TaxTMI 
TaxTMI 
2005 (6) TMI 224
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....e facts of the case before us at this stage. However, the background in which this Special Bench has come to be constituted can be outlined here. This case was initially fixed for hearing before a Division Bench of the Tribunal i.e. 'D' Bench, New Delhi. During the course of hearing, it was noticed by the Members constituting the Division Bench that the assessee-company has challenged, inter alia, the validity of search conducted under section 132 in its appeal and the question involved for consideration was whether the Income Tax Appellate Tribunal has powers to adjudicate upon the issue relating to the validity of search conducted under section 132 while disposing of the appeal against the block assessment. It was also noticed by the Division Bench that in a Third Member decision in the case of Dr. A.K. Bansal v. Asstt. CIT [2000] 73 ITD 49, the Allahabad Bench of ITAT has held that in the event of assessee challenging the validity of search under section 132 on the ground of non-existence of any circumstances/conditions enumerated in clause (a), (b) or (c) of sub-section (1) of section 132 or challenging the very factum of search on the ground that there was no search wa....
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....n referred to it by the Hon'ble President, a similar issue came to be decided by the Special Bench of ITAT consisting of three Members constituted at Bangalore in the case of C. Ramaiah Reddy v. Asstt. CIT [2003] 87 ITD 439 and taking note of the same, a reference was made to the Hon'ble President to constitute a Larger Bench of five Members to consider and decide this question of law. Accordingly, the Hon'ble President constituted this Special Bench consisting of five Members to decide the said question. 4. Sr. Advocate Shri C.S. Aggarwal initiated the arguments on behalf of the assessee. He submitted that although no appeal has been provided either under section 246A or 253 against the warrant of authorization purportedly issued under section 132(1) and the assessee thus has remedy in filing a Writ Petition before the High Court challenging the said authorization, when the assessee seeks to challenge the assessment made under section 158BC as a result of search, he can very well dispute the validity of search on the basis of non-issue of warrant of authorization or even on the basis of issue of authorization which was not valid. He submitted that the dispute thus p....
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....ssee that the Tribunal can go into the question of sufficiency of reasons, but the stand of the assessee is that while examining the applicability of Chapter XIV-B, the Tribunal has the powers to see that the provisions of the said Chapter have been properly applied inasmuch as there is a warrant of authorization issued against the assessee and the same is validly issued based on such reasons as are required to initiate action under section 132(1). He also submitted that the assessee is not denying or disputing the position that no separate appeal is provided in the Act against the use of power under section 132(1) by the concerned Departmental Authorities. The case of the assessee, however, is that if such power is not invoked in accordance with law, he can certainly dispute/challenge the same in the appellate proceedings as the right of the assessee gets affected only when an assessment is made under Chapter XIV-B. 7. Shri Aggarwal further submitted that a similar issue had arisen for consideration before the Hon'ble Chandigarh Bench of ITAT in the case of Raj Kumar Gupta and in its order dated 4-9-2001 in IT (SS) Appeal No. 38 (Chd. of 1997), the Tribunal held that it is ....
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.... examine the relevant record and see for itself whether there was a warrant of authorization issued against the assessee and whether the pre-conditions as prescribed under section 132(1) for issue of such warrant have been properly satisfied. 9. Reliance was placed by Shri C.S. Aggarwal on the decision of Jodhpur Bench of ITAT in the case of Ashok Kumar Soni v. Dy. CIT [2001] 72 TTJ (Jodh.) 323 wherein it was held that irregular and improper exercise of power for issuance of search warrant can be scrutinized and examined judicially by the Tribunal in the appellate proceedings before it and although sufficiency of satisfaction/belief for issuing such warrant is not justiciable, the factum of very existence of such satisfaction/belief is justiciable. He also placed reliance on the decision of Jodhpur Bench of ITAT in the case of Chitra Devi v. Asstt. CIT [2002] 77 TTJ (Jodh.) 640 wherein it was held that the Tribunal has the jurisdiction as also the duty to examine the validity of authorization for search when the same is challenged before it and it can adjudicate on such examination as to whether the jurisdictional conditions precedent for issuance of authorization of search did ....
