TaxTMI 
TaxTMI 
2022 (6) TMI 144
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....ssessing officer has erred in initiating the proceedings under section 153A of the IT Act, 1961 and the assessment order is without jurisdiction, bad in law and void. 3. The Ld. Assessing officer erred in making additions that are beyond the scope of provisions of assessment to be made under section 153A of IT Act, 1961 and hence bad in law and void. 4. The Ld. Assessing officer erred in completing the assessment beyond the time limit as per the provisions of section 153B of IT Act, 1961 and hence bad in law and void. 5. On the facts and in the circumstances of the case and in law, the Ld. A. O. erred in assessing the income of your appellant at Rs. 4,74,41,51,670/- as against returned income of Rs. 55,95,863/-. Your appellant disputes wrongful variations and submits that his returned income to be accepted as correct. 6. On the facts and in the circumstances of the case and in law, the Ld. A. O. erred in making an addition of Rs.2,25,00,000/- on account of Alleged Bogus Share Application money under section 68 of the IT Act, 1961 as taxable income. Looking to the facts and in the circumstances of your Appellant's case the said addition made b....
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.... 14. The assessment is made in gross violation of principles of natural justice and hence bad in law and void. 15. The learned A. O. erred in imposing Interest under section 234B and 234C of the IT Act, 1961. 16. The learned A. O. erred in initiating penalty proceedings u/s. 271(1)(c) of Income Tax Act, 1961. 17. Any other ground or grounds as may be urged at the time of hearing." 04. ITA number 1292/M/2018 is filed by Balaji Universal Trade Links Private Limited (Assessee/Appellant) against the order passed by the Commissioner of Income Tax (Appeals) - 47, Mumbai (The Learned CIT (A)) dated 29/12/2017 for assessment year 2009 - 10. 05. Assessee has raised following grounds of appeal:- "1. The Order of the assessing office is erroneous on the facts and in the law. On the facts and in the circumstances of the case he ought to have accepted the returned income. 2. The Ld. Assessing Officer has erred in initiating the proceedings under section 153A of the IT Act, 1961 and the assessment order is without jurisdiction, bad in law and void. 3. The Ld. Assessing Officer erred in making additions that are beyond the scope o....
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..... is incorrect and invalid and ought to be deleted. 11. On the facts and in the circumstances of the case and in law, the Ld. A. O. erred in making an addition of Rs. 43,60,000/- on account of Alleged Unexplained Investments. Looking to the facts and in the circumstances of your Appellant's case the said addition made by the Ld. A.O. is incorrect and invalid and ought to be deleted. 12. On the facts and in the circumstances of the case and in law, the Ld. A. O. erred in disallowing of Rs. 4,12,214/- on account of Depreciation. Looking to the facts and in the circumstances of your Appellant's case the said disallowance made by the Ld. A.O. is incorrect and invalid and ought to be deleted. 13. On the facts and in the circumstances of the case and in law, the Ld. A. O. erred in making an addition of Rs. 18,87,82,519/- on account of Alleged Non Genuine Loans under section 68 of the IT Act, 1961. Looking to the facts and in the circumstances of your Appellant's case the said addition made by the Ld. A.O. is incorrect and invalid and ought to be deleted. 14. On the facts and in the circumstances of the case and in....
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.... 07. Search & seizure action u/s 132 (1) of the act was carried out at the residential premises of Shri Manoj B Punamiya and Mr Arvind Vyas by The Director Of Income Tax (Investigation) Mumbai on 31/10/2009. 08. Subsequently notice u/s 153A was issued on 9/8/2011. In response to that notice assessee filed copy of the return of income filed on 24/8/2011 declaring total income of Rs. 6,755,462/-. Subsequently the assessment order u/s 143 (3) read with Section 153A of the income tax act was passed on 7/8/2012 determining total income of the assessee at Rs. 1,51,05,04,880/-. 09. Assessee preferred an appeal before the learned CIT - A who passed an order on 29/12/2017 dismissing the appeal of the assessee for statistical purposes. Before the learned CIT - A assessee challenged the validity of search. The learned CIT - A upheld the validity of the search in paragraph number 7.8 of his order. The additions on the merits were confirmed. Therefore assessee aggrieved with the order of the learned CIT - A has preferred this appeal. 010. learned authorized representative straightway submitted that the issue is squarely covered in the case of the assessee itself by the order dated 31....
