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TMI Blog2012 (4) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... erred both in law and on facts of the case in deleting the additions of Rs. 1,86,54,215/- and Rs. 12,93,000/-made by the A.O on account of unexplained investment in the purchase/construction of SCO 16-17 Sector 8, Chandigarh. (iii) The Ld. CIT(A) has erred both in law and on facts of the case in deleting the addition of Rs. 10,31,520/- made by the A.O on account of unexplained investment in the purchase of SCF No 210, Sector 24, Chandigarh (iv) The Ld. CIT(A) has erred both in law and on facts of the case in deleting the addition of Rs. 2,00,000/- on account of undisclosed interest income. (v) The Ld. CIT(A) has erred both in law and on facts of the case in deleting the addition of Rs. 8,40,000/- made by the A.O on account of unexplained household expenses. (vi) The Ld. CIT(A) has erred both in law and on facts of the case in deleting the addition of Rs. 2,50,00,000/- made by the A.O on account of unexplained deposit from M/S Shubh International Ltd. (vii) The Ld. CIT(A) has erred both in law and on facts of the case in deleting the addition of Rs. 1,54,056/- made by the A.O unexplained interest income (viii) The Ld. CIT(A) has erred both in law and on facts of the case in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, it is pertinent to examine the relevant statutory provisions, in the matter. It is contended therein that no search warrant has been issued u/s 132(1) of the Act, in the caseof the above named assessee, therefore, the AO has no jurisdiction to frame assessment u/s 158BC of the Act. In view of this vital legal issue of jurisdiction, as raised by the assessee, as preliminary objection, we deem it fit to decide the same first. The assessee, at the outset, challenged the validity of the impugned block assessment framed by the AO, being without jurisdiction, as no search warrant has been issued u/s 132(1) of the Act, in the name of the assessee as Smt.Mohinder Kaur, legal heir of late Shri Taranjit Singh. 5. The submission of the assessee is reproduced hereunder: "1.1 A search & seizure operation was carried out on Smt.Mohinder Kaur on 23 r d May, 2002. Consequent to that assessment order has been framed under Section 158BC of the Act on Smt. Mohinder Kaur and late Shri Taranjeet Singh. Shri Taranjeet Singh died on 19 t h April. 2000 and as such on the date of the search which took place after more than two years from the date of death Shri Taranjeet Singh was not alive. 1.2 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a matter of f act there was no search warrant issued in the name of the wif e of the assessse. In the absence of a search warrant in the name of the assessee Itself the block assessment was quashed. 2.2 Simil ar is the judgment of the Delhi High Court in the case of CIT vs. Ms. Pushpa Rani 289 ITR 328 where it has been held that if there is no search warrant issued in the name of the assessee, the proceedings under Section 158BC are without jurisdiction and void ab initio. 2.3 Simil arly in the case of Nenmal Shankarlal Farmer vs. Asstt. CIT (Inv.) 195 ITR 582 the Karnataka High Court has held that f or the purpose of the Act, the f irm and its partners are different entities. The f irm itself is a person f or the purpose of the Act. When a search was to be on the partner, the warrant of authorization should have been in the name of the partner. The warrant of authorization in the name of the f irm will not be val id for carrying out a search on the partner. 2.4 Simil arly in the case of Jt. CIT vs. LatikaV. Waman 1 SOT 535 (Mum) husband and wif e were doing same business in same premises. Search warrant was issued against husband only. It was held by the Mumbai Bench that no p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no warrant of authorization in the capacity of legal heirs of my husband Late Shri T aranjit Singh. 4. That my counsel in the submission bef ore the ld. CIT(A) has by mistake stated that a separate warrant of authorization was issued in the name of legal heir of late Shri T aranjit Singh. 5. That it is hereby conf irmed and reiterated that no warrant of authorization was issued as legal heir of late Shri T aranjit Singh. 6. That the warrant of authorization issued was in my name and in my individual capacity only. Sd/- Deponent Verif ication Verif ied that the contents of para No. 1 to 6 of my above aff idavit are true and correct to the best of my kno wledge and no part of it is f alse or mis- stated and nothing material has been concealed theref rom. Sd/- Chandigarh Deponent Dated 1.3.2012." 