TMI Blog2022 (8) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... heets could not have been relied upon in the absence of supportive evidence to prove it. Therefore, we conclude the issue aforesaid in favour of the assessee and against the revenue. The matter would thus require to be remanded for a fresh assessment. Maintainability of writ petition - Assessment order has been passed in violation of the principles of natural justice as held by us while dealing with the issue aforesaid, the writ petitions to challenge the assessment orders would be maintainable even if we ignore that the constitutional validity of certain provisions has been challenged. In fact, violation of the principles of natural justice would itself be a ground to allow the jurisdiction of this court under Article 226 of the Constitution of India because it violates Articles 14 and 19 of the Constitution of India. It is also when challenge to the authorization of warrant for search has also been made for want of competence of the officer. It is alleging that warrant for search was not issued by the competent officer and, therefore, the search itself would vitiate. In view of the aforesaid, the writ petitions would be maintainable. Constitutional validity of Section 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be recorded by the assessing authority after proper discussion and could not have been discarded summarily, thus needs to be considered appropriately on remand of the case. Validity of warrant of Authorisation - We have gone through the search panchanamas and find that other than one search warrant issued under the authorization of the Additional Commissioner of Income Tax, the other warrants of authorisation were issued by the Deputy Commissioner of Income Tax and other officers below the rank of Additional Commissioner of Income Tax, who are not having authority for issuance of authorisation on their own, unless so authorised by the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner. The petitioner has raised an issue on the authorisation of the warrants because if the Deputy Commissioner of Income Tax has authorised the warrant of search without authorisation in his favour, it would offend Section 132 of the Act of 1961 and the issue goes to the root of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yard owner and the petitioner firm. Search was conducted in the joint names of three persons, namely Mr.Prem Kumar, Mr.K.Sreenivasalu and Mr.J.Sekar Reddy, and if the material collected therein was to be used for addition of the income of the petitioner firm, the assessing authority should have arrived at a conclusive satisfaction that the said material belongs to the petitioner firm and represents and discloses its income. Instead of discharging the onus of such satisfaction before using the material against the petitioner firm, the assessing authority strangely first used the same material for addition of income of the yard owners showing it to be their income and in contrast made addition of income on the basis of some material subsequently in the hands of the petitioner firm. The assessment against the yard owners named above was completed under Section 153C of Act of 1961 on 29.8.2021. The same assessing authority thereafter passed the assessment order against the petitioner firm, though prior to it he was satisfied that material found from the search belongs to the yard owners. Therefore, addition of income in the hands of the petitioner firm becomes illegal. The iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 292CC inserted by the Finance Act, 2012 alleging it to be violative of Articles 14, 19 and 21 of the Constitution of India and to pass consequential order in favour of the petitioner. 2. A further challenge has been made to declare the Explanation added under Section 132(1) of the Income Tax Act, 1961 by the Finance Act, 2017 with retrospective effect from 1.4.1962; the Explanation added under section 132(1A) of the Act of 1961 and under Section 132A of the Act of 1961 with retrospective effect from 1.10.1975 to be illegal and arbitrary and violative of Articles 14, 19 and 21 of the Constitution of India. 3. A challenge is also made to the assessment orders dated 30.9.2021 passed by the fourth respondent for the assessment years 2014-2015, 2015-2016, 2016-2017 and 2017-2018 under Section 153A of the Act of 1961. THE FACTUAL MATRIX: 4. The brief facts for filing of the writ petitions to challenge the constitutional validity of the provisions referred to above and even the assessment orders dated 30.9.2021 for four different assessment years are that the petitioner is primarily involved in the business of letting on hire the excavators, equipment and vehicles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department failed to afford an opportunity for it. The petitioner firm, therefore, filed W.P.No.21166 of 2019 to challenge the order dated 28.6.2019 issued by the ACIT foreclosing the right of the petitioner of crossexamination. The petitioner sought permission to cross-examine Mr.K.Sreenivasalu, Mr.S.Nagarathinam and Mr.S.Murugesan, whose sworn statements were recorded during the course of search and relied on by the ACIT for the purpose of computation of turnover, expenses and income of the petitioner firm. 9. The Court vide order dated 17.7.2019 allowed W.P.No.21166 of 2019 and permitted the petitioner to crossexamine Mr.Nagarathinam and Mr.Murugesan on 1.8.2019 at 12 noon. As regards Mr.K.Sreenivasalu, considering the submission of the ACIT that he had turned hostile by giving specific retraction statement, this Court held that there would be no need to accord permission to cross-examine him and, accordingly, his statement was not to be relied. 