TMI Blog2015 (10) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... never used by the Income-tax authority for completing the assessment, there is no change of opinion of the Assessing Officer and therefore reopening is valid under section 147 of the Act. In the light of these facts, we do not find ourselves in agreement with the order of the ld. CIT(A) who has held that reopening of assessment to be illegal and quashed the entire assessment in all the assessment years - set aside the order of the ld. CIT(A) and restore matter to his file with a direction to re-adjudicate the issues raised before him on merit by passing a reasoned order. - Decided in favour of revenue for statistical purposes. - ITA Nos.110 to 113/LKW/2012 - - - Dated:- 10-12-2014 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER For the Appellant : Shri. Vivek Mishra, CIT (DR) For the Respondent: Shri. Abhinav Mehrotra, Advocate ORDER PER SUNIL KUMAR YADAV: These appeals are preferred by the Revenue against the respective order of the ld. CIT(A) on common grounds, therefore, these appeals were heard together and are being disposed of through this consolidated order for the sake of convenience. 2. Since the grounds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound and seized. A warrant of authorization was issued in the name of M/s Shivam Granodyog Pvt. Ltd. and not in the name of M/s Shivam Gramodyog Sansthan and during the course of search at premises No.E-1, E-13, Site-I, UPSIDC Industrial Area, Rania, Kanpur Dehat, incriminating documents were found and on the basis of which proceedings under section 153C of the Act were initiated against the assessee, as it relate to the assessee. But the proceedings initiated under section 153C of the Act were dropped with the prior approval of the Addl. CIT on the ground that no satisfaction can be recorded in the case of M/s Shivam Granodyog Pvt. Ltd. in whose name warrant of authorization was issued and incriminating documents were found. 4. The incriminating documents and books of account found during the course of search was examined by the Assessing Officer and he formed a belief that since the material relate to the assessee and the same were not disclosed, therefore, the income chargeable to tax has escaped assessment. The Assessing Officer accordingly formed a belief that income chargeable to tax has escaped assessment and after recording reasons, notice under section 148 of the Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings under section 153C of the Act cannot be initiated. The ld. D.R. has further contended that though the search may be held to be illegal, but the documents and material collected during the course of search can be used by the Department for reopening of assessment, having formed a belief that the income chargeable to tax has escaped assessment. In support of this contention, the ld. D.R. has placed reliance upon the judgment of the Hon'ble jurisdictional High Court in the case of Dr. Sharad B Sahai and Another vs. CIT in Civil Misc. Writ Petition Nos. 640 of 2005; 700 of 2006 and 1687 of 2004, in which it was held that even if a search is declared illegal, the material found at the time of search can be utilized for the purposes of assessment. Therefore, the coordinated post search investigation and meaningful assessment has to take place it may be that on account of search being declared illegal, the block assessment under section 158BC of the Act cannot be made but the regular assessment or the re-assessment contemplated under the Act can be made. Therefore, initiation of proceedings under section 148 of the Act read with section 147 of the Act by the Addl. CIT cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. is also placed on record containing the details of seizure. Since the incriminating documents relate to the assessee, the Assessing Officer initiated proceedings under section 153C of the Act against the assessee. Later on it was realized that the proceedings under section 153C of the Act cannot be initiated without recording satisfaction by the Assessing Officer of the person/party searched. But in the instant case, the person/party searched was M/s Shivam Granodyog Pvt. Ltd. which was not at all in existence. Under these circumstances where the warrant of authorization was issued in the wrong name, the entire search was held to be illegal. Therefore, the satisfaction as required for initiating proceedings under section 153C of the Act cannot be recorded. Having realized illegality and complications in the search upon M/s Shivam Granodyog Pvt. Ltd., the Assessing Officer has dropped the proceedings initiated under section 153C of the Act with the approval of the Addl. CIT. While dropping the proceedings initiated under section 153C of the Act, the Addl. CIT directed the Assessing Officer to see the feasibility of taking action under section 147 of the Act. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings initiated under section 153C of the Act would be held to be illegal in the absence of record of satisfaction by the Assessing Officer of the person/party searched in the light of the judgment in the case of Prakash Agrawal vs. Asstt. CIT (supra). 13. In the instant case, having realized the legal position, the Assessing Officer has dropped the proceedings initiated under section 153C of the Act after obtaining approval from the Addl. CIT. Therefore, it cannot be said that the Assessing Officer has ever applied his mind to the incriminating material found during the course of search for framing assessment under section 153C of the Act. 14. It is also settled position of law as held by the Hon'ble Apex court in the case of Pooran Mal vs. Director of Inspection (supra) and the Hon'ble Allahabad High Court in the case of Dr. Sharad B Sahai and Another vs. CIT (supra) that where search and seizure were in contravention of the provisions of section 132 of the Act and is held to be illegal, still the material seized was liable to be used subject to the law by the Income-tax authorities. Therefore, we are of the view that the incriminating material found during the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases, the Assessing Officer has applied his mind to the incriminating material found during the course of search while completing the assessment under section 153C of the Act. Therefore, it was held that if the same material is used for reopening the assessment, it amounts to change of opinion and the reopening is not permissible. 19. In the case of CIT Anr. vs. Rinku Chakraborthy (supra), the issue involved was with regard to reopening of the block assessment and the Hon'ble High Court of Karnataka has held that there is no distinction between an assessment done under Chapter XIV-B or under Chapter XIV, therefore, reopening of the block assessment is permissible. 20. In the case of ACIT vs. M/s Mudit Finance (P) Ltd. (supra), the issue in dispute was with regard to the completion of assessment under section 153A or 153C of the Act. Therefore, this judgment is not relevant to the controversy involved in the present case. 21. In the case of CIT vs. C. Sivanandan (supra), the issue involved was with regard to the validity of reopening of assessment on the basis of the evidence which was considered in completing the block assessment. But the issue in dispute is entir ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