6. The revenue filed submissions in response to CO dated 29.03.2012, which is reproduced as under : "F.No.CIT/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not challenged the validity of search in any independent proceedings and, therefore, assessee can not challenge the validity of issue of notice u/s 158BC in the case of Mohinder Kaur before the Hon'ble Tribunal. It is not the case of assessee that there were two businesses, one in the name of Smt. Mohinder Kaur and another in the name of Late Taranjit Singh and search was conducted only in the respect of business which was being owned and run by Smt. Mohinder Kaur. It may be stated that there was only one business of M/s Lada Liquors which' was taken over and being run by Smt. Mohinder Kaur after the demise of her husband. Assessing Officer Issued two notices u/s 158BC, one in the case of Smt. Mohinder Kaur and another in the name of Smt. Mohinder Kaur L/H of Late Taranjit Singh. Therefore, it is not the case of assessee that no search was conducted in respect of assessment of undisclosed income which has been made in the hands Smt.Mohinder Kaur L/H Late Taranjit Singh. There is no denying the fact that search was conducted at the business premise of M/s Lada Liquors which was run by Late Taranjit Singh before his demise and by his wife Smt. Mohinder Kaur after his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of notice before the completion of assessment proceedings, such notice is deemed to be valid. In view of this, Assessing Officer has correctly issued notice u/s 158BC in the name case of Smt. Mohinder Kaur L/H of Late Taranjit Singh. Yours faithfully, Sd/- (Jyoti Kumari) Commissioner of Income Tax-ll, ITAT, Chandigarh" 6(i) A perusal of the written submission filed by the revenue, dated 29.03.2012, reveals that it has been contended therein that search was conducted u/s 132 of the Act, in pursuance of warrant of authorization, issued by the competent authority. It is further mentioned therein that Shri Taranjit Singh expired on 19.04.2000 and the search was conducted on 23.5.2002. The business was taken over and carried on by his wife Smt.Mohinder Kaur till the date of search. The contention of the revenue is that there is no illegality in the conduct of search against the assessee. Further, revenue placed reliance on the decision of Seth Brothers 74 ITR 836 (S.C). This contention of the revenue is in the context of validity of the search, whereas the issue involved in the present C.O. is validity of the block assessment order. The assessee has not challenged the validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue, further contended that non- mentioning of legal heir, in the warrant of authorization, issued in the name of Smt.Mohinder Kaur is only a technical mistake, which is rectifiable, as per Section 292B of the Act. The proposition convassed by the revenue is contrary to the express provisions of the Act. Section 292B is not intended to rectify the warrant of authorization issued u/s 132(1) of the Act. The provision of Section 292B merely cures the defects in the notice, summons etc. if such notice is issued in substance and effect, in conformity with, or according to the intent and purposes of the Act. 6(ii). The revenue filed letter dated 29.02.2012, which is as under: "F. No: DDIT/Inv-il/Chd/2011-12/1298 Dated: 29-02-2012 To, The Commissioner of Income Tax-II, ITAT, Chandigarh Madam, Sub: -IT{SS) No. 13/Chd/2006 and CO No. 3l/Chd/2006 in the case of Mohinder Kaur L/H of Late Taranjit Singh for the Block Period 01-04-1996 to 23-05-2002 and A..Y. 2003-04 - regarding- Kindly refer to your letter No. 820 dated 24-02-2012 on the subject cited above. 2. In this regard, it is submitted that the original warrant in the case of Smt. Mohinder Kaur was sent to your kind office vide let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Kumar Mukesh Kumar L/H of Late Mohar Singh (2008) 13 DTR 209 8(i). Assessee also placed reliance on another decision of ITAT Jabalpur, in the case of CIT V CM Mittal Stainless Steel Pvt. Ltd. 263 ITR 255. 9. Ld. 'DR' placed reliance on the decision of Hon'ble jurisdictional High Court in the case of CI T V Mukta Metal Works 36 ITR 555 (P&H); CI T V Panchayanyam Management Agencies & Services 333 I TR 281 (Ker), and CIT V K.M.Ganeshan 333 ITR 562 (Mad). Revenue also placed reliance on the decision in the case of Jai Bhagwan Om Prkash V Director of Inspection & others (1994) 208 I TR 424 (P&H.) 9(i) Ld. 'DR' filed Paper Book containing written submissions. Annexure-1, is a letter of DDI T, Annexure-2, Order-sheet, Annexure-3, statement of Smt.Mohinder Kaur . The Paper Book filed by the revenue contains at S.No. 1, under the head Annexure-4, details of premises covered u/s 132(1), as per appraisal report, as indicated at page 27 to 28 of the Paper Book. 10. A bare perusal of the relevant records, rival submissions, made by both the revenue and the assessee reveals that a Warrant of Authorization u/s 132(1) of the Act was issued, on 22.05.2002, in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der u/s 158BC of the Income Tax Act,1961, on the same date i.e. 22 n d Aug.,2005, computing undisclosed incomes , at Rs. 9,02,13,220/- as indicated above and in the same status. However, the AO recorded in Column No.1 against the head 'Name of Assessee' at page one of the Block Assessment Order, as "Smt.Mohinder Kaur W/o Late Shri Taranjit Singh, House No.694 Sector 8,Chandigarh". Thus, the AO has framed two Block Assessment against a single warrant of authorization u/s 158BC of the Act. 10(iii) It is undisputed fact that single warrant of authorization referred to above has been issued by the Income Tax Department. Panchnama, in respect of Smt.Mohinder Kaur, premises and lockers have been prepared in the same status. Statement of Smt.Mohinder Kaur has been recorded in the course of search operation, as an 'individual and the Block Assessment Orders have been passed, in the status of an 'individual' as indicated above. 