TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 920
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....ellant's case. 2. The appellant denies itself liable to be assessed under section 143(3) r.w.s.153A of the Act under the impugned order on the ground that :- i. The search initiated in the case of the appellant is illegal and ultra vires the provisions of section 132(1)[a], [b] & [c] of the Act; ii. That the search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132[2] is bad in law [224 ITR 19 [sc]] and consequent assessment under section 153A is null and void-ab-initio on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajit Jain, reported in 260 ITR 80. iii. that the appellant contends that the revenue has to discharge its burden of proving that there is a valid initiation of search under section 132[1][a], [b] & [c] of the Act, its execution and its completion in accordance with law to render the proceedings valid and to assume jurisdiction to make an assessment under section 153A of the Act. Reliance is placed on the decision of the Hon'ble Karnataka High Court in the case of C. Ramaiah Reddy Vs. ACIT reported in [2011] 61 DTR 82. ....
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....tted that during the course of appellate proceedings the learned CIT [A] called for the remand report of the learned assessing officer as regard to the question raised by the assessee on the validity of search u/s. 132 of the Act. The learned assessing officer submitted his report dated 29/01/2016 along with annexures giving his comments on the issues raised by the assessee in the appellate proceedings in connection to the validity of search u/s. 132 of the Act. A copy of the said report furnished by the learned assessing officer was provide to the assessee by the learned CIT[A] [Ref. Page 24 - 44 of the Index to Common Paper Book]. 3. It is submitted that from the copy of warrant produced by the learned assessing officer before the learned CIT[A], it is clear that the Warrant of Authorisation has been issued on two distinct separate persons, namely Smt. Radha Timblo a m/s Timblo Private Limited. [1] It is submitted an action of search is conducted as per the provisions of section 132 of the Act. As per the provisions of section 132 of the Act it can be initiated on any person. [ii] It is submitted that the Income-tax Act defines person under section 2 [31] of the Act. For th....
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.... on 22/04/2010] a) Warrant in the name of : Radha S. Timblo. b) Warrant to search (Details & Ownership of place to search) : Timblo Private Limited Kadar Manzil, Near Hari Mandir, Margao. [The said copy of panchanama drawn on 21/04/2010 along with annexures is placed at page 78 to 86 of the common paper book] B. Panchanama dated 22/04/2010 [started at 12.45 PM and temporarily closed at 7.30 PM on 22-04-2010] a) Warrant in the name of : Radha S. Timblo. b) Warrant to search (Details & Ownership of place to search) : Timblo Private Limited Kadar Manzil, Near Hari Mandir, Margao. [The said copy of panchanama drawn on 22/04/2010 along with annexures is placed at page 70 to 77 of the common paper book] C. Panchanama dated 27/04/2010 [started at 12.15 concluded/temporarily closed at 10.30 PM on 27/04/010] a) Warrant in the name of : Radha S. Timblo. b) Warrant to search (Details & Ownership of place to search) : Timblo Private Limited Kadar Manzil, Near Hari Mandir, Margao. [The said copy of panchanama drawn on 27/04/2010 along with annexures is placed at page 56 to 68 of the common paper book] [viii) it is submitted that the panchanamas as mentioned above....
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....arlier paragraphs Smt. Radha S Timblo St M/s Timblo Private Limited are two different distinct separate persons as per the Act, Wherefore, in view of the above the assessee company humbly pray and submit that there is no search in the case of the assessee company i.e. M/s. Timblo Private Limited and consequently the notice issued under section 153A of the Act is bad in law and without jurisdiction and future proceedings are also bad in law for want of proper jurisdiction and the impugned orders passed by the learned assessing officer on the company, deserves to be cancelled. 4. Without prejudice if at all any assessment could be made on the assessee company i.e. M/s. Timblo Private Limited it ought to have been made under section 153 C of the Act & not under section 153A of the Act, as has erroneously been done in this case, after complying with the mandatory conditions and conditions precedent in respect thereof. 5. It may also be noticed that no panchanama has been drawn in the name of this assessee i.e. M/s. Timblo Private Limited & this also proves that no search was conducted on the assessee company. The Panchanamas drawn during the impugned search proceedings are drawn ....
