TMI Blog2024 (5) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... the Officers of Assessment Wing who makes assessment and those mentioned in Section 131 (1A) are of the Investigation Wing who carries out search survey and as such both the sections operates in different fields. Thus before making of a search, a notice under Section 131 (1A) of the Act has to be issued and since the taxing provisions of the statutes are to be interpreted strictly, the issuance of the notice under Section 131 (1A) of the Act in the instant case after conducting of the search is absolutely illegal without jurisdiction. Taxing Statutes are to be interpreted strictly - It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment - See Ajmera Housing Corporation Anr. 2010 (8) TMI 35 - SUPREME COURT] Ambiguity in the taxing provision - The words of a taxing statute must never be stretched against a tax-payer and if the legislature has failed to clarify its meaning by use of appropriate language, the benefit must go to the tax-payer. The Apex Court held that eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under Section 132 of the Act. Thus, the two essential conditions being absent before the impugned search under Section 132 was conducted, the same is without jurisdiction. Thus the subject search is absolutely illegal inasmuch as it is contrary to the express provisions of Section 131 (1A) of the Act. WP allowed. - HONOURABLE MR. JUSTICE KAUSHIK GOSWAMI For the Petitioner : Dr. A Saraf For the Respondent : Asstt. S.G.I. JUDGMENT ORDER (CAV) Heard Dr. A. Saraf, learned Senior Counsel assisted by Mr. P.K. Bora, learned counsel for the petitioner and Mr. S. C. Keyal, learned Standing Counsel for the Income Tax Department, Government of India appearing for all the respondents. 2. The present writ petition has been filed by the petitioner challenging the illegal search and seizure conducted at the residential premises of the petitioner on 02.12.2020 and the impugned notices dated 29.12.2020, 05.01.2021, 21.01.2021 and 28.01.2021, issued by the respondent No. 3, on the ground that the same is absolutely illegal and without jurisdiction and in violation of the mandatory provisions of the Income Tax Act, 1961(herein after referred as the Act ) 3. The facts of the case is that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 131 (1A) of the Income Tax Act 1961 was not within the jurisdiction of the Respondent No. 3 and directed the petitioner to send the soft copy of the books of account and others documents through email. 7. In reply to the notice dated 5-1-2021 issued by the respondent No. 3, the petitioner sent a reply vide letter dated 16-1-2021 by making the submission that the decision in the case of Classic Builders Developers v. Union of India 251 ITR 492 (MP ) as referred to its reply dated 05.01.2021 was related to a survey conducted and was not related to a case where search had already been conducted. The petitioner in support of its contention that issuance of the notice u/s 131 (1A) of the Act after the search was illegal relied on a decision of the Allahabad High Court in Anita Sahani v. DIT (Investigation) 266 ITR 597. 8. The respondent no. 3 however without appreciating the provisions of Section 131 (1A) of the Act in the correct perspective, issued another notice dated 21-1-2021 in the purported exercise of powers u/s 131 (1A) of the Act directing the petitioner to appear before the said authority on 25-1-2021 to give and/or produce either personally or through an authorized represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him under Section 131 of the Act. 14. He further submits that the summons under Section 131 (1A) of the Act have been assailed in this petition on the ground that as a search and seizure had already been taken place under Section 132 (1) (i to v) of the Act, a further summons under Section 131 (1A) of the Act would not be maintainable inasmuch as, Section 131 (1A) of the Act provides that if any of the authorities mentioned therein has reason to suspect that any income has been concealed or likely to be concealed, he may before taking action under Section 132 (1) (i to v), may invoke the power under Section 131(1) for making any enquiry or investigation relating thereof. 15. He further submits that the pre-condition of invoking the power of Section 131 (1) under Section 131 (1A) of the Act for making an enquiry or investigation in respect of there being any reason to suspect that any income has been concealed or likely to be concealed is that such power can be invoked only before the authority concerned had taken any action under Section 132 (1) (i to v) of the Income Tax Act. He further submits that as in the instant case, the action under Section 132 (1) (i to v) had already been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 131 (1A) of the Act can be exercised notwithstanding that no proceeding is pending before the Investigating Officers. In other words, Section 131 (1A) can also be invoked for the purposes of a preliminary inquiry before carrying out the search operations.He further submits that issuance of notices under Section 131 (1A) post search would not, in any manner, render proceedings under Section 132 invalid, if they were otherwise initiated pursuant to valid authorization issued after recording satisfaction on basis of material available on record. He further submits that provisions of Section 131 (1A) do not require that before carrying out search proceedings under Section 132, a notice is required to be given to assessee. 20. He further submits that it is not required under the provision of Section 131 (1A) that before proceeding with the provision of Section 132 a notice is required to be given to the assessee and it cannot be because the provision of Section 132 provides power of search and seizure and if the notice would be given, then the whole purpose of conducting search and seizure will vanish, as because the assessee after knowing the fact that a notice for initiating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority.] (2) For the purpose of making an inquiry or investigation in respect of any person or class of persons in relation to an agreement referred to in section 90 or section 90A, it shall be competent for any income-tax authority not below the rank of Assistant Commissioner of Income-tax, as may be notified by the Board in this behalf, to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before it or any other income-tax authority. (3) Subject to any rules made in this behalf, any authority referred to in sub-section (1) [or sub-section (1A) or sub-section (2) may impound and retain in its custody for such period as it thinks fit any books of account or other documents produced before it in any proceeding under this Act: Provided that an Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal 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 is in, the building, place, v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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.] 