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....ase and even if the same was issued, conditions precedent as prescribed in clauses (a), (b) and (c) of section 132(1) were not satisfied. He contended that the search conducted in this case, therefore, was invalid and the assessment completed under Chapter XIV-B in pursuance of such invalid search is liable to be quashed. 11. As regards the decision rendered by Bangalore Special Bench of ITAT in the case of C. Ramaiah Reddy v. Asstt. CIT [2003] 87 ITD 439, Shri Aggarwal submitted that the same cannot be considered as the precedent or ratio decidendi on the issue under consideration mainly because the issues raised before the Special Bench in the said case were different and the issue as is specifically raised for consideration before the Special Bench in the present case was not there directly for consideration of the Bangalore Special Bench. He invited our attention to the three questions referred to the Bangalore Special Bench of the ITAT by the Hon'ble President to show that the issue relating to validity of search and especially the Tribunal's power to go into that aspect was not specifically referred to by the Hon'ble President. 12. Advocate Shri V.H. Patil a....
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.... gone into by the Tribunal while deciding the appeals filed against the block assessment, it is then difficult to understand what exactly is the bar in not looking into the aspect of validity of search on the basis of satisfaction recorded by the competent authority. He also contended that even if the recording of such satisfaction by the competent authority is assumed to be an administrative Act for the sake of argument, other administrative acts of similar nature are being challenged regularly before the High Court in the Writ Jurisdiction. He submitted that even the Bangalore Special Bench of ITAT also reckoned the power of the Tribunal to go into the validity of search, but ultimately circumscribed such examination which was totally unjustified. In support of his contentions, he also relied on the decision of Allahabad Bench of ITAT in the case of Dr. A.K. Bansal and that of Hon'ble Bombay High Court in the case of CIT v. Mrs. Sandhya P. Naik [2002] 253 ITR 534. 13. Shri M.S. Syali, Sr. Advocate appearing on behalf of Maharani Kam Sundri as Intervener submitted that acts done by a Court which has no jurisdiction either over the person, the cause or the process are said t....
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....997] 1 SCC 416 wherein it was held that there is no wrong without a remedy. He submitted that there is no doubt that it is for the assessee to make out a prima facie case to show that such satisfaction was not there or that the conditions specified in clauses (a), (b) and (c) of section 132(1) were not satisfied. However, once such case is made out, the Tribunal having inherent and plenary powers as held by Hon'ble Supreme Court in the case of ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815, has ample jurisdiction to go into this aspect and examine the issue relating to validity of search. 16. Reliance was placed by Mr. Syali on the decision of Hon'ble Supreme Court in the case of Berium Chemicals Ltd. v. CLB AIR 1967 SC 295 wherein it was held that the words 'reason to believe' or 'in the opinion of' do not always lead to the construction that the process of entertaining 'reason to believe' or 'the opinion' is an altogether subjective process not lending itself even to a limited scrutiny by the court that such 'reason to believe' or 'opinion' was not formed on relevant facts or within the limits or within the restrains of the....
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....lenged. Reliance was placed by him on the decision of Karnataka High Court in the case of Ashok & Co. v. CIT [1992] 195 ITR 786 and that of Hon'ble Rajasthan High Court in the case of Deep Chand Kothari v. CIT [1988] 171 ITR 381 to contend that question of jurisdiction can be raised at any time even during the course of collateral proceedings. He contended that when validity of reopening can be challenged in the reassessment proceedings before the Assessing Officer even if such reopening was approved by Chief CIT on being satisfied himself about the escapement of income, there is no reason why validity of initiation of search under section 132(1) cannot be challenged in the block assessment proceedings. Reliance was also placed by him in this regard on the decision of Hon'ble Delhi High Court in the case of Mrs. Kailash Suneja v. Appropriate Authority [1998] 231 ITR 318 wherein it was held that Appropriate Authority having acted in an arbitrary fashion in arriving at the fair market value of properties ignoring the sale instance of comparable properties and relying On sale instances of properties situated far away from subject properties, by making adjustments for plus and ....
