TMI Blog2022 (11) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and reasons to believe were called for and I find that the officer has recorded cogent reasons for the initiation of the search itself. The records reveal that the officer has had information in his possession to lead to the belief that action under Section 132 was warranted. The challenge to the search is rejected and all writ petitions on this score, are dismissed. Necessary response or urgency in the medical emergency leading to hospitalization of one of the children of the petitioner - HELD THAT: As the Hon ble Supreme Court has observed in the case of Pooran Mal [ 1973 (12) TMI 2 - SUPREME COURT ] search and seizure, by its very nature, is bound to cause some dislocation to the parties concerned. Some of this dislocation is also intended as a conscious measure to intimidate. There are limits that must be adhered to and in the present case, the exacerbation of the medical condition of the person concerned is a matter of hospital record. As does not dispute the medical record. His attempt is to state that the child had a pre-existing medical condition and thus, the Department cannot be held responsible for the sudden distress needing hospital attention. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As the Audit has recommended, it is necessary that the Legislature or the Board, administratively, fix such timelines, for the purpose of integrity of procedure, including compliance with the provisions of natural justice as well as to ensure quality in the framing of assessments in a timely manner. This is protect against, and prevent a situation where the notices are issued too proximate to the expiry of limitation leading to a hurried framing of assessment and that the assessment is not based upon incriminating material. Such arguments are indeed available to assessees, but subsequent to the framing of the assessment itself, that would enable an examination of the material brought on record in order to test such submissions.The challenge to notices issued under Section 153A is rejected. Challenge to notices in terms of Section 153C - The provisions of Section 153C require the receiving officer, that is, the jurisdictional assessing officer of the assessee concerned, to issue notice,if he is satisfied that the books of account/documents/assets seized or requisitioned have a bearing on the determination of total income of such other person for the block period. The satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 187 9505, 9296, 17573, 17621, 17750 and 9289 of 2021 And WMP.Nos.24729, 24730, 24716, 24719, 24667, 24668, 24669, 24670, 24671, 24672, 24722, 24723, 24539, 24538, 24732, 24731, 24736, 24734, 24713, 24715, 24708, 24701, 24703, 24710, 24717, 24718, 24721, 24720, 24725, 24727, 24541, 24542, 24545, 24544, 24733, 24735, 24739, 24737, 24742, 24743, 24746, 24749, 24757, 24758, 24748, 24750, 24751, 24753, 24756, 24759, 24763, 24764, 24766, 24767, 24774 24776 of 2020 And WP.Nos.19996, 20050, 20030, 20048, 19876, 19877, 20056, 19998, 19999, 20000, 20038, 20041, 20046, 20028, 20033, 20036, 20039, 20040, 20045, 19867, 19871, 20051, 20055, 20057, 20061, 20060, 20063, 20064, 20065, 20068, 20071 20074 of 2020 And WMP.Nos.24540, 17712, 24815, 24813, 24810, 24806, 24804, 24801, 24803, 24824, 24822, 24821, 24820, 24823, 24825, 24828, 24831, 24808, 24809, 24811, 24814, 24817, 24818, 24819, 24826, 24827, 24829, 24830, 24832, 24833, 24835, 24837, 24855, 25856, 25857, 25835, 25836, 25834, 18758, 10104, 10107, 18924, 19381, 19388, 19391, 19383, 19384, 19394, 19395, 19392, 19385, 19387, 19378, 19379, 22429, 22430, 22424, 22419, 22414, 22408, 22402, 22396, 2242 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Mariappan, Shanmugakani Sivajothi and Somasundaram Rishi Sharaan) constitute the rest of the batch. 3. The genesis of the Writ Petitions are the searches conducted under Section 132 of the Act between 06.08.2019 and 11.08.2019 and consequential proceedings thereafter, culminating in the passing of the assessment orders. SNJ Breweries Pvt. Ltd. is the primary assessee and is stated to be operational in this line of business from 06.04.2011. It operates from factories situated at Madurantakam in Tamil Nadu. 4. The matters were heard on various dates and this common and consolidated order is passed after hearing the detailed submissions of all learned Senior Counsel for the petitioners as well as the learned Senior Standing Counsels for the respondents. II. Issues: 5. Issue 1 - The validity of search under Section 132 is challenged by way of Writ of Declaration by SNJ Breweries, SNJ Distillers, SNJ Sugars, N.Jayamurugan, Geetha Jayamurugan, Ramamoorthy Srithar, Srithar Sudha, Nandhini Transports Pvt. Ltd., Kandasamy Thirumoorthy, Thirumoorthy Kala, Manickam Karthikayen, Kaycee Distillers, Chandran