2025 (8) TMI 58 - HC - Income Tax

No Hard Copy Books Seized Under Section 133A; Certified Copies Provided, Assessment Orders Upheld

Lunkad Media And Entertainment Ltd. And Others Versus Union Of India, Parkson Securities Limited Versus The Assistant Commissioner Of Income Tax 3 (1) And Others, Lunkad Securities Ltd., Rajvir Marketing And Investment Limited, Lunkad Media And Entertainment Ltd., Lunkad Securities Ltd. And Others, Lunkad Securities Ltd., West End Management Technologies Pvt. Limited, Parkson Securities Limited, Rajvir Marketing And Investment Limited Versus The Assistant Commissioner Of Income Tax-3 (1) And Others

The HC held that no hard copies of books of account were impounded during the survey under s 133A. The petitioners were entitled to certified copies of ... Retention of documents during survey u/s 133A - Validity of u/s 133A(3) (ia), order passed u/s 281B and order passed u/s 133(A)(3)(ia)(b) - Seeking direction to the respondents to return all the documents, paper, hard disk impounded by the order and the document taken without receipt of the petitioners - HELD THAT:- By way of reply, it is specifically stated by the respondents that during the survey proceedings, no hard copies of books of account like cash book, ledger and journal were found, therefore, none could be impounded. Vide order dated 30.10.2007, this Court held that the petitioners / Company is entitled to obtain certified copies of the books of account and other documents impounded by the respondents on payment of charge prescribed under the law, hence, the respondents were directed to supply, in case the petitioners appliy for grant of certified copies of the relevant book of account and other documents. During the pendency of this petition, the assessment proceedings were completed by the Assessing Officer. During the pendency of this petition, an interlocutory application was filed on 07.03.2007 seeking direction to hand over the assessment orders to the petitioners. The said order was complied with by the respondent. Thereafter, the appeals were filed before the learned CIT, which were partly allowed, and the petitioners, thereafter, filed Income Tax Appeals before the learned ITAT, and all were dismissed by a common order. The petitioners have preferred the aforesaid income tax appeals, which have been admitted on common questions of law. Since all the impugned orders have culminated in assessment orders and have been upheld by the ITAT, therefore, this writ petition has rendered infructuous as all the appeals are liable to be decided on the question of law framed by this Court while admitting the appeal. Share application money unexplained - Reliance on loose scrap of unsigned calculations on a paper that is not even a letter pad of the Appellant, nor does it bear any rubber stamp - Search was conducted by the Income Tax Authorities in the companys' affairs and the Income Tax Authority examined all the material, which was confirmed by the Commissioner of Income Tax as well as the ITAT. Therefore, loose scrap papers containing certain entries of money were found in corroboration with the bank statements, and the same were duly appreciated by the Assessing Officer, CIT as well as ITAT, and all the correspondence money found in the bank account has rightly been treated as books of account. Hence, the facts and the law involved in the case of V.C. Shukla [1998 (3) TMI 675 - SUPREME COURT] are different from the case at hand. Hence, question Nos. 1 & 2 are answered against the petitioners/appellants. Appellant could not produce any documents before the Assessing Officer or the CIT because books of accounts were under seizure of the Department - Appellants could not produce any document before the Assessing Officer or CIT despite the opportunity available to them. In the writ petition, the interim order was passed for the supply of certified copies of the documents seized during the search. The respondents came up with the reply that in compliance with the said order, all the documents were supplied. Thereafter, the petitioners never filed any application alleging non-compliance with the order. Therefore, all the materials which were seized from the premises of the appellants were provided to them - Question No.3 is also answered against the appellants. Survey operation carried out was actually a “search” or not? - Whether the order of assessments, as confirmed by ITAT, is bad in law and illegal as they were passed without following the procedure under Section 153-A, 153-B,153-C and 153-D? - Principal Officer, M/s Praksons Securities Ltd. mentioned that vide letter dated 21.12.2011, a request was made for supply of the copies of all the books of account seized during the search operation conducted on 2nd & 3rd March, 2006. The Assistant Commissioner has simply replied that in this connection, you are requested to please receive the photocopies of all the seized documents and books of account on 22.12.2011. Therefore, the Assistant Commissioner has never admitted in its letter that on 2nd & 3rd March, 