The Madurai Bench of Madras High Court ruled that if incriminating material was seized from the personal assistant of the assessee, then constructive possession must be attributed to the assessee.
The petitioner, M/s.S.R.Trust is a public charitable trust enjoying exemption under the Income Tax Act, 1961. It is running a hospital in the name and style of “Meenakshi Mission Hospital and Research Centre (MMHRC)” at Madurai. Both M/s.S.R.Trust as well as Dr.S.Gurushankar are assessees coming within the jurisdiction of the respondent, the Assistant Commissioner of Income Tax.
The AO conducted the search which yielded certain incriminating material. Since the material related to MMHRC, Madurai, the assessing officer was satisfied that the proceedings have to be initiated under Section 153C of the Act for the period commencing from the assessment years 2012-13 to 2016-17, against M/s.S.R.Trust which is running MMHRC. Thereupon the impugned notices under Section 153A of the Act were issued to Dr.S.Gurushankar, while the impugned notices under Section 153C of the Act were issued to M/s.S.R.Trust.
After receiving the notices, noticees applied to the first respondent for copies of the satisfaction note recorded by him and the seized material. Both were furnished to the noticees. Thereafter, instead of taking part in the assessment proceedings, the petitioners invoked the jurisdiction of this Court under Article 226 of the Constitution of India. The writ petitions were admitted and interim stay was also granted. To vacate the same, petitions were filed by the assessment authority.
The coram of Justice G.R.Swaminathan held that initiation of the impugned action cannot be said to be without basis. They are grounded on solid material. In fact, immediately after the seizure of the material, the impugned action was not taken. The officials examined many other persons and statements were also recorded.
The petitioners contended that if the jurisdictional fact itself is absent, it is not open to the respondents to initiate the proceedings under Sections 153A and 153C of the Act. Though the petitioners have alternative remedies available under the statute, when the jurisdictional fact itself is absent, it is certainly open to the assessees to knock the doors of this Court by filing writ petitions.
“Only after fully satisfying himself, the assessing officer chose to issue the impugned notices. If the petitioners have nothing to fear, they can as well place all the materials before the assessing authority for consideration. I am satisfied with the jurisdictional facts exist for assumption of jurisdiction under Section 153A as well as Section 153C of the Act. I do not find any illegality or infraction of procedure in the action initiated by the respondents. The writ petitions lack merit,” the court said.
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