Gujarat High Court
Bhagwandas Rupchand Parwani vs Assistant Commissioner Income ... on 6 February, 2024
Author: Sunita Agarwal
Bench: Sunita Agarwal
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C/SCA/434/2024 CAV JUDGMENT DATED: 06/02/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 434 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 454 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 455 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 456 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 457 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 458 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 459 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 461 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 462 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 463 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 464 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 465 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 467 of 2024
With
R/SPECIAL CIVIL APPLICATION NO. 470 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL
and
HONOURABLE MR. JUSTICE ANIRUDDHA P. MAYEE
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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BHAGWANDAS RUPCHAND PARWANI
Versus
ASSISTANT COMMISSIONER INCOME TAX,CENTRAL CIRCLE 1(1)(1)
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Appearance:
MR RK PATEL, SR. ADV. with DARSHAN R PATEL(8486) for the
Petitioner(s) No. 1
for the Respondent(s) No. 2
MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
SUNITA AGARWAL
and
HONOURABLE MR. JUSTICE ANIRUDDHA P. MAYEE
Date : 06/02/2024
CAV JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA
AGARWAL)
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
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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
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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
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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 during the course of search, on
the submission made by the searched person, it was found
that Survey No.287 was sold by the searched person to the
petitioner herein by a document, namely Sale Deed
Register No.1616 dated 21.08.2019. On consideration of
the rate for the land at Survey No.287, on the statement
recorded of the searched person, it was found prima facie
that the petitioners herein/assessees had paid "on money"
in cash of Rs.11,25,97,290/- in A.Y. 2020-21 for purchase
of the land bearing Survey No.287 at Muthiya village. It
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was, thus, concluded that the information received during
the course of search carried out on 15.10.2019 from the
seized material, the information in the seized
incriminating documents, pertains/relates to the petitioner
herein, namely Bhagwandas Rupchand Parwani. The
satisfaction note was, thus, forwarded by the Assessing
Officer of the searched person to the Assessing Officer of
the petitioner herein vide communication dated
07.04.2022 with the observation that during the course of
search, document/ digital data related to the petitioner
were found and seized and the same is being forwarded
for perusal and necessary action.
6. We may further note that the petitioner's objection to the
satisfaction note recorded by the Assessing Officer of the
petitioner assessee has been dealt with and rejected vide
detailed order dated 02.12.2023 passed by the respondent
No.2, wherein it is categorically recorded that the
Assessing Officer of the searched person has first drawn
his satisfaction that the seized material pertains to the
assessee and the information contained therein relates to
the assessee (the petitioner herein). Thereafter, the
Assessing Officer of the petitioner assessee has also drawn
his satisfaction that the seized material pertains to the
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assessee and the information contained therein relates to
the assessee and have a bearing on the determination of
total income of the assessee (the petitioner herein). The
legal requirement as spelt out in Section 153C of the Act
has duly been fulfilled in the instant case. The fact that the
satisfaction note drawn by the Assessing Officer of the
assessee is the carbon copy of the note of the Assessing
Officer of the searched person, would not be the reason to
reject the satisfaction note saying that the Assessing
Officer of the petitioner assessee did not record his
independent satisfaction.
7. Noticing the above, we may go through the decisions
relied by learned Senior Counsel for the petitioner. The
judgement in the case of Canyon Financial Services
Limited (supra) is of no help to the petitioner for the
simple reason that the said case was decided on the merits
of the materials/documents seized during the course of
search. The issue before the Delhi High Court in the said
case was as to whether the seized material during the
course of the search, could be said to "belong to" the
assessee. The said case pertains to the period prior to the
amendment of Section 153C of the Act'1961 by the
Finance Act, 2015 with effect from 01.06.2015. The
satisfaction notes in the said case were prepared on
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13/19.03.2014. In the facts and circumstances of the said
case, it was noted by the Delhi High Court that from the
documents seized and referred in the satisfaction notes, it
may be said to "pertain to" the assessee, but it cannot be
presumed to "belong to" the assessee, the person other
than the searched person. It was then recorded that the
Assessing Officer of the assessee ( other than the searched
person) recorded as verbatim, the satisfaction as recorded
by the Assessing Officer of the searched person word by
word, without going through the material with regard to
his satisfaction that the documents seized belong to the
other person and the said documents do not belong to
other person, hence, the jurisdictional requirement under
Section 153C(1) of the Act'1961 of the Assessing Officer of
the searched person having to be satisfied that the seized
documents do not belong to the searched person but to the
assessee (other than the searched person) has not been
fulfilled. In these facts and circumstances of the said case,
the satisfaction notes issued by the Assessing Officer of
the searched person as also the assessee (other than the
searched person) and all consequential proceedings
thereto were quashed.
8. In the facts and circumstances of the instant case, in view
of the change in the legal regime with effect from
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01.06.2015, the requirement is that even an information
contained in the documents seized, if pertains to or relates
to a person other than the searched person, the
requirement of Section 153C(1) can be held to be fulfilled.
In view of the categorical statement in the satisfaction
note of the searched person forwarded by the Assessing
Officer of the searched person to the Assessing Officer of
the petitioner assessee, it cannot be assumed that no
prima facie satisfaction of the seized material being
"pertain to" the petitioner assessee could be recorded.
The decision of the Delhi High court in Canyon
Financial Services Limited (supra) relied on by learned
Senior Counsel for the petitioner, therefore, is
distinguishable.
9. Another decision of the Apex Court relied by learned
Senior Counsel for the petitioner, in Super Malls (P)
Limited (supra) also pertains to the legal regime prior to
the Amendment Act of 2015. However, it may be noted
that in the said case, the Apex Court recorded that there
was no satisfaction note by the Assessing Officer of the
searched person and then it was noted that the
requirements of recording satisfaction before issuing
notice under Section 153C of the Act, 1961 is mandatory.
