Correctness of Documents Handed over to AO could not be gone into by Courts at stage of issuance of notice: Gujarat HC [Read Order]

The Gujarat High Court held that the correctness of documents handed over to AO could not be gone into by Courts at the stage of issuance of notice.

The petitioner, Raju Bhupendra Desai had received a notice issued under section 153C of the said Act calling upon the petitioner to prepare true and correct return of his total income for the A.Y. 2012-13 in the prescribed form and manner under the Act. The petitioner therefore filed a return of income in response to the said notice. The petitioner thereafter received the notice issued under section 142(1) of the said Act calling upon the petitioner to furnish the accounts and documents in connection with the scrutiny assessment proceedings under section 143(3) read with section 153C of the Act for the A.Y. 2012-13. Along with the said notice, the petitioner also received a certified copy of the reasons recorded in the proceedings under section 153C of the said Act for the assessment year 2012-13 in the case of the petitioner. The petitioner filed objections against the said satisfaction note, which objections came to be disposed of by the respondent via the order. The petitioner filed further objections, which also came to be rejected by the respondent via the order.

Advocate Mr. M.R. Bhatt for the respondent at the outset challenging the very maintainability of the petition, has relied upon the decision of Supreme Court in the case of Commissioner of Income-Tax Gujarat, versus Vijaybhai N. Chandrani, and submitted that the Court should not interfere at the stage of issuance of notice under section 153C of the said Act, and more particularly when the objections raised by the petitioner have been duly considered by the Assessing Officer. According to him, after the disposal of the objections, the Assessing Officer is required to pass an order of assessment, and if that order goes against the assessee, he could exhaust the remedy under the Act.

Such petition at this juncture is also not maintainable in view of the settled legal position that when the alternative remedy is available to the aggrieved party, it must first exhaust the same before approaching the Writ Court. However, the learned advocate Mr. D.R. Patel for the petitioner would submit that existence of alternative remedy itself would not be a bar against entertaining the writ petition under Article 226 of the Constitution of India, if the impugned order is without jurisdiction or is passed in violation of the principles of natural justice.

The division bench of Justice Bela M. Trivedi and Justice A.C.Joshi noted that at the time of issuing the notice under section 153C of the Act, the Assessing Officer has to satisfy himself whether the books of accounts or documents or assets seized or requisitioned by the other Assessing Officer in the proceedings under section 153A and handed over to him, had a bearing on the determination of the total income of the person to whom the notice under section 153C is issued. Such satisfaction would be in the realm of subjective satisfaction of the concerned Assessing Officer.

“The sufficiency or correctness of the documents or material handed over by the other Assessing Officer to him also could not be gone into by the Courts at this stage. In the case of Raymond Woolen Mills Ltd. Versus ITO, it has been held that in determining whether the commencement of reassessment proceeding is valid, the Court has only to see whether there is prima facie some material on the basis of which the department has opened the case, and that the sufficiency or correctness of the material could not be considered at this stage. It is true that the supreme Court has made the said observations while considering the validity of the reasons recorded by the Assessing Officer for reopening of the assessment of the assessee under Section 147, whereas the present case arises out of the proceedings initiated and the satisfaction recorded by the Assessing Officer for initiating the proceedings under section 153C of the said Act, nonetheless such reliance of the decision of Supreme Court by the respondent could not be said to be out of place when the matter was concerning about the reopening of the assessment of the petitioner assessee,” the court said.

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