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ACIT-2 (1) , Raipur Versus S.P. Cold Storage

2016 (5) TMI 321 - ITAT Bilaspur

Assessment u/s 153A - Held that:- Revenue had conducted survey operation at the business premises of the assessee firm in which materials are seized. This survey does not entitle the Revenue to initiate proceedings u/s 153A. having searched the residence of partners of the assessee firm Revenue could have initiated action against the assessee firm only u/s 153C had any document pertaining to the firm were seized from the residential premises. Since no material was seized, the revenue could not h .....

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mises of the assessee firm and from the place of search no material whatsoever relating to the firm was found nor any submission was recorded from the partners of the firm nor the search notice was served upon the partners of the firm, the search conducted qua the assessee firm was not a valid search. In such circumstances, proceedings initiated u/s 153a in the case of the assessee firm are invalid. Accordingly we do not find any infirmity in the order of the learned CIT (Appeals) accordingly we .....

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appeals are diaposed of by this common order. The common issue raised is that the learned CIT (Appeals) erred in cancelling the block assessment orders framed by the AO for these assessment years. 2. This is the second round of these appeals before the Tribunal. In the earlier rounf the assessee has taken a legal ground before the Tribunal that the assessment order passed u/s 153A read with the section 143(3) is bad in law and hence liable to be quashed. It was contended before the Tribunal tha .....

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the legal ground first and if necessary to adjudicate the remaining ground. 3.Pursuant to the above direction of the ITAT, learned CIT (Appeals) adjucticate the issue and held as under: 4.1 I have gone through the original assessment orders, the appellate orders and the submissions of the appellant. I have also perused the records made available by the A.O.The records show that only survey under Sec. 133A of the Act was cinducted at the business premises of the appellant Near Railway crossing, K .....

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ome group, the place of search has been mentioned as the residence of the same group, the place search has been mentioned as the residence of Sh. Prithpal Singh Chadhok and others located at Prithpal Farm House VIP Road Raipur . Point (a) of para-2 of page-2 of the authorization authorizes the officers named in the preceding paragraph, only to enter and search the specified building i.e., the residence of Sh. Pritpal singh Chandhok and others located at Pritpal Farm House, VIP road , Raipur and .....

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premises located Near Railway Crossing Khamatarai Raipur on the strength of this authorization. No statements under sec 132 (4) of the Act were recorded; nor seizure of any bullion, money, valuables, loose papers, documents etc. relating to the appellant was effected from the appellant s premises at khamtari even to render an impressions that any action comtemplated under sec.132 of the Act was taken in the appellant s case. Persual of the provisions of section 132, 153A, 153B,etc of the act an .....

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582 (kar. Hc.). The assessment for seven assessment years were made on the basis of material impounded suring survey conducted at the business premises of the appellant firm and no material whatsoever found or seized from the aforesaid residential premises of the partners relates to the appellant firm. In view of the above factual and legal matrix, I am of the considered opinion that no search and seizure operation was ever conducted at the business premises of the appellant firm, which is sin .....

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Hon ble ITAT , Bilaspur Bench , Bilaspur and all other grounds are accordingly, dismissed. 4. Against the above, Revenue is in appeal before us. 5. We have heard both the counsel and persued the records. Learned D.R. submitted that the learned CIT (Appeals) has totally erred in cancelling the assessments. Learned D.R> submitted that section 153A speaks od situation where such search is initiated u/s 132 and not of search conducted. Hence learned D.R. submitted that the revenue Department had .....

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constructed as the requisite search as wnvisaged u/s 153 A of the I.T. Act. 6. In this regard learned D.R. Placed reliance upon the following case laws: 1. ACIT vs. Chetan Das Lachman Das (ITAT DELHI 36 SOT 417). 2. ACIT VS. CHilka Vyankatesh Sidram 122 ITD 293 (ITAT PUNE). 3. Naresh chand Baid vs. ACIT 23 Taxmann.com 378 (Hon ble High Court of Chhattisgarh) 4. Canara Housing Development Co. vs. DCIT, Bangalore, 49 Taxmann.com 98 (Hon ble High Court Of Karnataka). Drawing strength from these ca .....

