TMI Blog2017 (8) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... resultant assessment order, are bad in law and hence liable to be quashed. - Decided in favour of assessee. - I. T. A. Nos. 6759 and 6662/Delhi/2013 - - - Dated:- 28-4-2017 - R. S. Syal (Vice-President) And Suchitra Kamble (Judicial Member) For the Assessee : Salil Kapoor, Sumit Lalchandani and Ananya Kapoor, Advocates For the Department : Naveen Chandra, Commissioner of Income-Tax Departmental Representative ORDER R. S. Syal (Vice-President) 1. These two cross-appeals-one by the assessee and the other by the Revenue-arise out of the order passed by the Commissioner of Income-tax (Appeals) on October 14, 2013 in relation to the assessment year 2004-05. 2. Succinctly, the facts, as recorded in the assessment order, are that a search and seizure action under section 132 of the Income-tax Act, 1961 (hereinafter also called the Act ) was carried out in the Swastik Pipes group of cases on August 28, 2008. Notice under section 153A was issued on August 25, 2010 and served on the assessee. In response to the same, the assessee submitted vide its letter dated October 7, 2010 that the return filed under section 139 of the Act may be treated as its return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : 4. Sub-section (1) of section 153A provides that : In the case of a person where a search is initiated under section 132 or books of account. . . are requisitioned under section 132A , the Assessing Officer shall issue a notice under this section requiring such person to furnish the return of income in respect of each of the assessment years falling within the six assessment years. It is, thereafter, that the Assessing Officer has to complete the assessment of such six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made . On going through the plain language of sub-section (1) of section 153A, it is overt that notice under this provision can be issued on a person on whom search is initiated under section 132 or requisition is made under section 132A. It is not the case of the Revenue that books of account or any other documents or assets were requisitioned under section 132A qua the assessee. Thus, we are confined to the former part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onveyed that the assumption of jurisdiction under section 153A of the Act was valid. To justify his point, the Assessing Officer annexed a copy of Form No. 45, being the warrant of authorisation under section 132 of the Act issued by the Director of Income-tax, which is available on pages 52-53 of the paper book. It can be seen that such warrant of authorisation was issued in the name of M/s. Northern Strips Ltd., M/s. Super Plastic Coats Pvt. Ltd. as per annexure. The said annexure contains names of six parties including K. G. Finvest and Trade Ltd. The address given on the warrant of authorisation is 1-2, Central Market, West Avenue Road, Punjabi Bagh, New Delhi. The assessee returned its reply dated September 24, 2010 to the Assessing Officer, whose copy is available on page 54 of the paper book, contending that the warrant contains the name of K. G. Finvest and Trade Ltd. , as against the its name of K. G. Finvest Pvt. Ltd. It was also asserted that none of its directors had any directorship in the two companies mentioned in Form No. 45 or any of the other five companies enumerated in the annexure. The Assessing Officer replied vide his letter dated September 30, 2010 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of search. In common parlance, initiation means the beginning of a process or, in other words, a first step in the entire process. Search commences with the issue of authorisation by the competent authority. Thus, the initiation of search commences with the issue of authorisation by the Director of Income-tax. Execution of search warrant, which is a step after the initiation of search, takes place later on, which leads to the actual conduct of the search at the premises of the person searched. Going by the contention of the learned Departmental representative, seen in the context of section 153A, there remains no doubt that notice under section 153A can be issued where a search is initiated under section 132 or, in other words, a warrant of authorisation is issued. Per contra, in the absence of a warrant of authorisation on the assessee, no notice under section 153A can follow. We have gone through the copy of warrant of authorisation in this case, from which it is apparent that neither the assessee is named therein nor its address is given in it. Even, there is no mention of any permanent account number of the assessee in that. 7. The learned Departmental representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee was actually subjected to search. Acceding to his request, we adjourned the matter to April 24, 2017 for enabling the Revenue to place on record any material indicating the factum of any search action having been actually undertaken on the assessee under section 132 of the Act. On the appointed date again, the learned Departmental representative sought some more time. This time, again the request was accepted but it was conveyed that no further time will be allowed beyond the next scheduled date of hearing on April 25, 2017. On the given date, again the result remained the same and a similar request was made, which was turned down. In the given circumstances, we have no difficulty in drawing an inference that there is no material indicating the actual conduct of search on the assessee. Not only the assessment order but also the impugned order, do not refer to any material or evidence to prove the factum of actual taking place of search on the assessee. It transpires from the above discussion that neither any search was initiated nor conducted on the assessee. 