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....ity of order passed under section 158BC, the assessee can very well challenge the validity of search because the very jurisdiction to proceed under section 158BC is assumed by the Assessing Officer as a result of search which obviously means a valid search. 20. Shri Shiva Swamy, learned counsel appearing for M/s. Anuradha Timber Estates as intervener mainly attempted to assail the order of the Bangalore Special Bench of ITAT in the case of C. Ramaiah Reddy and that too on the various issues relating to Panchanama. He submitted that several conclusions drawn by the Tribunal in the said order on these issues are contrary to the Statute, self-contradictory and illogical. In this regard, he highlighted the following aspects: (i) The Bangalore Special Bench was of the view that in every case of search there should necessarily be a panchnama whereas it is nowhere stated in the Income-tax (IT) Act or in the IT Rules that in every case of search there should be a panchanama. (ii) The Bangalore Special Bench held that it is the duty of the authorized officer to record the conclusion of search in the last panchnama whereas it is nowhere stated in the IT Act or in the IT ....
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....be computed only with respect to the main section 158-BE(1). He submitted that the Bangalore Special Bench has erred in holding that Explanation 2 completely overrides section 1158BE(1) and that this Explanation comes into play in the case of each and every search. According to him, if the provisions of section 158-BE(1) and Explanation 2 to that section are interpreted harmoniously, the same will lead to the conclusion that if there is more than one authorization for search in the case of the same person, the date of execution of the 'last' of such authorizations must be taken as the starting point for ascertaining the limitation period. In this regard, his contention was that since the word 'Panchanama' is not defined and there is also no need to write a panchanama in each and every case or to record the conclusion of a search in the panchanama under the statute, provisions of Explanation 2 to section 158BE(1) should be ignored completely. For proper appreciation of the concept of 'execution of authorisation', he relied on the decision of Hon'ble Bombay High Court in the case of CIT v. Mrs. Sandhya P. Naik [2002] 253 ITR 534 wherein it was held that th....
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....e for a quasi-judicial authority to apply the provisions contained in Explanation 2(a) to section 158BE when the most crucial term in the Explanation, namely 'panchanama' is not defined either in the Income-tax Act or in the Income-tax Rules or in the Criminal Procedure Code, and when the dictionary meaning is inappropriate? Question 2: Without prejudice to the above question, whether there is a legal requirement for an authorized officer to prepare a 'panchanama' for recording any activity that takes place during the search? Question 3: Whether there is a legal requirement that an authorized officer should record the conclusion of a search in any 'panchanama' or in a chronologically 'last panchanama'? Question 4: Whether the expression "the authorization referred to in subsection (1)" appearing in Explanation 2 to section 158BE refers to "the last of the authorizations for search" already mentioned in section 158BE(1)? Question 5: Whether it is possible to state that the limitation time should start from the 'last panchanama' when the last panchanama itself can be prepared after the assessment order has be....
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.... contrary to the provisions of the legislation contained in the Income-tax Act or in the Income-tax Rules, or which are self-contradictory, or which are illogical? Question 13: Whether the question regarding the 'practicability' of seizure of any article or thing is a question of fact or question of law, and whether it can be adjudicated by the Income Tax Appellate Tribunal? Question 14: Whether the term 'Seizure' includes taking possession of any article or thing by putting a lock or a seal? 24. Shri Shiva Swamy submitted that none of the above questions raised by him deal with the administrative discretion exercised by the Departmental Officers in the course of a search and since the same relate to the interpretation of certain provisions of the Income-tax Act and the Income-tax Rules, they can always be raised before an Appellate Tribunal. 25. In reply, Shri G.C. Sharma, learned Special Counsel appearing for the Revenue, submitted that for deciding the issue raised before this Special Bench, it is necessary to recognize the distinction between an administrative/executive power conferred on a specific authority appointed under the Income-ta....