25. From a plain reading of Section 131 (1A) of the Act it is crystal clear that the power under Section 131 (1A) cannot be said to be an independent power in itself but is the power for the purpose of making enquiry and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Court regarding discovery, production of evidence, etc., in relation to the judicial proceedings before them in regard to the assessment and there was no question of repetition of those Officers performing judicial function in sub-s. (1A) of s. 131 of the Act, but the power under s. 131(1A, is exercised notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income tax authority, for the purpose of the items enumerated in clauses (1) to (v) mentioned therein. But under the power of such search and seizure under s. 132 of the Act, the concerned authority cannot exercise power as enumerated in clauses (a), (b), (c) and (d) of s. 131(1) of the Act, on the basis of the reasons to believe consequent upon information in his possession in regard to the undisclosed income or property in regard to the income or property which is concealed or is likely to be concealed. Sub-s. (1A) of s. 131 of the Act empowers him or makes him competent for exercise of power, in his jurisdiction, as conferred under sub-s. (1) of s. 131 on the authorities mentioned under sub-s. (1) for proceeding against such person or class of persons for maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or is likely to be concealed, by any person or class of persons, within his jurisdiction, then, for the purposes of making any enquiry or investigation relating thereto, it shall be competent for him to exercise the powers conferred under sub-section (1) on the income-tax authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other income-tax authority. 30. In view of the above, it is absolutely clear that before making of a search, a notice under Section 131 (1A) of the Act has to be issued and since the taxing provisions of the statutes are to be interpreted strictly, the issuance of the notice under Section 131 (1A) of the Act in the instant case after conducting of the search is absolutely illegal without jurisdiction. TAXING STATUTES ARE TO BE INTERPRETED STRICTLY: 31. It is a well settled law that taxing statutes are to be interpreted strictly and while interpreting the taxing statue one must have argued to the strict letter of law and not merely to the spirit of law and one cannot be taxed by inference or by analogy. In Cape Brandy Syndicate V. Commissioner of Inland Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in construing a taxing statute one must have regard to the strict letter of the law and not merely to spirit of the statute or the substance of the law .. 37. The aforesaid law again reiterated in the case of H.H. Lakshmi Bai Anr. Vs. Commissioner of Wealth Tax Ors, reported in (1994) 2 SCC 534 at paragraph 10 the Apex Court held that taxation statute in particular has to be strictly construed and that there is no equity in a taxing provision. In Federation of A.P. Chambers of Commerce Industry and Ors. Vs. State of A.P. and Ors, reported in (2000) 6 SCC 550 at paragraph 7, the Apex Court held that it is trite law that a taxing statute has to be strictly construed and nothing can be read into it. In Ajmera Housing Corporation Anr. Vs. Commissioner of Income Tax, reported in (2010) 8 SCC 739 at paragraph 36 it was held as under: 36. It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment . AMBIGUITY IN THE PROVISIONS - BENEFIT MUST GO TO THE TAX PAYER: 38. It is a sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legislature having clearly laid down the manner in which the notice under Section 131 (1A) is to be issued, the same has to be mandatorily followed. Any manner other than what is provided in the aforesaid provision is necessarily forbidden. Therefore, it is imperative that before conducting search under sub-clause (i) of sub-section 1 of Section 132 of the Act, a notice under sub-section 1A of Section 131 has to be issued. 43. The submission of the respondents that Section 131 (1A) of the Act was introduced to extend similar powers to an authorized Officer within the meaning of sub-section (1) of Section 132 before he takes search and seizure action under clauses (i) to (v) of that sub-section which is in conformity with the submissions advanced on behalf of the petitioner that Section 131 (1A) was introduced in the statute empowering the Authorized Officer before he takes search and seizure action under clauses (i) to (v) of that sub-section. 44. The decisions of the Orissa High Court in the case of Liberty Marine Syndicate (P) Ltd. PCIT, Cuttack, [(2017) 394 ITR 277], relied by the respondent is not applicable in the present case in as much as in the said case, a notice under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of challenge in the writ petition. The Gujarat High Court at paragraph 11, in the last three line of the paragraph, held as under: As noted herein above, the notices under s. 131 (1A) of the Act are not subject-matter of Challenge in the present petition, hence, it is not necessary to examine the validity of such notices. Since the notice under Section 131 (1A) was not matter of challenge, the High Court had not examined the validity of said notice and thereby, the aforesaid decision cannot said to be have any applicability in the present case. 49. Pertinent also to refer to the affidavit-in-opposition filed on behalf of the respondents no. 2 and 3, wherein the respondents have stated that a search and seizure action under Section 132 of the Act in the case of the petitioner was conducted on 04.12.2020, on the basis of the authorization dated 02.12.2020, issued by the Principal of Income Tax (Investigation), NAR, Guwahati (respondent no. 2). In the said affidavit, it is further stated that during the post search investigation, Deputy Director of Income Tax (Investigation) Unit (2) (3), Dibrugarh (respondent No. 3) issued notices to the petitioner under Section 131 (1A). It is thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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