Bombay High Court
Dnh Spinners Private Limited 2018 19 vs Deputy Commissioner Of Income Tax ... on 17 March, 2025
Author: M.S. Sonak
Bench: M.S. Sonak
2025:BHC-OS:4248 1
31-39,41,42.WP.4898.25 and ors(J).docx
Revati
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO.4894 OF 2025
WITH
WRIT PETITION (L) NO.4895 OF 2025
WITH
WRIT PETITION (L) NO.4903 OF 2025
WITH
WRIT PETITION (L) NO.4909 OF 2025
WITH
WRIT PETITION (L) NO.4912 OF 2025
WITH
WRIT PETITION (L) NO.4916 OF 2025
WITH
WRIT PETITION (L) NO.4917 OF 2025
WITH
WRIT PETITION (L) NO.4933 OF 2025
WITH
WRIT PETITION (L) NO.4953 OF 2025
WITH
WRIT PETITION (L) NO.5015 OF 2025
WITH
WRIT PETITION (L) NO.5041 OF 2025
DNH Spinners Private Limited
a company incorporated in India
having its registered office at Unit
No.1701, 17th floor, Supreme
Headquarters, Junction of 14th
and 33rd Road, Bandra West,
Mumbai-400050. .. Petitioner
Versus
1. Deputy Commissioner of Income-tax,
Central Circle -1(2), 906, Pratiksha
Bhavan, Old CGO Annexe, Maharishi
Karve Road, Mumbai-400020.
2. Principal Commissioner of Income-tax
Central -1 Mumbai
2
31-39,41,42.WP.4898.25 and ors(J).docx
Pratiksha
Bhavan, Old CGO Annexe, Maharishi
Karve Road, Mumbai-400020.
3. Union of India,
Through the Secretary,
Department of Revenue,
Ministry of Finance,
Government of India,
North Block, New Delhi-110001. .. Respondents
______________________________________________________
Mr. Dharan Gandhi for the Petitioner.
Mr. Akhileshwar Sharma a/w Ms Shraddha Worlikar for the
respondents.
______________________________________________________
CORAM M.S. Sonak &
Jitendra Jain, JJ.
RESERVED ON: 10 March 2025
PRONOUNCED ON: 17 March 2025
JUDGMENT (Per Jitendra Jain, J):
-
1. Heard learned counsel for the parties.
2. Rule. The rule is made returnable immediately at the
request and with the consent of the learned counsel for the
parties.
3. This is group of 11 writ petitions filed by the petitioner
for various assessment years, which are tabulated as under :-
Sr.No. WP (L) Numbers Assessment Years
1 4894 of 2025 2013-14
2 4895 of 2025 2014-15
3 4903 of 2025 2018-19
4 4909 of 2025 2015-16
5 4912 of 2025 2020-21
6 4916 of 2025 2019-20
7 4917 of 2025 2011-12
8 4933 of 2025 2017-18
9 4953 of 2025 2010-11
31-39,41,42.WP.4898.25 and ors(J).docx
10 5015 of 2025 2016-17
11 5041 of 2025 2012-13
4. The petitions challenges the notices issued under
Section 153C of the Income-tax Act ('the Act') dated 28
February 2024 and the orders rejecting the objection to the
issue of this notice. By consent of the parties, since a common
issue is involved, Writ Petition (L) No.4894 of 2025 for the
assessment year 2013-14 is taken as a lead matter.
5. The facts relevant to Writ Petition (L) No.4894 of 2025
for Assessment Year 2013-14 are as under:-
(i) On 19 October 2019, a search action under Section
132 of the Act was initiated in the case of Alok Kumar
Agarwal, Ankit Agarwal, M/s. Alankit Limited and M/s.
Alankit Assignments Limited, Delhi. In the said search action,
various documents and books of accounts were seized from
the search parties.
