Dr.s. Gurushankar v. The Assistant Commissioner Of Income Tax, Central Circle-1, Central Circle-1

M/s.S.R.Trust,Rep. by its Managing Trustee,Dr.S.Gurushankar,No.1, Melur Road, Lake Area,Madurai – 625 107. ... Petitioner in W.P.(MD)No.22213 to 22217 of 2018 Dr.S. Gurushankar, S/o. Dr. Sethuraman, No.2/47, Melur Road, Uthangudi, Madurai-625 107. ... Petitioner in WP(MD). 22218 to 22224 of 2018 Vs. 1. The Assistant Commissioner of Income Tax, Central Circle-1, Central Circle-1, Kulamangalam Main Road, Meenambalpuram, Madurai – 625 002. 2. The Deputy Commissioner of Income Tax, Central Circle-1, Central Circle-1, Income Tax Staff Quarters Campus, Kulamangalam Main Road, Meenambalpuram, Madurai – 625 002. ... Respondents W.P.(MD)No.22213 to 22217 of 2018 The Assistant Commissioner Of Income Tax, Central Circle-1, Income Tax Valuation Wing, Additional Office Building, Kulamangalam Main Road, Meenambalpuram, Madurai-625002. ... Respondent in WP(MD). 22218 to 22224 of 2018 Prayer in WP(MD). 22213 of 2018 : Writ Petition is filed under Article 226 of the Constitutionof India, praying this Court To issue a Writ of Certiorari, callingfor the records on the file of the Respondents pertaining to theimpugned Notice issued u/s. 153C of the Income Tax Act, 1961 inNotice No.ITBA/AST/S/153C/2018-19/1011914284(1) dated 04.09.2018 ofthe 1st Respondent along with consequent satisfaction recorded forinitiating the above proceedings through communication forhttps://hcservices.ecourts.gov.in/hcservices/ PAN: /CC-1/MDU/2018-19 dated 20.09.2018 issued by the 2[nd]Respondent for the assessment year 2012-13 and quash the same asillegal. Prayer in WP(MD). 22214 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue Writ ofCertiorari under Article 226 of the constitution of india callingfor the records on the file of the Respondents pertaining to theimpugned Notice issued u/s.153C of the Income Tax Act, 1961 inNotice No.ITBA/AST/S/153C/2018-19/1011914292 (1) dated 04.09.2018 ofthe 1st Respondent along with consequent satisfaction recorded forinitiating the above proceedings through communication for PAN: /CC-1/MDU/2018-19 dated 20.09.2018 issued by the 2ndRespondent for the assessment year 2013-2014 and quash the same asillegal. Prayer in WP(MD). 22215 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentspertaining to the impugned Notice issued u/s. 153C of the Income TaxAct, 1961 in Notice No.ITBA/AST/S/153C/2018-19/1011914300(1) dated04.09.2018 of the 1st Respondent along with consequent satisfactionrecorded for initiating the above proceedings through communicationfor PAN: /CC-1/MDU/2018-19 dated 20.09.2018 issued by the2[nd] Respondent for the assessment year 2014-15 and quash the same asillegal. Prayer in WP(MD). 22216 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentspertaining to the impugned Notice issued u/s. 153C of the Income TaxAct, 1961 in Notice No.ITBA/AST/S/153C/2018-19/1011914310(1) dated04.09.2018 of the 1st Respondent along with consequent satisfactionrecorded for initiating the above proceedings through communicationfor PAN: /CC-1/MDU/2018-19 dated 20.09.2018 issued by the2[nd] Respondent for the assessment year 2015-16 and quash the same asillegal. Prayer in WP(MD). 22217 of 2018 : Prayer in WP(MD). 22216 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentspertaining to the impugned Notice issued u/s. 153C of the Income TaxAct, 1961 in Notice No.ITBA/AST/S/153C/2018-19/1011914310(1) dated04.09.2018 of the 1st Respondent along with consequent satisfactionrecorded for initiating the above proceedings through communicationfor PAN: /CC-1/MDU/2018-19 dated 20.09.2018 issued by the2[nd] Respondent for the assessment year 2015-16 and quash the same asillegal. Prayer in WP(MD). 22217 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue Writ ofCertiorari under article 226 of the constitution of India callingfor the records on the file of the Respondents pertaining to theimpugned Notice issued u/s.153C of the Income Tax Act, 1961 inNotice No.ITBA/AST/S/153C/2018-19/1011914305(1) dated 04.09.2018 ofthe 1st Respondent along with consequent satisfaction recorded forinitiating the above proceedings through communication for PAN:https://hcservices.ecourts.gov.in/hcservices/ /CC-1/MDU/2018-19 dated 20.09.2018 issued by the 2ndRespondent for the assessment year 2016-2017 and quash the same asillegal. Prayer in WP(MD). 22218 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentpertaining to the impugned Notice issued u/s. 153A of the Income TaxAct, 1961 in Notice No.ITBA/AST/S/153A/2017-18/1007473260(1) dated30.10.2017 of the Respondent for the assessment year 2010-11 asillegal without jurisdiction. Prayer in WP(MD). 22219 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentpertaining to the impugned Notice issued u/s. 153A of the Income TaxAct, 1961 in Notice No.ITBA/AST/S/153A/2017-18/1007473259(1) dated30.10.2017 of the Respondent for the assessment year 2011-12 asillegal and without jurisdiction. Prayer in WP(MD). 