Patna High Court
Amit Kumar Alias Amit Sarraf vs The Union Of India on 28 July, 2023
Bench: Chief Justice, Partha Sarthy
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.1965 of 2021
======================================================
Amit Kumar alias Amit Sarraf Son of Mr. Amarnath Saraf resident of Amar
Madhuri Bhawan, Road No. 4 Kazipur, P.O. Bankipore, P.S. Kadamkuan, in
the district and Town of Patna - 800004.
... ... Petitioner/s
Versus
1. The Union of India
2. The Income Tax Officer, Ward - 5 (3), Patna, Loknayak Jai Prakash Bhawan,
Patna.
3. The Deputy Director of Income Tax (Investigation), Unit -2, Aaykar
Bhawan, Maqbul Alam Road, Varanasi - 221002.
4. The Director General of Income Tax (Investigation), 16/116, Bhargava
Estate, Civil Lines, Kanpur- 208001.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 17372 of 2021
======================================================
Amit Kumar alias Amit Sarraf Son of Mr. Amarnath Saraf, resident of Amar
Madhuri Bhawan, Road No. 4, Kazipur, P.O. Bankipore, P.S. Kadamkuan, in
the Town and District of Patna-800004.
... ... Petitioner/s
Versus
1. Principal Commissioner of Income Tax-1, Patna Central Revenue Building,
Beer Chand Patel Marg, Patna.
2. Joint/Additional Commissioner of Income Tax, Range-4, Lok Nayak Jai
Prakash Bhawan, Patna.
3. The Income Tax Officer, Ward-5(1), Patna, Lok Nayak Jai Prakash Bhawan,
Patna.
... ... Respondent/s
======================================================
Appearance :
(In Civil Writ Jurisdiction Case No. 1965 of 2021)
Patna High Court CWJC No.1965 of 2021 dt.28-07-2023
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For the Petitioner/s : Mr.Ajay Kumar Rastogi, Sr. Advocate
: Mr.Parijat Saurav, Advocate
Ms. Smriti Singh, Advocate
Ms. Shilpi Keshri, Advocate
For the Respondent/s : Dr. K. N. Singh, ASG
Mr. Anshuman Singh, Advocate
Mrs.Archana Sinha @ Archana Shahi, Sr. S.C.
Mr. Alok Kumar, Advocate
(In Civil Writ Jurisdiction Case No. 17372 of 2021)
For the Petitioner/s : Mr.Ajay Kumar Rastogi, Sr. Advocate
: Mr.Parijat Saurav, Advocate
For the Respondent/s : Mrs.Archana Sinha @ Archana Shahi, Sr. S.C.
Mr. Alok Kumar, Advocate
======================================================
CORAM: HONOURABLE THE CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE PARTHA SARTHY
CAV JUDGMENT
(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 28-07-2023
Two writ petitions are filed against proceedings
arising from a requisition made under Section 132 of the Income
Tax Act 1961(for brevity, 'the Act').
2. CWJC No. 1965 of 2021 seeks release of cash
amounting to Rs. 98,50,000/- requisitioned and seized by the
Income Tax Department on 02.06.2017, which was originally
seized from the petitioner on 01.06.2017 by the Directorate of
Revenue Intelligence. The petitioner contends that withholding
of the seized cash without any demand raised, tantamount to
violation of statutory provisions contained in Section 132B(3) of
the Act. A declaration is sought, as to the expiry of limitation of
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21 months, as prescribed under Section 153B(a) of the Act, from
the end of the financial year, in which the last of the
authorizations was executed. There is also a claim for interest on
the amounts withheld so far.
3. CWJC No. 17372 of 2021, on the very same
ground of limitation, seeks a writ of certiorari against the
notices issued under Section 148 of the Act for assessment years
2013-14 to 2018-19, which is also based on the recovery of
cash, which is the subject matter of the earlier writ petition.
4. On 01.06.2017, the Department of Revenue
Intelligence intercepted the petitioner while he was travelling in
a train and found cash of Rs. 98.50 lacs on his person. The DRI
handed over the cash to the Deputy Director of Income Tax
(Investigation), Varanasi and the Additional Director of Income
Tax (Investigation), Varanasi recorded the statement on oath of
the petitioner, under Section 131(1A). The petitioner asserted
that the cash belongs to his brother, who, however, gave a
statement disowning the cash. On 06.06.2017, an authorization
was issued under Section 132A of the Act, which is the last of
the authorization based on which the requisition of cash was
made. The matter was transferred on the request of the ITO,
Ward-5(3), Patna to the Benami Cell. A notice was issued under
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Section 148 on 29.03.2019 for the assessment year 2012-13 and
an order was passed on 28.05.2019 for the said assessment year.
The petitioner filed an e-return for the assessment year 2018-19
on 26.03.2019. On December, 2019, the limitation for passing
assessment order under Section 153A for the assessment years
2013-14 to 2018-19 expired as per Section 153B. The Benami
Cell dropped the proceedings under the Benami Act and
forwarded the case, with a report, back to the Assessing Officer.
