TaxTMI 
TaxTMI 
2019 (2) TMI 1471
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....se of the reached (sic. searched) person?" 3. The facts stated briefly are that a search came to be carried out under section 132 of the Income Tax Act, 1961 (hereinafter referred to as the "Act") in the premises of Dr. Rajesh Rajora. Pursuant thereto, proceedings under section 153C of the Act came to be instituted against the respondent assessee. The Assessing Officer, by an order dated 30.12.2011, made under section 153A read with sections 153C and 143(3) of the Act, assessed the total income of the assessee at Rs. 1,57,31,665/- and further directed initiation of penalty proceedings under section 271(1)(c) read with section 274 of the Act. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals), who by an order dated 21.8.2012 partly allowed the appeals. The respondent assessee filed cross objections, inter-alia, contending that the Madhya Pradesh High Court in the case of Rajesh Rajora v. Union of India, (2013) 40 taxmann.com 330 (MP) had quashed the issuance of search warrant and subsequent search and seizure proceedings against Rajesh Rajora and, hence, the consequent proceedings under section 153C read with section 153A of the Act in the ha....
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....uestion as to whether if during the search under section 132 of the Act, the Assessing Officer finds that any undisclosed income belongs to any person other than the person with respect to whom the search was made under section 132 of the Act, or whose books of account or other documents or any assets were requisitioned under section 132A of the Act is traced out, the proceedings under section 158BD of the Act against any other person, other than the person with respect to whom the search was made would be permissible and/or maintainable or not? The court turned down the contention that the notices under section 158BD the Act on the basis of material with respect to undisclosed income found against other persons, during the course of such search would not be permissible and/or maintainable. The petitioner thereafter carried the matter before the Supreme Court, which in the case of Gunjan Girishbhai Mehta v. Director of Investigation, 2017 (393) ITR 310, held that if the original search warrant is invalid, the consequential action under section 158BD of the Act would also not be rendered invalid. It was urged that the above decisions would be squarely applicable to the facts of the ....
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....ns rest are entirely different. Section 153C of the Act requires a factual finding of incriminating material having been found whereas section 158BD requires the Assessing Officer to form an opinion that some undisclosed income belongs to a person other than the searched person is found. It was submitted that section 153C of the Act does not require the Assessing Officer to record satisfaction regarding undisclosed income and the finding regarding undisclosed income takes place only at the stage of assessment under section 153C and that the seized documents are analysed only at the stage of assessment. According to the learned advocate, section 153C of the Act is a completely procedural section as opposed to section 158BD which requires the Assessing Officer to record a satisfaction that undisclosed income belongs to another person. It was submitted that it is the undisclosed income that triggers the proceeding under section 158BD of the Act, whereas section 153A and 153C go hand in hand. If a proceeding under section 153A of the Act falls, the proceeding under section 153C as a natural corollary would also fall. 5.1 In support of such submission, the learned advocate placed relia....
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....h Court setting aside the search in the case of Rajesh Rajora had not been passed. Therefore, before the Assessing Officer as well as the Commissioner (Appeals), no contention had been raised with regard to the validity of the search. It is only when the validity of the search was examined in the case of the searched person and held to be invalid, that this contention was raised in the cross objection filed by the assessee before the Tribunal. 7. Since the question raised in these appeals arises only out of the order of the Tribunal and was not raised before the Assessing Officer or the Commissioner (Appeals), it is not necessary to refer to the orders passed by either of the said authorities. 8. A perusal of the impugned order passed by the Tribunal reveals that before the Tribunal, it was pointed out during the course of hearing that in an identical case of DCIT v. Madhu Khurana, the Tribunal had dismissed identical appeals preferred by the revenue based on the very search action on the ground that the Madhya Pradesh High Court in the case of Rajesh Rajora v. Union of India (supra) has quashed the issuance of the search warrant itself. In that case, the Tribunal held that in vi....
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....s required to be considered. Section 158BD of the Act is held to be a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under section 132 or 132A of the Act. The special provisions under Chapter XIVB more particularly section 158BD of the Act are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous orders falling in the block period, intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. A bare reading of the section 158BD of the Act makes it clear that for invoking a block assessment, there must be a search conducted under section 132 of the Act, or documents or assessed requisitioned under section 132A and the AO is satisfied that there exists any undisclosed income which may belong to other person other than the person with respect to whom the search was conducted or requisition was made. Therefore, when during the course of a search conducted under section 132 of the Act or from the documents or assessed requisitioned under section 132A the AO finds....
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....nformation discovered in the course of search, if capable of generating the satisfaction for issuing a notice under section 158BD, cannot altogether become relevant for further action under section 158BD of the Act. 11. On behalf of the respondent assessee, it has been contended that the above referred decision would not be applicable when it comes to interpretation of section 153C of the Act. The learned advocate for the respondent has tried to draw a distinction between the provisions of section 158BD and section 153C of the Act as referred to hereinabove. 12. At this juncture, reference may be made to the provisions of section 158BC, 158BD, 153A and 153C of the Act, which read as under:- "158-BC. Procedure for block assessment. - Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132-A, in the case of any person, then, - (a) the Assessing Officer shall - (i) in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995 but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within ....
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....ents or any assets are requisitioned under section 132-A 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 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 the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) 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: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search....
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....sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153-A." 13. The learned advocate for the respondent has placed reliance upon the words "undisclosed income" as appearing in section 158BD of the Act, to submit that the same requires the Assessing Officer to be satisfied that any undisclosed income belongs to any person before he hands over the books of accounts and other documents or assets seized or requisitioned to the Assessing Officer having jurisdiction over such other person, whereas section 153C requires the Assessing Officer to be only satisfied that money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs to the person other than the person....
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.... to the facts of the present case and section 153C of the Act would be required to be interpreted accordingly. 15. Insofar as the proviso to section 153C of the Act is concerned, the same provides for reference to the date of initiation of search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. Pertinently, while in case of assessment under section 153A of the Act, the limitation under section 153B of the Act has to be computed with reference to the end of the financial year in which the last of the authorisations of search under section 132 of the Act or for requisition under section 132A of the Act was executed, in case of assessment under section 153C, under the proviso to section 153B, the limitation has to be computed with reference to the end of the financial year in which the books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdicti....
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....ustody it was seized and, therefore, no Writ of Prohibition in restraint of such use could be granted. It must be, therefore, held that the High Court was right in dismissing the two writ petitions. The appeals must also fail and are dismissed with costs." 17. Thus, what is held in the above decision is that unless there is an express or necessarily implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search or seizure is not liable to be shut out. In other words any evidence, be it undisclosed income belonging to a person other than the searched person as contemplated under section 158 BD; or money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belonging to a person other than the searched person as contemplated under section 153C of the Act, in the absence of an express or necessarily implied prohibition in the Constitution or other law, the evidence obtained as a result of an illegal or invalid search or seizure cannot be shut out. Consequently, merely because in the case of the searched person the issuance of warrant of authorisation and the consequent search and seizure....