TMI Blog2019 (2) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... section 153C of the Act would not become invalid. As held by the Supreme Court in Gunjan Girishbhai Mehta (supra), when the assessee has participated in the proceedings for assessment, the information discovered during the course of search, if capable of generating satisfaction for issuing notice under section 153C, cannot altogether become irrelevant for further action under section 153C - ITAT has erred in quashing the assessment proceedings under section 153C of the Act initiated against the assessee on the ground that the authorisation of search under section 132 of the Act was quashed in the case of the searched person. - Decided in favour of the revenue - R/TAX APPEAL NO. 1 of 2017 With R/TAX APPEAL NO. 2 of 2017 With R/TAX APPEAL NO. 5 of 2017 With R/TAX APPEAL NO. 6 of 2017 - - - Dated:- 24-12-2018 - MS HARSHA DEVANI AND DR A. P. THAKER, JJ. For The Appellant (s) : MRS MAUNA M BHATT (174) For The Respondent (s) : MR B S SOPARKAR (6851) COMMON ORAL JUDGMENT ( PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. All these appeals arise out of a common order dated 15.2.2016 made by the Income Tax Appellate Tribunal, Ahmedabad Bench 'D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not justified in setting aside the assessment under section 153C of the Act merely because the search had been held to be invalid in the case of the searched person. In support of such contention, reliance was placed upon the decision of the Supreme Court in the case of Pooran Mal v. Director of Inspection (Investigation) , (1974) 93 ITR 505, for the proposition that even if the search and seizure are in contravention of the provisions of section 132 of the Income Tax Act, still the material seized can be used subject to law before the Income Tax authorities against the person from whose custody it was seized. 4.1 It was contended that the proceedings under section 153C of the Act are not dependent on the validity or otherwise of the authorisation under section 132 of the Act. The validity or otherwise of the authorisation under section 132 of the Act would be relevant for the purpose of assessment of the searched person under section 153A and that once satisfaction is reached under section 153C of the Act, the procedure of assessment is required to be followed. 4.2 In support of her submission the learned Standing Counsel placed reliance upon the decision of a Divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal, Mr. B. S. Soparkar, learned advocate for the respondent submitted that the decisions of this court as well as the Supreme Court in the case of Gunjan Girishbhai Mehta (supra) were rendered in the context of sections 158BC and 158BD of the Act and would not be applicable to sections 153A and 153C of the Act. Reference was made to the provisions of section 158BD of the Act to submit that the same requires the Assessing Officer of the searched person to record satisfaction that any undisclosed income belongs to any person other than the searched person. It was submitted that while section 153C requires the Assessing Officer to record a satisfaction that certain articles belonging to a certain person other than the searched person as opposed to the satisfaction required under section 158BD of the Act. It was submitted that section 153C of the Act requires satisfaction of a fact that the money, bullion, articles etc. belong to a certain person, as opposed to the satisfaction that there is undisclosed income, and in that light the satisfaction of fact is to be determined that when the material belongs to a certain person and that such search is quashed, and the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e court held that in absence of any search warrant in the name of an assessee, search conducted in its premises is not a valid search as contemplated under section 132 of the Income Tax Act. The court was further of the view that initiation of a valid search as contemplated under section 132 of the Act in case of a person is a prerequisite to issue notice for making assessment/reassessment under section 153C of the Act in respect of such person. It was submitted that, therefore, when the search itself has been held to be invalid the proceedings under section 153C of the Act would suffer from the same defect. 5.3 Reference was made to the decision of the Madhya Pradesh High Court in the case of Rajesh Rajora v. Union of India , (2013) 40 taxmann.com 330 (Madhya Pradesh), to submit that the said court has quashed the issuance of warrant of authorisation and consequent search and seizure proceedings. It was submitted that in the present case, the proceedings under section 153C of the Act have been initiated pursuant to search and seizure carried out in the case of Rajesh Rajora, and hence, when the search and seizure had been quashed, the proceedings under section 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the petitioners had challenged the warrant of authorisation issued under section 132 of the Act as well as the assessment order framed under section 158BC of the Act. In the facts of that case, on behalf of the respondent, it was contended that the only mandatory requirement of section 158BD of the Act is that the Assessing Officer of the searched person should be satisfied that undisclosed income belongs to some other person and upon recording this satisfaction, the books of account, etc. are required to be handed over to the Assessing Officer of such other person. Once these two mandatory requirements/conditions are fulfilled, the Assessing Officer of the 'other person is under a mandate to proceed against the other person. It was, accordingly, contended that it was incorrect on the part of the petitioners to contend that if the search is held to be invalid, the proceedings in the case of