Sec. 153C notices issued to ‘Karti P.Chidambaram’ valid as no mala fide/lack of jurisdiction was established: HC

Case details: Karti P. Chidambaram v. PDIT - [2021] 128 taxmann.com 116 (Madras)

Judiciary and Counsel Details

• • S.M. Subramaniam, J. 
  • Abhishek Singhvi, K.V. Viswanathan, Sr. Counsel, N.R.R. Arun Natarajan, Amit Bhandari, R.V. Easwar, Ms. Rubal Bansal, AR.L. Sundaresan and Ms. C. Uma for the Petitioner
  • R. Sankaranayanan, A.P. Srinivas and A.N.R. Jayaprakash for the Respondent

Facts of the Case

Assessee-Karti P. Chidambaram had sold his land measuring 5.11 acres by three sale deeds and disclosed the capital gains in return of income (ITR). Assessing Officer (AO) initiated reassessment pursuant to the search conducted at buyer’s premises. However, later on, he issued notices under section 153C on basis of information received from DDIT (Inv.) related to search and seizure operations conducted at the buyer’s premises.

Assessee contended that AO elected to initiate proceedings under Section 153C merely on basis of information received from Inv. wing. He was well aware of the search action but he slept over the matter for a considerable length of time without any action and woke up one fine morning and issued the notices under section 153C. Such an action was not only legal malice, but without jurisdiction.

High Court Held

The Madras High Court has held that the scope of judicial review under Article 226 of the Constitution of India is to scrutinize the processes and procedures through which a decision is arrived in consonance with the provisions of the Statutes by the competent authority, but not the decision itself. The authority competent must be allowed to scrutinize the searched and impounded materials and provide an opportunity to the assessee to defend his case. Such an adjudicatory process alone would provide justice to the parties to the lis.

It was for the assessee to defend his case before the competent authority by submitting the documents and evidence and establish his case both based on the provisions of the Act and facts. At the stage of Show Cause Notice (SCN), High Court would not enter into the venture of conducting an adjudication of disputed facts. It is the duty of the fact-finding authority to adjudicate the facts and arrive at a conclusion. Thus, the ground of legal malice was not established by the petitioners, to set aside the SCN.

A writ may be entertained if the SCN was issued without jurisdiction or on malafide grounds. In the given case, no malafide or lack of jurisdiction was identified or established by the assessee, and thus, the point raised in this regard stands rejected.