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....referred to the finding of the coordinate bench that in absence of panchnama being drawn against the assessee, no incriminating material have been found pertaining to assessee and also the premises search did not belong to the assessee, it could be concluded based on the cumulative effect of all the above stated relevant facts that no valid search was conducted against the assessee and the assessment u/s 153A of the act is bad in law and is liable to be quashed. Therefore the argument of the learned authorised representative was that when the coordinate bench has categorically - the assessment u/s 153A of the act for assessment year 2004 - 05 to 2007 - 08, there cannot be any assessment in the hands of the assessee Under the provisions of Section 153A of the act. He therefore submitted that assessment order passed by the learned assessing officer u/s 153A of the income tax act on 7/8/2012 deserves to be quashed. He submitted that when there is no such carried out on the assessee, there cannot be any applicability of the provisions of Section 153A of the act in the hands of the assessee. 012. He further submitted that as there is no valid search, the assessment order could not be....
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....ne of the documents, claimed to be seized, belongs to the assessee. It was asserted that no search was ever conducted upon the assessee, hence, the proceedings u/s 153A of the Act are bad in law and void. The ld. counsel for the assessee took us to various pages of the paper book and also the copy of panchnama drawn by the Department. The ld. counsel also invited our attention to the finding contained in the impugned order (as mentioned at page-4), wherein, the assessee in response to letter dated 18/08/2011 asked the authorities to provide the assessee, the copy of the search warrant, if any, issued against the assessee. 2.2. On the other hand, Shri N. P. Singh, ld. CIT-DR, strongly defended the case of the Revenue by contending that search and seizure operation was validly carried out by the Department and the search warrants were also executed. The case was heard at length on 17/02/2016. At this stage, since the jurisdictional issue was raised by the assessee, the ld. CIT-DR sought time to seek comments from the Assessing Officer. At the time of hearing on 03/03/2016, the ld. CIT-DR filed a reply dated 01/03/2016, duly signed by the DCIT, Central Circle- 7(1)(Mumbai), w....
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....n, notice u/s 153A was issued on 27/12/2010. The assessee challenged the initiation of proceedings u/s 153A of the Act. It is noteworthy that as abundant caution, the assessee filed return in response to notice u/s 153A on 24/08/2011, declaring total income at Rs.4,325/-, as was originally declared in return of income filed u/s 139(1) of the Act. The assessment was completed purportedly u/s 143(3) r.w.s. 153A on 29/12/2011 making certain additions. 2.6. The validity of initiation of proceedings u/s 153A of the Act were challenged before the ld. Commissioner of Income Tax (Appeals) by contending that 153A notice can be issued only in the cases, where action 132 is initiated and/or where books of accounts etc are requisitioned u/s 132A of the Act. The stand of the assessee was that, neither any search action was initiated against the assessee nor any books of accounts, etc were requisitioned u/s 132A of the Act, therefore, proceedings u/s 153A may be dropped. However, the ld. Commissioner of Income Tax (Appeals) affirmed the stand taken in the assessment order. The assessee is in further appeal before this Tribunal. 2.7. At the beginning of the hearing, the ld. coun....
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....as not been drawn against the assessee. The Revenue has drawn Panchnama against 'Manoj Punimia and group' while there is no concept of 'group' under the provisions of the Act . 2.9. From the aforesaid factual matrix, following question arise for our consideration (i) whether a valid search was conducted against the assessee. 2.10. In the light of the aforesaid question, now, we shall deal with the facts available on record by keeping them in juxtaposition with the provisions of section 153A of the Act. Section 153A is reproduced hereunder:- 153A. (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 income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified ....
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....n, the tax shall be chargeable at the rate or rates as applicable to such assessment year. The scope and effect of insertion of section 153A and amendment made in various sections has been elaborated by Finance Act 2003 and Departmental Circular No.7 of 2003 dated 05/09/2003. The Finance Act, 2003 has provided that the provisions of this chapter shall apply where a search is initiated u/s 132 or books of account, other documents or any asset are requisitioned u/s 132A after 31/05/2003 by inserting a new section 153A in the Act. It is pertinent to mention here that the word used in Section 153A of the Act which confers jurisdiction to issue notice and frame assessment, is 'initiated'. Of course, it means a valid initiation, with which there can be no quarrel inasmuch as the warrant of authorization stands already executed by the competent authority and bears the name of the assessee- company among the persons to be searched. The new section 153A provides the procedure for completion of assessment, where a valid search is initiated u/s 132. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish within such period as may be specified i....