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....e grounds of appeal before ITAT and power of Tribunal to adjudicate upon them must arise out of the order of the Assessing Officer, what the Assessing Officer could not do while performing his function, the Tribunal is not competent to do the same in appeal before it. He submitted that the jurisdictional fact of search is to be gathered from the record and once this jurisdictional fact of the search having been initiated during the specified period is established, the Assessing Officer has to proceed to frame the assessment as provided in Chapter XIV-B and the Tribunal has no power to pronounce as an Appellate Authority upon the validity of search and nullify the assessment made under Chapter XIV-B. He contended that the Assessing Officer is not authorized under the Act to question in assessment proceedings the validity of search and it therefore follows that the Tribunal is also not competent to decide that question. 27. Shri G.C. Sharma pointed out that similar submissions were made before Delhi Bench of the ITAT in the case of Virinder Bhatia v. Dy. CIT [2001] 79 ITD 340 and Division Bench of the Tribunal was pleased to accept the propositions urged on behalf of the Revenue. ....
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....132(1) is beyond the scope of an appeal provided under the Act, then it cannot be indirectly challenged while challenging the validity of a block assessment. He also contended that it is an incorrect proposition of law to still contend that while challenging the validity of the assessment before the appellate authority, the appellant could challenge the validity of search and that the appellate authority is duty bound to see whether a warrant of authorization was issued and whether the conditions for issuance of the search warrant were satisfied. He submitted that all that the Assessing Officer or the appellate authorities including "tribunal can see/check from the record is as to whether the search had been initiated within the prescribed period for the purposes of framing a block assessment. 30. As regards the decision of Hon'ble Delhi High Court in the case of Ajit Jain relied upon by the learned counsel for the assessee, Shri G.C. Sharma submitted that the same is not an authority to canvass an answer to the question raised before the Special Bench. He contended that the passage of the said decision only lays down that alternate remedy is not a bar to issuance of a writ ....
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....pter XIV-B of the Income-tax Act. He reiterated the stand of the Revenue that there can be no challenge of the exercise of an executive action before a quasi-judicial authority and that the Hon'ble Tribunal is only empowered to examine whether the search has been, in fact, initiated and is not empowered in law to examine whether reasons to believe existed before the issuance of the search warrant. He submitted that the action under section 132(1) cannot be compared with the reopening of an assessment under section 147 by issue of a notice under section 148 because the reasons are recorded and subsequently reassessment is framed by the Assessing Officer while performing functions of a quasi-judicial authority whereas the reasons under section 132(1) are recorded not by the Assessing Officer but by an independent authority competent to issue warrant under section 132 which is purely an executive action. He contended that the Tribunal is merely a quasi-judicial authority and such quasi-judicial authority has no control over exercise of an executive power by an authority prescribed in the Act for that purpose. According to him only the High Court has the power and the authority to ....
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....nder section 158BC is based upon the conduct of the search, no further document beyond Panchanama is required to be produced by the Department before the Tribunal to establish the factum of search. Without prejudice to this contention, he submitted that the department is in possession of an authorization of search issued in the name of appellant duly signed by the Director of Income-tax (Investigation), and if the Tribunal comes to a conclusion that it is entitled to see the authorization of search and passes an order accordingly, the department is ready to produce the same for the perusal of members of the Tribunal. He, however, contended that if at all it is to be held that the Tribunal can direct the production of warrant of authorization, it should not be laid down as a rule but this can appropriately be done only after filing an affidavit by the assessee as per rule 10 of ITAT Rules. 34. Shri Sharma also contended that the case laws relied upon by Advocate Shri Syali are with reference to different Acts and in the context of altogether different provisions which are not at all pari materia with the provisions of section 132(1). In this regard, he submitted that the Tribunal....