22220 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue Writ ofCertiorari under Article 226 of the constitution of India callingfor the records on the file of the Respondents pertaining to theimpugned Notice issued u/s.153A of the Income Tax Act, 1961 inNotice No.ITBA/AST/S/153A/2017-18/1007473258(1) dated 30.10.2017 ofthe Respondent for the assessment year 2012-13. Prayer in WP(MD). 22221 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentpertaining to the impugned Notice issued u/s. 153A of the Income TaxAct, 1961 in Notice No.ITBA/AST/S/153A/2017-18/1007473257(1) dated30.10.2017 of the Respondent for the assessment year 2013-14 asillegal and without jurisdiction. Prayer in WP(MD). 22222 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentpertaining to the impugned Notice issued u/s. 153A of the Income TaxAct, 1961 in Notice No.ITBA/AST/S/153A/2017-18/1007473256(1) dated30.10.2017 of the Respondent for the assessment year 2014-15 andquash the same as illegal and without jurisdiction. https://hcservices.ecourts.gov.in/hcservices/ W.P.(MD)NO.22213 OF 2018 & batch Prayer in WP(MD). 22223 of 2018 : Prayer in WP(MD). 22222 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentpertaining to the impugned Notice issued u/s. 153A of the Income TaxAct, 1961 in Notice No.ITBA/AST/S/153A/2017-18/1007473256(1) dated30.10.2017 of the Respondent for the assessment year 2014-15 andquash the same as illegal and without jurisdiction. https://hcservices.ecourts.gov.in/hcservices/ W.P.(MD)NO.22213 OF 2018 & batch Prayer in WP(MD). 22223 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue Writ ofCertiorari under Article 226 of the constitution of India callingfor the records on the file of the Respondents pertaining to theimpugned Notice issued u/s.153A of the Income Tax Act, 1961 inNotice No.ITBA/AST/S/153A/2017-18/1007473252(1) dated 30.10.2017 ofthe Respondent for the assessment year 2015-16. Prayer in WP(MD). 22224 of 2018 : Writ Petition is filed under Article 226 of theConstitution of India, praying this Court To issue a Writ ofCertiorari, calling for the records on the file of the Respondentpertaining to the impugned Notice issued u/s. 153A(a) of the IncomeTax Act, 1961 in PAN: dated 05.02.2018 for the assessmentyear 2016-17 and quash the same as illegal and without jurisdiction. (in all W.Ps.) For Petitioner : Mr.R.Sivaraman For Respondents : Mr.T.R.Senthilkumar, Senior Standing Counsel, Assisted by, Mrs.K.G.Usharani, Junior Standing Counsel. * * * C O M M O N O R D E R In these writ petitions, notices issued under Sections 153Aand 153C of the Income Tax Act, 1961 are under challenge. 2. Notices under Section 153A of the Income Tax Act, 1961have been issued against Dr.S.Gurushankar, while notices underSection 153C of the Act have been issued against M/s.S.R.Trust. Inthe case of Dr.S.Gurushankar, the assessment years pertain to ;2010-11 to 2016-17, while in the case of M/s.S.R.Trust, theassessment years pertain to 2012-13 to 2016-17. 3. The facts leading to the issuance of the impugned noticescan be summarised as follows:- i) M/s.S.R.Trust is a public charitable trust enjoyingexemption under the Income Tax Act, 1961. It is running a hospitalin the name and style of “Meenakshi Mission Hospital and ResearchCentre (MMHRC)” at Madurai. Both M/s.S.R.Trust as well asDr.S.Gurushankar are assessees coming within the jurisdiction of thefirst respondent. https://hcservices.ecourts.gov.in/hcservices/ ii) One C.P.Anbunathan and C.Giridharan, businessmen based inKarur came under the adverse notice of the Income Tax Department.Their residential and business premises were searched in the monthof April 2016 by invoking power under Section 132 of the Income TaxAct. Their sworn statements were recorded on various dates. It wasrevealed that they were involved in money laundering. They hadfloated shell companies and unaccounted money was routed throughthem. C.P.Anbanathan was found to charge 5% towards commission forhis services while C.Giridharan was found to take 1%. It also cameto light that those two individuals had transactions involvingMMHRC, Madurai. Based on the materials collected from C.P.Anbunathanand C.Giridharan, Income Tax Department decided to conduct a searchoperation in the residential and business premises ofDr.S.Gurushankar. On 12.09.2016, the premises of Dr.S.Gurushankarand that of his Personal Assistant Sachithananth were searched. iii) The search yielded certain incriminating material. Sincethe material related to MMHRC, Madurai, the assessing officer wassatisfied that the proceedings have to be initiated under Section153C of the Act for the period commencing from the assessment years2012-13 to 2016-17, against M/s.S.R.Trust which is running MMHRC.Thereupon the impugned notices dated 30.10.2017 under Section 153Aof the Act was issued to Dr.S.Gurushankar, while the impugnednotices dated 04.09.2018 under Section 153C of the Act were issuedto M/s.S.R.Trust. After receiving the notices, noticees applied tothe first respondent for copies of the satisfaction note recorded byhim 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 Article226 of the Constitution of India. The writ petitions were admittedand interim stay was also granted on 31.10.2018. To vacate the same,petitions were filed by the assessment authority. iv) The writ petitions however could be taken up for finaldisposal only in March 2021. 