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....ly. 2.12. Now, we shall discuss certain case laws. The Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla (ITA 707/2014) order dated 28/08/2015 made an elaborate discussion on the issue and after considering various decisions like CIT vs Ankitech Pvt. ltd. (2011) 11 taxman.com 100(Del.), CIT vs Anil Kumar Bhatia (2013) 352 ITR 493 (Del.), Madugula Venu vs DIT (2013) 29 taxman.com 200(Del.), CIT vs Chetan Das Laxman Das, order dated 07/08/2012 (ITA No.2021/2010)(Del.), Ranbaxy Laboratories Ltd. vs CIT (2011) 12 taxman.com 74 (Del.), Jai Steel India Jodhpur vs ACIT (2013) 36 taxman.com 523(Raj.), Hon'ble Bombay High Court in ITA No.36/2009 in the case of CIT vs M/s Murli Agro Products Ltd, M/s Canara Housing Developing Company vs DCIT (ITA No.38/2014) order dated 25/07/2014 from Hon'ble Karnataka High Court, Pr. CIT vs Kurele Paper Mills Pvt. ltd. (ITA No.369 of 20015) order dated 06/07/2015, CIT vs Continental warehousing corporation (Nhava Sheva) Ltd. (2015) 58 taxman.com78(Bom.), All Cargo Global Logistic Ltd. vs DCIT (2012) 23 taxman.com 103(Bom.)(SB), held that no addition could be made since no incriminating material was unearthed during search. 2.13.....
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.... 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 61[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 authorised officer) to- (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable....
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....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 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 stockin- trade of the business: Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so. [(1A) Where any [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] ....
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.... 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 proceeding under the Indian Incometax 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 such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true ; and (iii) that the signature and every other part ....
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....d 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 subsection (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 requesting for the return of the books of account or other documents and the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. (11) [***] (11A) [***] (12) [***] [(13) The provisions of the Code of....
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....ng under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act and any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, such books of account or other documents on the return of such books of account or other documents by any officer or authority by whom or which such books of account or other documents have been taken into custody under any other law for the time being in force, or (c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian IncomePage tax Act, 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, 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 may authorise any Additional Director, Additional Commissioner, Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assi....
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....premises of the assessee as the premises occupied by the assessee was not even entered upon by the search party. In that situation, the Hon'ble High Court held that the search was illegal and invalid. The ratio laid down in ACIT vs M/s S.P. Cold Storage (ITA Nos.142 to 147/BLPR/2012) order dated 30/10/2015, wherein, survey u/s 133A was conducted in the case of assessee firm and no search, as contemplated u/s 132 of the Act, was ever conducted at the business premises of the firm nor any requisition was made u/s 132A, therefore, the jurisdiction assumed by the Assessing Officer u/s 153A of the Act was held to be null and void, supports the case of the assessee. For the sake of repetition, it is worth mentioning that Hon'ble Delhi High Court in CIT vs Kabul Chawla (supra) and Hon'ble jurisdictional High Court after considering the decision of the Special Bench of the Tribunal in All Cargo Global Logistic Ltd. vs DCIT (supra) and CIT vs Murli Agro Products Ltd.(supra) in CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015) 58 taxman.com78 (Bom.) has made elaborate discussion and concluded that in the absence of any incriminating material, no assessment/reassessment u/s....
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....and, secondly, on the basis of such information it must have reason to believe that the conditions as stipulated in sub-clauses (a), (b) and (c) of section 132(1) of the Income-tax Act, 1961 exist. Sub-clauses (a), (b) and (c) of section 132(1) speak of any person. Search and seizure cannot be sustained 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 Income-tax 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 Income-tax 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 income-tax authorities and such a....
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....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 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 :" (underlined for emphasis) 13.The provisions of section 153A of the Income Tax Act, 1961, make it clear that only in the case of a person on whom a search is initiated under section 132 or books of account or other documents o....
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....wal (2012) 346 ITR 130 (All.) supports the case of the assessee. The ratio laid down by Hon'ble Apex Court in Union of India vs Ajit Jain 260 ITR 80(SC), CIT vs Ms. Rohini Valia 289 ITR 328 (Del.), Jindal Stainless Ltd. Vs ACIT 120 ITD 301 (Del.), Jayantilal Damjibhai & Ors. Vs DIT (2008) 219 CTR 26, also supports the case of the assessee. We are of the view that search action is in the nature of enforcement which involves invasion in the privacy of the assessee; such action has to be in full conformity with relevant legal provision. Such jurisdiction or action cannot be validated in casual or lax manner. We fully appreciate the mandate of the Superior Courts while considering the validity of assessment in such type of cases. The Mumbai Bench of the Tribunal in J.M. Trading Corporation vs ACIT 20 SOT 489 (Mum.) held that where a search is carried out at the premises owned by the assessee but rented out to other concern, the same does not result into a valid search u/s 132 of the Act upon the assessee. The appeal of the Revenue was dismissed by Hon'ble Bombay High Court vide order dated 29/06/2009 CIT vs J.M. Trading Corporation (ITA No.589 of 2009) and made following observations. ....
