TaxTMI 
TaxTMI 
2018 (12) TMI 321
X X X X Extracts X X X X
X X X X Extracts X X X X
....e purchase bills which do not bear the details of transportation despite the fact that during the course of search no material / evidence was found indicating that the purchase made from M/s. Vertex Chemical are not genuine. 2. On the facts and circumstances of the assessee's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in directing the Id. AO to compute the disallowance of bogus purchases by taking into account all the interpolated entries in the inward registers as well as the purchase bills which do not bear the details of transportation. 3. On the facts and circumstances of the assessee's case and in law the Ld. Commissioner of Income Tax (Appeals) erred in giving the above direction despite the fact that the vendor from whom purchases were made have admitted that they in fact supplied the goods to the assessee in his deposition before the Id. AO during the course of assessment proceedings. 4. The Assessee crave, leaves to add, amend, alter, modify and or withdraw any of the above grounds of appeal, which are without prejudice to one another. 2. Assessee has also raised additional ground challenging the jurisdiction of the Asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hases made from M/s. Vertex Chemicals. He verified the inward register and came to a conclusion that only those entries in the inward register where there was interpolation and which did not bear details of transportation could be disallowed. Ld.CIT(A) accordingly directed the Assessing Officer to verify the same and re compute disallowance. 6. Assessee filed appeals against this common order of the Ld.CIT(A) challenging the additions/disallowances sustained by the Ld.CIT(A). By way of additional ground, assessee challenges the assessment made u/s.143(3) r.w.s 153A of the Act without jurisdiction and therefore bad in law. 7. Ld. Counsel for the assessee referring to First Para of the Assessment Order submitted that, it is the finding of the Assessing Officer that search and seizure action was carried out in the business premises of the M/s. Kores (India) Limited., at Kores House, Worli, Mumbai on 19.09.2006 along with its associate companies including assessee. Ld.Counsel for the assessee submitted that assessee company is neither group concern nor associate concern of M/s. Kores (India) Ltd. The Ld.Counsel for the assessee further referring to Para No.5 at Page No.2 of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of any search an assessment made u/s 143(3) r.w.s 153A is bad on law and invalid. The assessee submits that there was no warrant in its name and hence an assessment made u/s 143(3) r.w.s 153A is illegal and accordingly no additions made thereunder can be sustained. 8. Coming to the merits of the case Ld. Counsel for the assessee submitted that the assessee is in the business of manufacturing carbon paper and stationery items and almost all the production of the assessee is supplied to M/s. Kores (India) Limited. The assessee is based in Goa and M/s. Kores (India) Private Ltd is based in Mumbai. The assessee for the sake of convenience and to ensure that the manufactured items were not rejected on account of quality requested Shri S.N. Shah of M/s. Kores (India) Limited to ensure that the raw material purchased by the assessee was acceptable. For that purpose, Shri S.N. Shah was authorized to place orders of the raw material so that the final product was not rejected. It is submitted that since M/s. Kores (India) Limited was based in Mumbai it was business convenience to have a bank account in Mumbai so that the sale proceeds could be credited immediately and also payment could....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Hon'ble Bombay High Court] (vii) M/s. Balaji Yarn Ltd v. DCIT [ITA.No. 6199 & 6201/Mum/2009 dated 23.05.2013 of ITAT Mumbai "G" Bench] (viii) Smt Nasreen Yusuf Dhanani v. ACIT [ (2009)118 ITD 0133] (ix) CIT v. Anil Kumar Chadha [55 taxmann.com 293 (Allahabad)] (x) JCIT v. Latika V. Waman [01 SOT 535 (Mum)]. 11. On the other hand, Ld. DR coming to the additional grounds of appeal submitted that, the Assessing Officer has clearly stated in the Assessment Order that there is a search in the case of M/s. Kores Group as well as the assessee, and the contention of the assessee that there was no search conducted in the case of assessee is not correct. Ld. DR requested the Tribunal to permit to file a copy of the search warrant, since it was already returned to the Assessing Officer to furnish the same. Coming to the merits of the case Ld. DR strongly supported the orders of the Authorities below. Ld. DR also referring to the statements of Shri S.N. Shah, Shri Jayant J. Jetly and Cashier Shri Manoj Memani submitted that assessee inflated purchases and also generated huge cash and it is evident from the statements recorded from these persons....