4. Heard the learned counsel appearing for the writpetitioners and the learned Senior Standing counsel appearing forthe Income Tax Department. 5. The learned counsel appearing for the writ petitionerscommenced his submissions by contending that unless the departmenthas come across some incriminating material, action cannot lieagainst the assessee either under Section 153A or under Section 153Cof the Act. Though while taking action under Section 153A of theAct, reach of the assessing officer can go anywhere upto ; 6 to 10years immediately preceding the assessment year relevant to theprevious year in which the search was conducted, reassessment has tobe confined to the year to which the seized material pertains as farhttps://hcservices.ecourts.gov.in/hcservices/ as action under Section 153C of the Act is concerned. In the case onhand, the material seized by the officials does not incriminate thepetitioners herein. In any event, the assessment proceedings ofM/s.S.R.Trust other than 2014-15 cannot be reopened. He would alsopoint out that the seized material is a mere bunch of some loosesheets containing invoices, purchase orders and receipts issuedpertaining to some four entities. The petitioners' counsel wants toemphasize that all the transactions speak about the purchase ofmedical equipments for MMHRC. The invoices relate to the period fromJanuary to March 2014. He also pointed out that there was a searchoperation in the premises of Dr.S.Gurushankar in November 2014. Thattriggered the reopening of the assessments of both M/s.S.R.Trust andMr.S.Gurushankar, for the previous six assessment years.Dr.S.Gurushankar admitted possessing undisclosed income and offeredto pay tax thereon. His explanation was accepted and the issue wasclosed. As regards M/s.S.R.Trust, orders were passed cancelling theexemption earlier granted. That was challenged by the Trust beforethe appellate authority which allowed the appeal. The departmenttook the matter before the Income Tax Appellate Tribunal but lost.T.C.A Nos.161 to 167 of 2020 filed by the department before theMadras High Court were also dismissed on 24.11.2020. The contentionof the learned counsel appearing for the petitioners is that theassessment of the petitioners herein was pending when the secondsearch took place in September 2016. The earlier assessment orderwas passed only on 31.12.2016. The argument of the petitioners'counsel is that for reasons best known to the department,reassessment proceedings were not allowed to abate in terms ofSecond Proviso to Section 153A(1) of the Act. Instead they wereallowed to continue and taken to its logical conclusion. Thereforeaccording to him, a concluded assessment cannot be reopened on thestrength of alleged incriminating material that was seized wellbefore the conclusion of the re-assessment proceedings. 6. The learned counsel appearing for the petitioners furthercontended that these aspects constitute a jurisdictional fact. Ifthe jurisdictional fact itself is absent, it is not open to therespondents to initiate the proceedings under Sections 153A and 153Cof the Act. Though the petitioners have alternative remediesavailable under the statute, when the jurisdictional fact itself isabsent, it is certainly open to the assessees to knock the doors ofthis Court by filing writ petitions. The learned counsel appearingfor the petitioners placed reliance on the Judgments of the Hon'bleSupreme Court reported in AIR 1961 SC 372 (Calcutta Discount Co.Ltd., V. Income Tax Officer, Companies District I Calcutta andAnother), (1973) 1 SCC 633 (Raza Textiles Ltd., V. Income TaxOfficer, Rampur, (1998) 8 SCC 1 (Whirlpool Corporation V. Registrarof Trade Marks, Mumbai and others), (2007) 1 SCC 732 (Arun Kumar andothers V. Union of India and others) and (2014) 52 taxmann.com 220(Delhi) (Pepsi Foods (P) Ltd., V. Assistant Commissioner of Income-tax) for his proposition that even at the notice stage, it is openhttps://hcservices.ecourts.gov.in/hcservices/ to the petitioner to move this Court. 