Case Note & Summary
The petitioner, DNH Spinners Private Limited, filed a group of 11 writ petitions challenging notices issued under Section 153C of the Income-tax Act, 1961, dated 28 February 2024, and the order rejecting objections dated 28 December 2024, for various assessment years from 2010-11 to 2020-21. The background of the case involves a search action under Section 132 of the Act conducted on 19 October 2019 against Alok Kumar Agarwal, Ankit Agarwal, M/s. Alankit Limited, and M/s. Alankit Assignments Limited (the Alankit Group). During the search, documents and books of accounts were seized. Subsequently, on 31 May 2022, the Deputy Commissioner of Income Tax (DCIT), Delhi forwarded a satisfaction note to the DCIT, Mumbai, indicating that materials found during the search had a bearing on the petitioner's total income, as the Alankit Group was engaged in providing accommodation entries to various parties, including the petitioner. On 28 February 2024, the DCIT, Mumbai recorded a satisfaction note and issued notices under Section 153C for assessment years 2010-11 to 2020-21. The petitioner filed objections on 6 April 2024 and 7 December 2024, primarily contending that the notices were time-barred, that no incriminating material existed, that the satisfaction note was not provided, and that the limitation period should be computed from the date of receipt of books by the jurisdictional officer. The respondents rejected the objections on 28 December 2024, holding that the incriminating material indicated accommodation entries likely exceeding Rs. 50 lakh, and that the limitation was correctly computed. The petitioner then approached the High Court under Article 226. The court, after hearing both sides, held that the issues raised, particularly regarding limitation and the existence of incriminating material, involve disputed questions of fact that require investigation during assessment proceedings. The court noted that the petitioner has an alternative remedy of raising these objections before the Assessing Officer and in appeal. Consequently, the court dismissed all writ petitions, declining to exercise its discretionary writ jurisdiction.
Headnote
A) Income Tax - Section 153C Notice - Limitation Period - Computation of 'relevant assessment year' - The court held that the determination of limitation under Section 153B(1) read with Section 153C requires factual findings regarding the date of receipt of books of accounts by the Assessing Officer of the non-search person, which is a mixed question of fact and law not suitable for summary adjudication in writ jurisdiction (Paras 31-39). B) Income Tax - Section 153C Notice - Satisfaction Note - Validity - The court held that the challenge to the satisfaction note on grounds of delay and lack of incriminating material involves disputed questions of fact that cannot be resolved in writ proceedings under Article 226 of the Constitution of India (Paras 41-42). C) Income Tax - Section 153C Notice - Writ Jurisdiction - Alternative Remedy - The court held that the petitioner has an alternative remedy of raising all objections in the assessment proceedings and thereafter in appeal, and therefore, the writ petitions are not maintainable (Paras 31-39).
Issue of Consideration
Whether the notices under Section 153C of the Income-tax Act, 1961 and the rejection of objections are liable to be quashed on grounds of limitation, lack of incriminating material, and procedural irregularities.
Final Decision
All writ petitions are dismissed. The court declined to exercise its discretionary writ jurisdiction, holding that the issues raised involve disputed questions of fact which require investigation during assessment proceedings, and the petitioner has an alternative remedy.
Law Points
- Section 153C notice
- limitation period
- satisfaction note
- incriminating material
- accommodation entries
- writ jurisdiction
- disputed questions of fact