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 132 in the case of M/s. Kores Group and there is a contradictory finding that there is a survey as well as search in the case of assessee by the Assessing Officer. In order to ascertain the fact as to whether there was any search in the case of the assessee on 05.07.2016 the Bench directed the Ld. DR to produce copy of search Warrant and Panchanama and the matter was adjourned to 14.07.2016. On 14.07.2016 the Bench directed the Ld. DR to obtain copy of warrant and copy of Panchanama and also directed to inform the Assessing Officer to be present on the next date of hearing with case records, and the case was adjourned to 08.09.2016. On 08.09.2016 Ld. DR sought time which was granted till 21.03.2017. As nobody appeared on 21.03.2017 on behalf of assessee the cases were heard exparte and on filing Miscellaneous Applications the cases were recalled and posted for hearing on 25.06.2018 and finally the matters were heard on 27.06.2018 and 26.10.2018. 14. We find from the record that Ld. DR had written a letter dated 05.07.2016 to D.C.I.T (Central)-7(2), Mumbai to furnish copy of warrant and copy of Panchanama, one more letter was written on 14.07.2016 to Pr.CIT (Central)-4, Mumbai ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld not produce the same. The Tribunal, therefore, concluded that there was no search warrant against the assessee. The Tribunal, therefore held that in absence of any search warrant, the orders passed by the Assessing Officer under section 153B of the Act were invalid. We have no reason to interfere with the order passed by the Tribunal. Section 153A of the Act pertains to assessment in case of search or requisition. Sub-section (1) thereof provides that notwithstanding anything contained in sections 139, 147, 148, 149, 151 O/TAXAP/347/2013 ORDER and 153 of the Act, in 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 31st of May 2003, the Assessing Officer shall issue a notice to such person requiring him to furnish the return of income and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Section 153B of the Act provides for time limit for completion of assessment under section 153A. Learned counsel for the assessee ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction ()1) of section 115WH or under section 148 for making of the return or by the notice under the first proviso to section 115WF or under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier." Thus, section 124 of the Act pertains to territorial jurisdiction of an Assessing Officer vested under sub-section (1) or (2) of section 120. An objection to such jurisdiction can be raised in terms of section 124(2). In terms of sub-section (3) of section 124, right to raise such objection shall be foregone beyond the stages mentioned therein. The said provisions are clearly concerning with the dispute of the assessee with respect to the territorial jurisdiction of the Assessing Officer and has no relevance in so far as the inherent jurisdiction for passing an order of assessment under section 153A of the Act is concerned, when no search O/TAXAP/347/2013 ORDER authorization under section 132 was issued or requisition under section 132A of the Act was made. Before closing, we notice that in Tax Appeal No.349 of 2013, for the assessment year 2005-06, the Revenue ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid is conducted. When the provisions are attracted, legal presumptions are raised against the assessee. The burden shifts on the assessee. Audited accounts for a period of ten years may have to be reopened. 12. A large number of decisions of various High Courts have been cited at the bar. We would, at the outset, refer to a decision of the Gujarat High Court in Khandubhai Vasanji Desai and Others v. Deputy Commissioner of Income-Tax and Another [(1999) 236 ITR 73]. Therein, it was clearly held : "This provision indicates that where the Assessing Officer who is seized of the matter and has jurisdiction over the person other than the person with respect to whom search was made under s. 132 or whose books of account or other documents or any assets were requisitioned under s. 132A, he shall proceed against such other person as per the provisions of Chapter XIV-B which would mean that on such satisfaction being reached that any undisclosed income belongs to such other person, he must proceed to serve a notice to such other person as per the provisions of s. 158BC of the Act. If the Assessing Officer who is seized of the matter against the raided person reaches such s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed unless it is clearly shown that it was done by the authority duly authorized, and