7. Per contra, the learned Senior Standing counsel submittedthat the impugned action was rightly initiated and that no case hasbeen made out for interference at the notice stage. According tohim, enough and more incriminating materials are availablewarranting reopening of the assessments of the petitioners herein.The learned Senior Standing counsel took me through the entirecontents of the counter affidavit filed by the respondents. Hisprimary contention is that the writ petitions have been pre-maturelyfiled and that they warrant a summary disposal. The learned SeniorStanding counsel placed particular reliance on the decision reportedin (2013) 14 SCC 661(Commissioner of Income Tax, Gujarat V.Vijaybhai N.Chandrani) 8. I carefully considered the rival contentions and wentthrough the materials on record. 9. Before going into the factual matrix, the legal positiondeserves to be taken note of. Sections 153A and 153C of the IncomeTax Act, 1961 read as follows:- “153A. Assessment in case of search or requisition.—(1) Notwithstanding anything contained in section 139,section 147, section 148, section 149, section 151 andsection 153, in the case of a person where a search isinitiated under section 132 or books of account, otherdocuments or any assets are requisitioned under section 132Aafter the 31st day of May, 2003, the Assessing Officer shall—(a) issue notice to such person requiring him to furnishwithin such period, as may be specified in the notice, thereturn of income in respect of each assessment year fallingwithin six assessment years and for the relevant assessmentyear or years referred to in clause (b), in the prescribedform and verified in the prescribed manner and setting forthsuch other particulars as may be prescribed and theprovisions of this Act shall, so far as may be, applyaccordingly as if such return were a return required to befurnished under section 139; (b) assess or reassess the total income of sixassessment years immediately preceding the assessment yearrelevant to the previous year in which such search isconducted or requisition is made and for the relevantassessment year or years: Provided that the Assessing Officer shall assess orreassess the total income in respect of each assessment yearfalling within such six assessment years and for the relevantassessment year or years: https://hcservices.ecourts.gov.in/hcservices/ (b) assess or reassess the total income of sixassessment years immediately preceding the assessment yearrelevant to the previous year in which such search isconducted or requisition is made and for the relevantassessment year or years: Provided that the Assessing Officer shall assess orreassess the total income in respect of each assessment yearfalling within such six assessment years and for the relevantassessment year or years: https://hcservices.ecourts.gov.in/hcservices/ Provided further that assessment or reassessment, ifany, relating to any assessment year falling within theperiod of six assessment years and for the relevantassessment year or years referred to in this sub-sectionpending on the date of initiation of the search under section132 or making of requisition under section 132A, as the casemay be, shall abate: Provided also that the Central Government may byrules made by it and published in the Official Gazette(except in cases where any assessment or reassessment hasabated under the second proviso), specify the class orclasses of cases in which the Assessing Officer shall not berequired to issue notice for assessing or reassessing thetotal income for six assessment years immediately precedingthe assessment year relevant to the previous year in whichsearch is conducted or requisition is made and for therelevant assessment year or years. Provided also that no notice for assessment orreassessment shall be issued by the Assessing Officer for therelevant assessment year or years unless— (a) the Assessing Officer has in his possession booksof account or other documents or evidence which reveal thatthe income, represented in the form of asset, which hasescaped assessment amounts to or is likely to amount to fiftylakh rupees or more in the relevant assessment year or inaggregate in the relevant assessment years; (b) the income referred to in clause (a) or partthereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated orrequisition under section 132A is made on or after the 1stday of April, 2017. “ “—153C.Assessment of income of any other person. (1) Notwithstanding anything contained in section139, section 147, section 148, section 149, section 151 andsection 153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuablearticle or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized orrequisitioned, pertains or pertain to, or any informationcontained therein, relates to, a person other than the personreferred to in section 153A, then, the books of account ordocuments or assets, seized or requisitioned shall be handedover to the Assessing Officer having jurisdiction over suchother person and that Assessing Officer shall proceed againsteach such other person and issue notice and assess