M/S DAVANAM CONSTRUCTIONS PRIVATE LIMITED V. DEPUTY COMMISSIONER OF INCOME TAX

WP/11459/2021

AI Insights

The case involves M/s. Davanam Constructions Private Limited, which challenged the proceedings initiated against it under Section 153C of the Income Tax Act, 1961, following a search related to Sri D.K. Shivakumar. The petitioner argued that the proceedings should have been initiated under Section 153A, as they were directly implicated in the search. The High Court's decision was influenced by previous rulings on similar cases involving the same parties and circumstances, leading to the conclusion that the petitioner was a 'searched person'.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 747150 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 04-12-2024
• Assessment Year: misc
• Other Referred Cases: W.P.No.9939/2022, W.A.No.830/2022, SLP No.21526/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAVI RAJ
• Assessee Lawyers: K SHETTY
• Keywords: Income Tax; Search and seizure; Section 153A; Section 153C; Quash and Strike Down
• Section: 153A; 153C

Judgement Text

" - 1 - NC: 2024:KHC:50032 WP No. 11459 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF DECEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE M.I.ARUN WRIT PETITION NO.11459 OF 2021 (T-IT) BETWEEN: 1. M/S. DAVANAM CONSTRUCTIONS PRIVATE LIMITED NO.148, SURVEYOR STREET BASAVANAGUDI BENGALURU-560 004 REPRESENTED BY ITS DIRECTOR SHRI HARISH D.V., AGED ABOUT 55 YEARS. …PETITIONER (BY SRI K. SHASHIKIRAN SHETTY, SENIOR COUNSEL FOR SRI A. MAHESH CHOWDHARY, ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(4), CR BUILDING, QUEENS ROAD, BANGALORE-560 001. …RESPONDENT (BY SRI RAVI RAJ Y.V. & SRI M. DILIP, ADVOCATES) THIS PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH AND STRIKE DOWN THE IMPUGNED SECTION 153C OF INCOME TAX ACT, 1961 BEARING NO.ITBA/AST/S/153C/2019- 20/1017491421 (1) DATED 21.08.2019 VIDE ANNEXURE-A1, ETC. Digitally signed by H K HEMA Location: High Court of Karnataka - 2 - NC: 2024:KHC:50032 WP No. 11459 of 2021 THIS PETITION COMING ON FOR FURTHER HEARING, THROUGH PHYSICAL HEARING/VIDEO CONFERENCING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE M.I.ARUN ORAL ORDER 1. Proceedings were initiated by the respondent against the petitioner and the premises of the Director of the petitioner herein was searched. On the ground that incriminating materials have been found, the respondent initiated proceedings under Section 153C of the Income Tax Act, 1961 (for short 'the Act'). On the short ground that proceedings ought to have been initiated under Section 153A of the Act, the present writ petition is filed. 2. The petitioner contends that search was ordered to be conducted in respect of one Sri D.K.Shivakumar. Separate warrants were issued to conduct search in the premises of one Sunil Kumar Sharma and the Directors of the petitioner herein (in the capacity of the Directors of the petitioner company). In the search conducted against Sri Sunil Kumar Sharma, incriminating material was found against him and in the search conducted against the Directors of the petitioner herein - 3 - NC: 2024:KHC:50032 WP No. 11459 of 2021 incriminating material was found against the petitioner company. 3. The respondent initiated proceedings against the said Sunil Kumar Sharma and the present petitioner herein under Section 153C of the Act. The said Sunil Kumar Sharma challenged the same by way of W.P.No.9939/2022 and connected matters. The learned Single Judge on the ground that proceedings ought to have been initiated under Section 153A of the Act and not Section 153C of the Act, allowed the writ petitions. The said order was challenged before a Division Bench of this Court in W.A.No.830/2022 and other connected matters. The view of the learned Single Judge has been upheld and the writ appeals filed by the revenue came to be rejected on the ground that the search conducted on the premises of a person becomes a 'searched person' and not 'other person' as required for the purposes of Section 153C of the Act. The same was challenged by filing SLP No.21526/2024 by the revenue. The said SLP also came to be dismissed. 4. As the facts in W.P.No.9939/2022, W.A.No.830/2022, SLP No.21526/2024 and the present case are similar and originate - 4 - NC: 2024:KHC:50032 WP No. 11459 of 2021 from the proceedings initiated against the same person namely, Sri D.K.Shivakumar and the search warrants were issued on the same day and the search was conducted on the premises of the Directors of the petitioner company in their capacity as its Directors, as admitted by both the petitioner and respondent herein, this Court is bound by the decision of the Division Bench of this Court and also the Hon'ble Apex Court. For the said reason, the writ petition requires to be allowed as the petitioner becomes the 'searched person' and not the 'other person' for the purposes of Sections 153A and 153C of the Income Tax Act. Hence, the following: ORDER (i) The impugned notices dated 21.08.2019 (vide Annexures-A to A5 to the writ petition), the impugned assessment orders dated 31.12.2019 (vide Annexures-B to B6 to the petition), the impugned demand notices dated 31.12.2019 (vide Annexures-C to C6 to the petition) and the impugned letter dated 10.09.2020 issued by the respondent (vide Annexure-D to the writ petition) are quashed; - 5 - NC: 2024:KHC:50032 WP No. 11459 of 2021 (ii) The respondent is at liberty to initiate appropriate proceedings against the petitioner in accordance with law. Sd/- (M.I.ARUN) JUDGE hkh. "