28.01.2021 and the assessmen ings were completed under section 158BC (now section 153A) the Ac against the searched person, a d after more than one year, the procee ings have been initiated against the petitioner on 30.03.2024 by issuing notices under section 153C of th Act.
3. Learne counsel relies on the circular o.24/2015 issued on 31.12.2015 wherei the Ministry of Finance issued directions in tune with the judgment passed in Commissioner of Income-tax III vs. Calcutta Knitwears (2014) 362 ITR 673 (SC), rel ating to recording of satisfaction note under section 158BD/153C of the Act.
4. Learne counsel submits that as per the said circular and directions of the Hon’bl e Supreme Court, the satisfaction could be prepared for any other person at any of the following stages:
“(a) at the time of or alo g with the initiation of proceedings against the searche person under section 158BC of the Act; or
b. in the course of the assessment proceedings nder section 158BC of the Act; or
c. immediately after the assessment proceedings re completed under section 15BC of the Act of the s earched person.”
5. Learne counsel submits that as the sati faction note was prepared by the AO on 31.10.2023, which is more than one year after the assessmen procee ings against the concerned sear hed person were completed, the same is highly belated and is not in tune with the directions issued by the Supreme Court, and such proceedings ought not had been pressed as against the petitioner and the same deserve to be withdrawn.
6. Learne counsel has further argued that the proceedings have been initiate for Assessment Year 2015-1 6, 2016-17, 2017-18 in CWP- 25316- 2024, CWP-26261-2024, and CWP-25294-2024 respectively which all beyond the period of six years, and therefore the proceedings ought ot be allowed to be continued. the Supreme Court in the case of Com Singh (2023) 458 ITR 43 (SC).
7. With regard to the aforesaid two objections, we have examined the case of the petitioner in CWP-25294-2024 and find that the petitioner had submitted an objection relating to the otice under section 153C of the ore the concerned Assessing O fficer (AO) wherein he has taken ction relating to delay in issuanc e of notice under section 153C, and of satisfaction note being prepared after a period of one year er objection relating to the peri d of limitation beyond six years been taken by the petitioner, and the concerned authority has e passed an order addressing to his objections relating to the delay in issuing of notice after the satisfaction note was prepared.
8. We fi d that after the search was conducted on 28.01.2021, the assessm ent proceedings were completed in September, 2022 under section 158BC (now section 153A) o f the Act against the searched person. The concerned Assessing Off cer (AO) of the said searched person drew a satisfaction note of initi ting proceedings on the basis the do cuments seized as against the petitioner on 07.06.2023 and
transmitted the documents to the concerned AO who also drew his satisfaction note on 31.10.2023, whereafter the notice was issued to the petitioner under section 153C of the Act on 30.03.2024. Thus, we find that i mediately after the assessment proceedings were completed the searched person under section 153A of the Act, within nine , the satisfaction notice was pre ared by the concerned AO. The ‘immediately after the assessment proceedings’ as mentioned in ervations of the Hon’ble Suprem e Court and noted in the circular 015 issued on 31.12.2015 cann t be read to mean that the same e done within a day or two or within a particular period. What is nt is that before AO issues a sa isfaction note, he must look into documents and pass a reas oned order. For that purpose considering various aspects, certain time should be allowed to be granted to the authorities too, and it cannot be a mechanical process.
9. In view thereto, we do not agree that th ere is any delay in preparing the satisfaction note and proceeding further against the petitioner.
10. The oher argument raised by learned counsel for the petitioner with regard o the 1st proviso to section 153C of the Act relating to the period of six y ears is concerned, we find that 1st proviso to section 153C reads as under:
“Provided that in case of such other person, the of the search under n under section 132A in 1) of section 153A shall te of receiving the books f account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such ther person.”
11. Thus, here are four different circumst ances which are to be taken into consideration for calculation of the per iod. Since the petitioner has no taken any such objection before the con cerned AO, we leave it open fothe petitioner to raise the said objection if so required, and we need not delve at the relevant time as and when the said issue as the petitioner himself did not take up the said issue b efore the concerned AO, and the AO ha no opportunity to pass any order on the said aspect.
12. We fu ther observe that the proceedings under section 153C of the Ac are co prehensive in nature, and the person against whom notice is issued, ought to take all the objections and wait for a final decision in the matter. It cannot be said that they are in any manner of such a nature which an affect the day to day functioning of the petitioner and prejudice him.
13. The writ petition, in our opinion, at required to be entertained except on jonoted is stage would therefore not be isdictional issue. Since we have the petitions.
14. Thus, the petitions are accordingly dismissed.
15. All pending applications also stand disposed of.
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