TaxTMI 
TaxTMI 
2022 (11) TMI 547
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....750 and 9289 of 2021 And WMP.Nos.24729, 24730, 24716, 24719, 24667, 24668, 24669, 24670, 24671, 24672, 24722, 24723, 24539, 24538, 24732, 24731, 24736, 24734, 24713, 24715, 24708, 24701, 24703, 24710, 24717, 24718, 24721, 24720, 24725, 24727, 24541, 24542, 24545, 24544, 24733, 24735, 24739, 24737, 24742, 24743, 24746, 24749, 24757, 24758, 24748, 24750, 24751, 24753, 24756, 24759, 24763, 24764, 24766, 24767, 24774 & 24776 of 2020 And WP.Nos.19996, 20050, 20030, 20048, 19876, 19877, 20056, 19998, 19999, 20000, 20038, 20041, 20046, 20028, 20033, 20036, 20039, 20040, 20045, 19867, 19871, 20051, 20055, 20057, 20061, 20060, 20063, 20064, 20065, 20068, 20071 & 20074 of 2020 And WMP.Nos.24540, 17712, 24815, 24813, 24810, 24806, 24804, 24801, 24803, 24824, 24822, 24821, 24820, 24823, 24825, 24828, 24831, 24808, 24809, 24811, 24814, 24817, 24818, 24819, 24826, 24827, 24829, 24830, 24832, 24833, 24835, 24837, 24855, 25856, 25857, 25835, 25836, 25834, 18758, 10104, 10107, 18924, 19381, 19388, 19391, 19383, 19384, 19394, 19395, 19392, 19385, 19387, 19378, 19379, 22429, 22430, 22424, 22419, 22414, 22408, 22402, 22396, 22423, 22417, 22412, 22405, 22401, 22169, 22172, 22171, 2217....
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....t of the batch. 3. The genesis of the Writ Petitions are the searches conducted under Section 132 of the Act between 06.08.2019 and 11.08.2019 and consequential proceedings thereafter, culminating in the passing of the assessment orders. SNJ Breweries Pvt. Ltd. is the primary assessee and is stated to be operational in this line of business from 06.04.2011. It operates from factories situated at Madurantakam in Tamil Nadu. 4. The matters were heard on various dates and this common and consolidated order is passed after hearing the detailed submissions of all learned Senior Counsel for the petitioners as well as the learned Senior Standing Counsels for the respondents. II. Issues: 5.Issue - 1 - The validity of search under Section 132 is challenged by way of Writ of Declaration by SNJ Breweries, SNJ Distillers, SNJ Sugars, N.Jayamurugan, Geetha Jayamurugan, Ramamoorthy Srithar, Srithar Sudha, Nandhini Transports Pvt. Ltd., Kandasamy Thirumoorthy, Thirumoorthy Kala, Manickam Karthikayen, Kaycee Distillers, Chandran Somasundaram, C.Mariappan, Shanmugakani Sivajothi, Somasundaram Rishi Sharaan and Leela Distillers. 6. Issue - 2 - The centralization of assessments under S....
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.... commenced on 06.08.2019 at 6.30 a.m. when more than 150 officials of the Department are stated to have commenced the proceedings in the temporary rental residence of the Director of the brewery at No.4/27, Cenotaph Road First Lane, Teynampet, Chennai - 18. Simultaneous therewith, his permanent residence located at Chitharanjan Salai, Teynampet and other locations such as location of companies owned by the Directors of the brewery, the registered office of the petitioner companies at Nandanam and other registered offices, the offices/residences of suppliers and vendors and other factory premises located at Tamil Nadu, Kerala, Goa and Andhra Pradesh as well as residences of the relatives of the Directors of the petitioner companies, the auditor and employees were also searched. (vi) In all, 56 locations spread over 7 states in India were raided. (vii) The basis for such a wide and far reaching search is questioned, particularly in the absence of any credible material to indicate the necessity for such action. (viii) No cash or documents were seized in the residential premises of N.Jayakumar, Director of SNJ Breweries. Some slips/chits of papers, 2 laptops and a notebook wer....