all the conditions precedent in relation thereto existed. Thus, before issuance of search warrant in order to take recourse under Section 132 of the I.T. Act, 1961, the authority competent to issue search warrant must be satisfied that search under Section 132 (1) is needed in respect of a definite person. Satisfaction required under Section 132 (1) of the Act 1961 is qua the person whose name appears in the warrant of authorization. If search as contemplated under Section 132 of the I.T. Act, 1961 is conducted in the premises of a person without any warrant of authorization in the name of the person searched, or on the basis of a warrant of authorization in the name of some other persons, that would be a clear case of non-application of mind of the empowered I.T. authorities and such a search cannot be held to be valid. It is so, because the belief which forms the foundation of search relates to a definite person who is to be subjected to search. If the contrary is the fact situation, the same would amount to serious lapses and would be in clear violation of the provisions contained in Section 132....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 31.8.95 in relation to Nav Bharat Corporation at No.28, Godown Street. It was a case of survey under Section 133 A of the Act and on that basis alone the entire proceedings has happened. For better clarity, the relevant portion of the proceedings, which shows that only survey was conducted in the premises of Nav Bharat Corporation, is extracted hereinbelow :- "Inventory of stocks taken at the business premises of M/s. Nav Bharat Corporation, 28, Godown St., Madras - 1, during the course of search / survey u/s 133A on 31/08/95." 17. The above document, which is undisputed and forms part of the Court records, makes it clear that the confusion has apparently happened because search under Section 132 of the Act commenced in the case of other assessees as well and, therefore, all similarly placed persons were clubbed together and assessment orders were passed. However, neither in the course of passing the assessment order nor during the appeal proceedings before the Tribunal or this Court, attention was drawn to the survey proceedings under Section 133 A of the Act, insofar as the present assessee is concerned. Since all the cases were taken up together as one lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red by action u/s. 132 of the Act. The notice u/s. 158BC cannot be issued on a person who is not belonged to search. 22. In the case of Smt Nasreen Yusuf Dhanani v. ACIT (supra) the Coordinate Bench of this Tribunal held as under: - "Chapter XIV-B is a special procedure for making assessment of search cases. These provisions of block assessment come into picture only as a result of search action carried out under s. 132. On reading the provisions of s. 132(1), it is clear that the section is person specific and not premises specific as argued by the Departmental Representative. The primary target for conducting a search action is the person who is in possession of any undisclosed income and upon consequence of the same the search party can enter and search any building, place, vessel, vehicle or aircraft where the undisclosed assets or incriminating documents are likely to be found in relation to such person." 23. In the case of M/s. Balaji Yarn Ltd v. DCIT (supra) the Coordinate Bench of this Tribunal considered a similar issue, as to whether in the absence of warrant of authorization in the name of the assessee the search is valid or not and it has been held as und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he expression clearly relates to a person in respect of whom search u/s 132 has been initiated as Section 153A itself provides. Thus to exercise powers under Section 153A in case of a person, the mandatory requirement is that there must be initiation of a search as contemplated u/s 132 or requisition u/s 132A in respect of such person. In a case, where there is no initiation of search as contemplated u/s 132, basic condition for issuance of notice u/s 153A does not exist. The word 'person' appearing in Section 132 and in Section 153 A is one and the same person. Thus the person, in respect of whom search u/s 132 is initiated, is the same person against whom notice under Section 153A is to be issued for making assessment/reassessment under that Section. Thus, initiation of a valid search as contemplated u/s 132 in case of a person is a prerequisite to issue notice for making assessment/reassessment under Section 153A of the I.T. Act, 1961 in respect of such person. In view of this settled position of law, in the absence of warrant of authorization issued in the name of the assessee and considering the admitted fact by the Revenue that there has been no search as contemplated u/s 132....