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r (Ahhatisgarh) which is also its business premises and from which the respondent has been regularly filing its return of income since long which is well within the Knowledge of the Department, copy of return of income since long which is well within the Knowledge of the department, copy of return filed for the Asst. Years 2002-03 and Intimation ujs 143(I)(a) of the LT act are wnclosed (Refer Page No.77 &78 of the Paper book) The respondent firm has two partners viz. Shri Gurpreet Singh Chan .....

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33A itself, copy of statements (extracts) are enclosed (Refer Page No. 52 to 60 of the paper book). The survey operation continued is july 2007 toi 19 July and was concluded on 19th July 2007, wherein various books of accounts loose papers & documents were impounded and an inventory Memo marked as Annexure A-I was prepared and inventorised with Sl.No. I to 144 and various books of accounts, loose paper and documents were found but not impounded and an inventory Memo marked as Annexure was pr .....

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for impounding and retaining such books of accounts, documents etc. in his custody for further investigation, copy such impounding order is enclosed (Refer Page No. 27 of the Paper Book). Since, the books of accounts documents etc. impounded during the survey operation could not be retained beyond a period of 10 days without the approval of the Director General of Income Tax (Investigation ), Bhopal vide order F.No. DGITIBPUTech.! 18IRetn. 107-08 dated 31-07-2007, copy of which is enclosed (Refe .....

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n 153A(1) which starts with a Non Obstante clause contemplate initiation and conduct of search under section 132 of the LT act on any person (section 153A(1)(b) reads as assess or reassess the total income….. in which such search is conducted or …. ) and the assessing officer gets jurisdiction to issue notice and frame assessment under the provisions of section 153A r.w.s. 1536 of the LT Act only after actual conduct of search in the premises of the assessee in accordance with the .....

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of authorisation under section 132(1) to enter & search the premises owned or belonging to the respondent firm [at Near railway Crossing Khamtarai, Raipur (Chhatisgarh)} has been issed or executed by the authorised officers. v) It is further submitted that in the present case, the material/ loose paper/ documents etc. on the basis of which assessments for seven assessment years i.e. from assessment Year 2002-03 to 2008-09 have been framed under the provisions of section 153A r.w.s. 143(3) of .....

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was issued to conduct search operation in the premises of the respondent firm and no Panchanama was ever drawn in respect of the respondent firm to effect any seizure as a result of any such search operation and even the survey was not converted/translated into search which itself is indicative of the fact that the department never intended to conduct any search operation against the respondent. vi) It is further submitted that a search & seizure operation under section 132 of the LT ACT wa .....

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other valuable article or thing was seized or found relating to the respondent firm form the aforesaid residential premises hence, the search conducted is invalid gua the respondent firm. vii) It has been held that mere mentioning of name of the assessee in the search Warrant or Panchanama in the absence of conduct of actual search at the premises of the assessee i.e. where that particular assessee is residing or is available or is generally or necessarily found or belonging to that assessee res .....

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nd such conduct of a person specific and premises specific search is a sine qua non for assumption of jurisdiction under the provisions of section 153A of the I.T.Act. Reliance in support of the aforesaid propositions is placed on the following judicial pronouncements : JM Trading Corporation Vs. ACIT (2008) 20 SOT 489 (ITAT MUMBAI) (PARA 24) affirmed by the Hon ble Bombay High Court vide judgment rendered on 29.06.2009 in Income Tax Appeal No. 589 of 200 and SLP filed by the Department in CC 16 .....

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idered as a search in the case of partnership firm. Reliance in support is palced upon the following judicial pronouncements : c) CIT Vs. Tirupati Oil corporation (2001) 248 ITR 194 (Bom. HC) d) Nemal Shankarlal parmer Vs. ACIT (1992) 195 ITR 582 (Kar. HC) ix) It is further submitted that incriminating material/loose papers/documents etc. on the basis of which the assessments have been framed under the provisions of section 153A r.w.s. 143(3) of the IT Act for the assessment Year 2002-03 to 2008 .....

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udicial pronouncements: CIT Vs G.K. Senniappan (2006) 284 ITR 220 (Mad. HC) CIT Vs. S.Ajit Kumar (2008) 300 ITR 152(Mad. HC) x)In view of the above since no search contemplated under the provisions of section 132 is conducted in the case of the respondent firm, the consequential assessments framed under section 153A of the LT Act for all the assessment years in appeal i.e. Assessment Year 2002-03 to 2007-08 is void ab initio, nullity and unsustainable in the eyes of law and it is requested that .....

