TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 232
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.... section 139 of the Act may be treated as its return of income in response to the notice under section 153A. Notice under section 142 was issued and eventually, the assessment was completed on the total income of Rs. 33,43,390 as against the returned income of Rs. 13,390, thereby making an addition of Rs. 33,30,000 on account of unproved share application money received from various persons. The assessee challenged the initiation of proceedings under section 153A before the learned Commissioner of Income-tax (Appeals) primarily, contending that no warrant of search was executed on the assessee-company. The learned Commissioner of Income-tax (Appeals) dismissed such contention. Thereafter, he dealt with the addition made under section 68 of the Act on the merits. Out of the total addition of Rs. 33,30,000 made by the Assessing Officer, the learned Commissioner of Income-tax (Appeals) deleted the addition to the tune of Rs. 30,80,000 and sustained the remaining addition of Rs. 2,50,000. Both the sides are in appeal on their respective stand points. The assessee, in its appeal, has, inter alia, challenged the initiation of proceedings under section 153A of the Act. 3. We have heard t....
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.... the former part of sub-section (1), which mandates that notice under section 153A can be issued on "a person where a search is initiated under section 132" of the Act. This shows that initiation of search under section132 is a pre-requisite for issuing notice under section 153A, though the assessment has to be made of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is "conducted". In other words, unless a search is initiated on a person under section 132, the Assessing Officer cannot acquire the jurisdiction for issuing notice under section 153A of the Act. The case of the assessee before us is that no search was initiated on it and hence notice under section 153A of the Act is bad in law. 5. Let us examine if the search was initiated on the assessee under section132 of the Act. The Assessing Officer has unequivocally recorded that the search and seizure action was taken under section 132 in the Swastik Pipes group of cases on August 28, 2008 and the case of the assessee was centralised by the Commissioner of Income-tax and, thereafter, notice under section 153A was issued and served on the asse....
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....tember 30, 2010 that the permanent account number referred to in the report of ADIT (Inv.), New Delhi pertained to the assessee-company and, hence : "the intended search is on M/s. K. G. Finvest Pvt. Ltd." The assessee was directed to file return of income under section 153A. Pursuant to such letter, the assessee filed a return and the assessment was finalised. The above correspondence between the assessee and the Assessing Officer took place before the completion of assessment on December 28, 2010. From the above correspondence, it becomes palpable that the warrant of authorisation included the name of "K. G. Finvest and Trade Ltd.", whereas the assessee's name is "K. G. Finvest Pvt. Ltd." ; the address given on the warrant of authorisation is 1-2, Central Market, West Avenue Road, Punjabi Bagh, New Delhi, as against the assessee's address of 10, 3rd floor, Satya Niketan, New Delhi ; and the assessee categorically submitted before the Assessing Officer that none of its directors had any directorship in the companies named in the warrant of authorisation and its annexure, which was not controverted by the Assessing Officer in his later letter. These facts have also not been....
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....tal representative submitted that some inadvertent typographical error must have crept in the warrant of authorisation by which the name of the assessee, namely, "K. G. Finvest Pvt. Ltd.", came to be wrongly written as "K. G. Finvest and Trade Ltd." To buttress this point, he referred to a copy of chapter 7 of the appraisal report, which is available on page 4 of the DPB. Name given at serial No. 17 of this list is "M/s. K. G. Finvest and Trade Ltd.", which is not the assessee. It is simple that if a warrant of authorisation is issued in the name of A, the Assessing Officer cannot make assessment under section 153A in the hands of A1, A2, A3 etc., who are not named in the warrant of authorisation. It is true that the permanent account number of the assessee is appearing in the above chapter 7 documents, which is not the warrant of authorisation but the corresponding address column in such document has also been left blank. Law contemplates initiation of search on a person under section 132 of the Act and not on the permanent account number. Even if a wrong permanent account number is taken into consideration but a correct person is subjected to search, assessment has to be framed i....
