Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(Raj) 1075

IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
Avneesh Jhingan, Bhuwan Goyal, JJ.
Shyam Sunder Khandelwal - Petitioner
Versus
Assistant Commissioner of Income Tax - Respondent
D.B. Civil Writ Petition No. 18363 of 2019, D.B. Civil Writ Petition No. 25348 of 2018, D.B. Civil Writ Petition No. 1035 of 2019, D.B. Civil Writ Petition No. 11519 of 2019, D.B. Civil Writ Petition No. 15044 of 2019, D.B. Civil Writ Petition No. 19895 of 2019, D.B. Civil Writ Petition No. 20580 of 2019, D.B. Civil Writ Petition No. 1374 of 2020, D.B. Civil Writ Petition No. 3350 of 2021, D.B. Civil Writ Petition No. 8767 of 2021, D.B. Civil Writ Petition No. 12516 of 2021, D.B. Civil Writ Petition No. 180 of 2022, D.B. Civil Writ Petition No. 182 of 2022, D.B. Civil Writ Petition No. 183 of 2022, D.B. Civil Writ Petition No. 342 of 2022, D.B. Civil Writ Petition No. 645 of 2022, D.B. Civil Writ Petition No. 690 of 2022, D.B. Civil Writ Petition No. 697 of 2022, D.B. Civil Writ Petition No. 1140 of 2022, D.B. Civil Writ Petition No. 1175 of 2022, D.B. Civil Writ Petition No. 1176 of 2022, D.B. Civil Writ Petition No. 1177 of 2022, D.B. Civil Writ Petition No. 2206 of 2022, D.B. Civil Writ Petition No. 2249 of 2022, D.B. Civil Writ Petition No. 2250 of 2022, D.B. Civil Writ Petition No. 2312 of 2022, D.B. Civil Writ Petition No. 2313 of 2022, D.B. Civil Writ Petition No. 2314 of 2022, D.B. Civil Writ Petition No. 2334 of 2022, D.B. Civil Writ Petition No. 2371 of 2022, D.B. Civil Writ Petition No. 2372 of 2022, D.B. Civil Writ Petition No. 2386 of 2022, D.B. Civil Writ Petition No. 2387 of 2022, D.B. Civil Writ Petition No. 2388 of 2022, D.B. Civil Writ Petition No. 2391 of 2022, D.B. Civil Writ Petition No. 2490 of 2022, D.B. Civil Writ Petition No. 2609 of 2022, D.B. Civil Writ Petition No. 2610 of 2022, D.B. Civil Writ Petition No. 2611 of 2022, D.B. Civil Writ Petition No. 2612 of 2022, D.B. Civil Writ Petition No. 2613 of 2022, D.B. Civil Writ Petition No. 2614 of 2022, D.B. Civil Writ Petition No. 2637 of 2022, D.B. Civil Writ Petition No. 2646 of 2022, D.B. Civil Writ Petition No. 2647 of 2022, D.B. Civil Writ Petition No. 3153 of 2022, D.B. Civil Writ Petition No. 3154 of 2022, D.B. Civil Writ Petition No. 3156 of 2022, D.B. Civil Writ Petition No. 3652 of 2022, D.B. Civil Writ Petition No. 3658 of 2022, D.B. Civil Writ Petition No. 3660 of 2022, D.B. Civil Writ Petition No. 3665 of 2022, D.B. Civil Writ Petition No. 3667 of 2022, D.B. Civil Writ Petition No. 3794 of 2022, D.B. Civil Writ Petition No. 3825 of 2022, D.B. Civil Writ Petition No. 3826 of 2022, D.B. Civil Writ Petition No. 3832 of 2022, D.B. Civil Writ Petition No. 3904 of 2022, D.B. Civil Writ Petition No. 3905 of 2022, D.B. Civil Writ Petition No. 3909 of 2022, D.B. Civil Writ Petition No. 3913 of 2022, D.B. Civil Writ Petition No. 3915 of 2022, D.B. Civil Writ Petition No. 3918 of 2022, D.B. Civil Writ Petition No. 3971 of 2022, D.B. Civil Writ Petition No. 3972 of 2022, D.B. Civil Writ Petition No. 3976 of 2022, D.B. Civil Writ Petition No. 3997 of 2022, D.B. Civil Writ Petition No. 3998 of 2022, D.B. Civil Writ Petition No. 3999 of 2022, D.B. Civil Writ Petition No. 4000 of 2022, D.B. Civil Writ Petition No. 4037 of 2022, D.B. Civil Writ Petition No. 4039 of 2022, D.B. Civil Writ Petition No. 4093 of 2022, D.B. Civil Writ Petition No. 4094 of 2022, D.B. Civil Writ Petition No. 4095 of 2022, D.B. Civil Writ Petition No. 4096 of 2022, D.B. Civil Writ Petition No. 4097 of 2022, D.B. Civil Writ Petition No. 4098 of 2022, D.B. Civil Writ Petition No. 4099 of 2022, D.B. Civil Writ Petition No. 4146 of 2022, D.B. Civil Writ Petition No. 4323 of 2022, D.B. Civil Writ Petition No. 4325 of 2022, D.B. Civil Writ Petition No. 4327 of 2022, D.B. Civil Writ Petition No. 4402 of 2022, D.B. Civil Writ Petition No. 4403 of 2022, D.B. Civil Writ Petition No. 4443 of 2022, D.B. Civil Writ Petition No. 4481 of 2022, D.B. Civil Writ Petition No. 4482 of 2022, D.B. Civil Writ Petition No. 4488 of 2022, D.B. Civil Writ Petition No. 4490 of 2022, D.B. Civil Writ Petition No. 4525 of 2022, D.B. Civil Writ Petition No. 4527 of 2022, D.B. Civil Writ Petition No. 4531 of 2022, D.B. Civil Writ Petition No. 4550 of 2022, D.B. Civil Writ Petition No. 4583 of 2022, D.B. Civil Writ Petition No. 4634 of 2022, D.B. Civil Writ Petition No. 4635 of 2022, D.B. Civil Writ Petition No. 4640 of 2022, D.B. Civil Writ Petition No. 4646 of 2022, D.B. Civil Writ Petition No. 4673 of 2022, D.B. Civil Writ Petition No. 4677 of 2022, D.B. Civil Writ Petition No. 4678 of 2022, D.B. Civil Writ Petition No. 4684 of 2022, D.B. Civil Writ Petition No. 4685 of 2022, D.B. Civil Writ Petition No. 4728 of 2022, D.B. Civil Writ Petition No. 4945 of 2022, D.B. Civil Writ Petition No. 4967 of 2022, D.B. Civil Writ Petition No. 4996 of 2022, D.B. Civil Writ Petition No. 4998 of 2022, D.B. Civil Writ Petition No. 5139 of 2022, D.B. Civil Writ Petition No. 5157 of 2022, D.B. Civil Writ Petition No. 5159 of 2022, D.B. Civil Writ Petition No. 5241 of 2022, D.B. Civil Writ Petition No. 12509 of 2022, D.B. Civil Writ Petition No. 12628 of 2022, D.B. Civil Writ Petition No. 12632 of 2022, D.B. Civil Writ Petition No. 13502 of 2022, D.B. Civil Writ Petition No. 13829 of 2022, D.B. Civil Writ Petition No. 13861 of 2022, D.B. Civil Writ Petition No. 15451 of 2022, D.B. Civil Writ Petition No. 20306 of 2019.
Decided On : 19-03-2024