Somasundaram, C.Mariappan, Shanmugakani Sivajothi, Somasunda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nducted by the Income Tax Department in their premises, but there have been two earlier instances in 2012 and 2016 as well. (v) The search commenced on 06.08.2019 at 6.30 a.m. when more than 150 officials of the Department are stated to have commenced the proceedings in the temporary rental residence of the Director of the brewery at No.4/27, Cenotaph Road First Lane, Teynampet, Chennai 18. Simultaneous therewith, his permanent residence located at Chitharanjan Salai, Teynampet and other locations such as location of companies owned by the Directors of the brewery, the registered office of the petitioner companies at Nandanam and other registered offices, the offices/residences of suppliers and vendors and other factory premises located at Tamil Nadu, Kerala, Goa and Andhra Pradesh as well as residences of the relatives of the Directors of the petitioner companies, the auditor and employees were also searched. (vi) In all, 56 locations spread over 7 states in India were raided. (vii) The basis for such a wide and far reaching search is questioned, particularly in the absence of any credible material to indicate the necessity for such action. (viii) No cash or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The common areas in the apartment had the facility of CCTV. However, R2 had disabled all cameras, evidently to suppress the inappropriate and improper manner in which the search was conducted. (xv) H.C.P.No.1693 of 2019 was filed seeking the production of the Director, N.Jayamurugan from illegal detention and notice was issued on 09.08.2019 to R2. Immediately upon receipt of the notice, the search was concluded in a hasty manner on 11.08.2019 at 11.00 a.m. (xvi) Ultimately, when the HCP came up for hearing on 13.08.2019, it was closed, the Division Bench recording as follows: 2. When the matter is taken up of hearing, the Learned Special Public Prosecutor submitted that what was done is only an enquiry, though the Learned Senior Counsel submits that it is a clear case of detention. Suffice it to state that the detenues are not in the custody of anyone as of now. Thus leaving open the larger issue these Habeas Corpus Petitions stand closed as nothing survives for consideration. However liberty is also given to the Petitioners to take appropriate action in the manner known to law, if they are of the view there involves illegal custody. (xvii) Several prohibito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife fell ill with a sudden spike in her blood sugar levels. The respondents, despite specific requests, refused to call a doctor, casually stating that senior officials could themselves handle the situation. She was left to her own devices to make an emergency call and reach the hospital. (xxvii) The search and seizure manual sets out in categoric terms the procedure to be followed in the conduct of searches. There has been clear violation of the stipulations thereunder. 12. The petitioners submit that the ingredients of Section 132 have not been satisfied in this case as the respondents have no reason to believe that: a) a person who has been issued a summons or notice under the provisions of the present Act or 1922 Act for production of books of accounts or documents, has omitted/failed to do so; b) a person to whom summons or notice under the provisions of the present or 1922 Act might be issued would not comply with such summon/notice. c) the petitioners are in the possession of money, bullion, jewellery or other valuable article or thing which represents wholly or partly income or property that has not or will not be disclosed for the purposes of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from the locality concerned and the outstation addresses referred to by the petitioners are their permanent addresses as reflected in their Aadhar cards. 17. There is complete and total denial of the allegations of human rights put forth by the petitioners. According to the respondents all necessary measures were taken to address the medical issues that were projected by the petitioners and their family members and the submissions to the contrary were to be rejected in full. 18. They rely upon the following judgments to buttress their submissions:- Hon ble Supreme Court: Commissioner of Commercial Taxes, Board of Revenue, Madras V. Ramkishan Shri Kishan Jhaver (66 ITR 664) Income-tax Officer V. Seth Brothers (74 ITR 836) Pooran Mal V. Director of Inspection (93 ITR 505) State of Punjab V. Baldev Singh ((1999) 6 SCC 172) DGIT (Inv.) V. Spacewood Furnishers (P) Ltd. (374 ITR 595) Income Tax Officer, Calcutta and Ors. vs. Lakhmani Mewal Das (103 ITR 437) Principal Director Of Income Tax (Investigation) vs Laljibhai Kanjibhai Mandalia ((2022)140 taxmann.com) Commissioner of Income-tax, Gujarat V. Vijaybhai N. Chand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the right to carry on trade and hold property. 