PRAVEEN SINGH RAJPUT, vs. ASSISTANT COMMISSIONER OF INCOME TAX

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WP(C)/23888/2023HC KeralaKLHC01052310202301 April 2024Bench: HONOURABLE MR. JUSTICE D. K. SINGH6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessment order was not barred by limitation. The normal period of limitation for completing the assessment for the assessment year 2021-2022 was nine months from April 1, 2022. However, Section 153(9) read with Explanation 1, Clause XII of the IT Act provides for an exclusion of a period not exceeding 180 days when a search is initiated or a requisition is made under Section 132A, until the seized items are handed over to the Assessing Officer. In this case, 171 days elapsed between the requisition and the handing over of the seized items. Therefore, the Assessing Officer had nine months from April 1, 2022, plus an additional 171 days to complete the assessment, which extended the limitation period up to January 20, 2023. The assessment order was dated June 17, 2022, which fell within this extended period. Consequently, the court found no jurisdictional error in completing the assessment order.

What were the facts?

The petitioner, Praveen Singh Rajput, who runs a jewellery shop, filed a writ petition challenging an assessment order passed by the Assistant Commissioner of Income Tax. The challenge was based on the ground that the assessment order was barred by limitation. The dispute arose from the seizure of 800 grams of gold and Rs. 1,48,58,000/- cash from the petitioner's agent, Mr. Mahendra Singh Rao, on January 23, 2022. The Income Tax Department sent a requisition on January 25, 2022, and obtained custody of the seized items on July 18, 2022, a period of 171 days. The assessment year in question is 2021-2022.

What were the issues?

1. Whether the assessment order for the assessment year 2021-2022 is barred by limitation, considering the provisions of Section 153(1) and Section 153(9) read with Explanation 1, Clause XII of the Income Tax Act, 1961. Assessee's contention: The assessment order was finalized after the prescribed time limit for completing the assessment had expired. Revenue's contention: The revenue did not explicitly record any contentions in the judgment. However, the court's analysis implies that the revenue would have argued for the applicability of the exclusion period under Section 153(9) read with Explanation 1, Clause XII.

Which sections of the Income-tax Act were involved?

Section 153(1),Section 153(9),Section 132,Section 132A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 1ST DAY OF APRIL 2024 / 12TH CHAITHRA, 1946 WP(C) NO. 23888 OF 2023 PETITIONER/S: PRAVEEN SINGH RAJPUT, AGED 43 YEARS 10/968D , 1ST FLOOR OCEAN BUILDING , MELE PALAYAM ROAD, NEAR VNM, CALICUT, PIN - 673001 BY ADVS. P.RAGHUNATHAN PREMJIT NAGENDRAN M.SHYLAJA RISHAL.K RESPONDENT/S: 1 ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 , AAYAKAR BHAVAN , NORTH BLOCK ,NEW ANNEXE BUILDING , MANANCHIRA, KOZHIKODE, PIN - 673001 2 JOINT COMMISSSIONER OF INCOME TAX AAYAKAR BHAVAN , NORTH BLOCK , NEW ANNEXE BUILDING, MANANCHIRA, KOZHIKODE, PIN - 673001 BY ADVS. NAVANEETH.N.NATH SUSIE B VARGHESE(K/1300/2019) OTHER PRESENT: SMT. SUSIE B. VARGHESE- SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.04.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 23888 OF 2023 2 JUDGMENT Dated this the 1st day of April, 2024 The present Writ petition has been filed impugning assessment order in Ext.P1 passed by the 1st respondent. The petitioner runs a jewellery shop where he undertakes purchases of old gold ornaments as well as raw gold. Mr. Mahendra Singh Rao, petitioner’s agent got arrested on 23.01.2022, by the Railway Police at Mangalore, having 800 grams of gold and cash of Rs. 1,48,58,000/-. The said amount and ornaments were recovered by the Railway Police and produced before the court. The information was sent to the Income Tax Department regarding the seizure of gold ornaments and cash from the possession of Mr. Mahendra Singh Rao. A requisition was send by the Income Tax Department on 25.01.2022 seeking the possession of the gold ornaments and cash seized from Mr. Mahendra Singh Rao, the agent of the petitioner. 2. In pursuance to the requisition send by the Income Tax Department, it got the custody of the gold ornaments and cash on 18.07.2022. Therefore, it took 171 days for