Advocates:
Advocate Appeared:
For the Petitioner:Mr. Sanjay Jhanwar, Senior Counsel & Mr. Prakul Khurana, Advocate assisted by Mr. Rajat Sharma, Advocate, Mr. Aryan Singh Chauhan, Advocate, Ms. Vrinda Lakhotia, Advocate, Mr. Siddharth Ranka, Advocate with Ms. Apeksha Bapna, Advocate., Ms. Shivangi Mewal, Advocate, Mr. Rohan Chatter, Advocate Mr. Gunjan Pathak, Advocate with Ms. Kanishk Singhal, Advocate, Mr. Aditya Bohra, Advocate & Ms. Priyanshi Roongta, Advocate, Mr. Suresh Kumar Sahni, Advocate with Mr. Ram Mohan Sharma, Advocate & Mr. Srijan Tiwari, Advocate, Mr. Shankar Lal Poddar, Advocate with Mr. Jagpravesh Singh, Advocate Mr. Dileep Shivpuri, Advocate Mr. Kartikeya Sharma, Advocate.
For the Respondent:Mr. Anuroop Singhi, Advocate, Mr. Sandeep Pathak, Advocate & Mr. Siddharth Bapna, Advocate assisted by Mr. Sarvesh Jain, Advocate, Mr. Narendra Singh Bhati, Advocate, Ms. Kriti Kalawatia, Advocate, Mr. Meyhul Mittal, Advocate Mr. Aditya Khandelwal, Advocate, Mr. Anurag Mathur, Advocate & Ms. Bhavna Laddha, Advocate for Mr. Shantanu Sharma, Advocate.

