MUKESH MANEKCHAND SHETH V. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2

SCA/14526/2019

AI Insights

The case involves Mukesh Manekchand Sheth, the petitioner, who challenged the notices issued under Section 153C of the Income Tax Act, 1961, by the Assistant Commissioner of Income Tax Central Circle-2, the respondent. The petitioner sought to quash these notices and any subsequent assessment orders for the assessment years 2009-10 to 2015-16, arguing that the notices were issued without proper jurisdiction. The High Court referenced a coordinate bench's earlier decision on similar matters, which had addressed the applicability of Section 153C post-amendment and the jurisdictional limits concerning the issuance of notices for assessment years beyond the prescribed six years following a search operation.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 750632 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 27-08-2019
• Assessment Year: misc
• Other Referred Cases: Special Civil Application No.12825 of 2018 and allied matters
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: B S SOPARKAR
• Keywords: Assessment years; Impugned notices; Jurisdiction; Search and seizure; Writ of Certiorari; Writ of Mandamus
• Section: 132; 153A; 153C; 132A

Judgement Text

"C/SCA/14526/2019 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 14526 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR.JUSTICE A.C. RAO ============================================= 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 ? ============================================= MUKESH MANEKCHAND SHETH Versus ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 ============================================= Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 for the Respondent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR.JUSTICE A.C. RAO Date : 27/08/2019 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. Rule returnable forthwith. Mrs. Mauna Bhatt, the Page 1 of 6 C/SCA/14526/2019 JUDGMENT learned senior standing counsel waives service of notice of rule for and on behalf of the respondent. 2. By this writ application, the writ applicant has prayed for the following reliefs: “7. The petitioner, therefore, prays that this Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to: (a) quash and set aside the impugned notices at Annexure’ A’ to this petition; (b) pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the notices at Annexure ‘A’ to this petition and stay further proceedings for assessment for AY 2009-10 to AY 2015-16; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition.” 3. A batch of writ applications with regard to the legality and validity of the issue of notice under Section 153C of the Act came to be heard by the coordinate bench. Finally, the Page 2 of 6 C/SCA/14526/2019 JUDGMENT said batch of writ applications came to be disposed of by the coordinate bench with a judgment and order dated 02.04.2019. The coordinate bench addressed itself on four questions. First, with regard to the maintainability of the petitions. Secondly, the question with regard to whether Section 153C of the Act as amended with effect from 01.06.2015 would be applicable to the case where search is initiated prior to that date. Thirdly, the question with regard to whether the notice u/s. 153C of the Act was barred by limitation and fourthly, the question with regard to the relevant Assessment Years contemplated u/s. 153A of the Act. 4. With regard to the first question, the coordinate bench took the view that the writ applications were maintainable. With regard to the second question, the Court took the view that the Legislature has specifically made the amended provisions of Section 153C of the Act applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C of the Act by virtue of such amendment. So far as the third question is concerned with Page 3 of 6 C/SCA/14526/2019 JUDGMENT regard to the limitation, the Court took the view that when the statute itself provides for an alternative period of limitation, merely because the period of limitation is provided under the first part has elapsed; it cannot be said that the notices were barred by the limitation on such ground. While answering the last question, the Court held as under: “21.2 On a plain reading of section 153A of the Act, it is evident that the trigger point for issuance of notice under that section is a search under section 132 or a requisition under section 132A of the Act. Notice is required to be issued to the searched person calling upon him to file return of income for six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, insofar as computation of the six assessment years in respect of which notice is required to be issued is concerned, the relevant date is the immediately preceding assessment year relevant to the previous year in which such search is conducted or requisition is made. 21. Accordingly, in terms of clause (b) of subsection (1) of section 153A of the Act, in case of HN Safal Group, since the search is conducted on 4.9.2013 the previous year in which such search is conducted or requisition made is 1.4.2013 to 31.3.2014 and the assessment year relevant to such previous year would be 201415; therefore, the six years assessment years would be the six assessment years preceding assessment year 2014-15 which would be 2013-14, Page 4 of 6 C/SCA/14526/2019 JUDGMENT 2012-13, 2011-12, 2010-11, 2009-10 and 2008-09. In case of Barter Group and Venus Group, since the search is conducted on 4.12.2014 and 13.3.2015 respectively, the previous year in which such search is conducted or requisition made is 201415 and the assessment year relevant to such previous year would be 201516 and therefore, the six assessment years preceding 2015-16 would be 2014-15, 2013-14, 2012- 13, 2011-12, 2010-11 and 2009-10. Therefore, in case any notices under section 153C of the Act which have been issued for assessment years beyond the six assessment years referred to herein above, such notices would be beyond jurisdiction as the same do not fall within the six assessment years as contemplated under section 153A of the Act.” 5. Ultimately, the final order which came to be passed by the Court reads as under: “In the light of the above discussion, the petitions succeed, and are accordingly, allowed. The impugned notices issued under section 153C of the Income Tax Act, 1961 in each of the petitions are hereby quashed and set aside. In cases where the assessment orders are subject matter of challenge, the impugned assessment orders are hereby quashed and set aside on the ground that the very initiation of proceedings under section 153C of the Income Tax Act, 1961 was without jurisdiction. Rule is made absolute accordingly in each of the petitions, with no order as to cost.” 6. The issue involved in the present petition is identical. We Page 5 of 6 C/SCA/14526/2019 JUDGMENT propose to apply the very same principles of law as laid down and explained by the coordinate bench in the Special Civil Application No.12825 of 2018 and allied matters to the facts of the present case. 7. In view of the above, the petition is allowed. The impugned notice at Annexure ‘A’ is hereby quashed and set aside. 8. Consequently, if any Assessment Order has been passed under Section 153C of the Income Tax Act, 1961, the same is also quashed and set aside. Rule is made absolute to the aforesaid extent. (J. B. PARDIWALA, J) (A. C. RAO, J) Dolly Page 6 of 6 "