GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
What's New Case Laws Highlights Articles News Forum Short Notes Statutory TMI SMS More ...
Extracts
Home List
← Previous Next →

Challenge to Validity of Search Action

Income Tax - Direct Tax Code - DTC - By: - Bharat Agarwal - Dated:- 6-7-2016 Last Replied Date:- 7-7-2016 - Introduction: A search and seizure action u/s 132 of the Income Tax Act, 1961 is often riddled with controversies. In recent times the instances where the courts have quashed search and seizure actions have increased. This has encouraged the person searched to challenge the validity of action of the department with increased frequency. The courts have intervened in many cases where the act .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

efore the High Courts in a writ jurisdiction under Article 226 of the Constitution. The courts have broadly differed in their approach which are being discussed hereunder. Judicial Cleavage: Currently, there is no decision of apex court available in the matter. The High Courts have differed in their views. This has encouraged forum shopping within the person searched. In some instances the person searched has filed writ in the high court and have also agitated the issue through grounds in their .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t of search action and therefore the validity of search can be adjudicated for effective and complete adjudication of search assessment. Some writ petitions against the search action have been dismissed by the courts holding that there is adequate remedy before appellate authority and hence no writ lies in the matter. The Punjab and Haryana High Court had in a writ refused to interfere in the search action holding that the assessee can approach the appellate forums, thereby creating a situation .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he right of appeal as a statutory right and only if it is provided under the statute that the said appeal can be entertained. It further held that the search action is an administrative act which does not require any prior opportunity of hearing. It is an action guided by public policy. On the other hand the search assessment is an act of assessing officer. The statute has accordingly provided an appeal against the act of the assessing officer which is a quasi judicial act and not against the se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ether any warrant of authorisation actually existed in the name of the appellant. Beyond that the appellate authority cannot try and determine whether the reasons existed for issuance of such warrant. Prior to the decision of special bench by Delhi ITAT, the Delhi High Court in the case of M.B Lal vs. CIT 2005 (9) TMI 64 - DELHI High Court referred to the decision of the appellate tribunal in the case of Bangalore ITAT in the case of C. Ramaiah Reddy 2003 (7) TMI 260 - ITAT BANGALORE and held th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

held that the validity of search can be challenged before the ITAT. It agreed that right to appeal was conferred by statute and could not be claimed as a fundamental right. However it further held that wherever such right has been provided in statute it has to be exercised in a reasonable, practical and liberal manner. The court held that since appeal is provided against the assessment order which is passed in pursuance to search, such power to appeal would even cover the challenge to search. It .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cision of the ITAT holding that the ITAT had exceeded the jurisdiction by adjudicating on the validity of search warrant. At around the same time the Rajasthan High Court in the case of CIT vs. Chitra Devi Soni 2007 (11) TMI 296 - RAJASTHAN HIGH COURT upheld the action of the ITAT in quashing the assessment order on the basis that the department could not produce the satisfaction note before the ITAT to verify the existence of conditions as provided u/s 132(1) of the Act before issuance of warra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case 2013 (10) TMI 932 - RAJASTHAN HIGH COURT has followed its own decision in the case of Chitra Devi (supra) while holding that the ITAT was within its jurisdiction to adjudicate the validity of search action while hearing appeal against the search assessment order. From the analyses of the above differing decisions of the court the following broad contentions emerge. Revenue s Contention: The arguments of the Revenue are that a search and seizure action is an administrative action and hence, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me Tax (Inv.) and that too after intimation to the DGIT(Inv.). Therefore, the validity of the said warrant of authorisation cannot be challenged before assessing officer who is lower in command than a Director of Income Tax (Inv.). Even Commissioner of Income Tax (Appeals) cannot be the forum for agitating the validity of search action. The Revenue also contends that the sufficiency of satisfaction note which is the basis of issuance of search warrant is a very subjective concept. Courts cannot .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hallenging such additions in appellate forums. Therefore, no prejudice is caused to the person searched in either ways so as to entitle him to challenge the search on the basis of satisfaction note prepared prior to search action. It further contends that the search action if leads to discovery of incriminating material then the search action cannot be challenged as ultimately the proof of pudding is in its eating. Moreover, such incriminating material can also be used in collateral proceedings. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rightly challengeable before appellate forums unlike section 132 under which the satisfaction is recorded by an officer other than the officer who carries out assessment of the search cases. Assessee s Contention: The above contentions of the revenue merits rebuttal. It has been held by the highest court of law that any administrative action which adversely affects a person becomes a judicial act the moment it is executed. Therefore, such an action can be scrutinised by the Courts. If the conten .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

u/s 153A of the Income Tax Act, 1961. As per the scheme of search assessment a period of 6 assessment years prior to the year in which search was conducted is mandatorily assessed. An appeal u/s 246 of the Act is provided under the Income Tax Act, 1961 against the order passed u/s 153A for each of these years. It is this order which is challenged in appeal proceedings. In such appeal a ground can be taken that the very initiation of proceedings u/s 153A is void ab initio. One of the reasons for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Revenue that sufficiency of the satisfaction of the search cannot be adjudged by the courts is an acceptable proposition. However, such a proposition cannot be stretched to a limit where even patently illegal issuance of warrant cannot be brought before courts for judicial intervention. Sometimes a warrant of authorisation may have been issued on erroneous facts or mistaken identity. Such warrants can and rather must be challenged. A search action is a serious invasion on the privacy of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessments. In both these sections the essential safeguard is in the form of proper belief leading to satisfaction of the notice issuing authority that some income has escaped assessment or that the order passed was erroneous and prejudicial to the interest of the revenue. The orders passed under both these sections can be challenged before the appellate authorities on the ground that satisfaction of the authority was invalid or erroneous and consequently the reassessment order is invalid. Sectio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

why warrant under section 132 of the Act cannot be challenged while challenging the assessment under section 153A of the Act . The revenue usually distinguish between the provisions of section 132 and section 148/263 on the basis that there is express provision in section 246 of the Act whereby the order passed u/s 148 can be challenged and similarly u/s 252 for challenging order u/s 263 before the ITAT. However, there is no such provision in the statute for challenging the action u/s 132 of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessment order is passed under section 153A. The statute has therefore provided appeal against the order u/s 153A of the Act . However, it does not mean that the challenge to initiation process as provided u/s 132 of the Act is excluded before appellate authorities. The intention of legislature is loud and clear. It has provided appellate remedy against initiation of reassessment and therefore search action as provided in section 132 can be challenged. Conclusion On an analyses of the conspectu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Latest Notifications:

    Dated      Category

20-7-2017 Cus (NT)

18-7-2017 IT

18-7-2017 CE (NT)

18-7-2017 CE

18-7-2017 GST CESS Rate

15-7-2017 Kerala SGST

14-7-2017 Andhra Pradesh SGST

14-7-2017 Cus (NT)

14-7-2017 Cus

13-7-2017 Co. Law

13-7-2017 Co. Law

13-7-2017 ADD

13-7-2017 ADD

12-7-2017 Jammu & Kashmir SGST

12-7-2017 Gujarat SGST

12-7-2017 Gujarat SGST

12-7-2017 CGST Rate

12-7-2017 UTGST Rate

12-7-2017 UTGST Rate

12-7-2017 IGST Rate

More Notifications


Latest Circulars:

19-7-2017 Income Tax

18-7-2017 Customs

17-7-2017 Customs

14-7-2017 Income Tax

13-7-2017 Central Excise

13-7-2017 Customs

13-7-2017 Central Excise

13-7-2017 Customs

7-7-2017 Income Tax

7-7-2017 Goods and Services Tax

More Circulars



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version