By TIOL News Service

RANCHI, JULY 03, 2015: THE issue before the Bench is - Whether when assessee's case is pending before CIT(A), it can still go in writ against conduct of search and seizure operations. NO is the answer.

Facts of the case

The assessee is a Company. It is a manufacturer, supplier, trading Company of Sponge iron, steel alloy and sponge iron. It filed writ petition in HC challenging the legality of search and seizure operations carried out including summons issued by the Revenue. Counsel of assessee submitted in HC that notice was issued, subsequent to the search and seizure operationscarried out by Revenue and this was not permissible in the eye of law. Moreover, the satisfaction which ought to be arrived at u/s 131(1A) and u/s 132(1) was not reduced in writing nor looking to the counter affidavit it appears that the Revenue had any material on record which had supplied the Revenue a reason to believe to carry out search and seizure. On the other hand, Counsel for Revenue submitted that, it had ample material in possession to prove that assessee had huge money, bullion, jewellery and other valuable articles represents either wholly or partly income or property which had not been disclosed for the purpose of Income Tax Act. Counsel for Revenue further submitted that the writ petition had been preferred after several months from the date on which the raid was carried out. Thus, this writ petition was nothing, but, an afterthought with some ulterior motive. Revenue further submitted that assessee had approached to settlement commissioner and had declared huge income. This declaration revealed that search carried out by Revenue was just and proper. Thereafter for any reason whatsoever this application was withdrawn which was not permissible in the eye of law and the case was abated which had been recorded by the Settlement Commissioner and thereafter, the AO passed an order and a notice issued to assessee to make payment of Income Tax against which an appeal was preferred by assessee before CIT(A) and therefore, writ petition may not be entertained by high Court.

After hearing both parties, HC held that,

++ we see no reason to entertain this writ petition mainly for the following facts and reasons:

(i) This petitioner has close connection with Ex. Chief Minister of the State. These facts have been stated in para9 of the counter affidavit filed by the respondent nos. 1 to 4. (ii) There was ample materials with the Income Tax Authorities that this petitioner has not disclosed huge income. (iii) The petitioner has filed rejoinder affidavit, but, the facts stated in paragraph no. 19 has not been controverted at all. Counsels appearing for both the sides have read and reread Section 131 and Section 132 of the Income Tax Act. (vi) Moreover, this writ petitioner has also preferred application before the Settlement Commission on 16th July, 2012 under Section 245C of the Act, 1961. Thereafter, the Settlement Commission passed an order under Section 245D(4) of the Act, 1961 dated 27th January, 2014 to the effect that there is no "true and full disclosure"of the income nor in the application preferred by this petitioner under Section 245C the manner in which such income has been derived is given. For this reason the final order was passed by the Settlement Commission, thereafter Assessing Officer has already passed an order dated 28th March, 2014 and assessment is arrived at Rs. 4.65 crores approximately of the income which is to be paid by this petitioner against which an appeal is preferred by this petitioner which is pending before the Commissioner of Income Tax (Appeal). These facts reveals that there is sufficient materials with the Income Tax Authorities which has provided reason to believe to these authorities to carry out search and seizure because this petitioner has preferred an application before the Settlement Commission under Section 245C. Normally this type of applications are being preferred by those assessee who have not disclosed their huge income. This applicant has also preferred such type of "repent application"which was ultimately not accepted by the Settlement Commission as there was no "full and true disclosure"of income nor the application under 245C had been given, the manner in which such income has been derived. "This repentance application"which is known in the eye of law an application under Section 245C of the Income Tax Act, 1961 justifies the search and seizure carried out by the respondents at the premises of this petitioner under Section 132 of the Act, 1961.(vii) For this reason it appears that this writ petition has been preferred with all ulterior motive to cause delay in finalisation of process of payment of the income tax. Even the application preferred before the Settlement Commission was an afterthought just to cause delay in payment of true and correct income tax. Every type of proceedings has been misused by this petitioner either by way of this writ petition or which was available before the Settlement Commission as there was not true and correct disclosure of the income by this petitioner.

++ As a cumulative effect of the aforesaid facts, reasons and judicial pronouncements, there is no illegality committed by the respondents in carrying out search and seizure under Section 132 of the Act, 1961 nor any illegality has been committed in issuing summons dated 4th May, 2010 (Annexure3) compelling the attendance under sub section (1A) of Section 131 the Act, 1961. There is no substance in this writ petition, hence the same is hereby, dismissed.

(See 2015-TIOL-1534-HC-JHARKHAND-IT)