other person cannot be undertaken. This court held that the search warrant cannot be said to be null and void. It then proceeded on the assumption that the authorisation for search is bad and illegal as it was against a dead person, and examined the issue as to whether when during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on other than a person searched under section 132 or 132A, section 158BD would be attracted an such other person with respect to whom undisclosed income is traced out is subjected to block assessment under section 158BD of the Act. Any other view more particularly contention on behalf of the petitioners is accepted, in that case, it would be defeat the object and purpose of enacting section 158BD of the Act. Even otherwise the word used under section 158BD of the Act is where the AO is satisfied that any undisclosed belongings to any person, other than the person with respect to whom search was made under section 132 and it does not say that where the AO is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom the valid and legal search was made under section 132 . Under the circumstances and assuming without prejudice to the aforesaid findings with respect to the authorization under section 132 of the Act, that the search was against a dead person and not valid, in that case also, the block assessment proceedings initiated under section 158BD of the Act by the impugned notices cannot be said to be illegal and/or contrary to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rth his total income including the undisclosed income for the block period: Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter: Provided further that a person who has furnished a return under this clause 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 158-BB 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 Assessing 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 tax payable by him on the basis of such assessment; ( d) the assets seized under Section 132 or requisitioned under section 132-A shall be dealt with in accordance with the provisions of section 132-B. 158-BD. Undisclosed income of any other person . - Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 153-C. Assessment of income of any other person. --( 1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153- A, then the books of account or 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 against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153- A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132-A in the second proviso to section 153-A shall be construed as reference to the date of receiving the books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false. 14. Therefore, while section 158BD of the Act uses the expression undisclosed income belongs to , which expression includes any money, bullion, jewellery or other valuable article of thing or any income based on any entry in the books of account or other documents or transactions, section 153C employs the words any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs to a person other than the searched person. Under section 158BD, the Assessing Officer of the searched person has to record satisfaction that such undisclosed income belongs to a person other than the searched person, whereas under section 153C, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson is in receipt of the books of account or documents or assets seized or requisitioned, and proceeds further with the assessment, such assessment would not be rendered invalid on account of the search having subsequently held to be invalid. 16. At this juncture, reference may also be made to the decision of the Supreme Court in the case of Pooran Mal v. Director of Inspection and Investigation (supra), wherein the court has held thus: In other words search and seizure for the purposes of preventing or detecting crime reasonably enforced was not inconsistent with the constitutional guarantee against search and seizure. It was held in that case that the search of the appellant by a Police Officer was not justified by the warrant nor was it open to the Officer to search the person of the appellant without taking him before a Justice of the Peace. Nevertheless it was held that the Court had a discretion to admit the evidence obtained as a result of the illegal search and the constitutional protection against search of person or property without consent did not take away the discretion of the Court. Following Kuruma v. Queen the Court held that it was open to the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not section 153C of the Act, in view of the fact that the controversy involved in this case stands more or less concluded by the decision of this court as well as the Supreme Court in the case of Gunjan Girishbhai Mehta (supra), it is not possible to accept such contention. 18. In the light of the decision of the Supreme Court in Pooran Mal (supra) as well as Gunjan Girishbhai Mehta (supra), merely because the original search is held to be invalid, the consequential action under section 153C of the Act would not become invalid. As held by the Supreme Court in Gunjan Girishbhai Mehta ( supra), when the assessee has participated in the proceedings for assessment, the information discovered during the course of search, if capable of generating satisfaction for issuing notice under section 153C, cannot altogether become irrelevant for further action under section 153C of the Act. 19. In the light of the above discussion, the appeals succeed and are accordingly allowed. The question is answered in the affirmative that is, in favour of the revenue and against the assessee. The Income Tax Appellate Tribunal has erred in quashing the assessment proceedings under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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