2019 (8) TMI 301 - HC - Income Tax

Validity of Income Tax search upheld, Tribunal order set aside. Court rules in favor of revenue.

The Principal Commissioner of Income Tax, (Central), Bengaluru, The DCIT, Central Circle 1 (3), Versus M/s. Associated Mining Co.,

The Principal Commissioner of Income Tax, (Central), Bengaluru, The DCIT, Central Circle 1 (3), Versus M/s. Associated Mining Co., - [2019] 417 ITR 420 ... Issues Involved:1. Validity of search under Section 132 of the Income Tax Act.2. Tribunal's failure to refer to the decision of the Delhi High Court in MDLR Resorts (P) Ltd. vs. Commissioner of Income Tax.3. Tribunal's reliance on the decision in J.M. Trading Corporation vs. ACIT.Issue-wise Detailed Analysis:1. Validity of Search under Section 132 of the Act:The primary issue was whether a search conducted at a location other than the official place of business of an assessee is valid under Section 132 of the Income Tax Act. The court clarified that under Section 132, the competent authority, if it has reason to believe that any person is in possession of undisclosed income or property, can authorize a search of any building, place, vessel, vehicle, or aircraft where such items are suspected to be kept. The court emphasized that the location of the premises is related to the satisfaction reached by the authorities, and the authorized officer can search any place mentioned in the warrant as well as any other place where he suspects that books of accounts belonging to the assessee are kept. Therefore, the change in the address of the firm does not invalidate the search, as long as the search is conducted in a place where the books of accounts or other documents are suspected to be located.2. Tribunal's Failure to Refer to MDLR Resorts (P) Ltd. vs. Commissioner of Income Tax:The court noted that the Tribunal did not refer to the Delhi High Court's decision in MDLR Resorts (P) Ltd. vs. Commissioner of Income Tax, which held that the address mentioned in the search warrant need not be the registered office or head office but can be any place where books of accounts, documents, etc., are located. The court reiterated that the search can be conducted at any place where the authorities suspect the books of accounts or other documents are kept, and the mere change of address does not invalidate the search.3. Tribunal's Reliance on J.M. Trading Corporation vs. ACIT:The Tribunal relied on its earlier decision in J.M. Trading Corporation vs. ACIT, where it was held that the premises where the assessee was functioning were not searched, and thus, the search was invalid. However, the court distinguished the facts of the present case from J.M. Trading Corporation, noting that in the present case, the search was conducted at the premises indicated in the authorization, which was occupied by the erstwhile partner of the assessee-firm. The court held that the search conducted at the premises where the books of accounts were found and seized was valid, even if the premises did not belong to the assessee at the time of the search.Conclusion:The court concluded that the search conducted under Section 132 was valid, and the change of address did not invalidate the search. The Tribunal's failure to refer to the relevant decision and its reliance on a distinguishable case led to an erroneous conclusion. The court set aside the Tribunal's order and dismissed the appeals filed by the assessee, answering the substantial questions of law in favor of the revenue.