On 31.03.2021, notices were issued under Section 148 for the
assessment years 2013-14 to 2018-19, which was first
challenged in an interlocutory application in the pending writ
petition and then later after withdrawing the interlocutory
application, challenged in CWJC No. 17372 of 2021.
5. The question arising in the writ petitions, is
identical and is one of limitation, requiring refund of the
amounts seized and setting aside of the notices issued under
Section 148. The failure of the Assessing Officer to initiate any
proceedings under Section 153A would preclude the Assessing
Officer from carrying out a regular assessment or a re-
assessment under Section 147 read with Section 148 of the Act
is the compelling argument.
6. We heard Shri A.K.Rastogi, learned Senior
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Counsel for the petitioner and Smt. Archana Sinha learned
Senior Standing Counsel for the respondents.
7. The learned Senior Counsel relied on the
decisions of the Hon'ble Supreme Court in Commissioner of
Income Tax v. Kabul Chawla; [2016]380 ITR 573 (Delhi),
Principal Commissioner of Income Tax v. Abhisar Buildwell
P. Ltd.; [2023] 454 ITR 212(SC) and Union of India v. Exide
Industries Ltd.; [2020] 425 ITR 1 (SC). The first two
decisions to bring home the point of limitation under Section
153A & 153B and the last cited, insofar as the rigor brought in
with a non-obstante clause; which Section 153A is.
8. Section 132 deals with search and seizure;
Section 132A with respect to the powers of requisition and
Section 132B regarding the application of seized or
requisitioned assets. Section 153A was introduced by Act 32 of
2003 superseding Chapter XIVB, 'Special Procedure for
Assessment of Search Cases'; as is seen from Section 158BI,
insofar as searches conducted after 31.05.2003.
9. Section 153A is a non-obstante provision
rendering nugatory Sections 147, 148, 149, 151 and 153 in the
case of a person, when a search is initiated under Section 132 or
books of account, other documents or any assets are
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requisitioned under Section 132A; after 31.05.2003. In all such
circumstances, the Assessing Officer, as per sub-clause(a), is
required to issue notice to such person to file a return in respect
of each assessment year falling within six assessment years and
for the relevant assessment year or years in which the search
was conducted or requisition made. Sub-clause (b) enables the
Assessing Officer, who issues notice under sub-clause (a) to
assess or re-assess the total income of six assessment years
immediately preceding the assessment year relevant to the
previous year in which such search was conducted or requisition
is made and also of the relevant assessment year or years in
which search or requisition was made. The Assessing Officer by
the proviso has also been conferred with the power to assess or
re-assess the total income in each of the assessment years, as
referred to in clause (b). The second proviso statutorily
prescribes for abatement of any assessment or re-assessment of
the six assessment years referred to earlier; including the
relevant assessment year, which abatement would statutorily
occur on the date of initiation of the search under Section 132 or
making of requisition under Section 132A. The third proviso
empowers the Central Government by a Notification to specify
a class or classes of cases in which the Assessing Officer is not
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required to issue such notices. The third proviso restricts such
issuance of notice in the relevant assessment year or years
unless the Assessing Officer has in his possession of books of
accounts or documents on evidence revealing the income
represented in the form of asset, which has escaped assessment,
to be equivalent to or in excess of Rs. 50 lacs, in the aggregate.
10. The effect of Section 153A and its
ramifications and consequences are no longer res integra. The
High Court of Delhi in Kabul Chawla (supra) has held so.
"37. On a conspectus of Section 153A(1) of the Act, read
with the provisos thereto, and in the light of the law
explained in the aforementioned decisions, the legal
position that emerges is as under:
(i) Once a search takes place under Section 132 of the
Act, notice under Section 153A(1) will have to be
mandatorily issued to the person searched requiring
him to file returns for six assessment years
immediately preceding the previous year relevant to
the assessment year in which the search takes place.
(ii) Assessments and reassessments pending on the
date of the search shall abate. The total income for
such assessment years will have to be computed by
the Assessing Officers as a fresh exercise.
(iii) The Assessing Officer will exercise normal
assessment powers in respect of the six years previous
to the relevant assessment year in which the search
takes place. The Assessing Officer has the power to
assess and reassess the 'total income' of the
aforementioned six years in separate assessment
orders for each of the six years. In other words there
will be only one assessment order in respect of each of
the six assessment years "in which both the disclosed
and the undisclosed income would be brought to tax".
(iv) Although Section 153A does not say that additions
should be strictly made on the basis of evidence found
in the course of the search, or other post-search
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material or information available with the Assessing
Officer which can be related to the evidence found, it
does not mean that the assessment "can be arbitrary or
made without any relevance or nexus with the seized
material. Obviously an assessment has to be made
under this Section only on the basis of seized
material."
(v) In absence of any incriminating material, the
completed assessment can be reiterated and the abated
assessment or reassessment can be made. The word
'assess' in Section 153A is relatable to abated
proceedings (i.e. those pending on the date of search)
and the word 'reassess' to the completed assessment
proceedings.