(ii) On 31 May 2022, the Deputy Commissioner of
Income Tax (DCIT), Delhi wrote to the DCIT, Mumbai that
during the course of the assessment proceedings under
Section 153A of Alankit Group, materials/documents which
has bearing on deciding the total income of the petitioner
were found and, therefore, satisfaction note along with related
annexures were forwarded for necessary action in the case of
the petitioner under Section 153C of the Act. In the
documents annexed to the satisfaction note, it is stated that
Alankit Group was engaged in providing accommodation
entries to various parties, including the petitioner.
(iii) On 28 February 2024, the DCIT, Mumbai recorded
31-39,41,42.WP.4898.25 and ors(J).docx
satisfaction note in the case of the petitioner. In the said
satisfaction note, it is stated that there was search action
against Alankit Group and it was revealed that various shell
entities controlled by Alok Kumar Agarwal had transactions
with the petitioner for providing accommodation entries for
various years. The satisfaction note records multiple
assessment years. The satisfaction note further records the
transactions between Alankit Group and the petitioner for
some of the assessment years and, therefore, the assessment
proceedings under Section 153C of the Act were proposed to
be initiated for the assessment years 2010-11 to 2020-21.
Thus, the notice dated 28 February 2024 under Section 153C
of the Act came to be issued for assessment year 2013-14.
The said notice called upon the petitioner to file its return of
income in response to the said notice within 30 days from the
service of the notice.
(iv) On 3 April 2024, the petitioner uploaded a reply to
the aforesaid notice under Section 153C of the Act. In the
said reply, the petitioner stated that since the respondents
have not opened the window for uploading the return of
income, the petitioner is unable to upload the return and,
therefore, the petitioner requested to open the window to
comply with the notice under Section 153C of the Act. The
petitioner also requested a copy of the satisfaction note for
issuing such a notice.
(v) On 6 April 2024, the petitioner objected to the
notice under Section 153C of the Act by uploading its
31-39,41,42.WP.4898.25 and ors(J).docx
objections on the respondents' portal. In the said objection,
the petitioner requested a copy of the satisfaction recorded
before issuing the notice. The petitioner further stated in its
objection that the relevant documents from the Assessing
Officer (AO) of the search person may have been received in
and around January 2024 and, therefore, the notice under
Section 153C can be issued for six assessment years but not
later than 10 assessment years if the income escaping
assessment is likely to exceed Rs.50 lakh. The assessee also
raised a plea concerning the computation of the block period,
whether it should be from the date of receipt of books of the
accounts by the jurisdictional AO of the non-search person or
the actual date of search in the case of the person against
whom the search action has been initiated and accordingly
the period of the "relevant assessment years" is to be
calculated. The petitioner, therefore, submitted that 6 years in
its case would start from assessment year 2017-18 onwards
since the AO received the records in and around January
2024. The objection further states that since the pre-requisite
satisfaction of income having escaped assessment of more
than Rs.50 lakh is not satisfied, the extended period of 10
years cannot be invoked. In any case, even if the extended
period is invoked, the notice issued for assessment years 2010-
11 to 2013-14 is without any authority of law.
(vi) On 21 November 2024, the respondents intimated to
the petitioner about the DIN number of the intimation letter
by which notice under Section 153C of the Act was issued.
31-39,41,42.WP.4898.25 and ors(J).docx
(vii) On 27 November 2024, the petitioner uploaded its
return of income for assessment year 2013-14 in Form ITR-6
in compliance with the notice under Section 153C of the Act.
(viii) On 6 December 2024, a notice under Section 143(2)
of the Act was issued to the petitioner stating that there are
certain points in connection with the return of income
submitted on 27 November 2024 on which the AO would like
to have further information and, therefore, requested the
petitioner to attend the office of the respondents on 23
December 2024 at 11.00 a.m.
(ix) On 7 December 2024, the petitioner objected to the
notice under Section 153C of the Act on various grounds. The
petitioner inter alia contended that the primary condition for
issuing notice under Section 153C of the Act is the satisfaction
of the AO that the incriminating material found during search
and seizure action has a bearing on the assessee's total
income. The petitioner further stated that they have not been
provided a satisfaction note despite the request being made.