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.... an area or space which can be sealed and to which legal access of entry cannot be made except with the knowledge of authorized officer. When such sealed room, almirah etc. is opened again then the same is also done in the presence of two witnesses. Such proceedings are also recorded in the panchnama at the conclusion and if prohibitory order is again to be passed then the same is mentioned in the panchnama. When the prohibitory order under section 132(3) is finally lifted then panchnama is drawn. *** *** 37. Panchnama is not defined under Income-tax Act. However, Board has issued tax payer's charter. In respect of charter of rights and duties of persons searched, the Board has mentioned that such person has a right to have a copy of panchnama together with all the annexure. Duty of the person searched is to affix his signature on the recorded statement, inventories and the panchnama. Rule 112 of the Incometax Rules provides the procedure to be followed in search. Combined reading of rule 112 and the tax payer's charter makes it clear that panchnama referred in Explanation 2 to section 158BE is that panchnama copy of which is given to the party searched. ....
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....le Bombay High Court in the case of CIT v. Mrs. Sandhya P. Naik [2002] 253 ITR 534, the authorized officer cannot keep the search proceedings in operation by passing a restraint order under section 132(3) so as to circumvent the provisions of section 132(3), read with section 132(5). However, the situation would be different where a prohibitory order under section 132(3) is issued because such order, unlike- a restraint order, does not amount to seizure as per subsection (3) of section 132. Such orders are issued where it is not practicable to seize. So an act of seizure remain to be performed and, therefore, search cannot be said to be concluded. Hence, in such case, search would be concluded when the prohibitory order is lifted and the books of account/valuable articles are actually seized and the panchnama is prepared. In such case, it is this panchnama (if it is the last one) which is relevant for calculating the period of limitation. Accordingly, we hold that the Tribunal can examine the record of search with a view to find out the factum of last panchnama as discussed above." Section 153B of the Act as applicable to the relevant year stipulate that time limit for com....
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....allow upsetting of proceedings, which had already been concluded and attained finality." 2.19. The Hon'ble Delhi High Court has in the case of MDLR Resorts Private Limited v. CIT (2013) 40 taxmann.com 365(Delhi) has held the defect in the panchanama as curable and not affecting the validity of search but has also held in the said judgment as under: "The effect of the said lapse on merits or to the value or degree of importance to be given to the material seized is a matter of appraisal and merits and not a question to be examined and answered in these writ petitions. The view, we have taken finds support from the decisions of the Supreme Court in ITO v. Seth Bros. [1969] 74 ITR 836 and Pooran Mal v. Director of Inspection [1974] 93 ITR 505 (SC). Reference can also be made to the decision of this court in CITv. S. K. Katyal [2009] 308 ITR 168/177 Taxman 380 wherein the expression 'panchnama' was elucidated and explained in the following words:- "15. These provisions demonstrate that a search and seizure under the said Act has to be carried out in the presence of at least two respectable inhabitants of the locality where the search and seizure is co....
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....due to non-preparation of the panchnama in the name of the assessee which evidences conclusion of the search and which effectively decides against whom the Revenue has conducted search so much so further actions are required to initiate assessment proceedings u/s 153A of the Act for the last six years against the person so searched within the time stipulated u/s 153B of the Act. Even Hon'ble Delhi High Court in the case of MDLR Resorts Private Limited(supra) has quoted relevant extract from decision of the Hon'ble Delhi High Court in the case of CIT v. S. K. Katyal [2009] 308 ITR 168/177 Taxman 380(Delhi) whereby the Hon'ble Court has clearly stated in para 24 that if a panchnama does not, from the facts recorded therein, reveal that a search was at all carried out on the day to which it relates, then it would not be a panchnama relating to a search and, consequently, it would not be a panchnama of the type which finds mention in the said Explanation 2(a) to section 158 BE. Thus, in the absence of panchnama being drawn against the assessee, no incriminating material having been found pertaining to the assessee and also the premises searched did not belonged to the assessee, it coul....