(vi) Insofar as pending assessments are concerned, the
jurisdiction to make the original assessment and the
assessment under Section 153A merges into one. Only
one assessment shall be made separately for each
assessment year on the basis of the findings of the
search and any other material existing or brought on
the record of the Assessing Officer.
(vii) Completed assessments can be interfered with by
the Assessing Officer while making the assessment
under Section 153A only on the basis of some
incriminating material unearthed during the course of
search or requisition of documents or undisclosed
income or property discovered in the course of search
which were not produced or not already disclosed or
made known in the course of original assessment."
11. The aforesaid decision was also upheld by the
Hon'ble Supreme Court in Abhisar Buildwell P. Ltd. (supra)
and the law was succinctly stated in paragraph 14, which reads
as under:-
"14. In view of the above and for the reasons stated above, it
is concluded as under:
(i) that in case of search under section 132 or requisition
under section 132A, the Assessing Officer assumes the
jurisdiction for block assessment under section 153A;
(ii) all pending assessments/reassessments shall stand
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abated;
(iii) in case any incriminating material is
found/unearthed, even, in case of unabated/completed
assessments, the Assessing Officer would assume the
jurisdiction to assess or reassess the "total income"
taking into consideration the incriminating material
unearthed during the search and the other material
available with the Assessing Officer including the income
declared in the returns; and
(iv) in case no incriminating material is unearthed during
the search, the Assessing Officer cannot assess or
reassess taking into consideration the other material in
respect of completed assessments/unabated assessments.
Meaning thereby, in respect of completed/unabated
assessments, no addition can be made by the Assessing
Officer in the absence of any incriminating material
found during the course of search under section 132 or
requisition under section 132A of the Act, 1961.
However, the completed/unabated assessments can be
reopened by the Assessing Officer in exercise of powers
under section 147/148 of the Act, subject to fulfilment of
the conditions as envisaged/mentioned under section
147/148 of the Act and those powers are saved."
(emphasis supplied by us)
12. The sum total of the declaration made, as
extracted hereinabove, is that, when assessments are pending of
the six prior years and the relevant year/years on which search
or requisition is made, then such assessments shall abate and it
shall be proceeded with under Section 153A. On such
assessment being proceeded with under Section 153A, the
Assessing Officer would be entitled to look at the disclosed
income, any information obtained from sources other than the
search and also such information obtained in the search, for the
purpose of completing assessment. Insofar as the completed
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assessments are concerned, they remain unabated and, in such
circumstances, there can be an assessment proceeded with under
Section 153A, only if there is incriminating material found
which reveals undisclosed income in any of the years as
provided under Section 153A. If no such incriminating material
is found on search, then there could be no assessment proceeded
with under Section 153A. However, if no incriminating material
is found or if the incriminating material found is brought to
assessment; then the Assessing Officer would not be precluded
from proceeding under Section 147 read with 148 of the Act, if
it is permissible under the said provisions.
13. We also have to notice that the limitation to
proceed under Section 153A, as provided in Section 153B is a
period of 21 months from the end of the financial year in which
the last of the authorization for search under Section 132 or
requisition under Section 132A was executed.
14. In the present case, there is no dispute as to
the first and last requisition having been made on 06.06.2017 in
the assessment year 2018-19, corresponding to financial year
2017-18. The last of the relevant assessment year in which the
requisition was made would be 31.03.2018 and the period of
limitation would expire on 31.12.2020. In the present case, no
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assessment was initiated on or before the said date under
Section 153A. The assessments were initiated that too under
Section 148 for the assessment years 2013-14 to 2018-19 on
31.03.2021, long after the assessment period had expired.
15. In this context, we have to also notice that Section 153A was introduced in the Act notwithstanding the provisions, inter alia, of Sections 147 and Section 148. Hence, when no proceedings were taken under Section 153A, after the requisition made under Section 132, the Assessing Authority is disabled from proceeding for any assessment. Insofar as assessments pending and abated under Section 153A, after the expiry of 21 months limitation period under Section 153B there can be no proceeding taken under the Act either for regular assessment under Section 143 or under Section 153A or reassessment under Section 147 read with 148.
16. On the above reasoning, writ petitions have to be allowed. Hence, in CWJC No. 1965 of 2021, there shall be a direction to the Department to refund the entire seized cash with interest, as provided under Section 132B(4). The proceedings under Section 147 and 148, as challenged in CWJC No. 17372 of 2021 shall be set aside.
17. The writ petitions are allowed, leaving the Patna High Court CWJC No.1965 of 2021 dt.28-07-2023 12/12 parties to suffer their respective costs.
K. Vinod Chandran, CJ) Partha Sarthy, J: I agree.
(Partha Sarthy, J) Sujit/-
AFR/NAFR NAFR CAV DATE 19.07.2023 Uploading Date 31.07.2023 Transmission Date