It was held that the Assessing Officer of the searched
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person simultaneously, while forwarding the document,
shall forward his satisfaction note to the Assessing Officer
of the other person and he is also required to make a note
in the file of the searched person that he has done so.
After receipt of the aforesaid satisfaction and upon
examination of such other documents relating to such
other person, the jurisdictional Assessing Officer may
proceed to issue notice for the purpose of completion of
assessment under Sections 158B and 158D of the Act'1961
and the other provisions to issue notice to initiate the
proceedings under Section 153C of the Act against the
other person. It was then noted that in the said case, the
Assessing Officer of the assessee and the Assessing Officer
of the searched person was the same and, therefore, the
satisfaction note by the Assessing Officer of the searched
person, as in the said case there was no question of
transmitting the documents so seized from the searched
person to another Assessing Officer as he himself was the
Assessing Officer of the searched person as well as the
Assessing Officer of the assessee. Therefore, there was a
sufficient compliance of the requirements under Section
153C of the Act. The question posed for consideration by
the Apex Court as to whether there is a compliance of the
provision of Section 153C of the Act by the Assessing
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Officer and all the conditions which are required to be
fulfilled before initiating the proceedings under Section
153C of the Act have been satisfied or not, was answered
in favour of the Revenue having noted that it is sufficient
for the Assessing Officer to note in the satisfaction note
that the documents seized from the searched person
belonged to the other person.
10. Having gone through the decision of the Apex Court in the
case of Super Malls (P) Limited (supra), we find that the
observations made therein with regard to the mandatory
requirement of Section 153C of the Act to record a
satisfaction note by the Assessing Officer of the petitioner
assessee herein, before issuing notice under Section 153C
of the Act has been fulfilled in the facts of the instant case.
11. Having noted the fact that the satisfaction note of the
Assessing Officer of the petitioner assessee has not been
brought on record and moreover, the assessment note of
the Assessing Officer of the searched person indicates a
prima facie case of inquiry against the petitioner, we do
not find any substance in the argument of the learned
Senior Counsel that the satisfaction note of the Assessing
Officer of the petitioner is to be discarded being a copy in
verbatim of the satisfaction note of the Assessing Officer
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of the searched person. It is not a case where it can be
argued that the satisfaction recorded by the Assessing
Officer of the petitioner in his satisfaction note supplied to
the petitioner is without any basis.
12. The first ground of challenge is, therefore, liable to be
turned down.
13. Coming to the second ground of challenge based on the
CBDT Circular No.19 of 219 dated 14.08.2019, suffice it to
note that the said ground is misconceived, inasmuch as,
the copy of the letter of communication to the petitioner of
satisfaction note to initiate assessment proceedings under
Section 153C of the Act has not been brought on record.
However, Mr. Varun K.Patel, learned Panel Counsel
appearing for the Revenue has brought the attention of
the Court to the communication dated 23.07.2022
addressed to the petitioner, a copy of which was supplied
in the Court, which contains the DIN number, to assert
that the requirement of CBDT Circular No. 19 of 2019
dated 14.08.2018 has been fulfilled. We may also note
from the order of disposal of the objection of the petitioner
wherein it is noted that the DIN number is mandatory for
communication by the Income Tax authority/officer to the
assessee or another person and it is not to be generated
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for the covering letter forwarded by the Assessing Officer
of the searched person to the Assessing Officer of the
assessee, i.e. the petitioner herein. Having gone through
the language of CBDT No.19 of 2019 dated 14.08.2019, we
do not find any error in the conclusion drawn by the
respondent No.2 in rejection of the objection of the
petitioner in this regard.
14. For the remaining grounds that the allegations against the
petitioner are baseless or there was no incriminating
material against the petitioner, we may note the decision
of the Apex Court relied on by that learned Counsel for
the Revenue in the case of Commissioner of Income-
Tax, Gujarat vs. Vijaybhai N. Chandrani, [2013] 35
taxmann.com 580(SC), wherein the Apex Court has held
that at the stage of issuance of notice under Section 153C,
the High Court ought not to have entertained the writ
petition and relegated the assessee to file reply to the said
notices and upon receipt of a decision from the Assessing
Officer, if for any reason, it was aggrieved by the said
decision, to question the same before the forum provided
under the Act.
15. Lastly on the question of delay agitated in the writ
petition, no submission has been made by the learned
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Senior Counsel and as such the same is not being dealt
with.
16. We may further note that no jurisdictional error could be
found in the decision of the Assessing Officer in the
proceedings under Section 153C of the Act'1961 and the
points raised by the learned Senior Counsel appearing for
the petitioner assessee on the plea of lack of jurisdiction of
the Assessing Officer in issuing notice under Section 153C
did not find favour with us.
17. We may clarify that within the scope of judicial review
under Article 226 of the Constitution of India, we do not
find any jurisdictional error in the proceedings under
Section 153C drawn against the petitioner, at this stage.
18. For the above, we do not find any merit in the challenge.
The writ petitions are, accordingly, dismissed. However, it
is further clarified that while framing the assessment
order, the Assessing Officer will not be influenced by any
of the observations made by us hereinabove. It is also
clarified that while disposing of the writ petitions, we have
not expressed any opinion on the correctness or otherwise
of the submissions made on merits of the proceedings
initiated against the assessee, based on the search carried
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out under Article 132 of the Act' 1961.
Further Order
19. The request for stay of the order for a period of four
weeks to enable the petitioner to approach the Apex
Court is hereby rejected.
(SUNITA AGARWAL, CJ )
(ANIRUDDHA P. MAYEE, J.)
SUDHIR
