TMI Blog2014 (10) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Group - at the time of search of the premises, the petitioner No.1 infact signed the panchnama, claiming to be the heir of deceased person - Not only that even thereafter when the proceedings u/s 158BC of the Act came to be initiated, no protest was raised by the petitioners and on the contrary, the returns of the income for the block period was filed on 03.10.2002 and the same was also signed by the petitioner No.1 and thereafter the assessment order determining the income as “NIL” has been passed on 11.09.2003 - when the search warrant was issued, it was for the premises and as such as a part of search in Nirma Group, it cannot be said that search warrant was null and void as sought to be contended on behalf of the petitioners. Whether during the search u/s 132 of the Act, the AO finds that any undisclosed income belongs to any person other than the person with respect to whom the search was made u/s 132 of the Act or whose books of account or other documents or any assets were requisitioned u/s 132A of the Act is traced out, the proceedings u/s 158BD of the Act against any other person, other than the person with respect to whom the search was made would be permissible and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-8-2014 - M.R. SHAH AND MR K.J.THAKER, JJ. For The Petitioners : MR SN SOPARKAR, SR. ADVOCATE MRS SWATI SOPARKAR, ADVOCATE For The Respondents MR MR BHATT, SR. ADVOCATE with MRS MAUNA M BHATT, ADVOCATE (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] By way of this petition under Article 226 of the Constitution of India, petitioners have prayed for an appropriate writ, direction and order to quash the warrant of authorization issued under Section 132 of the Income Tax Act, 1961 [hereinafter referred to as Act ]; to quash the assessment order dated 11.09.2003 framed under Section 158BC of the Act and to quash the notices dated 04.11.2003 issued under Section 158BD of the Act. [2.0] Facts leading to the present Special Civil Application in nutshell are as under: [2.1] It is the case on behalf of the petitioners that petitioner No.1 is the son of Late Shri Girishbhai K. Mehta [hereinafter referred to as deceased person ] who passed away on 11.10.1998. It is the case on behalf of the petitioners that on 27.09.2001 the respondent No.1 Director of Investigation, Ahmedabad issued search warrant in the name of deceased person and pursuant thereto searched residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners that for the purpose of issuing authorization under section 132 of the Act; (a) there has to be an existing person to whom summons under section 131 or notice under section 142(1) of the Act to produce books of accounts or any documents has been issued and he has failed to produce the same or; (b) there has to be an existing person to whom if summons under section 131 or notice under section 142(1) of Act to produce books of accounts or any documents is issued, he will not or would not produce the same or; (c) such existing person is in possession of any money, bullion, jewellery or other valuable thing which has not been or would not be disclosed for the purpose of the Act. Shri Soparkar, learned Counsel appearing on behalf of the petitioners has submitted that none of the above condition would have been fulfilled against the deceased person and hence the search operation carried out by the respondent is dehors the provision of law in as much as none of the prerequisite conditions for issuing authorization under section 132 of the Act were fulfilled. In support of his above submissions, Shri Soparkar, learned Counsel appearing on behalf of the petitioners has relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring on behalf of the petitioners has heavily relied upon the following decisions in support of his request to allow the present special civil application and grant the reliefs as prayed for. 1. Manish Maheshwari v. ACIT 289 ITR 341 (SC) 2. ACIT, Chennai v. A.R. Enterprises 350 ITR 489 (SC) 3. (Guj) DCIT v. Lalitkumar M. Patel 222 Taxmann 96 (Tax Appeal No.192 of 2012) 4. Ajit Jain v. Union of India 242 ITR 302 5. Union of India v. Ajit Jain 260 ITR 80 (SC) Making above submissions and relying upon above decisions, it is requested to allow the present Special Civil Application. [4.0] Present petition is vehemently opposed by Shri M.R. Bhatt, learned Counsel appearing on behalf of the respondent Department. [4.1] It is submitted that as such as a part of search in one Nirma Group, the residential premises of deceased person, father of the petitioner No.1 was covered under section 132 of the Act. It is submitted that the said deceased person was a closely trusted person of the promoter of Nirma Group and was also Director in the investment company of the group. It is submitted that the search warrant was issued for the premises i.e. 9, Gayatri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and on the contrary, return of the income for the block period was filed on 03.10.2002 and the same was signed by the petitioner No.1 and thereafter the assessment order came to be passed on 11.09.2003. [4.3] Now, with regard to the challenge to the notice under Section 158BD of the Act and served upon the petitioners is concerned, it is submitted that as required under the law, the satisfaction was reached by the AO of the searched person that the undisclosed income belongs to the third person i.e. the petitioners. It is submitted that such a satisfaction was reached on 01.09.2003, i.e. during the course of the proceedings under Section 158BC of the Act. It is submitted that accordingly, after recording satisfaction on 01.09.2003, the seized assets/documents were handed over to the AO having jurisdiction over the petitioners and thereafter, the said AO has finalized the assessments. It is submitted that however the same have not been given effect pursuant to the interim order passed by this Court. [4.4] It is submitted that as such pursuant to the notice under Section 158BD of the Act, petitioners in fact filed return of income and accepted the jurisdiction of the AO. