Punjab & Haryana HC: A Fresh Assessment Order Can’t Be Valid Without New Search and Seizure Operations

The Punjab and Haryana High Court, once the investigation was conducted and an assessment order was passed through the invoking Section 153A of the Income Tax Act for the AY 2006-07 to 2012-13, a fresh order without conducting an investigation operation would not be sustainable in law.

The bench of Justice Sanjeev Prakash Sharma and Justice Sudeepti Sharma witnessed that if there was no investigation conducted u/s 132 and 132A of the Income Tax Act against the applicant and only a Panchnama shows the name of the applicant prepared at the registered office of M3M India Limited, the respondent’s action in passing a second assessment order based on notice u/s 153A is held to be unjustified and without jurisdiction.

An investigation operation was conducted u/s 132 of the Act against the applicant company. According to the search proceedings, the assessments for FY 2006–07 to FY 2012–13 were articulated. Under Section 153A of the Income Tax Act, a notice was issued, and the applicant company was questioned to deliver the return of total income, including the undisclosed income. U/s 153A the final assessment was framed. The income returns were accepted.

An investigation in 2016 was conducted against M3M India Limited company at its office at Paras Twin, Tower-B, 6th Floor, Golf Course Road, Sector-54, Gurgaon, which was its registered office and business premises. But, while preparing the Panchnama marked at the Paras Twin Tower-B, Gurgaon, the applicant’s company name was added, but it is claimed that no authorization for investigation u/s 132 was issued in the applicant’s name, nor was any investigation conducted at the premises or registered office of the petitioner company with effect from May 2, 2011. The office premises were known to the respondent authorities as they had existed from FY 2011–2012 during the investigation conducted against the petitioner.

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U/s 153A the proceedings were not allowable. If any new material was discovered during the investigation, the foremost procedure available to the respondents to conduct a fresh assessment was u/s 153C.

U/s 153C the procedure stated was sacred and the applicant furnished that when a specific process has been initiated under the law the respondents ought to perform themselves as per that and a distinct process can not be chosen. U/s 153A the order levying Rs 400 crores via issuing a new assessment order is founded on the complete non-application of mind.

No flow is there for such money traceable to the books of the accounts of the applicant and the additions existed made on protective grounds in the books of the accounts of the another company. The amount obtained was just Rs 10 crore and the remaining amount of Rs. 396 crore was obtained and evaluated separately for the other companies. Though on the petitioner company, the respondents need to put the whole addition as undisclosed income.

As per the council, the applicant is not permitted to ask for the investigation post-participation for the investigation u/s 132 of the act and furnishes that the applicant has proceeded with an application u/s 245C (1) of the Act before the Income Tax Settlement Commission, which was rejected dated March 29, 2023, as of the disclosure is not full and true and there is a deficit in explaining the facts collected by the division. Therefore the assessment order is too appealable, and on that basis, the respondents have a counter.

The court concluded that on the grounds of the name being cited in the Panchnama alone, it could not be concluded that there was authorization to do an investigation against the applicant u/s 132 of the act and the authorization of doing an investigation was just against M3M India Limited having its registered office.

As per the court, it ruled that when an investigation of their premises any incriminating articles, documents, objects, or material relating to the petitioner was recovered, which was discovered to be adequate for reassessment by the assessing officer, he was mandated to pursue the procedure stated u/s 153C of the Act.