The Orissa High Court held that assessment proceedings cannot be initiated if no incriminating materials are seized at the time of the search.
The Petitioner, Smrutisudha Nayak is a Director of a Private Limited Company in the name and style of Sambit Resorts Pvt. Ltd. On 15th November 2007 search was conducted by the Income Tax Department at the Petitioner’s residence in Bhubaneswar and a Panchnama was drawn up on that date. Subsequently, another search warrant was issued under Section 132 (1) of the Income Tax Act, 1861 to conduct search and seizure operation of the locker standing jointly in the name of the Petitioner and her husband at Andhra Bank, Ashok Nagar Branch, Bhubaneswar.
Though the said search took place, nothing was found in the locker. The said search was not followed up immediately by a notice under Section 153A of the Act initiating search assessment proceedings.
More than 18 months later, the Assessing Officer issued a notice on 14th July 2009 commencing assessment proceedings under Section 153A/ 143(3) of the Act for the Assessment Year 2002-2003. Identical notices were issued for each of the Assessment Year of 2008-2009. The Petitioner filed her returns for the said AYs. Thereafter the present writ petitions were filed in this Court challenging the initiation of the assessment proceedings under Section 153A of the Act. On 11th September 2009, this Court directed that the assessment proceedings may continue but no final order shall be passed.
The division bench is headed by Chief Justice S. Muralidhar and Justice B.P. Routray held that with there being absolutely no incriminating materials found or seized at the time of the search, there was no justification for the initiation of assessment proceedings under Section 153A.
“The impugned notices issued to the Petitioners for the AYs 2002-03 and 2008-09 under Section 153A(1) read with Sections 143(3) of the Act are hereby quashed. The writ petitions are allowed but, in the circumstances, with no order as to costs,” the court said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