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....aling as regard to the basis and materials to arrive at a satisfaction that the assessee has income which is not disclosed. Hence, the satisfaction recorded for the issuance of a warrant under no stretch is considered as satisfaction warranting an action of search under section 132 of the Act which is not in accordance with law and does not have legs to stand the test of law. It is submitted that the process for arriving at satisfaction has to be discernible from the reasons recorded for issuing Warrant of authorization. The reasons and satisfaction should not be vague and should be definite and should reveal the basis for arriving at such satisfaction that the ingredients and the legal requirements as contemplated under section 132 [1] [a], [b], [e] of the Act has been satisfied or not. Since, the so called satisfaction recorded by the Hon'ble Director of Income- tax [Inv], Bangalore does not stand the test of law since there is no information as regard to the allegation that there is an escapement of income which warrants an action of search under section 132 of the Act on the assessee. It is submitted that since the learned authority has failed to record any satisfaction....
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....d in law and void-ab-into. It is further submitted that the learned assessing officer has to record his satisfaction as regard to the inference of liability before the issuance of notice under section 153A, as per the parity of reasoning of the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. IBC Knowledge Park, reported in 385 ITR 346. The relevant portion of the decision of the Hon'ble Court is reproduced hereunder: (i) Para 49 of the order: "On a conjoint reading of the aforesaid provisions, it becomes clear that a search can take place only when a concerned officer has information and reason to believe that any person is in possession of any valuable assets, which has not been or would not be disclosed under the Act. In such a case, a search can take place. Following the search, if any books of account, other documents, any valuable assets is or are found in the possession or control of any person in the course of a search, then the books of account or other documents or valuable assets could be seized. Under Section 153A, the satisfaction regarding an inference of liability must be recorded. The Assessing Officer has to issue notice to the asse....
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....3] r.w.s. 153A of the Act do not stand the test of law. 8. The Warrant issued partakes the nature & character of a Joint Warrant & any assessment pursuant to a search conducted based on this warrant has to be made on an AOP consisting of the persons whose names are mentioned in the warrant & thus the entire proceeding in the case of this assessee M/s. Timblo Private Limited is bad in law, void ab initio. This contention is strongly urged as section 292 CC was not present in the statute on the date the warrant was authorised, despite the fact that the said section was introduced w.r.e.f 01/04/1976. 9. In view of the above submissions the assessee humbly pray before this Hon'ble Tribunal to hold that the notice issued under section 153A of the Act in the case of the assessee is bad in law and illegal and consequently the orders passed under section 153A r.w.s. 143[3] of the Act for the above mentioned assessment years, on an illegal search which was not executed on the assessee requires to be cancelled, for the advancement of substantial cause of justice. 10. Department Appeal in ITA No. 89/PNJ/2016 for AY. 2010-11: [i] It is submitted that the department has preferred th....
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....the same and erroneously made the addition of Rs. 2 crores which being an estimation ought not to have been considered by the learned assessing officer. Further, if at all any unexplained expenditure to be considered by the learned assessing officer a sum of Rs. 4,22,64,000/- alone should have been considered. To this effect the assessee had also filed an affidavit explaining these facts, which was not properly appreciated by the learned assessing officer. The learned assessing officer rejected the explanation offered by the assessee purely based on surmises and conjectures and his own imagination. [v]. It is submitted further that the assessee had in the earlier year i.e. for the assessment year 2007-08 had disclosed and declared a sum of Rs. 76,09,624/- in M/s. Timblo Private Limited [Please refer page No. 66 of the paper book "under the head "Expenses not claimed" and page 88 and page 90 being notes to accounts at item 4] and another sum of Rs. 7,48,690/- was declared in the hands of M/s. Timblo Minerals Private Limited [Please refer page No. 173 'Under Sundry Expenses" and page 210 of the paper book] and further sum of Rs. 1,44,96,000/- was offered in the hands of Timblo ....