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....orial area of whole of India. His contention, therefore, was that each and every Director of Income-tax (Investigation) can exercise his powers vested in him under section 132 in respect of the entire territory of India and thus enjoys inherent jurisdiction over all the cases falling in the territory of whole of India. 37. As regards the various issues sought to be raised by Advocate Shri Shivaswamy, Shri Sharma contented that Intervener cannot enlarge the scope of question referred by the Hon'ble President for the consideration of Special Bench and since the issues sought to be raised by him are not within the scope of question specifically referred to by the Hon'ble President to this Special Bench, the same cannot be entertained. He submitted that many issues raised by him relating to irregularity or infirmities during the course of search, in any case, can be gone into by the Tribunal depending on the facts and circumstances of each case. 38. As regards the issue of examining the material before the Director of Income-tax (Investigation) in coming to the conclusion that the aforesaid case was fit for search and seizure operation, Shri G.C. Sharma stated that such a....
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....arge the scope of the said question by submitting that several issues relating to the validity of search and seizure operation right from initiation to conclusion of the said proceedings would arise depending upon the facts of each case. He has submitted that it would be appropriate if such incidental questions are also answered by this Special Bench consisting of five Members to settle the controversies on these issues taking into consideration its importance. He has also identified some of such issues and put for the same in the form of fourteen questions for the consideration of the Special Bench. It is, however, worthwhile to note here that the question referred to for the consideration of the Special Bench in that sense is very specific inasmuch as it deals with the powers of the Tribunal to adjudicate upon the issue relating to the validity of search conducted under section 132 and that too while disposing of the assessee's appeal filed against the block assessment. 41. The scope of the question referred to this Special Bench is thus limited to a consideration of the issues relating to the validity of search conducted under section 132 and those aspects which have a di....
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....d not record that the seized documents were relevant to any proceedings, would not invalidate the search proceedings. 43. Hon'ble Kerala High Court, however, has taken a slightly different view in the case of Dr. C. Balakrishnan Nair v. CIT [1999] 237 ITR 70 wherein it was held that action of the search party in dumping the documents, pass books etc. in an almirah and sealing it without ordering seizure, suspending the search for fourteen days and then resuming it for no valid reason, retaining the documents for more than fifteen days without handing them over to the ITO, and taking away of number of documents from petitioners' premises without their knowledge and consent is clearly an arbitrary exercise of power and, therefore, the whole action taken under section 132 is vitiated. Nevertheless, the preponderance of judicial opinion clearly suggests that the subsequent error/infirmities in the conduct or conclusion of search do not invalidate the search if the same is initiated after satisfactory compliance of the conditions stipulated in the exercise of the power under section 132(1) and such power is exercised bona fide in furtherance of statutory duties of the authori....
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....ere held to be not maintainable by the High Courts on the ground that alternative remedy in the form of appeal to the Tribunal was available to them. However, merely on the basis of the High Courts holding that the alternative remedy is apparently available to the assessee, it cannot be inferred that the Tribunal has the power to got into the issue relating to the validity of search conducted under section 132. In any case, this issue was never raised directly before the High Courts in any of the aforesaid decisions cited on behalf of the assessee and, as such, the High Courts had no occasion to decide the same on merits. It is worthwhile to consider here that appeal before the Tribunal and writ before the High Court are not mutually exclusive remedies in the strict sense. 46. Before us, it has been pointed out on behalf of the assessee that in some of the cases, it was submitted on behalf of the Revenue itself that the assessee has an alternative remedy available in the form of filing an appeal before the Tribunal in which all the issues including the issue relation to validity of search could be raised. It is, however, observed that such stand was taken by the Revenue before t....