10. After the order of the High Court, Mr.S.Murugesan was cross-examined, but Mr.S.Nagarathinam did not appear for crossexamination due to health issue and, later on, he sent a communication to the ACIT on 8.8.2019, through his c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 23.01.2020. The petitioner had also requested the ACIT to share with them the result of the independent investigation regarding the daily yard statements. Petitioners had also requested the ACIT to share with them the collective turnover out of sale of sand accounted and admitted by the yard owners. 12. The petitioner made a request not to proceed further in violation of the principles of natural justice and, accordingly, sought copies of the statements and documents relied upon by the department. When no response was given, the petitioner sent another communication on 5.4.2021 reiterating the earlier request. The petitioner especially made a request to the ACIT to permit cross-examination of Mr.Arun Pandi and Mr.Kandan, whose statements have been relied in the notice under Section 142(1) of the Act of 1961. When a chance of cross-examination was not given, then the petitioner was left with no option but to file another writ petition, being W.P.No.16176 of 2021. The department in their counter stated that they are not going to use the sworn statements of those persons against the petitioner and the same was recorded in the order dated 28.9.2021. 13. The order aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing against the order of this court in W.P.No.16176 of 2021, decided by order dated 28.9.2021. It is also when search warrants were not issued by the competent authority under Section 132(1) of the Act of 1961. Thus, the petitioner was not required to avail the remedy of appeal. It is in view of the judgment of the Apex Court holding that alternative remedy would not be a bar to entertain the writ petition, where order has been passed in violation of the principles of natural justice or lacks competence. It is also in the background that the petitioner has challenged the constitutional validity of Section 292CC inserted by the Finance Act, 2012 and even the Explanation added under Section 132(1) of the Income Tax Act, 1961 by the Finance Act, 2017 with retrospective effect from 1.4.1962; the Explanation added under section 132(1A) and under Section 132A of the Act of 1961 with retrospective effect from 1.10.1975. Therefore, the writ petitions were heard by this court to address the issues raised therein. 16. The constitutional validity of the provisions has been challenged mainly on the ground that they could not have been made retrospectively to take away the existing rights. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as given in the special audit report. It is more so when the special auditor is appointed by the department and not at the instance of the assessee. The assessing officer has not given cogent reason to discard the special audit report and caused assessment in an arbitrary manner, thus challenge to the order of assessment has been made even in reference to the special audit, with a prayer to set it aside. 20. On the facts given above, learned Senior Counsel for the petitioner raised legal arguments and were duly replied by learned Additional Solicitor General of India, which would be dealt with by this court while discussing the issues. 21. On the issue of maintainability of the writ petitions challenging the assessment order, learned Additional Solicitor General of India raised objection alleging that it has been filed with a challenge to the constitutional validity of the provisions only to avoid the remedy of appeal available to the petitioner. All the issues raised on facts can be effectively dealt with by the CIT (Appeals), but instead of preferring an appeal, the present writ petitions have been filed. The writ petitions to challenge the assessment orders may not be en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the allegation of violation of principles of natural justice in not providing an opportunity to cross-examine certain witnesses, whose statements were relied on to pass the impugned assessment orders. It is despite a stand taken by them in the counter affidavit filed in W.P.No.16176 of 2021, decided by order dated 28.9.2021. It was however submitted that the statements of those witnesses were relied only for corroboration. 27. In view of the above, the prayer for remand of the matter could not be contested seriously. Learned Additional Solicitor General referred to the judgment of the Apex court to indicate that quashing of the assessment order was not maintained, rather the judgment of the High Court was set aside. The facts of that case were different as the quashing of the assessment order was without its remand. 28. In view of the above, we would proceed to discuss the legal issues raised by the petitioner and contested by learned Additional Solicitor General. 