Dr. Bharat Mehta v. DCIT

Dr. Bharat Mehta v. Deputy Commissioner of Earnings-Tax(2020) 423 ITR 568: (2020) 317 CTR 759In the Excessive Courtroom of MadrasWP 20999/2003 and WPMP 26089/2003Before Justice R. Suresh KumarDecided on December 31, 2019

Relevancy of the Case: Validity of the block evaluation interval when an assessee denies sharing his passwords

Statutes and Provisions Concerned

The Data Know-how Act, 2000 (Part 2(1)(t))
The Earnings-Tax Act, 1961 (Part 132, 143(1), 143(2), 158B(a), 158BC, 158BG, 158BFA(2), 158BE, 158BG)
The Structure of India, 1950 (Article 226)

Related Information of the Case

The petitioner, a medical practitioner with some household companies, was an income-tax assessee from 1979 onwards. The respondent, Income, had put his premises in Chennai below warrant in 2001 for a block interval from April 1, 1990, to January 24, 2001.
The respondent concluded its search by recording a panchnama and a prohibitory order. The Income proceeded with a seizure, following which the petitioner filed a return for the block interval.
The respondent ordered a block evaluation for the stated block interval, computing the tax, surcharge, and curiosity payable by the petitioner to the extent of ₹ 5.23 crores and initiating penalty proceedings.
As a substitute of availing the enchantment treatment, the petitioner filed this writ petition.

Outstanding Arguments by the Advocates

The petitioner’s counsel argued that:

The limitation interval would begin on the day the search ended and the authorities issued the panchnama. The prohibitory order adopted by a number of search and seizure operations after an extended break would bar the block evaluation order from this limitation interval.
The petitioner didn’t obtain discover of the proceedings, and the respondent did not get prior approval from the Joint Commissioner or the Joint Director of Earnings Tax.
Furthermore, the petitioner was not given a correct alternative all through the evaluation proceedings, violating the rules of pure justice.

The respondent’s counsel submitted that:

The Director of Earnings Tax (Investigation) authorised the warrants, and the petitioner noticed these warrants and affixed his signature. The petitioner didn’t avail of alternate cures as current below the Act.
The search performed on certainly one of his premises was accomplished; the opposite was inconclusive; thus, they issued a prohibitory order. The petitioner didn’t cooperate with the respondents in sharing his password to realize entry to the digital data.
The respondents continued the search till June 12, 2001, once they accessed the paperwork. Thus, the limitation would begin in July.

Opinion of the Bench

The courtroom entertained the writ petition contemplating the violation of pure justice and the limitation interval.
The respondents obtained permission from the Joint Commissioner of Earnings Tax.
The respondents issued notices below Part 143(2) of the Earnings Tax Act, 1961, on June 6, 2003.
The respondents didn’t full their search in January because the petitioner didn’t disclose his passwords, which led to an prolonged search. Thus, the respondents concluded their search in June, and the limitation interval commenced in July. The discover was not in contravention of the limitation interval.

Remaining Choice

The bench held the block evaluation to be legitimate and dismissed the writ petition.

Arnav Kaman, an undergraduate scholar at Rajiv Gandhi Nationwide College of Regulation, Punjab, and Khilansha Mukhija, an undergraduate scholar on the Institute of Regulation, Nirma College Ahmedabad, ready this case abstract throughout their internship with The Cyber Weblog India in January/February 2024.