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....ccording to which, the Assessing Officer is required to commence the proceedings by serving the notice under this section where any search has been conducted under section 132 but initiated after 30th June, 1995. Further, such assessment has to be completed within a period of one year from the end of the month in which the last of the authorizations for search under section 132 was executed in case where search was initiated after 30th June, 1995 but before 1st January, 1997. These provisions indicate that the Legislature has used two words 'initiated' and 'conducted' with reference to the search under section 132. The word 'initiated' is understood in legal sense as 'commenced' while the word 'conduct' is understood as 'carry on'. If these words are read together, it would mean commencement of search, the actual carrying on/execution of search and completion of search. Therefore, validity of search referred to for consideration of the Special Bench has to be understood with reference to the initiation/commencement of the search, actual conducting of search and final execution of search vis-a-vis the powers/functions/duties of the Ass....
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....ssing Officer vis-a-vis the block assessment proceedings. Though jurisdiction to assess the undisclosed income found as a result of search initiated after 30-6-1995 is vested in the Assessing Officer under section 158BA, the actual exercise of such power begins under section 158BC by serving the notice on the assessee to file the return for the block period. Section 158BC uses two expressions namely "where any search has been conducted under section 132" and "in respect of search initiated". Before issuing any notice under section 158BC, the Assessing Officer is only required to see that search has been conducted in the case of a person whose undisclosed income is to be assessed. The latter expression is only relevant to see that such search must have been initiated after 30-6-1995. There is a distinction between initiation and conduct of search to which we will refer in the later part of our order. 51. At this stage, it is sufficient to mention that before the issuance of notice under section 158BC, the Assessing Officer is only required to satisfy himself that search was conducted in the case of an assessee and initiated after 30-6-1995 and nothing more. Another aspect of sear....
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....y premises where the person authorizing has reasons to suspect that books of account, other documents, money, bullion, jewellery or other valuable articles belonging to assessee are kept. This itself shows that action of authorizing search is altogether different from the act of search. As already discussed, the Assessing Officer is only required to see that search has been initiated and conducted and nothing more. It, therefore, follows that the Assessing Officer is not required to look into anything about the conditions prescribed in clauses (a) to (c) of section 132(1) of the Act. Consequently, right of appeal to the assessee would not include assailing any action of income-tax authority prior to initiation of search. Hence, it has to be held that requirements of clauses (a) to (c) of section 132(1) are not justiciable before the appellate authority. If the assessee is aggrieved by the action of the authority mentioned in section 132(1), then the only remedy available with the assessee is to challenge the same, before the High Court in writ petition under Article 226/227 of the Constitution of India. 54. Another contention of Mr. Aggarwal, the learned counsel for the assessee....
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.... the assessment is in time or otherwise?" 56. After examining the arguments of the parties and the interveners, all the three members delivered their separate orders stating different reasons. Though the above question was referred to the Special Bench with reference to the provisions of section 158BE, the arguments were advanced with reference to the powers of the Tribunal to examine the validity of the action of tax authorities under section 132(1) and consequently, the members of the Special Bench delivered their separate orders on this issue. The majority view was that the Tribunal cannot examine the validity of the action of the Income-tax authorities under section 132(1). We are in agreement with the majority view for the reasons given by us. Hence, contrary view taken by various division benches of the ITAT stands overruled. 57. Coming to the High Court judgments, we have already held that none of the judgments relied upon by the learned counsel for the assessee directly decide the issue under consideration. The main thrust of Mr. Aggarwal was on the judgment of jurisdictional High Court in the case of Ajit Jain. In that case, no doubt, it was held that a valid search ....