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....he jurisdiction of the Assessing Officer inasmuch as it filed the return of income in response to the notice under section 153A and also participated in the completion of assessment. In view of such submission to the jurisdiction of the Assessing Officer, the learned Departmental representative fervently argued that the initiation of search cannot be faulted with. To support this contention, he relied on a recent judgment of the hon'ble Supreme Court in Gunjan Girishbhai Mehta v. Director of Investigation [2017] 393 ITR 310 (SC) ; [2017] 80 taxmann.com 23 (SC). 10. Before considering the ratio decidendi of the verdict of the hon'ble Supreme Court, let us find out the elaborate facts of this case from the appealed against judgment of the hon'ble Gujarat High Court in Gunjan Girishbhai Mehta v. Director of Investigation [2014] 49 taxmann.com 69 (Guj) ; [2015] 4 ITR-OL 382 (Guj). In that case, one late Shri Girishbhai K. Mehta passed away on October 11, 1998. A search warrant was issued by the Director of Investigation in the name of the deceased on September 27, 2001. Search at the residential premises of the deceased was carried out. On seeing the authorisation, it was ....
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....er and on the contrary, the return of the income for the block period was filed on October 3, 2002 and the same was also signed by him and thereafter the assessment order determining the income at "nil" was passed on September 11, 2003. Since the search warrant was issued for a premises as a part of search in the Nirma group, the hon'ble High Court held that it could not be said that such search warrant was null and void. The hon'ble High Court then espoused the challenge to the notice under section 158BD on the ground that as the warrant of authorisation issued under section 132 of the Act was per se illegal as it was against a dead person, the search could no longer be valid and therefore, Chapter XIV-B of the Act would become inapplicable and as such no notice under section 158BD would stand. Rejecting such a contention, the hon'ble High Court noted that the notice under section 158BD was served on Gunjan Girishbhai, and even if it was presumed that the authorisation for search under section 132 of the Act was bad and illegal as the same was against the dead person, the proceedings under section 158BD could not be declared as invalid on the ground of invalidity of se....
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....ld, immediately on receipt of notice under section 153A. Moreover, in that case, a search operation actually took place and the defect, if any, claimed was in the warrant of authorisation. In the oppugnation, the Revenue in the instant case has failed to demonstrate that any search action was, in fact, taken on the assessee. We are reminded of the celebrated judgment of the hon'ble Supreme Court in Pooran Mal v. Director of Inspection (Investigation) [1974] 93 ITR 505 (SC) laying down that the material seized in an illegal search can be validly used by the Income-tax authorities. The judgment in Gunjan Girishbhai Mehta (supra) is reiteration of almost the same view, when it held that "the information discovered in the course of the search, if capable of generating the satisfaction for issuing a notice under section 158BD, cannot altogether become irrelevant for further action under section 158BD of the Act". What to talk of some "information discovered in the course of search" in the case under consideration, the Revenue has not proved the basic fact that the assessee was subjected to any search. The contention of the learned Departmental representative, on the basis of certain....
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....d with a situation in which neither any warrant of authorisation was issued in the name of the assessee nor any search had actually taken place, much less the finding of any incriminating material. As such, we hold that this judgment does not help the Revenue. 13. The learned Departmental representative, in an untiring endeavour, invoked the provisions of section 124(3) of the Act. He contended that the jurisdiction of the Assessing Officer can be challenged only before the Assessing Officer and that too, within a period of 30 days from the date of notice under section 142(1) or section 143(2). As the assessee failed to do so, the learned Departmental representative contended that, it lost the right to take up this issue before the Tribunal at this stage. To buttress his contention, he relied on the judgment dated August 5, 2010 of the hon'ble Delhi High Court in CIT v. Kapil Jain (I. T. A. No. 613 of 2009). With the help of this judgment, whose copy has been placed on record, it was contended that if no objection is taken within one month in terms of section 124(3) then the assessee is debarred from raising such objection in the assessment pursuant to search. 14. There can b....
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....accepted by the Tribunal. In further appeal, relying on section 124(3) of the Act, the hon'ble High Court held that the plea of transfer was not raised by the assessee "within one month from which he was served notice under section 158BD" of the Act. As such, the Tribunal order was set aside. 16. We find that the judgment rather than serving the stand of the learned Departmental representative, supports the assessee. In that case, the hon'ble High Court noticed : "It is not in dispute that the plea of the jurisdiction was not raised by the assessee at all within one month from the date on which he was served notice under section 158BD of the Act." Reference to the one month period in this judgment has been made from the date of notice under section 158BD and not the notice under sections 142(1) and 143(2) of the Act. There is no dispute that the assessee did raise objection within one month from the date of notice under section 153A. As such, we are not inclined to accept the contention advanced by the learned Departmental representative in this regard. 17. Now we take up the reasoning in the impugned order rejecting the contention of the assessee of invalidity of noti....