The core legal questions considered by the Tribunal in these consolidated appeals pertain to the validity and jurisdictional competence of the assessment orders framed under section 153A of the Income Tax Act, 1961 ("the Act") and the consequent revisionary orders passed under section 263 of the Act for Assessment Years 2013-14 and 2015-16. Specifically, the issues include:
1. Whether the assessment orders framed under section 153A of the Act are valid and sustainable when the search warrant under section 132 of the Act was not issued in the name of the assessee but in the names of other persons and entities.
2. Whether the Principal Commissioner of Income Tax (PCIT) had jurisdiction to initiate and pass revisionary proceedings under section 263 of the Act against the assessment orders framed under section 153A which are alleged to be invalid and void ab initio.
3. Whether the revisionary proceedings under section 263 of the Act were initiated and concluded in accordance with the principles of natural justice, including the provision of reasonable opportunity of hearing and proper satisfaction of the conditions precedent for invoking section 263.
4. Whether the allegations of cash loans and fund transfers made by the PCIT in the revision orders are supported by sufficient evidence and whether such directions can be sustained.
5. Whether documents such as the search warrant and panchnama, produced before the Tribunal but not before the PCIT during revision proceedings, can be admitted as additional evidence and what effect such admission would have on the matter.
Issue-wise Detailed Analysis
1. Validity of Assessment Orders framed under Section 153A without a valid Search Warrant in the Assessee's Name
Legal Framework and Precedents: Section 153A mandates that assessments under this provision can only be framed if a search is initiated under section 132 of the Act against the person concerned. The search must be authorized by a warrant issued in the name of the person whose assessment is to be framed. The principle is that the person named in the search warrant and the person against whom proceedings under section 153A are initiated must be the same. The Tribunal relied on the precedent set by a coordinate bench in Jindal Stainless Ltd. v. ACIT, which held that assessments framed under section 153A without a valid search warrant in the name of the assessee are non-est, void ab initio, and invalid.
Court's Interpretation and Reasoning: The Tribunal observed that the search warrant (Warrant no. 7263 dated 06.02.2019) was issued only in the names of "Avtar Singh Kochar, Gagandeep Singh Kochar, Hari Singh Kochar, M/s. H.L. Forex Pvt. Ltd." and not in the name of the assessee. No other warrant in the name of the assessee was produced by the revenue despite opportunity. Since the initiation of proceedings under section 153A requires a valid search warrant in the name of the assessee, the Tribunal held that the Assessing Officer had no jurisdiction to frame assessment orders under section 153A against the assessee. Consequently, the assessment orders are non-est, invalid, void ab initio, illegal, and unlawful.
Key Evidence and Findings: The assessee produced the search warrant and panchnama before the Tribunal, showing the warrant was not issued in his name. The revenue failed to produce any warrant in the assessee's name or any other material to rebut this fact. The Tribunal also noted that no additions in the assessment orders pertained to documents or material belonging to the persons named in the warrant, reinforcing the absence of jurisdiction.
Application of Law to Facts: The Tribunal applied the settled legal principle that jurisdictional defects in issuing assessment orders under section 153A cannot be cured and render the orders nullities. Since no valid warrant was issued against the assessee, the assessments under section 153A are invalid.
Treatment of Competing Arguments: The revenue argued that the search warrant and panchnama were part of the assessment records and that the PCIT might not have had these documents during revision proceedings. It also contended that multiple warrants may have been issued in the course of the search. The Tribunal rejected these contentions, holding that the revenue cannot term its own records as additional evidence and that no other warrant was produced to support the revenue's assumption. The Tribunal further held that the absence of a valid warrant in the name of the assessee is a fundamental jurisdictional defect which cannot be cured by assumptions or presumptions.
Conclusion: The assessment orders framed under section 153A of the Act in the assessee's case are non-est, invalid, void ab initio, and liable to be quashed.
2. Jurisdiction and Validity of Revisionary Proceedings under Section 263 against Non-est Assessment Orders
Legal Framework and Precedents: Section 263 empowers the PCIT to revise an assessment order if it is erroneous and prejudicial to the interests of revenue. However, the jurisdiction to revise presupposes the existence of a valid assessment order. The Tribunal relied on the principle laid down by the Hon'ble Apex Court in Kiran Singh & Others v. Chaman Paswan & Ors, which states that a decree or order passed without jurisdiction is a nullity and cannot be revised or enforced. Further, the coordinate bench decision in M/s Shahi Exports Pvt. Ltd v. PCIT was relied upon, which held that revision under section 263 is invalid if the assessment order itself is non-est.
Court's Interpretation and Reasoning: Since the assessment orders under section 153A were held to be invalid and void ab initio, the Tribunal held that the PCIT had no jurisdiction to initiate or pass revisionary orders under section 263 against such non-existent orders. The Tribunal emphasized the legal maxim "Sublato Fundamento Cadit Opus" - if the foundation (assessment order) is removed, the superstructure (revision order) must fall.
Key Evidence and Findings: The Tribunal noted that the PCIT proceeded with revisionary proceedings without properly satisfying the twin conditions for invoking section 263 and without appreciating the jurisdictional defect in the assessment orders. The PCIT also failed to consider the submissions of the assessee regarding the invalidity of the search warrant.