IMPORTANT POINT
The court ruled that proceedings under Section 148 of the Income Tax Act are improper when material seized relates to a person other than the one searched, necessitating the application of Section 153C.

Headnote:
(A) Income Tax Act, 1961 - Sections 148 and 153C - Writ petition challenging notice issued under Section 148 - The court held that the issuance of notice under Section 148 was improper as the proceedings should have been initiated under Section 153C due to the nature of the material seized. The court emphasized that Section 153C applies when material belonging to a person other than the one searched is involved. (Paras 6, 24, 40)
(B) Jurisdiction - The court ruled that the Assessing Officer must follow the specific provisions of Section 153C when dealing with seized material related to other persons, and cannot initiate proceedings under Section 148 without fulfilling the conditions of Section 153C. (Paras 30, 36)
Facts of the case:
The petitioner filed an income tax return for AY 2014-15, but a notice under Section 148 was issued based on material seized during a search of the Manihar Group, leading to objections being raised and subsequently rejected.
Findings of Court:
The notices issued under Section 148 were quashed as the proceedings should have been initiated under Section 153C, allowing the respondents to proceed according to law.
Issues: The main issue was whether the proceedings should have been initiated under Section 148 or Section 153C based on the seized material.
Ratio Decidendi: The court concluded that Section 153C must be applied when the material seized relates to a person other than the one searched, and Section 148 cannot be invoked in such cases.
Result: The writ petitions are allowed accordingly.

JUDGMENT :

These petitions involve common fact and question of law and are being decided by this order. For convenience, the facts are being taken from the lead case D.B. Civil Writ Petition No.4677/2022.

2. Writ petition is filed challenging the notice issued under Section 148 of the Income Tax Act, 1961 (hereafter 'the Act') and the order dated 05.03.2022 rejecting the objections filed to issuance of notice.

Facts:-

3. The brief facts are that for Assessment Year 2014- 15 the petitioner filed income tax return declaring income of Rs. 18, 76, 890/-. On 30.03.2021 notice was issued under Section 148 of the Act. The petitioner filed return on 07.01.2022 and sought the reasons for initiating the proceedings. On 18.02.2022 the reasons were supplied. The objections filed on 01.03.2022 were rejected on 05.03.2022.

Arguments Of Petitioners:-

4. Learned counsel for petitioner contented that basis of issuance of notice under Section 148 is the material seized during the search conducted on Ramesh Manihar Group (hereafter 'the Manihar Group'), the proceedings should have been initiated under Section 153C of the Act. Decisions of the Karnataka High Court in Sri. Dinakara Suvarna v. Deputy Commissioner of Income Tax in Income Tax Appeal No.16/2015 on 08.07.2022 and the Bombay High Court in M/s. Aditi Constructions v. Deputy Commissioner of Income Tax & Ors. in Writ Petition No.783/2016 dated 04.05.2023 are relied upon. Submission is that Section 153C is a special provision dealing with the search cases and notice issued under Section 148 of the Act is without jurisdiction.