2006, there was a search operation. The appellants tried to put the word search in the mouth of the Assistant Commissioner by mentioning the word search operation in their letter. Admittedly, the provisions of Sections 153A to 153D of the Act apply in case of search under Section 132 of the Act and not in case of survey. Hence, questions No.4 & 5 are also answered against the appellants. ISSUES: Whether the survey conducted under Section 133A of the Income Tax Act, 1961, was lawfully authorized and within the scope of the statutory powers.Whether entry into and search of residential premises adjoining business premises during the survey was lawful under Section 133A of the Act.Whether seizure and retention of books of account and other documents during the survey complied with the procedural safeguards under Section 133A(3)(ia) of the Act.Whether the impounded documents, including loose papers and unsigned calculations, can be treated as 'books of account' attributable to the assessee for the purpose of assessment.Whether denial of access to the original seized records during assessment and appellate proceedings violated principles of natural justice and rendered the assessment orders invalid.Whether the survey operation was in substance a 'search' attracting the provisions of Sections 153A to 153D of the Act, and if so, whether the assessments passed without following the procedure under these sections are valid.Whether the Income Tax Appellate Tribunal (ITAT) erred in dismissing appeals without remanding the matter despite deficiencies in supply and authentication of seized documents.Whether additions made under Section 68 of the Act on the basis of unexplained share application money and cash deposits were justified in absence of proper books of account. RULINGS / HOLDINGS: The survey under Section 133A of the Act was lawfully authorized and conducted within the statutory scope; the survey authorization pertained to the business premises and not the residential premises.Entry into the residential premises was unlawful as Section 133A does not permit survey of residential premises distinct from business premises; however, this did not vitiate the entire survey operation.Seizure and retention of documents under Section 133A(3)(ia) require recording of specific and detailed reasons; mere use of the word 'incriminating' was held insufficient, but in the present case, the retention was upheld as the documents were relevant and connected to business activities.Loose papers and unsigned calculations, when corroborated by bank statements and other material, can be treated as 'books of account' attributable to the assessee for assessment purposes, distinguishing from the precedent relied upon by the petitioners.Denial of access to original seized records was addressed by directions to supply certified copies; since the petitioners failed to file any application alleging non-compliance, the contention of denial of natural justice was rejected.The survey operation was not a 'search' within the meaning of Sections 153A to 153D of the Act; thus, assessments passed without following the procedure under these sections are valid.The ITAT did not err in dismissing appeals without remand, as adequate opportunity was given and certified copies of documents were supplied in compliance with court directions.Additions made under Section 68 of the Act were justified on the basis of corroborated material and unexplained cash deposits, notwithstanding absence of traditional books of account. RATIONALE: The Court applied the statutory framework of the Income Tax Act, 1961, particularly Sections 133A, 132, 143(3), 144, 147, 153A to 153D, and procedural safeguards therein.The Court distinguished between 'survey' under Section 133A and 'search' under Section 132, emphasizing that survey powers are limited and do not extend to residential premises not connected to business.The requirement under Section 133A(3)(ia) to record reasons for seizure was interpreted strictly, but factual findings supported the retention of documents as relevant to the business investigation.The Court relied on precedents including the Apex Court's judgment in Central Bureau of Investigation v. V.C. Shukla & others, clarifying the evidentiary value of loose papers as books of account when corroborated by other evidence.The principle of natural justice was upheld by ensuring supply of certified copies of seized documents; failure to challenge compliance negated claims of denial of opportunity.The Court rejected the appellants' attempt to recharacterize the survey as a search based solely on an internal letter, holding that procedural safeguards applicable to search do not apply to survey operations.The Court affirmed the ITAT's factual findings and concurrent orders, declining to interfere absent any jurisdictional error or procedural illegality.The Court recognized the legitimacy of assessment additions based on corroborated evidence of unexplained cash credits and share application money, even in the absence of traditional books of account.