G.SUNILKUMAR vs. THE DEPUTY DIRECTOR OF INCOME TAX CENTRAL CIRCLE

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WP(C)/7182/2015HC KeralaKLHC01053022201506 March 2015Bench: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that it would be incumbent upon the appellate authority (the 2nd respondent) to consider the petitioners' contention regarding the validity of the search and whether the assessing authority had jurisdiction to initiate proceedings under Section 153A based on that search, prior to deciding the appeals on merits. The Court also directed the appellate authority to consider the petitioners' request for an opportunity to cross-examine the Authorized Officer of the Department in accordance with the applicable provisions of law. This consideration of the validity of the search, the jurisdiction, and the cross-examination request must be done before proceeding with the appeals on their merits. The High Court disposed of the writ petition with these directions.

What were the facts?

The petitioners, G. Sunilkumar and Smt. Indu Sunilkumar, are challenging assessment orders for the assessment years 2003-04 to 2009-10, passed under Section 143(3) read with Section 153C of the Income Tax Act, 1961. They have filed appeals before the Commissioner of Income Tax (Appeals) - IV (the 2nd respondent). A primary contention raised by the petitioners in their appeals is that the entire assessment procedure is vitiated because the assessing authority relied on materials obtained during a search that was not witnessed by 'panchas'. They argue that the absence of 'panchas' invalidates the search proceedings, rendering the seized materials inadmissible for assessment. The petitioners sought an opportunity to cross-examine the authorized officer and witnesses to substantiate their claims regarding the jurisdiction and legality of the search before the appeals are heard on merits.

What were the issues?

1. Whether the assessment procedure is vitiated due to the assessing authority relying on materials obtained from a search conducted without the presence of 'panchas', thereby rendering the search proceedings illegal and the seized materials inadmissible? 2. Whether the Commissioner of Income Tax (Appeals) is obligated to grant the petitioners an opportunity to cross-examine the authorized officer and witnesses to substantiate their contentions regarding the illegality of the search and the consequent lack of jurisdiction of the assessing authority, prior to adjudicating the appeals on merits? Assessee's arguments: The petitioners contend that the search proceedings are vitiated due to the absence of 'panchas', making the seized materials unreliable for assessment. They further argue that they should be allowed to cross-examine the authorized officer and witnesses to prove the illegality of the search and the lack of jurisdiction of the assessing authority before the appeals are decided on merits. Revenue's arguments: The judgment does not record any specific arguments made by the revenue.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153C,Section 153A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 6TH DAY OF MARCH 2015/15TH PHALGUNA, 1936 WP(C).No. 7182 of 2015 (W) --------------------------- PETITIONER(S): --------------

1.

G.SUNILKUMAR,

SUNEETRON AGENCIES, M.C.ROAD,

THIRUVALLA - 689 101.

2 SMT.INDU SUNILKUMAR,

SRAVANAM, POWER HOUSE ROAD, THIRUVALLA - 689 101. BY ADV. SRI.RAMESH CHERIAN JOHN RESPONDENT(S): ---------------

1.

THE DEPUTY DIRECTOR OF INCOME TAX CENTRAL CIRCLE,

PUBLIC LIBRARY BUILDINGS, SASTHRI ROAD,

KOTTAYAM - 686 001.

2.

THE COMMISSIONER OF INCOME TAX (APPEALS)-IV,

KERA BHAVAN, KOCHI- 682 018

3.

THE ADDITIONAL DIRECTOR OF INCOME TAX,

PALAKKAD - 678 014. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX &

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06-03-2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rvs.

WP(C).No. 7182 of 2015 (W)

APPENDIX PETITIONER(S)' EXHIBITS : ----------------------- EXT.P1 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2003-04 IN THE CASE OF THE 1ST PETITIONER. EXT.P2 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2004-05 IN THE CASE OF THE 1ST PETITIONER. EXT.P3 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2005-06 IN THE CASE OF THE 1ST PETITIONER. EXT.P4 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2006-07 IN THE CASE OF THE 1ST PETITIONER. EXT.P5 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2007-08 IN THE CASE OF THE 1ST PETITIONER. EXT.P6 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2008-09 IN THE CASE OF THE 1ST PETITIONER. EXT.P7 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2009-10 IN THE CASE OF THE 1ST PETITIONER. EXT.P8 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2003-04 IN THE CASE OF THE 2ND PETITIONER. EXT.P9 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2004-05 IN THE CASE OF THE 2ND PETITIONER. EXT.P10 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2005-06 IN THE CASE OF THE 2ND PETITIONER. EXT.P11 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2006-07 IN THE CASE OF THE 2ND PETITIONER. EXT.P12 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2007-08 IN THE CASE OF THE 2ND PETITIONER. EXT.P13 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2008-09 IN THE CASE OF THE 2ND PETITIONER. EXT.P14 - TRUE COPY OF THE ORDER OF ASSESSMENT FOR THE YEAR 2009-10 IN THE CASE OF THE 2ND PETITIONER. EXT.P15 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2003-04 FILED BY THE 1ST PETITIONER. EXT.P16 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2004-05 FILED BY THE 1ST PETITIONER. EXT.P17 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2005-06 FILED BY THE 1ST PETITIONER. EXT.P18 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2006-07 FILED BY THE 1ST PETITIONER. EXT.P19 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2007-08 FILED BY THE 1ST PETITIONER. EXT.P20 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2008- FILED BY THE 1ST PETITIONER. EXT.P21 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2009-10 FILED BY THE 1ST PETITIONER. EXT.P22 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2003-04 FILED BY THE 2ND PETITIONER.