WP(C) NO. 23888 OF 2023 3 obtaining the gold ornaments and cash which was seized from the alleged agent of the petitioner. 3.Learned counsel for the petitioner has challenged the assessment order only on one ground i.e., the assessment order is barred by limitation. According to him the assessment order has been finalized after the time prescribed for completing the assessment got over. 4.In the present case, the assessment year is of 2021- 2022. For the purpose of computing the limitation, 01.04.2022 would be relevant date to compute the limitation period for completion of the assessment. Section 153(1) of the Income Tax Act, 1961 (‘the IT Act’ for short) provides that no order of assessment shall be made under Sections 143 or 144 after expiry of 21 months from the end of the assessment year, in which the income was first assessable. However, under the 3rd proviso of Section 153(1), only nine month limitation is provided in respect of the assessment year which is commencing from 01.04.2021. 5.As mentioned above, in the present case, the assessment year is of 2021-2022, therefore, the normal period of limitation would be nine months from 01.04.2022

WP(C) NO. 23888 OF 2023 4 for completing the assessment. 6.Section 153(9) of Clause XII of explanation 1, provides for completion of the period of limitation in case of search initiated under Section 132 or requisition is made under Section 132A. Clause XII of explanation 1 under Section 153(9) of the IT Act, 1961 provides for the period not exceeding 180 days to be excluded from computing the period of limitation for completing the assessment under Section 153(1). Clause XII of explanation 1 to Section 153 on reproduction reads as under:- “**XII the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee,— “ 7. From the reading of Clause XII of explanation 1 to Section 153(9) of the IT Act, 1961, it is evident that maximum period of 180 days would be extra available where requisition is made under Section 132A until the seized articles are handed over to the assessing officer having jurisdiction over the assessee.

WP(C) NO. 23888 OF 2023 5 8.In the present case as stated above, the time spend from the date of requisition till the gold ornaments and cash seized for handing over to the assessing officer was 171 days. Thus the assessing officer would get nine months from 01.04.2022 + 171 days for completing the assessment. The assessment order was dated 17.06.2022. However, if the limitation as mentioned above is computed, the assessing officer would have the time for completing the assessment upto 20.01.2023. In view thereof, I do not find that the order suffers from barred of the limitation or there is jurisdictional error in completing the assessment order. In view thereof, I find no error in the assessment order. Therefore, the writ petition is hereby dismissed. Sd/- DINESH KUMAR SINGH JUDGE SJ

WP(C) NO. 23888 OF 2023 6 APPENDIX OF WP(C) 23888/2023 PETITIONER EXHIBITS EXHIBIT-P1 ASSESSMENT ORDER DT. 17.06.2023 FOR AY 2021.23 EXHIBIT-P2 APPLICATION U/S 451CR.P.C BEFORE JUDICIAL MAGISTRATE FIRST CLASS [III COURT] : MANGALORE EXHIBIT-P3 STATEMENT FILED THROUGH E-MAIL BEFORE ADI MANGALORE BY PETITIONER ON 14.02.2022 EXHIBIT-P4 ORDER U/S 131[3] OF THE ACT DT. 14.02.2022

IMPOUNDING

IPHONE

OF PETITIONER EXHIBIT-P5 ORDER DT. 01.04.2022 BY JMFC [III COURT] MANGALORE ON APPLICATION U/S 451 CR.P.C. EXHIBIT-P6 NOTICE U/S 143[2] DT.24.06.2022 ISSUED BY FIRST RESPONDENT EXHIBIT-P7 NOTICE U/S 142[1] DT.22.11.2022 ISSUED BY FIRST RESPONDENT EXHIBIT-P8 NOTICE U/S 142[1] DT. 15.05.2023 ISSUED BY FIRST RESPONDENT EXHIBIT-P9 RESPONSE TO EXT. P-8 NOTICE FILED BY PETITIONER EXHIBIT-P10 NOTICE U/S 142[1] DT.26.05.2023 ISSUED BY FIRST RESPONDENT EXHIBIT-P11 PRE-ASSESSMENT NOTICE FOR 2021.22 DT. 12.06.2023 ISSUED BY FIRST RESPONDENT EXHIBIT-P12 RESPONSE TO EXT. P-11 FILED BY PETITIONER

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