Facts of the Case

The writ petitions filed by Ashutosh Agarwal were part of a large batch of appeals and writ petitions adjudicated together by the Delhi High Court in ITA 52/2024 and connected matters arising from search and seizure operations conducted by the Income Tax Department. Following 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 as being contrary to the statutory framework governing search assessments.

Issues Involved

  1. Whether search-based reassessment proceedings under Sections 153A/153C were validly initiated in accordance with statutory requirements.
  2. Whether the impugned notices complied with prescribed limitation provisions and jurisdictional conditions.
  3. Whether proceedings lacking statutory foundation could be sustained in law.
  4. Whether relief should be granted where the Revenue exceeded its statutory authority.

Petitioner’s Arguments

  • The impugned notices were issued without satisfying the mandatory statutory prerequisites for invoking search assessment provisions.
  • The proceedings were beyond jurisdiction and contrary to the safeguards embedded in the Act.
  • Statutory limitations and conditions governing reassessment following a search had not been fulfilled.
  • Consequently, the notices and subsequent proceedings were liable to be quashed.

Respondent’s Arguments

  • The search assessment provisions constitute a special code empowering reassessment of income discovered during a valid search.
  • The notices were issued based on material unearthed during the search operation.
  • The statutory scheme permits reopening of multiple assessment years following a search subject to compliance with prescribed conditions.
  • Therefore, the impugned proceedings were lawful and within jurisdiction.

Court Order / FINDINGS

  • Search assessment proceedings must strictly adhere 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 are without jurisdiction and unsustainable in law.
  • Courts are empowered to intervene where statutory safeguards are disregarded.

Important Clarification

  • Search provisions, though constituting a special regime, remain subject to strict statutory limitations.
  • Jurisdictional defects strike at the root of proceedings and cannot be cured subsequently.
  • Authorities must demonstrate compliance with all statutory prerequisites before invoking coercive reassessment powers.
  • Taxpayers are entitled to protection against actions taken beyond lawful authority.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1772263821_ASHUTOSHAGARWALVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE28.pdf 

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