The petitioner submitted that no incriminating material has
been found for initiating proceedings under Section 153C of
the Act. The petitioner also objected to the issue of notice for
various assessment years by interpreting the phrase "relevant
assessment year/years." The primary contention being the
starting date for calculating the limitation whether from the
date of receipt of books by the jurisdictional officer and what
is the date of receipt of the books of accounts. The petitioner
also stated that there is no satisfaction that the income
31-39,41,42.WP.4898.25 and ors(J).docx
escaped assessment is more than Rs.50 lakh.
(x) On 28 December 2024, the respondents passed an
order rejecting the petitioner's objections. In the said order,
the respondents referred to the incriminating material for the
assessment years 2014-15, 2015-16, and 2016-17 and further,
after referring to the same, it is stated that these transactions
are likely to have a bearing on the total income of the
petitioner for assessment years 2010-11 to 2020-21. The order
further states that since the undisclosed income by using
accommodation entries as escaped assessment is likely to
exceed Rs.50 lakh, the assessment proceedings must be taken
under Section 153C of the Act. The respondents also rejected
the petitioner's contention that the notice is time-barred. The
respondents also stated that the interpretation of the phrase
"relevant assessment year" by the petitioner is not correct, and
the condition for issuing notices under Section 153C of the Act
has been correctly met. Along with the said order, the
petitioner was provided with various materials, including the
satisfaction note.
6. Against the above backdrop, the petitioner is
challenging the issue of notice under Section 153C of the Act
dated 28 February 2024 and the order rejecting the objection
dated 28 December 2024.
7. Mr. Gandhi, learned counsel for the petitioner,
submitted that the proceedings are time-barred under clause
(ii) to the third proviso to Section 153B(1) of the Act. He
further submitted that since a satisfaction note by the AO of
31-39,41,42.WP.4898.25 and ors(J).docx
the search party has been prepared after a gap of 10 months,
the same is bad in law. Thirdly, he submitted that the
satisfaction note prepared by the petitioner's AO is after a gap
of more than 4 years from the date of search and more than
21 months from the date of the satisfaction note of the AO of
the search party and, therefore, the same is time-barred. He
also challenged the proceedings that a communication letter
dated 31 May 2022 by the DCIT is without DIN. He
submitted that there is no incriminating material and,
therefore, the provisions of Section 153C of the Act are not
attracted. He submitted that no opportunity has been
provided to challenge the satisfaction note. He, therefore,
submitted that the impugned proceedings are to be quashed
and set aside. Mr. Gandhi relied on various decisions in
support of these submissions. However, except for stating that
he should not be made to face assessment since he has raised
jurisdiction issue, no arguments have been raised as to why
this Court should exercise its discretionary jurisdiction.
8. Mr. Sharma, learned counsel for the respondents
submits that the issue involved in these petitions requires
investigation of facts as to whether there is any incriminating
material for invoking the provisions of Section 153C of the Act
for various assessment years. He further submitted that
insofar as the limitation issue is concerned, it has to be
ascertained as to on what date books of accounts were
transferred to the AO of the petitioner. He further relied upon
the order to reject the objection to interpreting the phrase
"relevant previous year." He submitted that the limitation
31-39,41,42.WP.4898.25 and ors(J).docx
issue is a mixed question of fact and law; therefore, under
Article 226 of the Constitution of India, this Court should not
entertain the petition involving the disputed question of fact.
He submitted that the petitioner is not without any remedy.
Still, this issue can be raised in the appeal proceedings if the
petitioner is unsatisfied with the final assessment order under
Section 153C of the Act. He submitted that this is a case
where huge unaccounted income in the form of
accommodation entries were found and, therefore, the
respondents should not be restrained from proceeding with
the assessment proceedings at this stage. He submitted that
the issues raised can be adjudicated in the appeal proceedings.
9. We have heard learned counsel for the petitioner and
respondents.