orhttps://hcservices.ecourts.gov.in/hcservices/ reassess the income of the other person in accordance withthe provisions of section 153A, if, that Assessing Officer issatisfied that the books of account or documents or assetsseized or requisitioned have a bearing on the determinationof the total income of such other person for six assessmentyears immediately preceding the assessment year relevant tothe previous year in which search is conducted or requisitionis made and for the relevant assessment year or yearsreferred to in sub-section (1) of section 153A. Provided that in case of such other person, thereference to the date of initiation of the search undersection 132 or making of requisition under section 132A inthe second proviso to sub-section (1) of section 153A shallbe construed as reference to the date of receiving the booksof account or documents or assets seized or requisitioned bythe Assessing Officer having jurisdiction over such otherperson. Provided that in case of such other person, thereference to the date of initiation of the search undersection 132 or making of requisition under section 132A inthe second proviso to sub-section (1) of section 153A shallbe construed as reference to the date of receiving the booksof account or documents or assets seized or requisitioned bythe Assessing Officer having jurisdiction over such otherperson. Provided further that the Central Government may byrules made by it and published in the Official Gazette,specify the class or classes of cases in respect of suchother person, in which the Assessing Officer shall not berequired to issue notice for assessing or reassessing thetotal income for six assessment years immediately precedingthe assessment year relevant to the previous year in whichsearch is conducted or requisition is made and for therelevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where anyassessment or reassessment has abated. (2) Where books of account or documents or assetsseized or requisitioned as referred to in sub-section (1) hasor have been received by the Assessing Officer havingjurisdiction over such other person after the due date forfurnishing the return of income for the assessment yearrelevant to the previous year in which search is conductedunder section 132 or requisition is made under section 132Aand in respect of such assessment year— (a) no return of income has been furnished by suchother person and no notice under sub-section (1) of section142 has been issued to him, or (b) a return of income has been furnished by suchother person but no notice under sub-section (2) of section143 has been served and limitation of serving the noticeunder sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has beenmade, before the date of receiving the books of account ordocuments or assets seized or requisitioned by the AssessingOfficer having jurisdiction over such other person, suchhttps://hcservices.ecourts.gov.in/hcservices/ Assessing Officer shall issue the notice and assess orreassess total income of such other person of such assessmentyear in the manner provided in section 153A.” 10. The above provisions came up for consideration in quite afew decisions. The Hon'ble Division Bench of Delhi High Court in thedecision reported in (2015) 61 taxmann.com 412(Delhi) (Commissionerof Income-tax (Central)-III V. Kabul Chawla) held that theassessment can be made under Section 153A of the Act only on thebasis of the material seized during the course of search or otherpost-search material or information available with the assessmentofficer which can be related to the evidence found. Completedassessments can be interfered with by the AO while making theassessment under Section 153A only on the basis of someincriminating material unearthed during the course of search orrequisition of documents or undisclosed income or propertydiscovered in the course of search which were not produced or notalready disclosed or made known in the course of originalassessment. 11. The High Court of Gujarat in the decision reported in(2017) 81 taxmann.com 292(Gujarat) (Principal Commissioner ofIncome-tax-4 V. Saumya Construction (P.) Ltd.,) also held that ifno incriminating material was found during search, no addition canbe made on the basis of the material collected after search. Thesheet anchor of the petitioner's counsel rests on the decision ofthe Hon'ble Supreme Court reported in (2017) 84 taxmann.com 290(SC)(Commissioner of Income-tax-III, Pune V. Sinhgad TechnicalEducation Society). In the said case, the Hon'ble Supreme Courtwhile quashing the notice issued under Section 153C of the Act heldthat the incriminating material must pertain to the assessment yearsin question and if the documents seized do not establish any co-relation, document-wise, with the assessment years, action cannotbe taken. It was further held that this requirement under Section153 C