29. The relevant facts leading to this petition are that a search under Section 132 of the Act of 1961 in the joint names of Mr.Prem Kumar, Mr.K.Sreenivasalu and Mr.J.Sekar Reddy was conducted at some places ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -examination, would not be used. 33. The assessment orders made a reference of the statements of those witnesses who were not put for crossexamination by the petitioner and thereby the challenge to the assessment orders has been made in reference to the violation of the principles of natural justice and for that a writ petition would be maintainable without availing the remedy of appeal. 34. Learned Senior Counsel made a reference of the detailed order passed by this court in the said writ petition [W.P.No.16176 of 2021] and submitted that going contrary to the counter affidavit submitted by the Revenue in the said writ petition, the statements of many witnesses, which includes Mr.N.Kandan and Mr.Arun Pandi, were relied. It is nothing but a contemptuous act of the assessing authority and otherwise, he tried to mislead the court by submitting that they would not use the statements of the witnesses who were not put for cross-examination. Therefore, on the aforesaid ground itself the assessment orders deserve to be set aside. 35. Learned Additional Solicitor General vehemently contested the issue aforesaid. The argument aforesaid is said to be erroneous for the following reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reenivasalu turned hostile and, therefore, there was no need to cross-examine him. Mr.Arun Pandi was served with summons on three occasions, but he did not turn up to make himself available for crossexamination. The provisions of the Code of Civil Procedure were referred to submit that even after summoning, if a witness does not turn up, the revenue need not wait indefinitely because the proceedings are time bound and the procedure followed by the civil court need not be followed in income tax proceedings. 39. In view of the above, he has justified the action of the respondents on the issue and submitted that there is no violation of the principles of natural justice. 40. The further case of the revenue is that the statement of Mr.Kandan was relied for the limited purpose relating to the ownership of sand yards. Mr.Kandan was a government official, who is said to have been paid money by the petitioner, and in any case, the statements of those witnesses were not put for crossexamination and were used only to corroborate the material seized during the course of search proceedings. 41. We have considered the rival submissions of the parties and perused the record. 42. To d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss-examination or who did not turn up, they should have not mislead the court in the earlier writ petition. 44. In view of the aforesaid, the assessing authority could not have relied on the statement of those witnesses for any purpose. If it is used to corroborate the material collected during the course of search and seizure, it could not have been without an opportunity of cross-examination. It is quite surprising that contrary to the sworn affidavit, the statements of the witnesses were used against the petitioner firm. The order of the court in the earlier writ petition does not qualify aforesaid. We seriously deprecate the practice of the revenue in going against their own statement made before the court in W.P.No.16176 of 2021 and the order passed therein. 45. At this stage we may clarify that mere service of summons and non turning-up of the witnesses would not allow the revenue to rely on the statement of such witnesses, when they were not put for cross-examination by the assessee. The presence of the witnesses for cross-examination should be ensured if to be relied, but the procedure was not applied and the reason for it is said to be time constraint. The aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been recorded that the sworn statements are not going to be used against the writ petitioner. When the department had earlier taken a stand not to use the statements of those witnesses, then now they cannot take a u-turn to say that those witnesses can be put for cross-examination before the CIT(A). The stand aforesaid is in contradiction to the order passed in W.P.No.16176 of 2021 and cannot be allowed. In fact, no one prevented the revenue to take a stand in the said writ petition to the effect that those who have turned hostile are not required to be put for cross-examination and they would be using the statements of other witnesses. The question of cross-examination of the witnesses now after the categorical statement of the revenue, which is reflected in the order in the earlier writ petition, cannot be accepted. It seems that the department is changing their stand which was accepted by this court in W.P.No.16176 of 2021. Therefore, we find force in the argument of learned Senior Counsel appearing for the petitioner that not only there is violation of the principles of natural justice, but even action of the respondents is contemptuous in using the statements of witnesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation. [emphasis supplied] 51. In view of the judgment aforesaid and the fact that the assessment order has been passed in violation of the principles of natural justice as held by us while dealing with the issue aforesaid, the writ petitions to challenge the assessment orders would be maintainable even if we ignore that the constitutional validity of certain provisions has been challenged. In fact, violation of the principles of natural justice would itself be a