TaxTMI 
TaxTMI 
2017 (2) TMI 645
X X X X Extracts X X X X
X X X X Extracts X X X X
....her issue a writ of mandamus or any other appropriate writ or writs by directing the opp.parties to release the seized documents as per the Panchanama dated 02.12.2014 vide Annexure-1." 2. The brief fact leading to the institution of this writ petition is that search warrant was issued by opposite party no.1 on 01.12.2014 by the Income Tax Department in exercise of the powers conferred under Section 132 of the Income Tax Act, 1961, hereinafter to be referred to as "the Act, 1961", in short. The authorities of the Income Tax Department conducted search, but no incriminating material has been recovered, rather they found cash amounting to Rs. 40,050/- and gold jewellery of 906 grams belonging to two married ladies of the family, which are within the permissible limits as prescribed by the Income Tax Department and accordingly, Panchanama was prepared showing inventory of cash worth of Rs. 40,050/-, golden jewellery valued at Rs. 22,00,714/-, but not seized. 3. Opposite party no.2 after search and seizure, issued a notice under Section 153 of the Act, 1961 on 06.08.2015 calling upon the petitioner to prepare a true and correct return for the assessment year 2009-10 and furnish t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 merely on surmises and conjectures, rather in course of scrutiny of the documents in the premises of the petitioner, it was found that there was some undisclosed income, which has not been disclosed by the petitioner while submitting the return under Section 139 of the Act, 1961 and as such, it cannot be said that there was no reason for making search and seizure. He further submits that the competent authorities of the Income Tax Department had issued notice under Section 153-A of the Act, 1961 in which he has made objection, which has been answered by the petitioner and in the meanwhile the assessment order has also been passed by the competent assessing authority and as such, at this moment, the writ petition itself is not maintainable because there is an assessment order and if the petitioner is at all aggrieved, he may challenge the same before the appropriate forum. He further submits that since the order of assessment has been passed by the authority, he ought to have approached the alternative remedy of appeal under the Statute, but instead of doing so, he has approached this Court invoking the extraordinary jurisdiction of this Court under Articles 226 and 227 of the Con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), [then,- (A) 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, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under this sub-section in all cases where he has reason to believe that any delay in getting the authorisation from the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner] having jurisdiction over such person may be prejudicial to the interests of the revenue : Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or 6 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 Ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, jewellery or other valuable article or thing under clause (iii) of subsection (1). (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any 7 proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation.-For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed- (i) that suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of subsection (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period of sixty days from the date on which the last of the authorisations for search was executed and thereupon the powers exercisable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer. (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1A) objects for any reason to the approval given by the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or] Director General or [Principal Director or] Director under sub- section (8), he may make an application to the Board stating therein the reasons for such objection and req....
X X X X Extracts X X X X
X X X X Extracts X X X X
....em and had come to be of the opinion that they were relevant and useful, or else he must set out in the warrant of authority particulars of such documents, books of accounts, etc. The difference in between the wordings of clauses (a) and (b) of sub-section (1) of Section 132 of the Act, 1961 is that under clause (a) action may be taken if a person is searched with a summons to produce or cause to be produced, specified books of account or other documents and fails to do so. But in clause (b) the basis is somewhat different. In the latter case, the Commissioner must have reason to believe that the person to whom a summons has been issued under clause (a) or might be issued, will not produce or cause to be produced any books of account or documents which will be useful and relevant to an income tax proceeding. Under clause (b), unless summons under clause(a) has been issued, no specification is possible. In such a case the basis is that the 10 assessee will suppress books of account and documents which will be required. The income tax authorities require the power furnished by clause (b) for the very reason that they do not know what the relevant books of account and documents are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ondition for issuance of notice upon the assessee is stipulated in the said provision before invoking the jurisdiction conferred under the provision of Section 132 of the Act. 10. Section 133(A) reads as follows:- "133A. Power of survey. (1) Notwithstanding anything contained in any other provision of this Act, an income-tax authority may enter- (a) any place within the limits of the area assigned to him, or (b) any place occupied by any person in respect of whom he exercises jurisdiction, or (c) any place in respect of which he is authorised for the purposes of this section by such income-tax authority, who is assigned the area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place, at which a business or profession is carried on, whether such place be the principal place or not of such business or profession, and require any proprietor, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession- (i) to afford him the necessary facility to inspect such books of account or other documen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and make or cause to be made extracts or copies therefrom, (ia) impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him: Provided that such income-tax authority shall not- (a) impound any books of account or other documents except after recording his reasons for so doing; or [(b) retain in his custody any such books of account or other documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General or the Principal Commissioner or the Commissioner or the Principal Director or the Director therefor, as the case may be,] (ii) make an inventory of any cash, stock or other valuable article or thing checked or verified by him, (iii) record the statement of any person which may be useful for, or relevant to, any proceeding under this Act : [Provided that no action under clause (ia) or clause (ii) shall be taken by an income-tax authority acting under sub-section (2A).] (4) An income-tax authority....