9. The learned Departmental representative argued that the assessee subjected itself to the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d November 4, 2003 issued under section 158BD of the Act. The hon'ble High Court noticed that in so far as the challenge to the warrant of authorisation issued under section 132 of the Act and consequently to quash the assessment order dated September 11, 2003 framed under section 158BC of the Act was concerned, the same was mainly on the ground that the said warrant of authorisation issued under section 132 of the Act was in the name of a dead person i.e., late Shri Girishbhai K. Mehta. The hon'ble court noticed that as a part of search in the Nirma group, the residential premises of the deceased person was covered under section 132 of the Act as the said deceased person was a director in an investment company of the group. It was noticed that though the authorisation was in the name of the deceased but the search warrant was issued for the correct address of the deceased. It was also noted that at the time of search of the aforesaid premises, Gunjan Girishbhai signed the panchnama, claiming to be the heir of the deceased person. Not only that even thereafter when the proceedings under section 158BC of the Act came to be initiated, no protest was raised by the petitioner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the hon'ble Supreme Court, it becomes evident that the challenge before it was to the notice under section 158BD, being the notice for assessment of income of any person other than the person searched. Whereas section 158BC in the earlier provisions of assessment of search cases under Chapter XIV-B dealt with the assessment of a person searched, section 158BD dealt with the assessment of any other person . In the successor provisions, dealing with search, introduced with effect from June 1, 2003 section 153A deals with the assessment of a person searched and section 153C with the assessment of any other person . In other words, section 153A is a parallel of section 158BC and section 153C is a parallel of section 158BD. In the instant case, it is the assessment of person allegedly searched, which is disputed before us, unlike the notice issued for the assessment of other person before the hon'ble Supreme Court. Even otherwise, the issue of invalidity of the search warrant in that case was not raised at any point of time prior to the notice under section 158BD. On the contrary, the assessee contested the validity of search before the Assessing Officer at the very thresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153A of the Act. In that case, notice under section 153A was issued pursuant to search and seizure operation under section 132 in the premises of the petitioner. The Assessing Officer passed assessment order making addition thereof. Revision petition under section 264 was filed claiming that the assessment proceedings under section 153A were invalid as no panchnama was drawn in the name of the petitioner. The hon'ble High Court dismissed the objection by holding that though the name of the petitioner did not figure in the panchnama but search warrant was issued against all the petitioners and documents and papers, etc., relating to the petitioner were also seized and duly mentioned in the annexure to the panchnama . We are unable to comprehend as to how this judgment advances the case of the Revenue. Admittedly, in that case, search warrant was issued in the name of the assessee and such warrant was also executed. Certain incriminating material was also found. Mere failure to mention the name of the petitioner in panchnama was held to be not affecting the validity of the search. Au contraire, the facts of the instant case are absolutely distinguishable. We are con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once the assessee placed on record its objection before the Assessing Officer pursuant to notice under section 153A, there was no occasion for it to once again repeat the same objection after the issuance of notice under section 143(2). The assessee kept on vehemently contesting before the Assessing Officer that he had no jurisdiction because no warrant of authorisation was issued in its name but the Assessing Officer rejected the same. Once the Assessing Officer issued notice under section 143(2), after rejecting the assessee's objections in this regard, the assessee could not have, possibly taken up the same issue once again. The essence of the matter is that there should be something to demonstrate that the assessee did challenge before the Assessing Officer the jurisdiction to issue notice under section 153A, which is patently present in the instant case. In Kapil Jain (supra), search was conducted at the premises of the father of the assessee. Notice under section 158BC was issued on the assessee. Subsequently, the case was transferred to another circle. The jurisdiction of the Assessing Officer to issue notice under section 158BD read with section 158BC was challenged. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king for the loan was found. Contrary to that, the case of the assessee before us is that no search was conducted at all on it. Thus, this judgment is not applicable. Thereafter, the learned Commissioner of Income-tax (Appeals) relied on the case of Ashok Chaddha v. ITO [2011] 337 ITR 399 (Delhi). That judgment is, again, of no consequence because of the proposition laid down therein to the effect that no notice was required to be issued under section 143(2) of the Act which is obviously not an issue before us. The last reliance of the learned Commissioner of Income-tax (Appeals) is on the judgment of the hon'ble Supreme Court in the case of Pooran Mal (supra) in which it has been laid down that even though search and seizure was in contravention of the provisions of section 132 but the material seized can be used against the person from whose custody it was seized. This judgment, again, does not support the case of the Revenue any further for the reason that no incriminating material worth the name could have been seized from the assessee as the search itself was not conducted. Ergo, it is abundantly clear that the view canvassed by the learned Commissioner of Income-tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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