22. Akin to the ratio of this judgment, is that of the judgement passed by the Hon ble Supreme Court in the case of Seth Brothers (supra), wherein the provisions of Section 132 came to be discussed. Seth Brothers had been subject to search and seizure action on 07th and 08th June, 1963 and had challenged the same on the ground that the action was intrusive and violative of the provisions of law. The Court went into the scheme of Section 132 concluding that the vesting of power upon the revenue officers under that Section was not arbitrary, but was premised on the satisfaction of statutory conditions justifying the search action. 23. The issue of a warrant by a Commissioner is neither a judicial nor a quasi-judicial act. The Commissioner were enjoined to issue such warrant only based upon information in his possession in consequence of which he forms the necessary belief, the matter is not subject to scrutiny by the Court. 24. In this connection, they referred to a decision of the Allahabad High Court in Income-tax Officer, A-Ward, Agra and Ors. v. Firm Madan Mohan Demma Mal and anr. (70 ITR 293). The ratio of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e power. Where the Commissioner entertains the requisite belief and for reasons recorded by him authorises a designated Officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the Officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the Officer has in executing the authorisation acted bona fide. 26. The ratio of the aforesaid judgments was reiterated in the case of Pooran Mal (supra) when a constitutional challenge was laid to the provisions of Section 132 stating that the provisions violated Articles 19(1)(f) and (g) of the Constitution of India. This was repelled by the Hon ble Supreme Court in the following terms at page 518: We are, therefore, to see what are the inbuilt safeguards in section 132 of the Income Tax Act. In the first place, it must be noted that the power to, order search and seizure is ves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd restrictive as is possible under the circumstances. The provisions, therefore, relating to search and seizure in Section 132 and rule 112 cannot be regarded as violative of Articles 19(1)(f) and (g) . 27. The Bench notes that undoubtedly search and seizure is a drastic process and is bound to be accompanied by unsavoury events and sometimes inconvenient results. A sudden search and seizure will no doubt unnerve inmates of the location under search. In the cases before me, allegations and rebuttals have been advanced in regard to the highhandedness of the officials as well as the oppression that was allegedly meted out to the residents. So too in Pooran Mal s case. This has been noticed in the judgment itself, but the Bench takes an overall view of the matter stating that on the whole, the search was not established to be malafide, oppressive or excessive. So too in this case. The Bench held further that even if a search had been illegal, the evidence seized can be validly used in the assessments to follow. 28. The ambit of phrase reasons to believe have been interpreted in the seminal judgment in the case of Lakmani Mewal Das (supra) in the context of Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the illicit article by the person from whom such contraband had been seized during the illegal search. That would be stretching the ratio of the judgment in Pooran Mal beyond what the Court had intended. 31. In the case of Spacewood Furnishers Pvt. Ltd. (supra) , 8. What is significant and, therefore, must be noticed is that in both the aforesaid two decisions while this Court has emphasized the necessity of recording of reasons in support of the 'reasonable belief contemplated by Section 132, nowhere, in either of the decisions any view had been expressed that the reasons recorded prior to authorizing the search needs to be disclosed or communicated to the person against whom the warrant of authorization is issued. The same is the view expressed by this Court in Dr. Pratap Singh v. Director of Enforcement 155 ITR 166 (SC) while considering a pari materia provision in the Foreign Exchange Regulation Act. The material on which the officer has reasons to believe that any documents will be useful for or relevant to any investigation need not be disclosed in the search warrant; such material may be secret, may have been obtained through intelligence, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich summons or notice had been issued, or such person will not produce such books of accounts or other documents even if summons or notice is issued to him; or