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....lso filed an affidavit explaining the same. [ix]. In the instant case also the assessee denies itself that it has not incurred any expenditure of Rs. 2 Crore which is only an estimate, but considered erroneously by the learned assessing officer as unexplained expenditure. It is also important to note the fact that the said seized dairy is unsigned. Further it is submitted that the learned assessing officer has not brought anything on record to demonstrate that the said alleged expenditure of Rs. 2 Crore has indeed been incurred by the assessee and has not made any enquiry as regard to the veracity of the loose and dumb papers on which he is relying upon. In all circumstances the inference and the presumption drawn by the learned assessing officer is totally not tenable in law and the addition of Rs. 2 crores required deletion which the learned CIT[A] has rightly deleted the said addition made. [x] The assessee places reliance on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Lubtec India Ltd., reported in 311 ITR 175. Wherein the Hon'ble Court has held that "It is quite clear that what is postulated in section 69C of the Income-tax Act, 1961 is that....
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....ssessee humbly pray that the addition made by the learned assessing officer amounting to Rs. 4,22,64,000/- as unexplained expenditure under section 69C of the Act, which was rightly deleted by the learned CIT[A] requires to be confirmed by this Hon'ble Tribunal and dismiss the department appeal for the advancement of substantial cause of justice. 11. In view of the overall submissions made by the assessee on the legal issue for all the A.Y's i.e. 2006-07 to 2010-11 as well as on merits for the A.Y. 2010-11, the assessee humbly pray before this Hon'ble Tribunal to allow the appeals of the assessee and dismiss the appeal of the department for the A.Y. 2010-11 in the interest of justice and equity or to pass any such orders as this Hon'ble Tribunal deem fit and proper in the interest of justice and equity. 4. On the other hand, ld. DR for the revenue has drew our attention at page 1 of the paper book, where the statement of the assessee was recorded during the course of survey on 21.04.2010 which reads as under :- Thereafter he drew our attention to the page 5 of the paper book where the statement of Smt. Radha S. Timblo was recorded during search and it was answer....
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....tate that TPL is entirely owned and managed by me & my family members. I am also one of the Directors of M/S Timblo Minerals Private Limited a Company, having its Office at Kadar Manzil P O Box 34 Opp: Hari Mandir Margao Goa 403601 ( hereinafter referred to as TMPL'), which is also entirely owned and managed by me & my family members. I say that Timblo Enterprises is a proprietary concern solely owned by me. The said Timblo Enterprises is having its Office at Kadar Manzil, POBox 34, Opp: Hari Mandir, Margao Goa 403 601 (herein after referred to as TE' for short). The said TE is engaged in extraction, processing, trading & export of mineral ore for last several years. And the business income from the said TE is offered to tax by me in my individual capacity. The said TE has been converted into a Partnership Firm with effect from 01.01.2011,by inducting my children as partners, I being the Managing Partner. I say that all the above entities viz, TPL, TMPL, me & TE (as firm) are assessed to income tax by the Assistant Commissioner of Income Tax, Central Circle, Panaji, Second Floor, Pundalik Niwas. Rua -de- Ourem, Panaji - Goa. I say & state that during the search on t....
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....ended 31-03-2007, in TPL & TMPL Same has been treated as not being an allowable expense for income tax purposes and accordingly added back to the taxable income. And in TE (proprietary concern) it has been shown as capital withdrawal by me. I say that all of the above shortage amounting to Rs. 2,28,54,314/- in aggregate, is a resulting figure and is on account of and a part of this very unexplained expenditure, which has not been accounted, and is included in the Rs, 4,22,64,000/- which has been shown above. It will be next to impossible to show a linkage to each of expenditure with dates of the amount paid/spent, and therefore I swear this affidavit on oath to substantiate my statement as true, and correct. I say that statements made here in above are true to the best of my knowledge. Solemnly affirmed by me this 11th Day of December 2012 at Margao, Goa Sd/- Margao Goa. Radha. S. Ttimblo 6. In view of the above, it is clear that the search warrant was clearly issued against the assessee company and, therefore, the action on the part of the revenue to initiate the search proceedings against the assessee company was in....