10(iv) A perusal of the provisions of Section 158BC and 158BD of the Act, clearly reveals the true legislative intent. The text of Section 158BC is reproduced hereunder : "158-BC-Where any search has been conducted under section 132 or books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed 13[under section 158BC] against such other person and the provisions of this Chapter shall apply accordingly." 10(vi). A bare perusal of the provisions of Section 158BD clearly reveals that where the AO is satisfied that any undisclosed income belongs to any person, other than the person, with respect to whom search was conducted 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, then the AO of the party searched would record satisfaction that undisclosed income belongs to other person not covered u/s 132(1) or 132A of the Act and such books of account and documents shall be handed over to the AO having jurisdiction over such other person, and that AO shall proceed u/s 158BC against other person and the provisions of this Chapter shall apply accordingly. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under Section 132A, the conditions precedent have to be satisfied. Held accordingly, that where the premises of a director of a company and his wif e were searched under Section 132 of the Income-tax Act,1961, and a block assessment had to be done in relation to the company, the AO had to (i) record his satisfaction that any undisclosed income belonged to the company and (ii) hand over the books of account and other documents and assets seized to the AO having jurisdiction against the company." d). The decision of the Hon'ble Gujrat High Court, in the case of Khandubhai Vasan G.Desai V Dy CIT (1999) 236 ITR 73, has been referred to by the Hon'ble Supreme Court in the case of Manish Maheshwari V ACIT (supra). The relevant part of the decision of the Hon'ble Gujrat High Court is reproduced hereunder : "This provision indicates that where the AO who is seized of the matter and has jurisdiction over the person other than the person with respect to whom search was made u/s 132 or whose books of account or other documents or any assets were requisitioned under Section 132A, he shall proceed against such other person as per the provisions of Chapter XIV-B which would mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, a reference is made to the decision of the Hon'ble Supreme Court, in the case of Arun Kumar V UOI and others (2006) 286 ITR 89 (S.C). The relevant part of the decision is reproduced hereunder : "A "jurisdictional fact" is a fact which must exist before a court, Tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional fact is one on the existence or non- existence of which depends the jurisdiction of a court, a Tribunal or an authority. It is the fact upon which an administrative agency's power to act depends. If the jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming the existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess. The existence of the jurisdictional fact is thus the sine qua non or condition precedent for the exercise of power by a court of limited jurisdiction. If the jurisdictional f act exists, the authority can proceed with the case and take an appropr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... longed to the assessee, proceedings against her under s, 158BC were valid, could not be accepted" "Chapter XIV-B of the Act is a special procedure for making assessment of search cases. These provisions of block assessment come into picture only as a result of search action carried out reading the provisions of s.132(l) of the Act, it is clear that the section is person -specific and not premises-specific as argued by the ld. Departmental Representative. The primary target for conducting a search action is the person who is in possession of any undisclosed income and upon consequence of the same the search party can enter and search any building, place, vessel, vehicle or aircraft where the undisclosed assets or incriminating documents are likely to be found in relation to such person.-- Jt. CIT vs. Latika V. Waman (2005) I/ SOT 535 (Mumbai) relied on. "It is undisputed fact that there is no search warrant issued in the name of the assessee. The search warrant as per the Panchnama furnished is in the name of husband of the assessee and in the name of company wherein he is a director. In respect of the Panchnama issued in respect pf the bank lockers, it is seen that the Panchnama i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) 97 : (2007) 289 ITR 341 (SC) relied on." (c) 260 ITR 80(S.C) In the case of CIT v Ms.Pushpa Rani (2004) 136 ITR 627, the Hon'ble Delhi High Court has held that if there is no search warrant issued in the name of the assessee, the proceedings under s. 158BC are without jurisdiction and void ab initio. In the case of Nenmal Shankarlal Parmer v Asstt.CIT (Inv.) (1992) 102 CTR (Kar) 64 : (1992) 195 ITR 582 (Kar), has been held by the Karnataka High Court as under : "Therefore, there is no reference at all in the warrant of authorization that such documents or Money, bullion, jewellery, or other valuable article or thing is in the possession of the petitioner in his individual capacity. As a necessary consequence, the mere mention of residential premises does not enable the Department to effect seizure either of gold, jewellery or other articles or documents and, hence, it