Application of Law to Facts: The Tribunal applied the settled legal principles to hold that revision proceedings under section 263 cannot be sustained when the original assessment order is void ab initio. The PCIT's order was therefore quashed.
Treatment of Competing Arguments: The revenue contended that the revision proceedings were valid and that the PCIT had the authority to examine the assessment order. The Tribunal rejected this, emphasizing that jurisdictional competence is a threshold issue and cannot be assumed or presumed. The revenue's failure to produce a valid warrant in the name of the assessee was fatal to its case.
Conclusion: The revision orders under section 263 passed by the PCIT are non-est, invalid, and liable to be quashed as they were based on invalid assessment orders.
3. Admission of Search Warrant and Panchnama as Additional Evidence before the Tribunal
Legal Framework: Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 prohibits parties from producing additional evidence before the Tribunal except under certain conditions, such as if the Tribunal requires it or if the income-tax authorities decided the case without giving sufficient opportunity to the assessee to adduce evidence.
Court's Interpretation and Reasoning: The revenue argued that the search warrant and panchnama produced before the Tribunal were additional evidence not placed before the PCIT and should not be admitted. The assessee countered that these documents were part of the assessment records and were available to the PCIT and AO, and that the issue regarding the warrant was raised before the PCIT during revision proceedings.
The Tribunal observed that the revenue's argument that these documents were additional evidence is untenable because these documents are part of the department's own records and cannot be termed as new evidence. The Tribunal further noted that the assessee had raised the issue of the invalid warrant before the PCIT, albeit without producing the documents, but the PCIT failed to appreciate this point.
Key Evidence and Findings: The Tribunal found that the documents were part of the assessment records and that the revenue had access to them. The Tribunal rejected the contention that the documents constitute additional evidence under Rule 29.
Application of Law to Facts: The Tribunal held that the documents cannot be excluded on the ground of being additional evidence and that the PCIT was duty-bound to consider them while passing orders under section 263.
Treatment of Competing Arguments: The revenue's argument for remand to allow examination of the documents was rejected as a mere attempt to prolong litigation. The Tribunal also rejected the suggestion that there might be other warrants in the name of the assessee without any evidence.
Conclusion: The search warrant and panchnama produced before the Tribunal are not additional evidence and form part of the assessment records. The PCIT ought to have considered these documents during revision proceedings.
4. Compliance with Principles of Natural Justice in Revision Proceedings under Section 263
Legal Framework: Section 263 requires that the revisionary authority must provide a reasonable opportunity of being heard before passing any order. The principles of natural justice are fundamental to such proceedings.
Court's Interpretation and Reasoning: The assessee contended that the PCIT passed the revisionary orders without proper opportunity of hearing and on the basis of different information than that provided in the show cause notice. The Tribunal noted that since the revision orders are quashed on jurisdictional grounds, detailed adjudication on this issue is not required. However, it was observed that the PCIT failed to properly consider the submissions of the assessee regarding the invalidity of the search warrant, which is a serious procedural lapse.
Conclusion: Since the revisionary orders are quashed on jurisdictional grounds, no further adjudication on natural justice compliance is necessary.
5. Allegations of Cash Loan and Fund Transfers without Corroborative Evidence
Legal Framework: Any addition or direction based on alleged transactions must be supported by corroborative evidence and the assessee must be given opportunity to confront such evidence.
Court's Interpretation and Reasoning: The assessee challenged the PCIT's direction to adjudicate cash loans and fund transfers based on surmises, conjectures, and third-party averments without corroborative evidence or opportunity of cross-examination. The Tribunal found that since the foundational assessment orders are invalid, the subsequent directions based on them cannot be sustained.
Conclusion: The allegations and directions based on unsupported material are not sustainable in law and do not survive the quashing of the assessment and revision orders.
Significant Holdings
"The provisions of Sec. 153A of the Act mandates that to issue a notice u/s 153A, a search must have been initiated in case of the said person based on a warrant of authorization issued in the name of very such person... It is an undisputed & undeniable fact that there must be an issuance of a valid warrant of authorization of search in the name of the very person u/s 132 of the Act in whose case proceedings u/s 153A of the Act are initiated."
"Assessments framed on the assessee under section 153A are invalid assessments when there is no warrant of authorization of search u/s 132 of the Act in his own name."
"Once a nullity always a nullity. A non-est order cannot be erroneous and prejudicial to the interest of the Revenue. In case the foundation is removed, the super structure must fall."
"The revenue cannot term its own records as additional evidence. The copy of search warrant and consequent panchnama relied upon by the assessee which were already in the possession of the Revenue since inception will not qualify as Additional Evidences in terms of Rule 29 of Income Tax (Appellate Tribunal) Rules, 1963."
"The orders framed u/s 153A of the Act in case of the assessee are non est, invalid, void-ab-initio, illegal and unlawful and deserves to be quashed in the interest of justice."
"The consequent orders passed by the Ld. PCIT u/s 263 of the Act for AY 2013-14 and AY 2015-16 are hereby quashed on the principle that in case the foundation is removed (i.e., assessment orders u/s 153A of the Act), the super structure (i.e., orders u/s 263 r.w.s. 153A of the Act) must fall."
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