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e the. We find that in the above said case law, warrant of authorization was specifically authorizing to search residential premises of assessee firm wherein materials relating to assessee firm were found. The above case law is totally distinguishable from the present case as no material whatsoever was found at the premises where search was conducted. ii) ACIT vs. Chilka Vyankatesh Sidram (Supra) This case law from tribunal related to block assessment under chapter XIVB of the IT act. The issue .....

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this case the issue was whether Revenue authorities are component to conduct search in premises of partners of the firm, the names of all partners as specifically mentioned in warrant of authorization issued in the name of partnership firm. This case law is not at all applicable as the issue of competence of search is not here. Further in the said case the facts were that the assessee participated and articles were found in search. This is not at all the case in the present case as no article wa .....

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assessee firm. In pursuant of survey operation, statement of partners was recorded. The survey operation continued from 16 July 2007 to 19 July 2007 and various books, documents, papers etc. were found and impounded. In this background we have to examine as to whether the search u/s 132 of the IT Act in this case gives jurisdiction to the AO u/s 153A of the IT Act. Now the assessee s plea and the learned CIT (Appeals) view is that in these facts no search and seizure operation was ever consucted .....

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n this case the tribunal had held that requisite condition for having conducted search in the name of the assessee u/s 132 was compiled with for which warrant of authorization was issued as specifically authorizing to search at residential premises of partners of assessee firm wherein material relating to assessee firm were found. It was to be concluded that AO was justified in assuming jurisdiction for framing assessment u/s 153A. We find that in the above said case law, warrant of authorizatio .....

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e issue was whether search warrant cannot be treated as illegal merely because full names of assesses are not written on it and whether non recording of the statement in a search conducted u/s 132 does not render search illegal. iii) Naresh Chand Baid vs. ACIT (Supra) In this case the issue was whether Revenue authorities are component to conduct search in premises of partners of the firm, the names of all partners as specifically mentioned in warrant of authorization issued in the name of partn .....

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re should be a search u/s 132 That initiation of proceedings u/s153A is not dependant income be unearthed during search. The facts of this case were that a search had taken place in the premises of the assessee. In the case of search, incriminating materials leading to undisclosed income was seized and the issue related to when once preecedings u/s 153A of the Act is intiated, whether CIT can invoke the power u/s 263 of the Act. Hence this case law is totally inapplicable. 10.Now we deal with th .....

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made on the firm without following the procedure u/s 158 BD was bad in law. ii) Nemal Shankarlal parmer Vs. ACIT (1992) 195 ITR 582 (Kar. HC) In this case it was expounded that for the purpose of Income tax Act the firms and its partners are different entities. The firm itself is a person for the purpose of the Act. When the legal title might have been with the person whose income or property is sought to be taxed and physical possession was with another person, it is in respect of such person s .....

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) read with section 153A in pursuance of such invalid search had to be declared as null and void A special leave petition aganst the above order of Hon ble Bombay High court has been dismissed by the Hon ble Apex court in SLP CC 16238/2010 dated 29-10-2010. 11. Noe in the light of the aforesaid discussion and case law, we analysis the facts of the present case. In this case there was a search. In the warrant of authorization the assessee s firm s name was there after the names of 8 individuals o .....

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it cannot be said that there was any serch on the assessee firm. Furthermore more it is noted that in the said search no material whatsoever relating to the assessee firm was found nor even any statement of the partners of the assessee firm was taken. Furthermore there is no evidence on record to show that even the notide of search was served upon the partners of the firm. In these circumstances, in our considered opinion, it cannot be said that there was any valid search upon the assessee firm .....

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enue to initiate proceedings u/s 153A. having searched the residence of partners of the assessee firm Revenue could have initiated action against the assessee firm only u/s 153C had any document pertaining to the firm were seized from the residential premises. Since no material was seized, the revenue could not have initiated proceedings against the assessee firm u/s 153C. in these circumstances in our considered opinion the revenue cannot take shelter of provisions of section 153A for initiatin .....

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