Facts of the Case

The writ petitions filed by Ankit Agarwal, as legal heir of Late Shanti Kumar Aggarwal, formed part of a large batch of matters decided together by the Delhi High Court arising out of search and seizure operations conducted by the Income Tax Department. Pursuant to the search, the Department issued notices under Sections 153A and 153C of the Income-tax Act, 1961 seeking assessment or reassessment for multiple assessment years. The petitioner challenged the validity of these proceedings on the ground that they were initiated without satisfying the statutory requirements governing search assessments, particularly in the context of proceedings against a legal heir.

Issues Involved

  1. Whether search-based reassessment proceedings under Sections 153A/153C could be validly initiated against a legal heir.
  2. Whether the notices were issued within the permissible statutory framework and time limits.
  3. Whether jurisdictional conditions prescribed under the Act for search assessments had been fulfilled.
  4. Whether proceedings lacking statutory compliance were liable to be quashed.

Petitioner’s Arguments

  • The impugned notices were issued without fulfilling the mandatory statutory conditions governing search assessments.
  • The proceedings initiated against the legal heir lacked proper jurisdictional foundation.
  • Statutory safeguards relating to limitation and prerequisites for invoking Sections 153A/153C were not satisfied.
  • Consequently, the reassessment proceedings were void and liable to be set aside.

Respondent’s Arguments

  • The search assessment provisions constitute a special code enabling reassessment of income following a valid search.
  • Proceedings could be initiated against the legal heir in accordance with the statutory scheme.
  • The notices were issued pursuant to information and material discovered during the search operation.
  • Therefore, the impugned proceedings were valid and within jurisdiction.

Court Order / FINDINGS

  • Search assessment proceedings must strictly conform to the statutory framework prescribed under Sections 153A and 153C.
  • Jurisdictional requirements, including limitation provisions and statutory preconditions, are mandatory in nature.
  • Proceedings initiated without satisfying these requirements cannot be sustained in law.
  • Relief is warranted where notices are issued beyond statutory limits or without proper jurisdictional basis.

Important Clarification

  • Search provisions under the Income-tax Act constitute a special regime but are not immune from statutory limitations.
  • Jurisdictional defects cannot be cured by subsequent proceedings.
  • Actions against legal heirs must strictly adhere to statutory requirements.
  • Authorities must demonstrate compliance with all prerequisites before invoking coercive reassessment powers.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1772263716_ANKITAGARWALLEGALHEIROFLATESHANTIKUMARAGGARWALVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE27DELHIANR..pdf  

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