10. At the outset, we wish to state that the petitioner in
the Writ Petition at page 42, paragraph 6, has stated that the
petitioner has no equally efficacious alternate remedy and,
therefore, has approached this Court through Writ Petitions. In
our view, the issues raised in the present petitions can be
agitated before the Appellate Authority in an appeal filed
against an order passed under Section 153C of the Act. The
said order under Section 153C of the Act is appealable. The
present notice and the orders challenged in interlocutory
proceedings cannot be challenged in the Writ Petition and
more so for the reasons we propose to set out hereinafter.
11. The petitioner has stated that the proceedings are
bad in law since no incriminating material was found for
certain years. The present proceedings are initiated under the
31-39,41,42.WP.4898.25 and ors(J).docx
documents and information received from the assessing officer
at New Delhi who had initiated the search proceedings against
Alankit Group. Whether for any assessment year or for all
assessment years for which the notices are issued, there is
incriminating material that would require investigation and
inquiry into the documents received from the assessing officer
at New Delhi by the assessing officer of the petitioner.
12. In its writ jurisdiction, this Court cannot go through
the material received from the New Delhi assessing officer to
ascertain any incriminating material for each of the
assessment years for which the notice is issued. In our view,
this would be best left for the assessing officer to be examined
during the assessment proceedings and for the Appellate
Authority under the Act to decide this issue. At this stage, it
would not be proper for the Court to adjudicate and enter the
arena of investigation into the facts relating to incriminating
material. At least prima facie, we cannot say that there was no
incriminating material or that the exercise was wholly without
jurisdiction. Therefore, it would be appropriate for the
petitioner to agitate this issue in the regular appellate
proceedings if the petitioner is not satisfied with the
assessment order passed under Section 153C of the Act.
13. We also observe that the issue relates to
accommodation entries provided by the petitioner's Alankit
Group and huge unexplained income by adopting this modus
operandi. This issue must be examined minutely during the
assessment proceedings. Looking at the facts of this case, we
cannot exercise our discretionary jurisdiction to restrain the
31-39,41,42.WP.4898.25 and ors(J).docx
respondents from proceeding with the assessment
proceedings.
14. The petitioner's next submission concerns the
communication dated 21 November 2024 issued by the ACIT
wherein it is stated that the notice under Section 153C has
DIN No.ITBA/AST/M/153C/2024-25/1070513034(1). The
petitioner contends that the belated generation of DIN is bad
in law, and, therefore, the impugned notice is time-barred. At
the outset, the notice dated 28 February 2024 at Exhibit
does bear the DIN number. Consequently, we fail to
understand on what basis the petitioner states that the DIN
number is belatedly generated. In any case, whether the initial
notice under Section 153C had a DIN number or not and
whether communication dated 21 November 2024 has
generated a DIN number belatedly is the question which
requires the Court to go into the factual issues. In its
extraordinary jurisdiction, this Court cannot venture into such
exercise and exercise its discretionary jurisdiction for
adjudication of this issue. Therefore, in our view, even this
issue can efficaciously be adjudicated in the assessment and
the appeal proceedings under the Act and not in the writ
proceedings.
15. The petitioner further contended that no opportunity
had been given to challenge the satisfaction note by the
assessing officer. In our view, this is not correct because in the
order dated 28 December 2024, the respondents have rejected
the objections and in the said order it is expressly stated in
paragraph 8 that the petitioner was given time of 15 days
31-39,41,42.WP.4898.25 and ors(J).docx
from the date of disposal of the objections to decide its further
course of action in the matter and thereafter no objections
would be entertained. We do not find any infirmity in this
finding of the assessing officer in the order rejecting the
objection. The assessing officer has given the opportunity to
the petitioner to decide its course of action, and therefore, the
petitioner has approached this Court by filing writ petition.
Insofar as non-entertainment of further objections is
concerned, we do not find any infirmity since at some stage
the filing of objections to the proceeding has to stop.