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid decisions would not be applicable to the facts of the case on hand. It is submitted that it is a settled proposition of law that a decision is an authority for what it actually decides and not necessarily for what logical follows from it. It is further submitted that a decision to be law under Article 141 must not be a mere conclusion by which the case is disposed of. Because, conclusion, my be on facts, it may not and does not necessarily involve consideration of law. It is submitted that it is well settled that Article 141 will not be attracted if law is not declared or settled vocally to support the conclusion reached for deciding the lis. In support of his above submissions, Shri Bhatt, learned Counsel appearing on behalf of the Department has relied upon the decisions in the case of Manager, Panjarapole, Deodar v. Chakaram Moraji Nat Anr. reported in (1997)2 GLR 1321 as well as in the case of Commissioner of IncomeTax v. Baroda Peoples Cooperative Bank Ltd. reported in [2006]280 ITR 282 (Guj.). [4.7] It is further submitted that the decision in the case of Ajit Jain (Supra) reported in 242 ITR 302 (Delhi) was with regard to challenge to authorization under section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted therefrom can be utilized in related proceedings. Making above submissions and relying upon above decisions, it is requested to dismiss the present petition. [5.0] Heard learned Counsel appearing on behalf of the respective parties at length. At the outset it is required to be noted that when the petition was filed, the same was filed in the name of individual persons and not in the capacity of heirs of deceased person. Thereafter, by way of amendment the petitioners were permitted to amend the cause title by describing them as heirs of deceased person also. As noted hereinabove the respective petitioners have prayed (a) to quash the warrant of authorization issued under Section 132 of the Act; (b) to quash the assessment order dated 11.09.2003 framed under Section 158BC of the Act and (c) to quash the notices dated 04.11.2003 issued under Section 158BD of the Act. [5.1] Now, so far as challenge to the warrant of authorization issued under Section 132 of the Act and consequently to quash the assessment order dated 11.09.2003 framed under Section 158BC of the Act is concerned, the same is mainly on the ground that the said warrant of authorization issued under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act [or any expense, deduction or allowance claimed under this Act which is found to be false] . 21. Sections 158BC and 158BD of the Act are machinery provisions. Section 158BC of the Act provides the procedure for block assessment and Section 158BD of the Act provides for assessments in the case of an undisclosed income of any other person. The said sections are relevant for the purpose of this case and, therefore, they are extracted. They read as under: Section 158BC. Procedure for block assessment.Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then, (a) The Assessing Officer shall, (i) In respect of search initiated or books of account or other documents or any assets requisitioned after the 30 th day of June, 1995 but before the 1st day of January, 1997 serve a notice to such person requiring him to furnish within such time not being less t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as provided under Section 158BE(1)(a) of the Act, that is the time limit for completion of block assessment. 23. Section 158BD of the Act provides for undisclosed income of any other person. The aforesaid provisions of the Act has been considered by the Hon ble Supreme Court in the aforesaid decision in the case of Calcutta Knitwears (Supra). In the aforesaid decision the Hon ble Supreme Court has observed and held that provisions of section 158BD of the Act is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under section 132 of the Act. It is observed that under section 158BD of the Act, if an officer is satisfied that there exists any undisclosed income which may belong to other person, other than the searched person under section 132A of the Act, after recording such satisfaction, may transmit the records/documents/chits/papers etc. to the assessing officer having jurisdiction over such other person and after receipt of the aforesaid satisfaction and upon examination of the said other documents relating to such other person, the jurisdictional AO may proceed to issue a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the premises i.e. 9, Gayatri , Motinagar Society. Therefore, as such the search warrant was issued for the premises, however such authorization was in the name of the head of the family Late Shri Girishbhai K. Mehta. However, as such the search warrant was with respect to the premises i.e. 9, Gayatri , Motinagar Society and as part of the search in Nirma Group. At this stage it is required to be noted that at the time of search of the aforesaid premises, the petitioner No.1 infact signed the panchnama, claiming to be the heir of deceased person. Not only that even thereafter when the proceedings under section 158BC of the Act came to be initiated, no protest was raised by the petitioners and on the contrary, the returns of the income for the block period was filed on 03.10.2002 and the same was also signed by the petitioner No.1 and thereafter the assessment order determining the income as NIL has been passed on 11.09.2003. Under the circumstances, when the search warrant was issued, it was for the premises and as such as a part of search in Nirma Group, it cannot be said that such search warrant was null and void as sought to be contended on behalf of the petitioners. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead, understood in the sense in which it is harmonious with the object of the statute to effectuate the legislative animation. It is further observed that a taxing statute should be strictly construed; and common sense approach, equity, logic, ethics and morality have no role to play. It is observed that nothing is to be read in, nothing is to be implied; one can only look fairly at the language used and nothing more and nothing less. It is further observed that while interpreting the machinery provision, the courts would interpret a provision in such a way that it would give meaning to the charging provisions and that the machinery provisions are liberally construed by the courts. It is further observed that machinery provisions must, be so construed as would effectuate the object and purpose of the statute and not defeat the same. [5.5] Now, considering the aforesaid propositions of law laid down by the Hon ble Supreme Court, the provisions of section 158BD of the Act and the issue/controversy raised in the present Special Civil Application is required to be considered. Section 158BD of the Act is held to be a machinery provision and inserted in the statute book for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal search was made under section 132 . Under the circumstances and assuming without prejudice to the aforesaid findings with respect to the authorization under section 132 of the Act, that the search was against a dead person and not valid, in that case also, the block assessment proceedings initiated under section 158BD of the Act by the impugned notices cannot be said to be illegal and/or contrary to the provisions of the statute. [5.6] Now, so far as the reliance placed upon the decision of the Hon ble Supreme Court in the case of A.R. Enterprises (Supra) is concerned, it appears that the said decision would not be applicable to the facts of the case on hand. In the case before the Hon ble Supreme Court, the question was with respect to undisclosed income and the question was whether the payment of advance tax by an assessee would by itself tantamount to disclosure of income for the relevant assessment year and whether such income can be treated as undisclosed income for the purpose of application of chapter XIVB of the Act. Before the Hon ble Supreme Court, there was no such question which is posed for consideration before this Court. [5.7] Now, so far as the reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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