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IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5888   OF 2013  (@ SPECIAL LEAVE PETITION (CIVIL) NO.8947 OF 2011)

COMMISSIONER OF INCOME TAX, GUJARAT  APPELLANT

VERSUS

VIJAYBHAI N. CHANDRANI      RESPONDENT

WITH C.A.NO.5896 OF 2013 @ S.L.P.(C)NO.29038/2011

WITH C.A.NO.5897 OF 2013 @ S.L.P.(C)NO.29039/2011

WITH C.A.NO.5898 OF 2013 @ S.L.P.(C)NO.29040/2011

WITH C.A.NO.5899 OF 2013 @ S.L.P.(C)NO.31248/2011

WITH C.A.NO.5900 OF 2013 @ S.L.P.(C)NO.32912/2011

WITH C.A.NO.5901 OF 2013 @ S.L.P.(C)NO.34009/2011

WITH C.A.NO.5902 OF 2013 @ S.L.P.(C)NO.34010/2011

WITH C.A.NO.5889 OF 2013 @ S.L.P.(C)NO.113/2012

WITH C.A.NO.5890 OF 2013 @ S.L.P.(C)NO.114/2012

WITH C.A.NO.5903 OF 2013 @ S.L.P.(C)NO.8502/2012

WITH C.A.NO.5891 OF 2013 @ S.L.P.(C)NO.12900/2012

WITH C.A.NO.5892 OF 2013 @ S.L.P.(C)NO.19991/2012

WITH C.A.NO.5893 OF 2013 @ S.L.P.(C)NO.21295/2012

WITH C.A.NO.5894 OF 2013 @ S.L.P.(C)NO.21340/2012

WITH C.A.NO.5895 OF 2013 @ S.L.P.(C)NO.24322/2012

O R D E R

1. Delay  in  filing  and  refiling  Special  Leave  

Petitions is condoned.

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2. Leave granted.

C.A.No.5888 of 2013 @ S.L.P.(C)No.8947 of 2011:

3. This appeal is directed against the judgment and  

order  passed  by  the  High  Court  of  Gujarat  in  S.C.A.  

No.13787  of  2009,  dated  30.03.2010,  whereby  and  

whereunder the High Court has set aside the Show Cause  

Notices issued by the Assessing Authority under Section  

153C of the Income Tax Act, 1961 (for short 'the Act,  

1961'), dated 07.10.2009.

4. Brief facts of the case are:

The  respondent-assessee  purchased  a  plot  of  land  from  

“Samutkarsh Co-operative Housing Society” (for short ‘the  

Society’)  being  developed  by  one  Savvy  Infrastructure  

Ltd. In 2008, a search was conducted under Section 132 of  

the Act, 1961 in the premises of the Society and also at  

the office of Savvy Infrastructure Ltd. During the search  

certain documents were seized under Section 132A of the  

Act, 1961. Upon scrutiny, it was found that the seized  

documents  reflected  names  of  certain  individuals  

including  the  assessee.  Accordingly,  for  further  

proceedings the Assessing Authority had transmitted the  

seized  documents  to  the  jurisdictional  Assessing  

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Authority in whose jurisdiction the assessee was being  

assessed.  After  receipt  of  the  said  

information/documents,  the  Assessing  Authority  has  

recorded a satisfaction note dated 06.10.2009, that, he  

has reason to believe that a case of escapement of income  

may exist and therefore the assessee’s case requires to  

be reassessed for assessment years 2001-2002 to 2006-2007  

under  Section  153C  of  the  Act,  1961.  The  relevant  

paragraphs of the said satisfaction note read as under:

“SATISFACTION NOTE FOR INITIATION OF PROCEEDINGS  U/S.153C OF THE INCOME TAX ACT, 1961

Name of the assessee : Shri Vijay H.Chandrani

AY :  2001-02  to  2006-07  U/s.153C   and 2007-08 U/s.143(3).

The DCIT Central Circle 1(1) Ahmedabad, vide  his  letter  DCIT/CC.1  (1)/Vijay  Chandrani/Samutkarsh  dated  30.03.2009  had  intimated ITO Ward 7(4) Ahmedabad that the above  mentioned assessee is one of member of the Co-op.  Society namely Samutkarsh Co-op.Housing Society,  the case of Samutkarsh Co-op.Housing Society as  well as in the case of Sa' Infrastructure Ltd.,  Ahmedabad, proceedings U/s.132 were carried out  by  department.   During  the  course  of  search,  certain incriminating document pertaining to the  assessee were also found......”