WP(C).No. 7182 of 2015 (W) EXT.P23 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2004-05 FILED BY THE 2ND PETITIONER. EXT.P24 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2005-06 FILED BY THE 2ND PETITIONER. EXT.P25 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2006-07 FILED BY THE 2ND PETITIONER. EXT.P26 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2007-08 FILED BY THE 2ND PETITIONER. EXT.P27 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2008-09 FILED BY THE 2ND PETITIONER. EXT.P28 - TRUE COPY OF THE APPEAL FOR THE ASSESSMENT FOR THE YEAR 2009-10 FILED BY THE 2ND PETITIONER. EXT.P29 - TRUE COPY OF THE SUMMARY OF ARGUMENTS OF THE 1ST PETITIONER FOR THE YEAR 2003-04. EXT.P29A - TRUE COPY OF THE SUMMARY OF ARGUMENTS (PRELIMINARY) OF THE 2ND PETITIONER FOR THE YEAR 2003-04 TO 2009-10. EXT.P30 - TRUE COPY OF THE LETTER DT.23-1-2015 FILED BEFORE THE 2ND RESPONDENT. EXT.P31 - TRUE COPY OF THE LETTER DT.23-1-2015 FILED BEFORE THE 2ND RESPONDENT. EXT.P32 - TRUE COPY OF THE LETTER DT.5-2-2015 FILED BEFORE THE 2ND RESPONDENT. EXT.P33 - TRUE COPY OF THE POSTING NOTICE DT.23-2-2015 ISSUED TO THE 1ST PETITIONER. EXT.P34 - TRUE COPY OF THE POSTING NOTICE DT.23-2-2015 ISSUED TO THE 2ND PETITIONER. EXT.P35 - TRUE COPY OF THE JUDGMENT DT.25-1-2012 IN WPC NO.34655 OF 2011. RESPONDENT(S)' EXHIBITS :

NIL. /TRUE COPY/ P.A.TO JUDGE RVS.

A.K.JAYASANKARAN NAMBIAR, J. ............................................................. W.P.(C).No.7182 of 2015 ............................................................. Dated this the 6th day of March, 2015 J U D G M E N T Against Exts.P1 to P14 orders passed under Section 143 (3) read with Section 153 C of the Income Tax Act, the petitioners have preferred Exts.P15 to P28 appeals before the 2nd respondent. One of the contention taken by the petitioners in the appeals before the 2nd respondent is that the whole assessment procedure was vitiated on account of the fact that the assessing authority had relied on the materials obtained during the course of the search and the search was not witnessed by any 'Panchas'. It is the contention of the petitioners that on account of there being no 'Panchas' at the time of search, the search proceedings itself is vitiated, and hence, materials obtained during the said search could not be relied upon for the purposes of completing the assessment against the petitioners. It is stated by counsel for the petitioners that the appeals are now proposed to be heard by the 2nd respondent, and the petitioner's request for a cross examination of witnesses, so as to substantiate his contentions with regard to the jurisdiction of the authorities who conducted the search, and the legality of the search itself, has not been gone into prior to a consideration of the

W.P.(C).No.7182 of 2015 2 appeals on merits, In the writ petition, therefore, the petitioners seeks a direction to the 2nd respondent to offer the petitioners an opportunity to cross examine the authorised officer and witnesses for the purposes of substantiating their contention regarding the illegality of the search, prior to the adjudication of the appeals on merits. 2. I have heard Sri.Ramesh Cheiran John, the learned counsel for the petitioners and Sri.Jose Joseph, the learned Standing counsel for the respondent bank. 3. On a consideration of the facts and circumstances of the case as also the submissions made across the bar, and in particular, the submissions with regard to the issue of legality of the search, that is urged in the appeals filed by the petitioners before the 2nd respondent appellate authority, I am of the view that, it would be incumbent upon the appellate authority to consider the contention of the petitioners with regard to the validity of the search, as also on the aspect of whether the assessing authority had jurisdiction to initiate proceedings under Section 153A on the basis of that search, prior to deciding the issue on merits. The appellate authority would also be required to consider the request

W.P.(C).No.7182 of 2015 3 of the petitioners for cross examining the Authorised Officer of the Department in accordance with the provisions of law applicable. I, therefore, dispose the writ petition with a direction to the 2nd respondent appellate authority to consider the said contention of the petitioners, including the contention regarding validity of search and consequent lack of jurisdiction. The appellate authority shall also consider the request of the petitioners for an opportunity to cross examine the witnesses and the Authorised Officer of the Department in accordance with the applicable provisions. The 2nd respondent appellate authority shall do this prior to proceeding with the appeal on merits. The writ petition is disposed of as above.

A.K.JAYASANKARAN NAMBIAR JUDGE mns

W.P.(C).No.7182 of 2015 4

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