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....s justified in holding that the search was illegal and without jurisdiction? (b) Whether the ITAT was justified in calling for the satisfaction note of the DI which is a secret document and on the basis of which warrant of search was issued by the DI? (c) Whether the ITAT was justified in ignoring the various Panchnamas prepared at various premises which clearly shows that the warrant of authorization were shown to the assessee in the presence of note only the authorized officer but also the Panches." 59. Mr. Aggarwal has pointed out that the Hon'ble High Court did not admit the aforesaid question of law and dismissed the appeal of revenue filed under section 260A. In these premises, it has been pleaded by him that the order of the Tribunal has been affirmed by the High Court and, therefore, it should be held that the Tribunal can adjudicate upon the action of the tax authorities under section 132(1). The judgment of the High Court has been perused carefully and the same is also being reproduced for the benefit of this order: "The Income-tax Appellate Tribunal vide orders dated September 7, 2001, allowed the appeal of the respondent assessee, Which....
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....the High Court, in our opinion, was entirely based on the finding of fact and, therefore, this judgment cannot be said to lay down any proposition of law regarding power of Tribunal to adjudicate on the issue of validity of action of DI/CIT under section 132(1) of the Act. 61. Before us, it has been contended by Shri G.C. Sharma, learned Special Counsel for the Revenue referring to Chapter XIII-C containing various provisions relating to the powers given to the various Departmental authorities, that the powers given to the competent authorities under section 132 are purely administrative or executive in nature and the assessee aggrieved by exercise of such powers can challenge the same by way of writ petition before the jurisdictional High Court since no remedy by way of an appeal is specifically provided in the Statute against the warrant of authorization issued under section 132(1). Shri Aggarwal, on the other hand, has submitted that when the search proceedings are initiated, the entire exercise becomes quasi-judicial and not just administrative. It would be appropriate here to understand the distinction between a judicial and administrative function. A judicial decision is m....
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....the public interest at large would out weigh the interest of the individual concerned. There could be cases where it may not always be possible for the authority concerned to prove reasonableness of its action on the ground that the information on the basis of which it could justify its action deserves to be protected. The power of search and seizure is an important means of unearthing black money. In a welfare state geared to social justice such powers are recognised as important. 63. Considering the nature of power of search and seizure as explained above, it cannot be said that it decides any right inter parties or between a person and the authority. The power is basically to collect evidence and to prevent tax evasion. Going by the purpose of the exercise of this power, there cannot be any opportunity of being heard or being afforded to the person who is to be searched. The only limitation on exercise of this power therefore is that the power should be exercised fairly and not arbitrarily. The existence of conditions for issue of a warrant of authorization to conduct a search can always be questioned only after warrant is issued and a search is carried out in the case of a p....
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....lable to an aggrieved person, he can have his right for action for damages in a civil court subject to the bar of civil proceedings as laid down in the Income-tax Act, 1961. He has a statutory right of appeal to the forums provided in the relevant law. We have already held that against an improper exercise of power to issue warrant of authorization, no appeal lies before the Appellate Authorities under the Income-tax Act. The other remedy is a prerogative remedy seeking issue of various writs or orders from the High Court. This remedy is always available to an aggrieved person against any arbitrary Action. We, therefore, hold that the question as to whether the initiation of search by issue of warrant of authorization is an administrative function or a quasi-judicial function is purely academic in the present context inasmuch as answer to the said question will not have any direct bearing on the issue under consideration before this Special Bench. 66. Before us, Mr. Syali has raised a contention to the effect that block assessment proceedings under Chapter XIV-B are collateral proceedings initiated as a result of action under section 132(1) and since the Assessing Officer acquir....
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....and tenant can exercise its power to decide a dispute only when there exists a landlord tenant relationship between the parties before it. But a power to issue a warrant of search is not dependent on existence of any primary fact. The process of forming 'reason to believe' on the basis of information in possession by the authority even if exercised improperly cannot be said to be an error outside the jurisdiction of the authority concerned. Therefore, challenge to such action cannot be raised in collateral proceedings. If a statutory remedy is not provided against improper exercise of such power as in the case of a decision to issue a search warrant, the remedy lies only in the form of seeking issue of a Writ of Certiorari. 70. Our conclusion that remedy against improper exercise of power in initiating search by issuance of warrant of authorization lies in the form of seeking issue of a writ also gets support from the decision of Hon'ble Delhi High Court in the case of Ajit Jain which has been subsequently affirmed by the Hon'ble Supreme Court. In the said case, similar action was challenged by the assessee in a writ petition filed before the Hon'ble Delhi Hi....