iv) Such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed; v) Such reasons may have to be placed before the High Court in the event of a challenge to formation of the belief of the competent authority in which event the Court would be entitled to examine the reasons for the formation of the belief, though not the sufficiency or adequacy thereof. In other words, the Court will examine whether the reasons recorded are actuated by mala fides or on a mere pretence and that no extraneous or irrelevant material has been considered; vi) Such reasons forming part of the satisfaction note are to satisfy the judicial consciousness of the Court and any part of such satisfaction note is not to be made part of the order; vii) The question as to whether such reasons are adequate or not is not a matter for the Court to review in a writ petition. The sufficiency of the grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and we are not to act as an appellate court and meticulously examine the information in order to decide whether an action under section 132 is called for, yet at the same time we may emphasise that the power to search a person is a stringent power provided by law and this requires the officers to scrupulously follow the mandate and the rigor of the law prior to authorising such an action, and unless the conditions to exercise such power are shown to exist, we would have no hesitation in striking down such an action. We are compelled to interfere as there was complete lack of information prior to the action of search, exhibiting gross non-application of mind and arbitrariness by the appropriate authorities. The reason to believe in the present case was non-existent prior to the search. Even after the search, there was no material to conclude that no such disclosure had been made, or that no disclosure would be made so as to satisfy the pre- requisites of section 132 of the Act. The respondents have merely acted on the basis of surmises and conjectures, and without due authorisation. Their actions are in contravention of law, making the action of search and seizure bad in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the writ affidavit regarding the difficulties and resistance encountered by the family in seeking medical help for the person and these allegations have not, in my view, been met or addressed effectively either in counter or in the submissions advanced before me. 40. There is yet another aspect of the matter. The petitioner states that there are CCTV cameras that were disabled by the petitioners. According to the revenue, the cameras were disabled at the instance of the petitioners. This a question of fact but one that can be ascertained by examination of evidence. On this aspect too, there are factual disputes as to both the coverage if any, that could have been provided, and the reasons for their disabling. 41. Learned Standing counsel does not dispute the medical record. His attempt is to state that the child had a pre-existing medical condition and thus, the Department cannot be held responsible for the sudden distress needing hospital attention. There has been a specific allegation by the petitioner in regard to the delay in permitting the family to seek medical assistance. Though denied in general terms, I am unconvinced that the respondents did exercise nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thirumoorthy Kala RamamoorthySrithar 47. The provisions of Section 127, insofar relevant to this case, read as follows: Power to transfer cases. 127. (1) (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, - (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is the reason that was set out for centralization and which appealed to the Court, that proceeded to dismiss the Writ Petitions. 55. The judgment in the case of Ajantha Industries (supra) was distinguished by saying that in that case, the assessee had duly appeared and objected to the transfers, whereas in the present case, there was no appearance and neither were objections filed. The Court thus was of the view that it would be an idle formality to quash the orders merely for their non-communication upon the assessees. The revenue counsel undertook that a copy would be furnished to the petitioners and that was recorded. IV (c) Discussion 56. Learned counsels have been heard and files were summoned to peruse the orders passed. The files contain, inter alia, Notification 13/2020 in C.No.142/2020-21/PCIT-1/CBE dated 29.12.2020 that has been issued recording the fact that Ramamoorthy Srithar and Kandasamy Thirumoorthy have not responded to the notices and hence it is presumed that they have no objections in the transfer of their assessments to Chennai. 57. The reasons set out, are, to facilitate comprehensive and coordinated assessment proceedings. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, passed by the Principal Commissioner of Income Tax, Tirupathi. 64. The aforesaid order has been passed after due opportunity and after taking note of the submissions and objections of the petitioner. That order had also been duly served upon the petitioner. The subsequent transfer was thus an internal transfer from R3 to R4, being Deputy Commissioner of Income Tax, Central Circle 2(1) to Assistant Commissioner of Income Tax, Central Circle 3(2). This does not warrant opportunity or any other procedural formality as the transfer is internal, from one officer to another, within the Central Circle. 65. This leaves the aspect of non-service of the orders upon the petitioners and I discuss below the decisions cited at the Bar. The relevant portion of the judgment in re. Ajanta Industries (supra) reads thus: The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under article 226 of the Constitution or even this Court under Article 136 of the Constitution in an appropriate case for challenging the order, inter alia, eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recourse to law if he is aggrieved thereby, then the said order is required to be communicated. To arrive at the said conclusion, as has been stated earlier, the Division Bench has found support from Rani Sati Kerosene Supply Co. [2004 SCC OnLine Cal 327 : (2005) 4 CHN 264] wherein it has been held that if an order is communicated after 30 days, an order of cancellation can easily be frustrated and, therefore, the phrase by an order in writing to be made appearing in the proviso to Para 9 of the Control Order is to be construed as by an order in writing to be communicated. 28. Keeping in view the aforesaid principles, if it is held that the order would become a nullity, it really does not serve the purpose of the Control Order. On the contrary, it frustrates it and, therefore, the interpretation placed by the High Court on Para 9 in juxtaposition with Para 10 to treat the order as null and void is neither correct nor sound. It is desirable that the authority shall pass an order within 30 days from the date of show-cause. Be it noted that there are two contingencies when the show-cause is issued for violation or when an order of suspension is passed. There can be no trace of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the Act. The Tribunal will adjudicate the matter in the light of the observations contained herein and in the judgment in the case of Malayil Mills (T. R. C. Nos. 15 and 16 of 1981 decided on 7th June, 1982-Kerala High Court) extracted earlier. 71. In General Exporters (supra), a learned single Judge of this Court held that the non-communication of reasons for issuance of a notice under Section 127 of the Act was fatal to the case of the revenue. In that case, the challenge was to an order of transfer of that assessee s file from New Delhi to Chennai. 72. The counter filed by the respondents in that matter was to the effect that the impugned order was passed based on certain reasons that had been recorded by the officer, and kept in the jurisdictional file. Since the note containing the reasons was very lengthy, the contents had not been incorporated in the notice or in the transfer order, the latter of which was challenged. 73. The Court has summoned the file and had perused the reasons, on the basis of which the impugned order had been passed. Ultimately, the order came to be set aside as being violative of principles of natural justice, since it was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e search was concluded on 11.08.2019 and notices under Section 153A were issued to all the petitioners on 03.02.2020. However, it was only on 10.09.2020 that the seized records had been handed over by the officers constituting the search team, to the jurisdictional Assessing Officer. 80. The first argument advanced in this regard is that the records ought to have been handed over within 60 days from the last of the authorizations executed for search. For this purpose, reliance is placed on Section 132(9A), extracted below: Search and seizure. 132. (1) Where 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 in consequence of information in his possession, has reason to believe that- . (9A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub-section (1), the books of account or other documents, or any money, bullion, jewellery or other valuable articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt at all. 86. Since in this case, the notices under Section 153A have preceded the date of handing over of the seized material, they are attacked on the ground that they are premature and vitiated by lack of application of mind. Reliance is placed upon the decisions of the Delhi and Orissa High Courts in the case of i) Commissioner of Income Tax V. Kabul Chawla (380 ITR 573), ii) Smt.Jami Nirmala V. The Principal Commissioner of Income Tax, Bhubaneswar and others (W.P.