Siddharth Totuka Vs ACIT Central Circle 4 (Supreme Court of India)
Summary: Supreme Court issued notice in Siddharth Totuka’s challenge arising from proceedings under Section 153C of the Income Tax Act, 1961 and permitted dasti service. The Special Leave Petition was directed to be tagged with SLP(C) No. 33392 of 2025. As interim relief, the Supreme Court ordered that proceedings before the Adjudicating Authority shall remain stayed insofar as Section 153C is concerned, including the order impugned passed by the Rajasthan High Court.
Read Rajasthan HC Judgment in this case: Rajasthan HC Refuses to Interfere With Section 153C Notice in Siddharth Totuka Case
The Rajasthan High Court had earlier dismissed Siddharth Totuka’s writ petition by following its decision in Vaibhav Global Limited Vs Assistant Commissioner of Income Tax. The High Court noted that the impugned Section 153C action arose after its earlier Division Bench judgment in Shyam Sunder Khandelwal & Ors. Vs Assistant Commissioner of Income Tax & Ors., where Section 148 proceedings had been quashed while granting liberty to the Revenue to proceed in accordance with law. The Revenue thereafter initiated Section 153C proceedings based on undisclosed income allegedly revealed during search of another person and a satisfaction note. The High Court declined interference and left the assessee’s grounds open before the authorities. The Supreme Court has now stayed the Section 153C proceedings in the meantime.
Supreme Court Stays Section 153C Proceedings
The Supreme Court did not finally adjudicate the validity of the proceedings under Section 153C. At this stage, it issued notice, permitted dasti service and directed that the matter be tagged with SLP(C) No. 33392 of 2025.
Significantly, the Court granted interim protection by directing that proceedings before the Adjudicating Authority shall remain stayed insofar as Section 153C of the Income Tax Act, 1961 is concerned, including the order impugned passed by the Rajasthan High Court.
Background of Section 153C Proceedings
The Rajasthan High Court had dismissed the writ petition of Siddharth Totuka by applying its decision in Vaibhav Global Limited Vs Assistant Commissioner of Income Tax mutatis mutandis.
The High Court traced the Section 153C proceedings to its earlier Division Bench judgment in Shyam Sunder Khandelwal & Ors. Vs Assistant Commissioner of Income Tax & Ors.. In that decision, notices issued under Section 148 and the impugned orders had been quashed, but the Revenue was expressly granted liberty to proceed against the petitioners in accordance with law.
Taking cue from this liberty, the Revenue subsequently initiated proceedings under Section 153C. The High Court noted that the notice related to undisclosed income revealed during search of another person and that a satisfaction note had been made the basis for initiating the proceedings. It therefore declined to interfere and left all grounds open to the petitioner before the authorities.
Cases Discussed
- Vaibhav Global Limited Vs Assistant Commissioner of Income Tax, D.B. Civil Writ Petition No. 12529/2025 (Rajasthan High Court) — The Rajasthan High Court followed this decision while dismissing Siddharth Totuka’s writ petition mutatis mutandis. The reproduced reasoning indicated that where the earlier High Court order had granted liberty to the Revenue to proceed in accordance with law, the assessee could raise available objections and defences before the authorities in the subsequent Section 153C proceedings.
- Dinesh Kumar Khatoria Vs Assistant Commissioner of Income Tax (Rajasthan High Court) — Referred to in the reasoning reproduced from Vaibhav Global Limited. The Section 153C notice concerned alleged undisclosed cash loans of Rs.3,55,00,000. The High Court declined to interfere with the notice and permitted the assessee to raise all available arguments and defences before the authorities.
- Shyam Sunder Khandelwal & Ors. Vs Assistant Commissioner of Income Tax & Ors., 2024 (4) TMI 196, D.B. Civil Writ Petition No. 18363/2019, decided on 19.03.2024 (Rajasthan High Court) — The Division Bench quashed the notices issued under Section 148 and the impugned orders but expressly granted liberty to the Revenue to proceed against the petitioners in accordance with law. The subsequent Section 153C proceedings were initiated taking cue from this liberty.
FULL TEXT OF THE SUPREME COURT ORDER
1. Issue notice.
2. Dasti service, in addition, is permitted.
3. Tag with SLP(C) No. 33392 of 2025.
4. In the meantime, the proceedings before the Adjudicating Authority shall remain stayed insofar as Section 153C of the Income Tax Act, 1961 is concerned including the order impugned passed by the High Court.