Otherwise, there will be no end to the petitioner's time and
again filing objections and the officer passing order every
time. Therefore, the contention raised by the petitioner on this
issue for this Court to exercise its discretionary jurisdiction
must also be rejected.
16. The petitioner has further submitted that the
satisfaction note is not for all the assessment years, and in the
absence of any co-relation of the document with the
assessment years for which the notice is issued, the same
constitutes a violation of condition of Section 153C of the Act.
In our view, this would require examining the documents with
the assessment year for which the notice is issued. This
investigation of co-relation of the documents assessment year-
wise cannot be done by this Court and more so while
exercising discretionary extraordinary jurisdiction under
Article 226 of the Constitution of India. This factual co-
relation must be done by the authorities under the Act and
therefore the efficacious and alternate remedy is more
31-39,41,42.WP.4898.25 and ors(J).docx
appropriate for adjudication of this issue and this Court
cannot be converted into the role of an assessing officer for
carrying out this investigation. Therefore,even this submission
is required to be rejected.
17. The petitioner has raised the issue of the notice
being time-barred by relying upon clause (ii) of the Act's 3rd
proviso to Section 153B(1). It is the contention of the
petitioner that the material was handed over to the
petitioner's assessing officer in May 2022, and therefore, the
assessment proceedings have become time-barred on 31
March 2024. The petitioner has raised this contention in its
letter dated 6 April 2024. The exact date on which the
assessing officer of the petitioner received the records is not
known. The petitioner, based on letter dated 3 January 2024
is proceeding on the premise that the materials were handed
over to the petitioner's assessing officer in May 2022.
18. In our view, the question of limitation is a mixed
question of law and facts. Furthermore, Section 153B(1)(ii)
provides that the period of limitation for assessing case of
other persons referred to under Section 153C shall be the
period of 12 months from the end of the financial year in
which the last of the authorization for search under Section
132A was executed or 12 months from the end of the financial
year in which books of accounts or documents or assets seized
or requisition are handed over under Section 153C to the
assessing officer having jurisdiction over such person
whichever is later. To examine whether the limitation for
deciding whether the assessment has become time-barred or
31-39,41,42.WP.4898.25 and ors(J).docx
not would require this Court to ascertain what was the last
date of authorisation for search in the case of Alankit Group.
We have not been shown by the petitioner the date of last
authorisation. Therefore, it would not be appropriate for this
Court to examine the issue of limitation raised in the present
proceedings. Also, we may observe that there are conflicting
decisions on this issue based on facts of each case. Therefore,
it is appropriate that the authorities adjudicate this issue
under the Act. However, that would not preclude the
petitioner from raising a plea of limitation in the appeal
proceedings if the petitioner is not satisfied with the
assessment order.
19. In our view, it would be premature to presume that
the assessment order passed under Section 153C would be
against the petitioner. If during the assessment proceedings,
and based on the submissions made by the petitioner, if the
assessing officer is convinced on the merits of the case, then
no prejudice would be caused to the petitioner. However, if
the assessment proceedings are intricated at this stage, it
would undoubtedly preclude the assessing officer from
investigating. This is the case of search and seizure where
huge unaccounted income in accommodation entry has been
detected. In our view, this Court cannot exercise its
discretionary jurisdiction in such type of cases by which the
officer should be prevented to proceed with such type of
assessment proceedings.
20. The petitioner has relied upon various case laws.
However, these are the case laws on the merits of the case. As
31-39,41,42.WP.4898.25 and ors(J).docx
observed above, the issues raised in this petition require
investigation of facts and raised mixed questions of law and
facts. We do not wish to exercise our discretionary jurisdiction
by entering the arena of factual investigation. This course of
action is best left for the authorities under the Act to be
examined. We do not propose to deal with the case laws since
as observed above, we are not inclined to entertain the
present petition, but the petitioner is relegated to raise all the
issues raised in these petitions before the authorities under the
Act in accordance with law.
21. In view of the above, all the petitions are dismissed
with no order regarding cost.
(Jitendra Jain, J) (M.S. Sonak, J)