(C) No.2857 of 2018) dated 10.08.2021) and iii) Smruti Sudha Nayak V. Union of India and others (439 ITR 193). 87. In the aforesaid decisions, the Courts have observed that though the provisions of Section 153A do not refer to evidence or material found in the course of the search or post-search material or information, whether incriminating or otherwise, relatable to the evidence found in the course of search, the provisions of Section 153A require that a search assessment be framed based only upon such seized material. 88. They also rely on Instruction in F.No.286/161/2006-IT dated 22.12.2006, as well as the Manual of the Income Tax Department, particularly Annexure 92 falling under Appendix V, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of an assessment under Section 153C that the officer has to examine the applicability of the seized documents to such other person , who is a third party to the search. 94. In the case of such third party, the receiving officer shall issue notice to the third party under Section 153C and proceed to assess/re-assess the income of such other person in accordance with the procedure set out under Section 153A, if that Assessing Officer were satisfied that the books of accounts or documents or assets seized or requisitioned have a bearing on the determination of the total income of the other person. The contrast between the two Sections is apparent. 95. They rely on the decisions of the Delhi, Kerala and Gujarat High Courts in the cases of (i) Commissioner of Income Tax V. Anil Kumar Bhatia (352 ITR 493), (ii) Madugula Venu V. Director of Income Tax (29 taxmann.com 200), (iii) Commissioner of Income Tax V. St. Francis Clay (385 ITR 624), (iv) E.N.Gopakumar V. Commissioner of Income-ttax (Central) (390 ITR 131) and (v) Amar Jewellers Ltd. V. Assistant Commissioner of Income-tax (444 ITR 97). V (c) - Discussion 96. The provisions of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment to be passed for the six years prior to the year of search relating to the determination of total income of each assessment year. 98. There is thus no requirement for two orders, one, a regular assessment, and the other a search assessment and an order under section 153A/153C will deal with all issues touching upon the determination of total income of that assessee, whether emanating from the search or otherwise. 99. The provision also uses the word shall in the context of issuance of notice. Thus, it is incumbent upon the Assessing Officer to issue a notice under Section 153A to any person/entity searched, and in my view, irrespective of whether the seized material are received or otherwise. No doubt, it stands to reason that the materials seized must be analysed and forwarded to the receiving Assessing Officer at the very earliest to enable the officer to peruse the same even prior to issuance of notice. However, it is not a statutory precondition. 100. This is amply demonstrated by a comparison of the provisions with Sections 153A and with Section 153C. Section 153A is direct and requires an Assessing Officer to compulsorily issue a notice in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of such other person. 104. The summary of legal position as set out in the case of Kabul Chawla is as follows: Summary of the legal position 38. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of accounts, documents or assets seized or requisitioned are handed over to the Assessing Officer having jurisdiction over the third party, whichever is later. 107. Section 153B reads as follows: Time limit for completion of assessment under section 153A. 153B. (1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment, (a) in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed: Provided that in case of other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153C. 110. The fact that there are no statutory timelines for initiation of proceedings by issue of notices under Sections 153 A and C is thus apparent, though there are certain references that one can draw in this regard from the Statute in regard to certain specific conditions. In the case of notice under Section 153C, there is a pre-condition for the issuance of notice, which is the recording of satisfaction by the receiving officer. Such satisfaction cannot be recorded unless the seized material has been received by the officer. 