5. Accordingly, the Assessing Authority has issued  

six Show Cause Notices under Section 153C of the Act,1961  

to  the  assessee  for  reassessment  of  income  of  the  

aforesaid  six  assessment  years  and  directed  him  to  

furnish  return  of  income  in  respect  of  the  said  

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assessment years in prescribed form within thirty days of  

the receipt of the said notices, dated 07.10.2009.  

6. Upon receipt of the said notice, the assessee by  

letter dated 11.11.2009 requested the Assessing Authority  

to furnish him with the copies of seized documents on the  

basis  of  which  the  said  notices  were  issued.  The  

Assessing Authority had provided the said documents to  

the assessee, whereafter the assessee has approached the  

High Court in a Writ Petition questioning the six Show  

Cause Notices dated 07.10.2009.

7. The High Court has elaborately examined the case  

at  hand  and  delved  into  the  statutory  scheme  for  

assessment  in  case  of  search  and  requisition  as  

prescribed under Sections 153A, 153B and 153C of the Act,  

1961 and reached the conclusion that the documents seized  

by  the  Assessing  Authority  under  Section  132A  do  not  

belong  to  the  assessee  and  therefore  the  condition  

precedent for issuance of the notice under Section 153C  

is not fulfilled. Accordingly the High Court has allowed  

the Writ Petition filed by the assessee and quashed the  

said  notices  issued  by  the  Assessing  Authority  by  the  

impugned judgment and order.

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8. Aggrieved by the aforesaid judgment and order  

passed  by  the  High  Court,  the  Assessing  Authority  is  

before us in this appeal.  

9. We have heard Shri Prasad, learned counsel for  

the  Assessing  Authority  and  Shri  Amar  Dave,  learned  

counsel  appearing  for  the  respondent  at  considerable  

length.

10. Shri  Prasad  besides  questioning  the  impugned  

judgment and order on merits would also submit that the  

High  Court  ought  not  to  have  entertained  the  Writ  

Petition  filed  by  the  assessee  against  the  Show  Cause  

Notices issued by the Assessing Authority under Section  

153C.

11. Au  contraire Shri  Amar  Dave  justifies  the  

impugned judgment and order.

12. We have gone through the documents on record  

including the satisfaction note recorded by the Assessing  

Authority  and  the  Show  Cause  Notices.  We  have  also  

perused  the  impugned  judgment  and  order  of  the  High  

Court.  

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13. In  the  instant  case,  it  transpires  from  the  

record that the jurisdictional Assessing Authority, upon  

having  a  reason  to  believe  that  the  documents  seized  

indicate  escapement  of  income,  has  issued  Show  Cause  

Notices  under  Section  153C  to  the  assessee  for  

reassessment of his income during the assessment years  

2001-2002 to 2006-2007. Thereafter, upon request of the  

assessee, the Assessing Authority has furnished him with  

the copies of documents seized under Section 132A. The  

assessee  being  dissatisfied  with  the  said  documents  

instead of filing his explanation/reply to the Show Cause  

Notices, has filed a Writ Petition before the High Court  

impugning the said notices.

14. In our considered view, at the said stage of  

issuance of the notices under Section 153C, the assessee  

could  have  addressed  his  grievances  and  explained  his  

stand to the Assessing Authority by filing an appropriate  

reply  to  the  said  notices  instead  of  filing  the  Writ  

Petition impugning the said notices. It is settled law  

that  when  an  alternate  remedy  is  available  to  the  

aggrieved  party,  it  must  exhaust  the  same  before  

approaching the Writ Court. In  Bellary Steels & Alloys  

Ltd. v. CCT, (2009) 17 SCC 547, this Court had allowed  

the  assessee  therein  to  withdraw  the  original  Writ  

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Petition  filed  before  the  High  Court  as  the  said  

proceedings  came  to  be  filed  against  the  show-cause  

notice and observed that the High Court should not have  

interfered in the matter as the Writ Petition was filed  

without even reply to the show cause notice. This Court  

further observed as follows:

“3.…In  the  circumstances,  we  could  have  dismissed these civil appeals only on the ground  of failure to exhaust statutory remedy, but for  the  fact  that  huge  investments  involving  the  large number of industries is in issue.”

15. We are fortified by the decision of this Court  

in Indo Asahi Glass Co. Ltd. v. ITO, (2002) 10 SCC 444,  

wherein the assessee had approached this Court against  

the  judgment  and  order  of  the  High  Court  which  had  

dismissed the Writ Petition filed by the assessee wherein  

challenge was made to the show cause notice issued by the  

Assessing Authority on the ground that alternative remedy  

was available to the assessee. This Court concurred with  

the findings and conclusions reached by the High Court  

and  dismissed  the  said  appeal  with  the  following  

observations:

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“5. This and the other facts cannot be taken up  for consideration by this Court for the first  time. In our opinion, the High Court was right  in  coming  to  the  conclusion  that  it  is  appropriate for the appellants to file a reply  to  the  show-cause  notice  and  take  whatever  defence is open to them.”

