CIT vs. Vijaybhai N. Chandrani [2013] 357 ITR 713 (SC)
The respondent-assessee purchased a plot of land from “Samutkarsh Co-operative Housing Society” (for short “the society”) being developed by one Savvy Infrastructure Ltd. In 2008, a search was conducted u/s. 132 of the Act, 1961, in the premises of the society and also at the office of Savvy Infrastructure Ltd. During the search certain documents were seized. Upon scrutiny, it was found that the seized documents reflected names of certain individuals including the assessee. Accordingly, for further proceedings the assessing authority had transmitted the seized documents to the jurisdictional assessing authority in whose jurisdiction the assessee was being assessed. After receipt of the said information/documents, the assessing authority has recorded a satisfaction note dated 7th October 2009, that, he has reason to believe that a case of escapement of income may exist and, therefore, the assessee’s case requires to be reassessed for the assessment years 2001-02 to 2006-07 u/s. 153C of the Act, 1961.
Accordingly, the assessing authority issued six show-cause notices u/s. 153C of the Act, 1961, to the assessee for assessment of income of the aforesaid six assessment years and directed him to furnish return of income in respect of the said assessment years in the prescribed form within 30 days of the receipt of the said notices, dated 7th October 2009.
Upon receipt of the notice, the assessee by letter dated 11th November, 2009, requested the assessing authority to furnish him with the copies of the seized documents on the basis of which the said notices were issued. The assessing authority had provided the said documents to the assessee, whereafter the assessee has approached the High Court in a writ petition questioning the six showcause notices dated 7th October, 2009.
The High Court elaborately examined the case at hand and delved into the statutory scheme for assessment in the case of search and requisition as prescribed u/s. 153A, 153B and 153C of the Act, 1961, and reached the conclusion that the documents seized by the assessing authority did not belong to the assessee and, therefore, the condition precedent for issuance of the notice u/s. 153C was not fulfilled. Accordingly, the High Court allowed the writ petition filed by the assessee and quashed the said notices issued by the assessing authority.
Aggrieved by the aforesaid judgement and order passed by the High Court, the assessing authority was before the Supreme Court.
The Supreme Court observed that the jurisdictional assessing authority, upon having a reason to believe that the documents seized indicated escapement of income, had issued show-case notices u/s. 153C to the assessee for reassessment of his income during the assessment years 2001-02 to 2006-07. Thereafter, upon request of the assessee, the assessing authority had furnished him with the copies of documents seized. The assessee being dissatisfied with the said documents instead of filing his explanation/reply to the show-cause notices, had filed a writ petition before the High Court.
According to the Supreme Court, at the said stage of issuance of the notices u/s. 153C, the assessee could have addressed his grievances and explained his stand to the assessing authority by filing an appropriate reply to the said notices instead of filing the writ petition impugning the said notices. The Supreme Court remarked that it is settled law that when an alternative remedy is available to the aggrieved party, it must exhaust the same before approaching the writ court.
The Supreme Court held that in the present case, the assessee had invoked the writ jurisdiction of the High Court at the first instance without first exhausting the alternative remedies provided under the Act. According to the Supreme Court, at the said stage of proceedings, the High Court ought not have entertained the writ petition and instead should have directed the assessee to file reply to the said notices and upon receipt of a decision from the assessing authority, if for any reason it is aggrieved by the said decision, to question the same before the forum provided under the Act.
In view of the above, without expressing any opinion on the correctness or otherwise of the construction that was placed by the High Court on section 153C, the Supreme Court set aside the impugned judgement and order of the High Court. Further, the Supreme Court granted time to the assessee, if it so desired, to file reply/objections, if any, as contemplated in the said notices within 15 days time from the date of order. If such reply/ objections were filed within time granted by this court, the assessing authority would first consider the said reply/objections and thereafter direct the assessee to file the return for the assessment years in question. The Supreme Court clarified that while framing the assessment order, the assessing authority would not be influenced by any observations made by the High Court while disposing of the writ petition and if, for any reason, the assessment order went against the assessee, he/it would avail of and exhaust the remedies available to him/it under the Income-tax Act, 1961.