111. In the case of assessment for the four years preceding the block period of six years, the pre-condition is the existent of an asset valued at Rs.50 lakhs or more. The ascertainment of this aspect also necessitates the existence of the seized material prior to the issuance of notice. Then again the inclusion of the seventh year, being the year of search under Section 153C(2) is also only after the receipt of books by the officer. In contrast, the only pre-condition for issuance of the notice under Section 153A is the search itself. I am thus unable to accept the argument of the petitioners to the effect that the transfer of the seized ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are issued too proximate to the expiry of limitation leading to a hurried framing of assessment and that the assessment is not based upon incriminating material. Such arguments are indeed available to assessees, but subsequent to the framing of the assessment itself, that would enable an examination of the material brought on record in order to test such submissions. V(d) Conclusion 114. The challenge to notices issued under Section 153A is rejected. V I. I SSUE - 4 Challenge to notices in terms of Section 153 C VI (a) - Submissions of petitioners with case-law 115. The challenge to Section 153 C notices is made by Ramamoorthy Srithar, Srithar Sudha, Nandhini Transports Pvt. Ltd., Kandasamy Thirumoorthy, Thirumoorthy Kala, Manickam Karthikayen, Kaycee Distillers, Chandran Somasundaram, C. Mariappan, Shanmugakani Sivajothi, Somasundaram Rishi Sharaan and Leela Distillers. 116. These petitioners are in receipt of notices under Section 153 C of the Act on the basis of materials found in the course of search, that are stated to relate to them. The first submission made by the petitioners is that in some of the cases, panchanamas hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand that issuance of notices for all 6 years is mandatory. The use of the words incriminating , the Kerala Bench has observed, does not flow from a reading of the statutory provision, and all material found would constitute valuable material upon which the officer may base the assessment. VI (c) - Discussion 121. The provisions of Section 153C have been extracted earlier, at paragraph 102 and require the receiving officer, that is, the jurisdictional assessing officer of the assessee concerned, to issue notice,if he is satisfied that the books of account/documents/assets seized or requisitioned have a bearing on the determination of total income of such other person for the block period. 122. The satisfaction recorded must state that the seized materials relate or pertain to such other person, and to the period in question, that is, the block of six years as stipulated under Section 153A. 123. I extract a sample satisfaction note in the case of Anitha Bottles a sole proprietary of C. Mariappan, petitioner in W.P.No.19414 of 2021, to examine whether the satisfaction arrived at by the authority may be said to be perverse or contrary to law. Satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed that this is the total sale which is recorded as GST Sales in Tally, 50% of which are only book entries. On perusal of the books of account (maintained in tally) for the FY:2018-19 kept at the office in the factory premise of M/s.Anitha Bottles, it was noticed that there were two accounts with names GST Purchases and Bottle purchase account . When it was asked to provide the evidences for the purchase accounts ledgers in the tally for one month, Shri K.Raj Kumar, provided the invoices for the purchases under the head GST Purchases and the hand written bought notes for the purchases mentioned under the head Bottle Purchase account as Annexure to his sworn statement. On verification of the bought notes, it was noticed that they have mentioned only names in the bill without any other details and it was also noticed that seller copy was retained with them. When it was asked to explain the same, Shri K.Rajkumar in the sworn statement recorded from him u/s 131 on 08.08.2019 stated in his answer to question number 22 of the statement that the purchases booked under the head Bottle Purchase Account are bogus and no actual purchase were made for such bills. The names ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 2019-20 (April to July) 1,20,73,517 2 2018-19 7,54,06,274 3 2017-18 8,32,11,217 4 2016-17 8,74,79,743 TOTAL 25,81,70,751 Further, it was noticed that on receipt of the payments from the M/s.SNJ group for the inflated invoices, M/s.Anitha Bottles has withdrawn cash of Rs.28.18 crore from their bank accounts for the FYs 2017-18 to 2019-20 (till July). The loose sheets containing monthly cash withdrawal from bank accounts, being printout of tally ledger account, have been seized vide ANN/MA/AB/LS/S. When it was asked to explain, the assessee could not provide any reason for withdrawal of such huge amounts of cash and has also not provided the evidences for the cash expenses. The FY wise withdrawals of cash are tabulated below: S.No. FY Cash withdrawal (in cr) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- was seized vide ANN/NN/CM/CASH/S and the same is required to be