of the Act is essential for assessment under the provision andit becomes a jurisdictional fact. The Hon'ble Division Bench ofDelhi High Court reiterated position laid down in Kabul Chawla caseand Saumya Construction case in Principal Commissioner of Income Tax(Central)-2 V. Index Securities (P.) Ltd.,) ((2017) 86 taxmann.com84(Delhi), and following Sinhgad Technical Education Society case,held that in order to justify the assumption of jurisdiction underSection 153 C of the Act, the documents seized must be incriminatingand must relate to each of the assessment years whose assessmentsare sought to be reopened. Since the satisfaction note forms thebasis for initiating the proceedings under Section 153 C of the Act,this requirement must be met for the initiation of the proceedingsand not subsequent thereto. It was held that it is not enough thatthe documents in question pertain to assessee but should belong tothem. https://hcservices.ecourts.gov.in/hcservices/ 12. In the light of the legal position laid down in theaforesaid decisions, the petitioners' counsel strongly urged that asfollows:- a) The seized material do not incriminate either of thepetitioners. The seized materials are commercial documents relatingto medical equipments purchased by MMHRC, Madurai. Depreciation wasclaimed in respect of those equipments and the same was alsogranted. Therefore, it is not open to the assessing officer toreopen such concluded matters. b) Without conceding but assuming that the seized materialsdo incriminate the petitioners, the assessment of M/s.S.R.Trust canbe reopened only for the AY 2014-15. This is because admittedly, theseized documents bearing the dates between January, 2014 and March,2014. The materials were seized only from Sachithananth and not fromDr.S.Gurushankar. The seized material pertain to M/s.S.R.Trust.Therefore, on the strength of such materials, the concludedassessments of Dr.S.Gurushankar cannot be reopened. b) Without conceding but assuming that the seized materialsdo incriminate the petitioners, the assessment of M/s.S.R.Trust canbe reopened only for the AY 2014-15. This is because admittedly, theseized documents bearing the dates between January, 2014 and March,2014. The materials were seized only from Sachithananth and not fromDr.S.Gurushankar. The seized material pertain to M/s.S.R.Trust.Therefore, on the strength of such materials, the concludedassessments of Dr.S.Gurushankar cannot be reopened. 13. I am of the view that none of the contentions havesubstance. The department had of course searched the premises ofDr.S.Gurushankar in November 2014 and reopened the assessment forthe previous six years. It is true that the proceedings wereinitiated under Section 153 C of the Act against M/s.S.R.Trust andfinal orders were passed on 31.12.2016. The petitioners' counseltried to make much out of the fact that the assessing officer oughtto have aborted the first search assessment proceedings. It is truethat the Second Proviso to Section 153A(1) of the Act states thatthe reassessment relating to any assessment year falling within theperiod of six years and for the relevant assessment year pending onthe date of initiation of search under Section 132 shall abate. Itis true that this proviso is worded in an imperative language. Thepetitioner Dr.S.Gurushankar was the searched person. M/s.S.R.Trustwas the connected person. In September 2014, Dr.S.Gurushankar wasthe Managing Trustee of M/s.S.R.Trust. Search under Section 132 hadbeen again conducted in September 2016. If the assessees wanted toinvoke the Second Proviso, they could have filed a memo or anapplication seeking abatement of the first search assessmentproceedings before the assessment officer. They did not do so. Theyallowed the assessment officer to pass final assessment order on31.12.2016. In any event, the proviso will only affect the firstsearch assessment and it cannot have any bearing on the Secondsearch assessment. 14. It must be noted that after the conclusion of the firstsearch, the petitioners were not at all in the radar of thedepartment. When the money laundering activities of C.P.Anbunathanand C.Giridharan were investigated, their operations with the MMHRCcame to light. It was that which triggered the search operation ofDr.S.Gurushankar and his Personal Assistant Sachithananth. On12.09.2016, a bunch of documents were seized from the premises ofhttps://hcservices.ecourts.gov.in/hcservices/ 14. It must be noted that after the conclusion of the firstsearch, the petitioners were not at all in the radar of thedepartment. When the money laundering activities of C.P.Anbunathanand C.Giridharan were investigated, their operations with the MMHRCcame to light. It was that which triggered the search operation ofDr.S.Gurushankar and his Personal Assistant Sachithananth. On12.09.2016, a bunch of documents were seized from the premises