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2016 (9) TMI 300 - RAJASTHAN HIGH COURT

2016 (9) TMI 300 - RAJASTHAN HIGH COURT - [2016] 387 ITR 575 - AO jurisdiction to issue notice under Section 158-BC - Held that:- Perusal of the warrant clearly shows that the names of Ms. Umlesh Goyal and Ms. Surbhi Goyal, has not been written in the warrant of authorisation. Thus, when names of the two assessees herein does not find mention in the warrant of authorisation, the AO has no jurisdiction to issue notice under Section 158-BC, and the issuance of notice was illegal and has rightly be .....

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fore, in our considered view a search under Section 132(1) has to be "person specific". The Authority authorising search has to have information in his possession in respect of a person and such a person should be specifically named in search warrant and since names of the assessees having not figured in the authorisation of warrant as having been proved on the basis of Form 45 which has been reproduced by us in para 16 hereinbefore, the AO has exceeded its jurisdiction in issuing the notice und .....

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er at-least 1.6.2002 an AO does get a right to assess a person, if satisfied on the material found that undisclosed income belongs to any person other than even the person searched.For the reasons assigned and our observation that when a search action under Section 132(1) has to be "person specific" & when admittedly the names of the present assessees did not figure in the warrant, we hold the AO had committed an apparent error to assess the assessees. Accordingly, we answer the question of law .....

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ct are directed against the order dated 4.4.2003 of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur. It pertains to block period 1.4.1988 to 23.3.1999. 2. Following questions of law were admitted by this Court :- 153/2003 "1. Whether on the facts and in the circumstances of the case, the learned Tribunal was right and justified in holding that no legal search has taken place in the case of the assessee under Section 132(1), as specifically the name of the assessee was not mentioned .....

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ssue of jurisdiction of the A.O. under Section 158BD, when no such issue was decided by the CIT(A)? 4. Whether on the facts and in the circumstances of the case, the learned Tribunal was right and justified in holding that CIT(A)'s direction, to the A.O., to initiate action under Section 158BD/147 was without authority and CIT(A) has no power to expand the jurisdiction of the A.O.?" 63/2004 "1. Whether on the facts and in the circumstances of the case, the learned Tribunal was righ .....

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ulled and thus, providing a relief of ₹ 41,25,500/- to the assessee? 3. Whether on the facts and in the circumstances of the case, the learned Tribunal was right and justified in coming to the conclusion that the word 'family' or 'family members' mentioned in the search warrant, do not cover wife and daughter of a person? 4. Whether on the facts and in the circumstances of the case, the learned Tribunal had power to adjudicate on the issue of jurisdiction of the A.O. Under .....

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acts and in the circumstances of the case, the learned Tribunal was right and justified in holding that the CIT(A) had no power to expand the jurisdiction of the A.O. by directing him to take appropriate action under Section 158BD / Section 147 of the I.T. Act, 1961? 2. Whether on the facts and in the circumstances of the case and in law, the C.I.T(A) can direct the A.O. to initiate action against the assessee under Section 158BD/147 of the I.T. Act, 1961, when initially the action was taken und .....

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the facts and in the circumstances of the case and in law, the C.I.T(A) can direct the A.O. to initiate action against the assessee under Section 158BD/147 of the I.T. Act, 1961, when initially the action was taken under Section 158BC, by the Assessing Officer? 3. Whether the findings and conclusion of the learned Tribunal are perverse and contrary to the fact and untenable in the eye of law?" 3. Since all the aforesaid appeals are admitted on more or less identical questions of law, for th .....

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, FDRs, shares & debentures were found by the Authorised Officers and such material were seized and taken in possession by the Authorised Officers. A simultaneous search was carried out at Belgaon (Karnataka) by the DDIT (Investigation), in the case of Sumant Goyal who is reported to be residing there. The search concluded on 11.5.1999. It transpires that insofar as O.P. Goyal and Anant Goyal are concerned, who are the heads of the family and in whose case panchnama for search operation was .....

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tice was issued. However, both the assessees filed their returns under protest, for the block period declaring total undisclosed income at NIL, inter alia, contending before the AO that the provisions of Section 158-BC of the Act are inapplicable as there was no warrant of authorisation against the present assessee under Section 132(1), therefore, the notice itself was bad, and raised several other grounds. However, the AO held that the notice issued under Section 158-BC is lawful in the case of .....

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culminated into enquiry, however, the AO despite of serious objections having been raised about jurisdiction and otherwise, proceeded to assess and accordingly passed the Assessment Order resulting into assessing undisclosed income in the case of Ms. Umlesh Goyal at ₹ 58,83,500/- and in the case of Ms. Surbhi Goyal at ₹ 41,25,500/-. 6. In appeals said Assessment Order was assailed before the Commissioner of Income Tax (Appeals). The CIT(A) called for Form No.45 which is a warrant an .....

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158-BC, and thus annulled the assessment made by the AO. 7. Dissatisfied with the annulling of the assessment, while the Revenue preferred appeal before the Tribunal, the assessees also preferred cross- objection. The Tribunal also went into the issue and upheld the finding of the CIT(A), who had annulled the assessment proceedings. 8. Learned counsel for the Revenue contended that the AO was well within its domain and had jurisdiction to have issued notice under Section 158-BC. Admittedly, O.P .....