brought to tax for the A.Y. 2020-21. Thus, I am satisfied that the seized materials, jewellery and cash belong to the assessee and contain information relating to the assessee M/s.Anitha Bottles (Prop. C.Mariappan) and that the details in the seized materials have got a bearing on the computation of total income of the assessee for the A.Y. 2014-15 to 2020-21. Section 153C(1) as amended with effect from 01.04.2017 provides that if any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to or any books of account or document seized or requisitioned pertains or pertain to or any information contained therein relates to a person other than the person referred to in Section 153A, then the Assessing Officer of the other person shall proceed against each such other person and issue notice and assess, re-assess the income of the other person in accordance with the provisions of Section 153A, if that Assessing Officer is satisfied that the books of account or documents or asset seized or requisitioned have a bearing on the determination of the total income of such othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 127. This finding has been confirmed by the High Court and thereafter the Hon ble Supreme Court in statutory appeal. In the present case, the proceedings are, as on date, at a very preliminary stage and the petitioners have approached this Court challenging the very initiation of proceedings by notices. To intervene at this stage would require the establishment of legal error or a high degree of perversity, in the proceedings which threshold has not been achieved in this case, in my considered view. 128. The mahazar refers to certain sheets of paper that have been found in the course of search. The petitioners have argued that loose sheets of paper can hardly form the basis for initiation of assessment, relying upon the judgment of the Hon ble Supreme Court in the case of Manohar Lal Sharma V. Union of India ((2017) 11 SCC 731). 129. While they may be in a position to prove the irrelevance of the loose sheets in the course of assessment, this Court, in exercise of writ jurisdiction is not privy to the entirety of the seized materials and cannot embark upon an exercise of fact finding to determine the veracity of a part of the material. It is thus for the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce under Section 34 of the Evidence Act. This finding has to be weighed as against the context of the lis before the Apex Court. 136. The judgment in the case of Lalitha Kumari V. State of Uttar Pradesh ((2014) 2 SCC 1), Beni V. BisanDayal (AIR 1925 Nagpur 445), Mukundram V. Dayaram (AIR 1914 Nagpur 44) and State of Haryana V. Bhajan Lal (1992 Supp (1) SCC 335) were discussed, the Court coming to the opinion that the materials in question, being loose papers and electronic data were not good enough to constitute offences to direct the registration of a First Information Report (FIR) and investigation thereupon. They say that the materials found, must qualify as proper materials as per the decisions discussed by them. Thus, they reject the request for directing investigation by the Central Vigilance Commission. 137. In Income Tax proceedings, the test for the deployment of seized materials in an assessment is its credibility and the nexus between such materials and the ultimate conclusion sought to be drawn by the authorities. Such parameters may be applied only once the proceedings have gathered some momentum and facts have been marshaled, parties have applied the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there has been some extension of the orders passed originally, there is lack of clarity on the number of extensions and the periods that such extensions covered. Thus, and in light of the aforesaid ambiguity, I would merely reiterate the provisions of Section 281B. As no material has been placed before the Court to the effect that the extensions are contrary to statute, the submissions of the petitioners are rejected. 144. These Writ Petitions are dismissed. V III. ISSUE 6 C hallenge to notices under Section 143(2) and orders of assessment under 143(3) VIII (a) Discussion and Conclusion 145. W.P.Nos.9557, 9499, 17577, 17628, 17771 of 2021 challenge notices issued under Section 143(2) on various dates in the case of Ramamoorthy Srithar, Srithar Sudha, Kandasamy Thirumoorthy, Thirumoorthy Kala and Manickam Karthikeyan. 146. W.P.Nos.23586, 23577, 24584, 23588, 24525 and 23579 of 2021challenge orders of assessment passed in terms of the provisions of Section 143(3) read with Section 153B(1)(b) of the Act on various dates in the case of SNJ Breweries, SNJ Distillers, Nandhini Transports, Kaycee Distillers, C.Mariappan and Leela Distillers. 147. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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