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....initiation part cannot be considered as inextricably linked with the block assessment inasmuch as the action under section 132(1) is not an integral part of the assessment proceedings. This is so because the Assessing Officer gets the jurisdiction to proceed under section 158BC merely on the basis of the factum of the initiation of search by virtue of section 158BA, and once the fact of search is established, he gets authority to proceed under Chapter XIV-B to complete the assessment under section 158BC. In other words, the assessment proceedings under Chapter XIV-B is the step taken away from the action conducted under section 132(1) more particularly its initiation part and the same being not inextricably linked with the assessment proceedings under Chapter XIV-B, the Tribunal cannot consider and decide the issue relating to the validity of search even in the exercise of its implied powers which obviously are limited by the express powers conferred on it by the Statute. We, therefore, find it difficult to agree with the contention raised on behalf of the assessee that the Tribunal can look into the aspect of validity of search by exercise of its implied or incidental power. 72....
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....ith the order of the Tribunal and the appeal of the department was dismissed. Sometimes, it is also seen that the strangers present at the time of the search are also searched. Such a search of the stranger would be valid vis-a-vis the person whose premises are searched under section 132(1) but such action vis-a-vis the stranger would be invalid in the absence of fresh authorization under section 132(1) and consequently, action under section 158BC cannot be taken against the stranger barring the circumstances under section 158BD. These examples are not exhaustive but are merely illustrative. Therefore, in such cases, the Tribunal, in our opinion, can satisfy itself about the validity of search by examining the authorization issued under section 132(1). If it is found that there was no such authorization in the case of the appellant then assessment made under section 158BC would be void ab initio. However, it is clarified that such power of Tribunal is very limited to ascertain the fact as to whether there was any authorization under section 132(1) in the case of the appellant and nothing more. 73. The next stage comes after the assumption of jurisdiction when the Assessing Offic....
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....ere is no specific mention of preparation of panchnama in section 132, it can be logically inferred from Explanation 1 after section 132(14). This Explanation provides that 'execution of an authorization for search' shall have the same meaning as assigned to it in Explanation 2 to section 158BE. The later Explanation provides that authorization of search shall be deemed to have been executed when the last panchnama is drawn in relation to a person in whose case warrant of authorization is issued. The above discussion shows that search comes to an end when the last panchnama is drawn with reference to the last of the authorizations. It is the date of such panchnama which is relevant for determining the period of limitation for passing the order under section 158BC by the Assessing Officer. Accordingly, we are of the view that the Assessing Officer is required only to find out the date when the last panchnama with reference to last authorization is drawn and nothing beyond that. The examination of the conduct of search party including the issuing of restraint order/prohibitory order is outside the purview of the Assessing Officer and consequently, outside the purview of the a....
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....hat Tribunal can examine the record of search with a view to find out the factum of last panchnama as discussed above. 77. To sum up, we hold that the Income-tax Appellate Tribunal has no powers, either express or incidental/implied, to adjudicate upon the issue relating to the validity of the search conducted under section 132 while disposing of the appeal against block assessment. As already discussed in paragraph No. 41, the search action under section 132 has three limbs, i.e., initiation of search, conduct of search and conclusion of search. Insofar as the validity of search is concerned, the first limb, i.e., initiation of search, which includes all the actions culminating into issue of warrant of authorization assumes significance and relevance and the same, in our opinion, are not justiciable in an appeal before the Tribunal. The only remedy in this matter lies in the form of seeking issue of a writ from the Hon'ble High Court. We, therefore, answer the question referred to this Special Bench in negative, i.e., in favour of the Revenue and against the assessee. 78. As regards the remaining two limbs, i.e., conduct of search and conclusion of search, anomalies and ....