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stment in various immovable properties which were found unrecorded so also jewellery, cash, FDRs etc. and naturally the AO was within his rights to assess such undisclosed income at-least pertaining to the assessees and, therefore, the notice under Section 158-BC was just and proper. He contended that assessment could not have been annulled as has been done by the CIT(A) as well as upheld by the Tribunal. He further contended that before the CIT(A) as well as the Tribunal, the assessees did not .....

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peration is a very serious matter and invades privacy of persons and unless there is a specific warrant of authorisation, the Revenue could not have proceeded to issue notice under Section 158-BC which was ab initio void and has rightly been annulled by the CIT(A) and upheld by the Tribunal. He contended that under the Act, "family" has not been defined but that does not mean that in search proceedings "family" would cover the assessees being wife and daughter. He also conten .....

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Tax [1974] 93 ITR 505 (SC). 11. We have considered the arguments advanced by the learned counsel for parties and have perused the material on record including the impugned order. 12. It would be appropriate to quote Section 132(1), Section 158-BC, and Section 158-BD, which reads ad infra :- "132(1) Where the [Director General or Director] or the [Chief Commissioner or Commissioner] [or any such [Deputy Director] or [Deputy] Commissioner as may be empowered in this behalf by the Board], in .....

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e, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other val .....

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], [Deputy] Commissioner, [Assistant Director] or [Assistant Commissioner or Income- tax Officer] (B) such [Deputy Director] or [Deputy] Commissioner, as the case may be, may authorise any [Assistant Director], [Assistant Commissioner or Income-tax Officer], (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to- (i) enter and search any [building, place, vessel, vehicle or aircraft] where he has reason to suspect that such books of account, other doc .....

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count, other documents, money, bullion, jewellery or other valuable article or thing;] (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing: Provided that where .....

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authorisation from the [Chief Commissioner or Commissioner] having jurisdiction over such person may be prejudicial to the interests of the revenue:] Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate poss .....

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respect of search initiated or books of account or other documents or any assets requisitioned after the 30th 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 than fifteen days; (ii) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not bein .....

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shall not be entitled to file a revised return;] (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143 [section 144 and section 145] shall, so far as may be, apply; (c) the Asessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the ta .....

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ther 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 [under section 158BC] (inserted by the Finance Act 2002, w.e.f. 1.6.2002) against such other person and the provisions of this Chapter shall apply accordingly." 13. On analysing the provisions of Section 132(1) read with Section 158-BC and 158-BD, while Section 132(1) authorises to carry out search and seizure oper .....

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ory conditions for the exercise of power to order search exist. The Competent Authority, namely the Commissioner or the Director of Inspection, is supposed to record reason for the belief. Search and seizure under Section 132 of the Act, have a serious invasion upon the right, privacy and freedom of tax payer, it presupposes that powers have to be exercised strictly in accordance with law and in fulfillment of the object & purport of the Act. 15. The right of privacy has been held to be fund .....

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ion 158-BC is attracted "where any search has been conducted under Section 132 in the case of any person". In our view from these words it should statutorily mandate that search should have been carried out under Section 132(1) in the name of a person before invoking the provision of Section 158-BC. "Person" should normally mean name depicted in the warrant of authorisation, and the Authority authorising a search has to have information in his possession in respect of a perso .....

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gal entities under the Act and in a case where search warrant has been issued in the name of O.P. Goyal and family, in our view it cannot be stretched to cover all the family members, namely spouse and children. It has to be in the name of specific person to initiate proceedings. 16. The CIT(A) has reproduced copy of warrant in Form No.45 which reads ad infra :- "..That Form No.45, inter alia, includes the following portions:- Whereas information has been laid before me and on the considera .....

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account or other documents which will be useful for, or relevant to, proceedings under the Indian Income-tax Act, 1922, or under the Income-tax Act, 1961, he would not produce, or cause to be produced, such books of account or other documetns as required by such summons or notice; Sarvashri/Shri/Shrimati OP Goyal and family, ANANT Goyal and all family members, Sumant Goyal are/is/in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery .....

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icle / aircraft)." 16.1 The Tribunal, in our view, has come to a correct conclusion that O.P. Goyal and family, Anant Goyal and family, all family members, Sumant Goyal, will not cover the assessees, namely Ms. Umlesh Goyal and Ms. Surbhi Goyal, wife and daughter of Anant Goyal, so as to confer issuance of notice under Section 158- BC, and the Revenue cannot even remotely, cover female members "in family" insofar as proceedings under Section 158-BC or Income-Tax Act is concerned t .....

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ties. 16.2 We have reproduced Form No.45 dated 23.3.1999 (supra) which is a warrant of authorisation under Section 132 of the Act read with Rule 112(1) of the Income Tax Rules, and perusal of the warrant clearly shows that the names of Ms. Umlesh Goyal and Ms. Surbhi Goyal, has not been written in the warrant of authorisation. Thus, when names of the two assessees herein does not find mention in the warrant of authorisation, the AO has no jurisdiction to issue notice under Section 158-BC, and th .....

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