ground to allow the jurisdiction of this court under Article 226 of the Constitution of India because it violates Articles 14 and 19 of the Constitution of India. It is also when challenge to the authorization of warrant for search has also been made for want of competence of the officer. It is alleging that warrant for search was not issued by the competent officer and, therefore, the search itself would vitiate. In view of the aforesaid, the writ petitions would be maintainable. CONSTITUTIONAL VALIDITY: 52. The petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, the Apex Court has from time immemorial held that the sufficiency or adequacy of the reasons cannot be gone into and the only aspect to be seen is whether the reasons have a rational connection or have a bearing to the formation of the belief. A reference of the judgment in the case of Dr.Pratap Singh v. Director of Enforcement, (1985) 3 SCC 72 has been given. 56. A further reference of the judgment of the Apex Court in the case of Vijay Mandanlal Choudhary and others v. Union of India, SLP (Criminal) No.4364 of 2014 , has been given, where the constitutional validity of Section 44 with retrospective effect was upheld. 57. As against the argument of learned Additional Solicitor General, learned Senior Counsel for the petitioner submitted that reason to believe or reason to suspect lays the foundation to proceed for assessment. It may be true that the power of the CIT(A) or the ITAT is limited, but, if no reason to believe germane to the facts or reason to suspect exist, the CIT(A) or the ITAT is having authority to decide the issue in reference to it, thus, no reason exists to deprive the CIT (A) or the ITAT to know and peruse the reason to believe or reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding of search belongs to the assessee. 62. Learned Senior Counsel for the petitioner submits that while the special audit report may not be binding on the assessing officer, it cannot be brushed aside completely holding it to be irrelevant. The assessing authority needs to give cogent reasons to ignore it and, therefore, not to be guided by the special audit report. It is more so when the auditor is appointed by the revenue itself and not at the instance of the assessee. The detailed audit report was submitted by the special auditor, which even goes to the root of the case, and if a realistic approach would have been taken by the assessing authority, the complexion of the assessment orders would have been different. 63. Learned Senior Counsel for the assessee has submitted that the special auditor has considered the allowable business expenditure under Section 37(1) of the Act of 1961 on the basis of the analysis of the entire seized record, but the same was discarded by the assessing authority holding it to be not allowable business expenditure based on his own suspected reasons. 64. Learned Additional Solicitor General seriously contested the issue aforesaid. It is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entirely with the assessing authority and can be challenged only on merits before the Commissioner of Income Tax (Appeals). The case of the revenue is that the special audit report is relied by the petitioner only to the extent that there is no link to trace the evidence against the petitioner. The said opinion was given by the special auditor in contradiction. However, these arguments have been raised, but the reasons do not find place in the assessment orders, which very summarily refused to rely on the special audit report. 69. We conclude the issue holding that though the special audit report is not binding on the revenue, the reasons for discarding it have to be recorded by the assessing authority after proper discussion and could not have been discarded summarily, thus needs to be considered appropriately on remand of the case. VALIDITY OF WARRANT OF AUTHORISATION: 70. Learned Senior Counsel for the petitioner submitted that the panchanamas submitted by the respondent department in the compilation typed-set show that search was conducted in the names of three joint names of Mr.Prem Kumar, Mr.K.Sreenivasalu and Mr.J.Sekar Reddy, referred in the warrant of authorisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer to conduct the search. Accordingly, it was submitted that the panchanamas were issued by the competent officers so authorised under the Act of 1961. 73. Narrating the facts, it is stated that the Additional Director of Income Tax (Investigation) is one of the official stated under Section 132(1) of the Act of 1961 and such an official in possession of various information if has a reason to believe , then can issue warrant of authorisation to conduct the search. The alternative argument of learned Additional Solicitor General is that the Additional Director as referred under clause (B) to Section 132(1) of the Act of 1961 can issue warrant of authorisation if he is so authorised by the competent officer, i.e., the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. In view of the above, the Additional Director of Income Tax (Investigation) was competent to issue the warrant of authorisation. 74. The Central Board of Direct Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director, or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy 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 documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia) search any person who has got out of, or is about to get into, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii): Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing, being stock-in-trade of the business: Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so. Explanation.