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and includes also all proceedings under this Act which may be commenced after such date in respect of any year." This section confers power upon the authority to conduct survey which authorizes the income tax authority to enter in any place within the limits of the area assigned to him, or any place occupied by any person in respect of whom he exercises jurisdiction or any place in respect of which he is authorized for the purposes of this section by such income tax authority, who is assigned area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place. 11. Section 153-A reads as follows:- "153A. Assessment in case of search or requisition (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." Section 153-A confers power upon the authorities for making an assessment in case of search or requisition which provides that notwithstanding anything contained in Sec.139, 147, 148, 149, 151 and 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned U/s.132-A after the 31st day of May, 2003, the Assessing Officer shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause-(b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and to assess or re-assess the total six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. This prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t make a search or authorize any officer to make a search unless he has reason to believe the existence of the facts mentioned in the section, the section does not compel him to give reasons and 17 non-mention of reasons in itself does not vitiate the order and the Court will never go into the adequacy of such reason as has been held by Hon‟ble Apex Court in the case of S. Narayanappa V. Commissioner of Income Tax, reported in 1976 63 I.T.R. 219 (S.C). We further gathered from the statutory provision as contained in Sec.132 of the I.T. Act that before invoking the jurisdiction conferred under the said provision the „reason to believe‟ must be there for making search and seizure of the premises of the assessee in order to know the real fact as to whether the income disclosed by way of income tax return for a particular year is in consonance with the income being possessed by the said assessee. If authorities have found from any sources that the income disclosed by the income tax return, yearly basis, is less than the entire assets and property, then certainly the statute confers power upon the authorities U/s.132 to conduct a search and seizure although there is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly without any further delay. However, the petitioner has submitted his response in compliance to the notice under Section 142(1) of the Act, 1961 and the letter dated 24.8.2016 stating in detail that he is not at all fault and whatever return he has submitted that is without any undisclosed income. The authorities in response to his compliance has answered the same vide letter communicated to the petitioner on 1st November, 2016 under the seal and signature of the Assistant Commissioner of Income Tax, Central Circle-2, Bhubaneswar, giving reply point wise and specifically stating therein that the record pertaining to the books of account of M/s.Vasumati Builders Pvt. Ltd. be produced failing which it shall be added to his total income being the Director, but he has not submitted the details about M/s.Vasumati Builders Pvt. Ltd. The petitioner thereafter has approached this Court questioning the search warrant conducted in exercise of the powers under Section 132 of the Act, 1961 on the ground that the search cannot be conducted merely on surmises and conjectures and there must be reason to believe and further on the ground that no incriminating things have come out after conclusio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... seizure no bullion or jewellery has been recovered, but there is also no dispute about the fact that certain documents have been seized as would be evident from the inventory list and when the authorities have gone through the seized documents, they have found that the income having been undisclosed by the petitioner reason being in spite of specific direction given to the petitioner to produce his documents, the documents have not been produced. For ready reference, the finding of the authorities in response to the application filed by the petitioner is being quoted hereinbelow to show as to whether there was reason to believe for conducting search and seizure or not. " 2. Please refer to page 12 of ASPI-10 regarding receipt of Rs. 5.00 Lakhs by M/s. Vasumati Builders Pvt. Ltd. from Shri Dhoi Sahu of Patia. You are the Director of Vasumati Builders Pvt. Ltd. You are requested to show the books of M/s. Vasumati Builders Pvt. Ltd. to proof this transactions. It may be stated that the above page shows payment of Rs. 5.00 lakhs to Dillip Motwani. The books of M/s. Vasumati Builders Pvt. Ltd. should show such transactions failing which it shall be added to the total income of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arious expenses of Rs. 60,88,690/-. It is replied by you that all the expenses relate to M/s. Vasumati Builders Pvt. Ltd. You are requested to explain all such expenses through the cash book and ledger of the Company failing which it shall be added to the total income of yours because you are the Director & the information is available from the documents seized from your premises. 9. Please refer to page-27 and 28 of ASPI-03 regarding various expenses appearing in these two pages. It is replied by you that all the expenses relate to M/s. Vasumati Builders Pvt. Ltd. You are requested to explain all such expenses through the cash book and ledger of the Company failing which it shall be added to the total income of yours because you are the Director & the information is available from the documents seized from your premises. 10. Please refer to page-36 of ASPI-03 regarding various expenses of Rs. 3,34,500/-. It is stated by you that these expenses relate to M/s. Vasumati Builders Pvt. Ltd.. You are requested to explain all such expenses through the cash book and ledger of the Company failing which it shall be added to the total income of yours because you are the Dir....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal available under the Statute, the present writ petition is to be dismissed. 21. In response, learned counsel appearing for the petitioner has submitted that since the petitioner has challenged the warrant and search and if warrant and search will be said to be illegal, its conclusion will be said to be a nullity in the eye of law. 22. There is no dispute about the contention raised by the petitioner that if the root will go, nothing remains. But as we have discussed hereinabove, we found that the submission made by the learned counsel for the petitioner has got no substance. We are of the further considered view that since the assessment order has been passed by the competent authority, it will not be proper for this Court to enter into the merit of the assessment order since this is not questioned in this writ petition. 23. We have also thought it proper to deal with two judgments relied upon by the learned counsel for the petitioner in the cases of Commissioner of Income Tax, Punjab and others v Vol.101 (19075) ITR and we after going through the said judgment have found that the said judgment has been passed taking into consideration the judgment rendered by the H....