ofhttps://hcservices.ecourts.gov.in/hcservices/ Sachithananth. Those documents purported to reflect the transactionsbetween MMHRC and one M/s.Vimal Trading Co. Mumbai, M/s.DasFlexogenic Technologies Pvt. Ltd., West Bengal, M/s.Kundan TradingCo., Surat and M/s.Pabitradhara Vyapar Private Limited, West Bengal.MMHRC had ostensibly purchased medical equipments from thoseentities for valuable consideration. When further investigation wastaken up, it turned out that all those entities are eitherfictitious entities or letterpad companies. In other words, thetransactions reflected in those documents are not genuinetransactions. The counter affidavit filed by the respondentsmentions the statement taken from a number of persons connected withthose transactions. Summon under Section 131 of the Act was issuedon 06.06.2017 to Dr.K.Vijayalakshmi, Medical Officer, MMHRC,Madurai. She deposed that no medical instrument was installed intheir sub- centre other than three pieces of very old instrument.Some of the transactions were funded by banking institutions. Onesuch institution was Union Bank of India, IFB, Chennai. Shri.RenjithSwaminathan, AGM, Union Bank of India, IFB, Chennai, deposed thatthe prescribed procedure was not followed and instead of issuing thedemand drafts directly to the suppliers, the demand drafts weregiven to the staff of the MMHRC. Shri.Dilep Kumar, one of theDirectors of M/s.Das Flexogenic Technologies Pvt. Ltd., West Bengal,deposed on 13.04.2017 that there was no supply of anyequipment/instrument to MMHRC. He further stated that he disownedthe bills attributed to their company. The counter affidavit filedis replete with reference to such material. C.Giridharan, Chennai,also deposed that there was no supply of equipments/instruments toMMHRC by M/s.Pabithra Dhara Vyapar Pvt. Ltd., and M/s.Das FlexogenicTechnologies and that the advance received from Dr.S.Gurushankar wasreturned by way of pre-signed open cheque. He also admitted that forthe money laundering service, C.P.Anbunathan used to take 5%commission of the total value on the demand draft which wasexchanged for cash. C.Giridharan also got sub-commission of 1%.There is abundant damning material. 15. The learned Senior Standing counsel asserted before thisCourt that he is ready to produce the original file for perusal. Ifthis cannot be called as incriminating material, I fail tounderstand what else can be. 16. Once I come to the conclusion that the materials seizedby the department incriminate the petitioners herein, notices issuedto Dr.S.Gurushankar for six assessment years have to necessarily besustained. Of course, one other contention of the petitioners'counsel deserves to be considered. The petitioners' claim thatnothing was seized from the residence of Dr.S.Gurushankar. Thematerial was seized only from the residence of Sachithananth.Sachithananth was not an assessee. But this argument has to bestated only to be rejected. Sachithananth is not someone who isalien to the transaction. He is the Personal Assistant tohttps://hcservices.ecourts.gov.in/hcservices/ 16. Once I come to the conclusion that the materials seizedby the department incriminate the petitioners herein, notices issuedto Dr.S.Gurushankar for six assessment years have to necessarily besustained. Of course, one other contention of the petitioners'counsel deserves to be considered. The petitioners' claim thatnothing was seized from the residence of Dr.S.Gurushankar. Thematerial was seized only from the residence of Sachithananth.Sachithananth was not an assessee. But this argument has to bestated only to be rejected. Sachithananth is not someone who isalien to the transaction. He is the Personal Assistant tohttps://hcservices.ecourts.gov.in/hcservices/ Dr.S.Gurushankar. Dr.S.Gurushankar is none other than the ManagingTrustee of M/s.S.R.Trust which runs MMHRC. Therefore, the possessionof incriminating material by Sachithananth can certainly beattributed to both the petitioners herein. The principle ofconstructive possession can very well be applied to the case onhand. If such an approach is not adopted, then it will be very easyfor an assessee to evade the provisions of the Act by utilizing theservices of third parties. In a case arising under the Prevention ofCorruption Act, the Hon'ble Supreme Court applied the principle ofconstructive receipt. The Hon'ble Supreme Court in the decisionreported in (2015) 12 SCC 348 (D.Velayutham vs. State), held asfollows:- “15.Though this Court has stressed the need andsignificance of phenolphthalein as a trap device incorruption cases, so as to allay doubts about the actualreceiving of bribes by accused persons, there may be caseswhere there are multiple demanders in a common or conjointbribe demand, and for whatsoever reason, only one receivesthe sum on their behalf, and is entrapped in consequence.Depending on strength of the remainder of evidence, inthese