-For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal. [emphasis supplied] 76. Section 132(1) of the Act of 1961 provides for action as given under Section 132(1)(a), (b) and (c) and it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (Investigation) and Director General of Income Tax (Intelligence) to issue authorisation under sub-section (1) of Section 132 of the Act of 1961. In view of the above, the argument of the revenue is to endorse the authorisation as per law. 79. To appreciate the argument, we have gone through the search panchanamas and find that other than one search warrant issued under the authorization of the Additional Commissioner of Income Tax, the other warrants of authorisation were issued by the Deputy Commissioner of Income Tax and other officers below the rank of Additional Commissioner of Income Tax, who are not having authority for issuance of authorisation on their own, unless so authorised by the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner. The petitioner has raised an issue on the authorisation of the warrants because if the Deputy Commissioner of Income Tax has authorised the warrant of search without authorisation in his favour, it would offend Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not under Section 153A of the Act of 1961. 84. The issue aforesaid has been contested by learned Additional Solicitor General and submitted that Section 153C of the Act of 1961 is not applicable in the case on hand. It applies only when search is conducted against a person and material recovered therein is to be used against other person not subjected to such search. In the instant case, search was conducted not only against three persons, but also against the firm, and, therefore, the material so collected therein was rightly considered for invocation of Section 153A of the Act of 1961. It was not a case that falls within the purview of Section 153C of the Act. The assessment could not have been under Section 153A and 153C against the same assessee. 85. To consider the issue aforesaid, it is appropriate to quote Sections 153A and 153C of the Act of 1961 hereunder: 153A. Assessment in case of search or requisition. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub-section, the expression relevant assessment year shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, asset shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) If any proceeding initiated or any order of assessment or reassessment made under subsection (1) has been annulled in appeal or any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 132A in the second proviso to subsection (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BASED ON SAME SET OF MATERIALS AGAINST TWO ASSESSEES 88. It is also the case of the petitioner firm that before completion of the assessment in the case of the petitioner firm, the same assessing officer had completed the assessment of few yard owners, where same material was used for making addition of the amount in the hands of those yard owners, namely Mr.K.Muthu, Mr.M.Chockalingam, Mr.S.Gopal, Mr.Karuppiah and Mr.K.T.Ramaiah. Therefore, the assessing officer made addition of income in the hands of the yard owners so also the petitioner firm based on the same material obtained during search. Thus, the same set of documents have been used by the same assessing authority for making addition of the amount at two places, namely in the hands of the yard owners and again in the hands of the petitioner firm going against the settled law. The department could not have recorded satisfaction about belongingness or ownership of the same documents in the names of two different persons for making the addition in the hands of two different assessees. 89. Learned Additional Solicitor General has contested the issue on the ground that the assessment in the case of yard owners and the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts. It was not a case where the petitioner firm has claimed certain expenditure where the question of its allowance or disallowance would become relevant. It is a case of computation of income of the petitioner firm by the assessing authority on the basis of certain seized documents comprising loose sheets, etc., keeping the regular books of accounts of the petitioner firm aside. The disallowance under Section 40A(3) of the Act of 1961 could not have applied in these circumstances. We find substance in this argument, however, we are not dealing with quantum of income in this order and the same be considered in remand proceedings. 95. In view of the discussion made above, while we hold the provisions of Section 292CC and the Explanations added to Sections 132(1), 132(1A) and 132A of the Act of 1961 to be constitutionally valid, an interference with the assessment orders is made for the reasons recorded above and, accordingly, the assessment orders are set aside with remand of the case to the assessing authority to pass assessment orders afresh and it would be after taking into consideration the findings recorded by this court. The assessee would be at liberty to advance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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