Back
2024 Supreme(Guj) 1140
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Sunita Agarwal, Aniruddha P. Mayee, JJ.
Bhagwandas Rupchand Parwani – Petitioner
Versus
Assistant Commissioner Income Tax, Central Circle 1(1)(1) – Respondent
R/Special Civil Application No. 434, 454-459, 461-467, 470 of 2024
Decided On : 06-02-2024
Advocate Appeared:
For the Petitioner: Mr R K Patel, Sr. Adv. with Darshan R Patel
For the Respondent: Mr.Varun K.Patel
IMPORTANT POINT
The main legal point established in the judgment is the requirement of independent satisfaction note by the Assessing Officer and the fulfillment of jurisdictional requirements under Section 153C of the Income Tax Act, 1961.
Headnote:
Income Tax Act - Challenge to notice under Section 153C and order of rejection of objection - Summary of Acts and Sections: Section 153C of the Income Tax Act, 1961 - The court discussed the legal requirements of Section 153C and the interpretations from the decisions of Canyon Financial Services Limited vs. Income Tax Officer and Super Malls (P.) Ltd. vs. Principal Commissioner of Income Tax. The court emphasized the need for independent satisfaction note by the Assessing Officer and the fulfillment of jurisdictional requirements under Section 153C.
Fact of the Case:
The case involved a challenge to the notice dated 06.5.2022 for the Assessment Year 2014-15 issued under Section 153C of the Income Tax Act, 1961 and the order of rejection of the objection filed by the petitioners. The petitioners argued that the proceedings were invalid due to various grounds including verbatim satisfaction notes, lack of DIN, and baseless allegations.
Finding of the Court:
The court analyzed the grounds of challenge and rejected them, emphasizing the fulfillment of jurisdictional requirements under Section 153C. The court clarified that there was no jurisdictional error in the proceedings under Section 153C and dismissed the writ petitions.
Issues: The issues revolved around the validity of the notice under Section 153C, verbatim satisfaction notes, lack of DIN, baseless allegations, and delay in recording satisfaction note.
Ratio Decidendi: The court emphasized the need for independent satisfaction note by the Assessing Officer and the fulfillment of jurisdictional requirements under Section 153C. The court also highlighted the inapplicability of the CBDT Circular No.19 of 2019 in the given case.
Final Decision: The writ petitions were dismissed, and the court clarified that the Assessing Officer should not be influenced by their observations. The request for stay of the order was rejected.
JUDGMENT :
Sunita Agarwal, J.
1. At the outset, we may record that Special Civil Application No. 436 of 2024, in this bunch, is being detagged as the facts therein are somewhat different. In the remaining bunch of writ petitions, challenge is to the notice dated 06.5.2022 for the Assessment Year 2014-15, (in short A.Y. 2014-15), issued under Section 153C of the Income Tax Act, 1961 (in short as ‘the Act’ 1961) as also the order dated 02.12.2023 of rejection of the objection filed by the petitioners herein. Further challenge is to the notice dated 11.12.2023 under Section 142(1) of the Act’1961. The prayer is to restrain the respondents from enforcing the compliance of the impugned notice under Section 153C dated 06.05.2022 for A.Y. 2014-15.
2. The grounds to challenge the initiation of proceedings under Section 153C of the Act’1961 are that :-
i. Satisfaction note of the searched person and satisfaction note of the petitioner (other than the searched person) are verbatim.
ii. The proceedings are invalid as the satisfaction note does not contain DIN (Document Identification Number), mandatorily to be generated as per the CBDT Circular No.19/2019 dated 14.08.2019.
iii. No incriminating material was found against the petitioners during the search carried out on 15.10.2019.
iv. There is undue delay in recording the satisfaction note in the case of the petitioners.
v. Baseless allegations have been made against the petitioners without there being any material before the Assessing Officer to even record a prima facie proof that the seized material has a bearing on the petitioners’ case.
3. Elaborating the above noted grounds, it was argued by Mr. R.K.Patel, learned Senior Advocate appearing for the assessee that the satisfaction note of the searched person dated 07.04.2022 and the satisfaction note of the petitioner (other than the searched person) dated 27.04.2022 are verbatim. It is, thus, evident that the Assessing Officer of the petitioner did not apply his mind independently and merely proceeded on the satisfaction note recorded by the Assessing Officer of the searched person. Reliance is placed on the decision of the Apex Court in the case of Canyon Financial Services Limited vs. Income Tax Officer, [2017] taxmann.com 71 (Delhi) decided on 10.07.2017 and in the case of Super Malls (P.) Ltd. vs. Principal Commissioner of Income Tax, 8 New Delhi, [2020] 115 taxmann.com 105 (SC) decided on 05.03.2020, to agitate that in both the cases, the Delhi High Court as also the Apex Court had noted that there has to be a satisfaction of the Assessing Officer and the requirement of recording of satisfaction note before issuing notice under Section 153C of the Act’1961 is mandatory. In a case where there was no satisfaction note by the Assessing Officer of the person other than the searched person, recorded independently, there cannot be any justification to proceed under Section 153C of the Act.
4. The contention, thus, is that the notice issued under Section 153C against the petitioner on the satisfaction note prepared by the Assessing Officer of the searched person does not fulfill the legal requirement as spelt out in Section 153C(1) of the Act’1961. The satisfaction note of the Assessing Officer of the petitioner assessee being a carbon copy of the satisfaction note of the Assessing Officer of the searched person, failed to fullfil the jurisdictional requirement. The Assessing Officer, thus, lacked jurisdiction to proceed under Section 153C by issuing notice dated 06.05.2022 and the resultant assessment proceedings for AY 2014-15 based on the said notice are liable to be quashed.
5. The copy of the satisfaction note of the Assessing Officer of the searched person covered under Section 153A of the Act’1961 with the covering letter dated 07.04.2022 for initiation of assessment proceedings under Section 153C of the Act’1961 proposed against the petitioner assessee is appended with the writ petition. A perusal of the said document indicates that duri
