* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 14.12.2012
+ W.P.(C) 7656/2012
MADUGULA VENU ..... Petitioner
Through: Mr. O. S. Bajpai, Sr. Adv. with Mr.
Shashwat Bajpai and Ms. Manasvni Bajpai,
Advocates.
versus
DIRECTOR OF INCOME TAX AND ORS ..... Respondent
Through: Ms. Suruchi Aggarwal, Sr. Standing
Counsel.
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
MR. JUSTICE R.V. EASWAR
R. V. EASWAR, J: (OPEN COURT)
This writ petition has been filed seeking quashing of the search and seizure
operation proceedings taken under section 132 of the Income Tax Act, 1961 (,,Act, for
short) and for further direction that no consequential action be taken against the petitioner
as a result of search, including action pursuant to the notice dated 02.11.2012 issued
under section 153A of the Act.
2. The brief facts resulting in the filing of the present petition are that the petitioner
is an individual who files his returns of income in the status of a non-resident. He is said
to be a qualified engineer employed in U.S.A., having left India in the year 1991. He
owned house bearing No.F-58, First Floor, Green Park Main, New Delhi-110016. There
was a search of the house on 05.03.2012 in the presence o f the petitioners step mother
Smt. Swarnlata. A panchnama was drawn up inventorizing the materials seized during
the search and the same is marked as Annexure P-2 to the writ petition. Pursuant to the
W.P. (C) 7656/2012 Page 1 of 5
search and as required by section 153A of the Act, the assessing officer issued notices for
the past six assessment years calling upon the petitioner to file returns of income.
3. The petitioner had earlier filed W.P. (C) No.1720/2012 questioning the legality of
the search action. The writ petition was disposed of by this Court by order dated
27.03.2012 and the same is reproduced below: -
"ORDER
27.03.2012
Counsel for the Revenue has entered appearance on advance
notice and the file relating to the satisfaction note was produced before
us in a sealed cover. The sealed cover was opened and the file has been
examined by us. We have also examined the preparatory note as well as
documents on record in the said file. It is apparent that investigations
are at the preliminary stage. Even notice under Section 153A of the
Income Tax Act, 1961 has not been issued to the petitioner.
At this stage, learned counsel for the petitioner prays that the
matter may be passed over in order to enable him to obtain instructions.
At 12 p.m.
The matter has been called at 12 noon. Mr. Bajpai, ld. senior
advocate submits that he has obtained instruction and the writ petition
may be treated as disposed of, with right to the petitioner to revive the
petition in case notice under section 153A of the Income Tax Act, 1961 is
issued.
We accept the statement made by Mr. Bajpai. The writ petition
will be treated as disposed of with right to the petitioner to revive the
present petition in case notice under 153A of the Income Tax Act, 1961 is
issued.
We clarify that we have not expressed any opinion, which will
prejudicially affect the interest of any of the parties, in case the writ
petition is revived."
SANJIV KHANNA, J.
R.V. EASWAR, J."
W.P. (C) 7656/2012 Page 2 of 5
4. It is pursuant to aforesaid order that the petitioner has filed the present writ
petition since notices under section 153A have been issued in the meantime.
5. The contention put forward on behalf of the petitioner is that no material which
would implicate him, in the earning of any undisclosed income was unearthed during the
search and, therefore, there was no basis to issue the notice under section 153A. It is
further pointed out that the petitioner has always been away from India and, therefore,
could not have earned any undisclosed income in India and he could not in any event be
held responsible for any alleged undisclosed income earned by his late father Dr. M. V.
Rao. It is vehemently contended that the search as well as the notices issued under
section 153A would only result in extreme harassment to the petitioner who is now
required to file returns for the past six years and face the cumbersome assessment
proceedings.
6. We are afraid that there is no merit in the contention. The file relating to the
satisfaction note recorded prior to the issue of the search warrant was produced in Court
by the learned senior standing counsel for the Income tax department, on advance notice
at the preliminary hearing of the petition, in a sealed cover. It was opened in Court and
we went through the satisfaction note, the preparatory note as well as the documents in
the file. We are satisfied that there exists sufficient and relevant material which could
form the basis of the satisfaction note and the reason to believe that the petitioner has
earned income which was not disclosed to the income tax authorities. The record of the
department was returned to the learned senior standing counsel in the Court.
7. Section 153A of the Act was introduced by the Finance Act, 2003 w. e. f.
01.06.2003 and it provides for assessment in the case of search or requisition. It is
mandatory for the assessing officer, whenever there is a search under section 132, to
W.P. (C) 7656/2012 Page 3 of 5
issue notice to the person searched requiring him to furnish the returns of income for the
six assessment years immediately preceding the assessment year relevant to the previous
year in which the search was conducted. Once the returns are filed, the assessing officer
shall assess or reassess the total income in respect of the each assessment year falling
within the six assessment years. There is an Explanation to the section which provides
that all other provisions of the Income Tax Act shall apply to the assessment made under
this section, which means that the provisions of section 142, 143, etc. are applicable and
these provisions ensure that reasonable opportunity is afforded to the petitioner to put
forth his case. We are, therefore, unable to accept the contention of the petitioner that he
would be put to harassment because of the notices issued under section 153A. The
section is couched in mandatory language which implies that once there is a search, the
assessing officer has no option but to call upon the assessee to file the returns of the
income for the earlier six assessment years. It is not merely the undisclosed income that
will be brought to tax in such assessments, but the total income of the assessee, including
both the income earlier disclosed and income found consequent to the search, would be
brought to tax. The normal provisions relating to inquiry, affording opportunity, etc.,
which are provided for in sections 142, 143, etc. are to be followed by the assessing
officer. There is also a time limit for completion of the assessment under section 153A
which is prescribed in section 153B. In these circumstances the petitioners contention
that he would be put through unnecessary harassment is a non-starter. He has to face the
assessment proceedings and participate in them; in case he has evidence or material to
show that he has not earned any income which is not disclosed to the income tax
authorities or to rebut the material gathered during the search, it is perfectly open to him
to do so. In fact, it is his right which is well protected by various provisions of the
Income Tax Act. Appeal remedies are also available against the assessment framed. The
apprehension of the petitioner is unfounded. This court is also of the opinion that
frequent recourse to remedies under Article 226, similar to this one, are more often than
not, speculative, and intended to delay and stall adjudication proceedings, which would
W.P. (C) 7656/2012 Page 4 of 5
have to take place. The scope of interference in these proceedings is limited to seeing
whether there was a satisfaction recorded by the concerned officials. That part had been
achieved by the previous writ proceedings; the only liberty reserved was to seek remedies
in case the petitioner was issued notice under Section 153A. In the present case however
the entire gamut of issues relating to the recording of satisfaction, and facts pertaining
thereto were canvassed, to suggest that the notice was issued mindlessly. While the Court
is conscious of a certain degree of hardship which would occur to any assessee whose
premises are searched, that does not afford it any higher right or confer greater remedies,
or expand the scope of a limited jurisdiction under Article 226. The present petition is
therefore speculative, and misconceived.
8. For the above reasons we see no merit in the writ petition. It is accordingly
dismissed, with costs quantified at `75,000/- payable to the Prime Ministers relief fund.
The petitioner is directed to deposit the same within four weeks, and place the receipt
thereof on the file of this court. The registry shall list this petition to record compliance,
on 01.02.2013.
R.V.EASWAR, J
S. RAVINDRA BHAT, J
DECEMBER 14, 2012
hs
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