16. In the present case, the assessee has invoked  

the  Writ  jurisdiction  of  the  High  Court  at  the  first  

instance without first exhausting the alternate remedies  

provided under the Act. In our considered opinion, at the  

said stage of proceedings, the High Court ought not have  

entertained  the  Writ  Petition  and  instead  should  have  

directed the assessee to file reply to the said notices  

and  upon  receipt  of  a  decision  from  the  Assessing  

Authority, if for any reason it is aggrieved by the said  

decision, to question the same before the forum provided  

under the Act.   

17. In view of the above, without expressing any  

opinion  on  the  correctness  or  otherwise  of  the  

construction that is placed by the High Court on Section  

153C,  we  set  aside  the  impugned  judgment  and  order.  

Further, we grant time to the assessee, if it so desires,  

to file reply/objections, if any, as contemplated in the  

said notices within 15 days' time from today. If such  

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reply/objections is/are filed within time granted by this  

Court, the Assessing Authority shall first consider the  

said reply/objections and thereafter direct the assessee  

to file the return for the assessment years in question.  

We make it clear that while framing the assessment order,  

the  Assessing  Authority  will  not  be  influenced  by  any  

observations made by the High Court while disposing of  

the  Writ  Petition.  If,  for  any  reason,  the  assessment  

order goes against the assessee, he/it shall avail and  

exhaust the remedies available to him/it under the Act,  

1961.

18. The appeal is disposed of accordingly. No costs.

C.A.NO. 5896 OF 2013 @S.L.P.(C)NO.29038/2011, WITH C.A.NO.5897 OF 2013 @S.L.P.(C)NO.29039/2011 WITH C.A.NO.5898 OF 2013 @S.L.P.(C)NO.29040/2011 WITH C.A.NO.5899 OF 2013 @S.L.P.(C)NO.31248/2011 WITH C.A.NO.5900 OF 2013 @S.L.P.(C)NO.32912/2011 WITH C.A.NO.5901 OF 2013 @S.L.P.(C)NO.34009/2011 WITH C.A.NO.5902 OF 2013 @S.L.P.(C)NO.34010/2011 WITH C.A.NO.5889 OF 2013 @S.L.P.(C)NO.  113/2012 WITH C.A.NO.5890 OF 2013 @S.L.P.(C)NO.  114/2012 WITH C.A.NO.5903 OF 2013 @S.L.P.(C)NO. 8502/2012 WITH C.A.NO.5891 OF 2013 @S.L.P.(C)NO.12900/2012 WITH C.A.NO.5892 OF 2013 @S.L.P.(C)NO.19991/2012 WITH C.A.NO.5893 OF 2013 @S.L.P.(C)NO.21295/2012 WITH C.A.NO.5894 OF 2013 @S.L.P.(C)NO.21340/2012

AND  WITH C.A.NO. 5895 OF 2013 @S.L.P.(C)NO.24322/2012:

19. These appeals arise from the judgment and orders  

passed  by  the  High  Court  of  Gujarat  in  Tax  Appeal  

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Nos.2085 of 2009, 2082 of 2009, 2078 of 2009, 2083 of  

2009, 2080 of 2009, 2077 of 2009, 2086 of 2009, 2084 of  

2009,  2079  of  2009,  dated  27.04.2011  and   Tax  Appeal  

No.444  of  2010,  445  of  2010,  2081  of  2009,  dated  

26.07.2011, 2081 of 2009, dated 27.04.2011, 1498 of 2010,  

dated 21.12.2011, 449 of 2010, dated 26.07.2011 and 1493  

of 2010, dated 21.12.2011 respectively.   

20. In  these  appeals  the  Tribunal  and  the  High  

Court, after going through the facts and circumstances of  

each case, have reached the conclusion that the Assessing  

Authority was not justified in computing the assessments  

and thereafter fastening liability on the assessee to pay  

tax  and  interest.  Since  these  appeals  are  primarily  

decided on facts by the First Appellate Authority, the  

Tribunal  and  the  High  Court,  we  do  not  find  any  

substantial question of law which requires to be decided  

by this Court.   

21. We make it abundantly clear that we have not  

expressed any opinion on the correctness or otherwise of  

the observations made by the High Court insofar as the  

interpretation  of  Section  153C  of  the  Act,  1961  is  

concerned.  The said question is kept open to be agitated  

in an appropriate matter.

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22. Accordingly, all these appeals are disposed of  

with no order as to costs.

...................J. (H.L. DATTU)

...................J. (DIPAK MISRA)

NEW DELHI; JULY 18, 2013.

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