Contention Of Respondents:-

5. Per contra the enactment of Sections 153A to 153D does not eclipse Section 148 of the Act and even in search cases the Department can proceed under Section 148. Reliance is placed upon the decision of the Apex Court in Deputy Commissioner of Income Tax (Central) Circle 1(2) v. M/s. M.R. Shah Logistics Pvt. Limited reported in [(2022)14 SCC 101] and in Principal Commissioner of Income Tax, Central-3 v. Abhisar Buildwell P. Ltd. reported in [(2023)454 ITR 212 (SC)]. Decision of Rajasthan High Court in S.B. Civil Writ Petition No.11850/2019 titled as Vijay Kumar Mehta v. Assistant Commissioner of Income Tax decided on 09.09.2019 against which the appeal (D.B. Special Appeal Writ No.1451/2019) was dismissed on 08.07.2020 and Madras High Court in Saloni Prakash Kumar v. Income Tax Officer, Ministry of Finance, Non Corporate, Ward- 6(1) and Ors. reported in [(2023) 458 ITR 452 (Madras)].

6. Submission is that acceptance of argument of petitioner would render Section 148 redundant. Further that Section 153C can be invoked for a block period of six years, whereas in the present case the information is not for all the six years therefore Section 148 is resorted to. It is further argued that under Section 153C the material apart from the material seized in search cannot be dealt and proceedings are to be initiated under Section 148 of the Act.

Issue:-

7. The question involved is of applicability of Sections 153C and 148 of the Act in case of seizure of material in search or requisition of books-documents relating to assessee other than on whom the search was conducted or requisitioned made.

History of special provisions:-

8. Before proceeding further it would be necessary to trace the history of the extant special provisions for assessment in the cases of search and requisition.

9. The Finance Act, 1995 inserted Section 158B to 158BG, stipulating special procedure for assessment in cases where search were initiated after 30.06.1985 but before 1.1.1997. Prior to this, the assessment and reassessment in search cases were dealt under regular provisions of Section 143, 147 and 148. The Assessing Officer (for short 'AO') under the special provisions had to assess only the undisclosed income with regard to the block period (which prior to 01.06.2001 was ten years and after 01.06.2001 was six years) preceding the financial year in which search was conducted, by passing

Click Here to Read the rest of this document

2024 Supreme(Raj) 1075

IMPORTANT POINTThe court ruled that proceedings under Section 148 of the Income Tax Act are improper when material seized relates to a person other than the one searched, necessitating the application of Section 153C.

Cases Referred (1)

Related Judgments

Shyam Sunder Khandelwal VS Assistant Commissioner of Income Tax - 2024 Supreme(Raj) 1075

Ajay Abasaheb Khamkar vs Income Tax Officer - 2026 Supreme(Online)(ITAT) 7085

Sejal Jewellary vs Union Of India - 2025 Supreme(Bom) 252

ABHUBHAI HIRABHAI DESAI MUMBAI vs DCIT CIRCLE 19(1) MUMBAI - 2026 Supreme(Online)(ITAT) 2473

DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-4 JAIPUR JAIPUR vs JITENDRA KUMAR DAGA JAIPUR - 2025 Supreme(Online)(ITAT) 12597

Karti P. Chidambaram VS Principal Director of Income Tax (Investigation) - 2021 Supreme(Mad) 3003

ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-4 JAIPUR vs GOPAL PRASAD GUPTA JAIPUR - 2026 Supreme(Online)(ITAT) 7043

Sachin Narayan, S/o. Sri. H. G. Narayan vs Assistant Commissioner Of Income Tax - 2025 Supreme(Kar) 2794

Kumara Lingappa vs Assistant Commissioner Of Income Tax - 2025 Supreme(Kar) 2610

ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-4 JAIPUR vs ASHOK KUMAR SINGHI JAIPUR - 2025 Supreme(Online)(ITAT) 18724

IMPORTANT POINT
The court ruled that proceedings under Section 148 of the Income Tax Act are improper when material seized relates to a person other than the one searched, necessitating the application of Section 153C.