must be held that the petitioner's contention that the warrant of authorization does not enable the Department to affect search or seizure of the property belonging to him on the basis of a warrant issued in the name of the firm, no warrant in the name of the petitioner at all having been issued, is va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment of undisclosed income under Chapter XIV-B. If in the course of search on V, any material incriminating his wife had been found, then the proper course for the AO would have been to issue a notice under s. 158BD. When specific procedures are prescribed for persons who are searched and for other persons in respect of whom incriminanting material is found, the AO cannot arrogate himself to bypass the prescribed procedures and issue notice under s. 158BC on a person who was not subjected to search. Moreover, we also reject the contention of the AO that the assessee could not have raised this objection since she had acquiesced in the proceedings. The assessee cannot concede jurisdiction to the assessing authority which is not prescribed by law. Her participation in the proceeding was merely a technical compliance of the notice issued by the AO. If she had not complied with the notice, she would have been subjected to further litigation and hence, it was merely a co-operative attitude, which has been reflected on her part, which cannot be equated with conceding of jurisdiction. Therefore, the entire proceedings undertaken by the AO were bad in law and hence, the assessment is quash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based upon it." In the instant case, M died prior to the issuance of search authorization and thus the search warrant was issued in the name of a dead person and the Panchnama was also prepared in the name of the dead person. These facts are not disputed by the counsel for the appellant. Thus, from the undisputed facts, it is crystal clear that not only the search was invalid but the authorization for conducting search itself was invalid and void ab initio. Thus the order passed by the AO under s. 158C(c)/144 dt. 30th July,2004 was illegal as the same was passed in consequence to a search warrant, issued under s.132 in the name of a dead person. Such search warrant is against: the law of natural justice. No valid assessment could have been made on the strength of such an invalid search warrant.-- R.C. Iain through LR vs. CIT (2004) 190 CTR (Del) 34 relied on; Dr. Partap Singh vs. Director of Enforcement (1985) 46 CTR (SC) 319 : (1985) 155 ITR 166 (SC), P'ooran Mal vs. Director of Inspection (lnv.) & Ors. 1974 CTR (SC) 25 : (1974) 93 ITR 505 (SC) and New Street Oil Mills vs. State of Kerala 1978 CTR (Ker)56 (1978) lll ITR 463 (Ker) distinguished." 12(i). A search is a pre-con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court, in another case of CIT V Ms. Pushpa Rani (2004) 136 Taxman 627 has held that if there is no search warrant, issued in the name of assessee, the proceedings u/s 158BC of the Act are without jurisdiction and void abinitio. 14. It is a well settled proposition of law that jurisdiction cannot be created or waived by the consent of the parties, as decided in the case of Kiran Singh V Chaman Paswan, AIR (1954) (S.C) 340 and Swarn Yash V CI T (1982) 138 ITR 734 (Del). Needless to say that the AO is not competent to arrogate jurisdiction upon himself, unless it is specifically provided under the express provisions of the Act. Thus, jurisdiction must originate from the Act and not from the discretion of the AO. Therefore, the AO is not competent to exercise jurisdiction u/s 158BC of the Act, in the absence of valid search operation u/s 132(1) of the Act. Needless to say that existence of statutory jurisdiction is a threshold condition for the AO, to exercise jurisdiction u/s 158BC and 158BD of the Act. Inherent lack of jurisdiction means, a power or jurisdiction which does not exist at all or vest with the AO. 14(i) In the case of P.V.Doshi V CI T (1978) 113 ITR 22 (AP), it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee appellant contended that Shri Taranjit Singh died on 19.4.2000. No warrant of Authorization u/s 132(1) of the Act can be issued in the name of a deceased person. It is essential to highlight here that it is established legal proposition that dead man is not a 'person' like a 'living being'. Dead man ceases to be a legal personality. Dead men are sans rights and duties, for it is said that they have laid down their rights and duties alongwith their death-----Actio personalis moritur cum persona ---- action dies with the death of a man. Thus, issuance of such warrant in the name of a dead person, like Shri Taranjit Singh is not legally feasible. Thus, the contention of the ld. 'AR' has factual and legal force. The proper legal course for the revenue was to frame block, in respect of undisclosed income, belonging to the deceased husband of the present assessee u/s 158BD of the Act, in the hands of his legal heirs. In this case, the revenue failed to invoke the provisions of Section 158BD of the Act, after recording valid satisfaction within the contemplation of the provisions of Section 158BD of the Act and in consonance with the ratio laid down by the var ..... X X X X Extracts X X X X X X X X Extracts X X X X
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