cases, constructive receipt by co-accused persons isopen to establishment by the prosecution, in order thatthose who intermediately obtain bribes be latched withequal culpability as their co- accused and entrappedreceivers. ... If the receipt and handling of bribemoney by Accused 2 so convincingly and inexorably pointstowards his custodianship of part of the same bribe amounton behalf of his superior officer, namely Accused 1, thenAccused 1 cannot rely on mere non- handling/ non-receiptof the bribe money, as his path to exculpation. ThisCourt's construal of anti-corruption cases is sensitiveeven to these byzantine methods of bribetaking, and wherean evader escapes a trap, constructive receipt has to bean alternate means of fastening criminal culpability.” The case on hand warrants a similar approach. If incriminatingmaterial was seized from the personal assistant of the assessee,then constructive possession must be attributed to the assessee. 17. The learned counsel appearing for the petitioners tookimmense pains to drive home his contention that since the documentsin question pertain only to the AY 2014-15, the assessment order ofM/s.S.R.Trust cannot be reopened in respect of other years. Thiscontention appears to be very attractive. However, on a deeperscrutiny, I am not able to accept the same. It is true that theseized material bears the dates for the period from January 2014 toMarch 2014. But again these dates cannot be taken at their facevalue. Only after enquiry one can come to the conclusion regardingthe actual period to which they relate. I may refer to 'chaostheory' in this regard. The hypothesis of Edward Lorenz is that themathematical models for weather systems can be extremely sensitivehttps://hcservices.ecourts.gov.in/hcservices/ to initial conditions and that small changes in these initialconditions can result in big effects. The flapping of butterfly inToronto can cause a typhoon in Tokyo. Correspondence between thetwo is revealed only with the benefit of hindsight. It is true thatwhile taking action under Section 153C of the Act, the assessmentscan be reopened only for the period that correspond to the seizedmaterial. The question of correspondence with the assessment periodhas to be borne in mind when final order is passed. At the initialstage, the correspondence cannot be formulated with precision.Things may appear fuzzy at the beginning. Only an enquiry canunearth the entire truth. At the initial stage, certain leeway hasto be given to the authorities. The statute itself prescribes theceiling limit. The long arm of the department cannot extend beyond apoint. I am therefore of the view that it would be against publicinterest to abort the efforts taken by the department to unearth theescaped income. 18. Thus, looked at from any angle, I have to hold thatinitiation of the impugned action cannot be said to be withoutbasis. They are grounded on solid material. In fact, immediatelyafter the seizure of the material, the impugned action was nottaken. The officials examined many other persons and statements werealso recorded. Only after fully satisfying himself, the assessingofficer chose to issue the impugned notices. If the petitioners havenothing to fear, they can as well place all the materials before theassessing authority for consideration. I am satisfied with thejurisdictional facts exist for assumption of jurisdiction underSection 153A as well as Section 153C of the Act. I do not find anyillegality or infraction of procedure in the action initiated by therespondents. The writ petitions lack merit. 19. These writ petitions stand dismissed and the interimorders earlier granted in these writ petitions stand vacated. Nocosts. Consequently, connected miscellaneous petitions are closed. Sd/-Assistant Registrar(P & A) PMU / /2021 Sub Assistant Registrar(CS) Note: In view of the present lock down owing toCOVID-19 pandemic, a web copy of the order may beutilized for official purposes, but, ensuring thatthe copy of the order that is presented is thecorrect copy, shall be the responsibility of theadvocate/litigant concerned.https://hcservices.ecourts.gov.in/hcservices/ To: 1. The Assistant Commissioner of Income Tax, Central Circle-1, Kulamangalam Main Road, Meenambalpuram, Madurai – 625 002. Central Circle-1, Kulamangalam Main Road, Meenambalpuram, Madurai – 625 002. 2. The Deputy Commissioner of Income Tax, Central Circle-1, Income Tax Staff Quarters Campus, Kulamangalam Main Road, Meenambalpuram, Madurai – 625 002. 3.The Assistant Commissioner Of Income Tax, Central Circle-1, Income Tax Valuation Wing, Additional Office Building, Kulamangalam Main Road, Meenambalpuram, Madurai-625002. Central Circle-1, Income Tax Valuation Wing, Additional Office Building, Kulamangalam Main Road, Meenambalpuram, Madurai-625002. SSS(CO)TR(30.03.2021) 15P 4C W.P.(MD)No.22213 of 2018 & batch 12.03.2021