Calcutta High Court Upholds Validity of Reassessment Proceedings Under Section 147 of the Income Tax Act

Court Dismisses Petitioner's Claim for Proceedings Under Section 153C Due to Lack of Incriminating Evidence

In a recent judgment, the Calcutta High Court has upheld the validity of reassessment proceedings under Section 147 of the Income Tax Act, dismissing the petitioner, Shiv Kumar Saraf's, claims for proceedings under Section 153C. The case, presided over by Justice Om Narayan Rai, involved a writ petition challenging the assessment proceedings for the assessment year 2019-20.

The petitioner, Shiv Kumar Saraf, contended that the assessment proceedings should have been conducted under Section 153C instead of Section 147, arguing that the latter was not applicable in the absence of incriminating material found during a search operation. However, the court maintained that the reassessment under Section 147 was appropriate, referencing the Supreme Court's decision in CIT v. Abhisar Buildwell (P) Ltd., which emphasized that in the absence of incriminating material during a search, reassessment under Section 147 is the correct remedy.

Justice Rai pointed out that there was no evidence of incriminating material found against the petitioner during the search and seizure operations. The assessment was based on information from the ADIT(Inv), as well as evidence collected post-search. The court further noted that Section 153C would only be applicable if both the Assessing Officer of the searched person and the officer of the person other than the searched person were satisfied with the incriminating nature of the materials found.

Additionally, the court expressed concern over the petitioner's timing in raising the jurisdictional issue, which was only brought up in the second round of writ proceedings. Justice Rai indicated that the petitioner seemed to be avoiding the statutory appellate process and delaying final adjudication.

The court dismissed the writ petition but allowed the petitioner the option to appeal to the appellate authority under Section 246 of the Income Tax Act within 15 days, ensuring that the issue of limitation would not be raised against him.

Bottom Line:

Jurisdictional issues under the Income Tax Act, 1961 - Assessment proceedings under Section 147 initiated when no incriminating material was found during search - Held, assessment under Section 147 is valid and proceedings under Section 153C are not mandatory in such cases.

Statutory provision(s): Sections 147, 153C, 246, 148A(b), 148A(d) of the Income Tax Act, 1961

Shiv Kumar Saraf v. Principal Chief Commissioner of Income Tax, (Calcutta) : Law Finder Doc Id # 2816632