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.... which the search was conducted. (xv) H.C.P.No.1693 of 2019 was filed seeking the production of the Director, N.Jayamurugan from illegal detention and notice was issued on 09.08.2019 to R2. Immediately upon receipt of the notice, the search was concluded in a hasty manner on 11.08.2019 at 11.00 a.m. (xvi) Ultimately, when the HCP came up for hearing on 13.08.2019, it was closed, the Division Bench recording as follows: 2. When the matter is taken up of hearing, the Learned Special Public Prosecutor submitted that what was done is only an enquiry, though the Learned Senior Counsel submits that it is a clear case of detention. Suffice it to state that the detenues are not in the custody of anyone as of now. Thus leaving open the larger issue these Habeas Corpus Petitions stand closed as nothing survives for consideration. However liberty is also given to the Petitioners to take appropriate action in the manner known to law, if they are of the view there involves illegal custody." (xvii) Several prohibitory orders were issued on 08.08.2019, 09.08.2019 and 10.08.2019 attaching the assets including bank accounts of the petitioners, all of which were duly disclosed. ....
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....lves handle the situation. She was left to her own devices to make an emergency call and reach the hospital. (xxvii) The search and seizure manual sets out in categoric terms the procedure to be followed in the conduct of searches. There has been clear violation of the stipulations thereunder. 12. The petitioners submit that the ingredients of Section 132 have not been satisfied in this case as the respondents have no 'reason to believe' that: a) a person who has been issued a summons or notice under the provisions of the present Act or 1922 Act for production of books of accounts or documents, has omitted/failed to do so; b) a person to whom summons or notice under the provisions of the present or 1922 Act might be issued would not comply with such summon/notice. c) the petitioners are in the possession of money, bullion, jewellery or other valuable article or thing which represents wholly or partly income or property that has not or will not be disclosed for the purposes of the present or 1922 Act. 13. Furthermore, it is a pre-requisite for the Income Tax Department to be in possession of 'information' leading to a 'reason to believe' that any ....
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....r cards. 17. There is complete and total denial of the allegations of human rights put forth by the petitioners. According to the respondents all necessary measures were taken to address the medical issues that were projected by the petitioners and their family members and the submissions to the contrary were to be rejected in full. 18. They rely upon the following judgments to buttress their submissions:- Hon'ble Supreme Court: Commissioner of Commercial Taxes, Board of Revenue, Madras V. Ramkishan Shri Kishan Jhaver(66 ITR 664) Income-tax Officer V. Seth Brothers (74 ITR 836) Pooran Mal V. Director of Inspection (93 ITR 505) State of Punjab V. Baldev Singh ((1999) 6 SCC 172) DGIT (Inv.) V. Spacewood Furnishers (P) Ltd. (374 ITR 595) Income Tax Officer, Calcutta and Ors. vs. Lakhmani Mewal Das (103 ITR 437) Principal Director Of Income Tax (Investigation) vs Laljibhai Kanjibhai Mandalia((2022)140 taxmann.com) Commissioner of Income-tax, Gujarat V. Vijaybhai N. Chandra (357 ITR 713) Madras High Court: P.Murugesan V. Director of Income-tax (Inv.) (222 CTR 619) Agni Estat....
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....ent passed by the Hon'ble Supreme Court in the case of Seth Brothers (supra), wherein the provisions of Section 132 came to be discussed. Seth Brothers had been subject to search and seizure action on 07th and 08th June, 1963 and had challenged the same on the ground that the action was intrusive and violative of the provisions of law. The Court went into the scheme of Section 132 concluding that the vesting of power upon the revenue officers under that Section was not arbitrary, but was premised on the satisfaction of statutory conditions justifying the search action. 23. The issue of a warrant by a Commissioner is neither a judicial nor a quasi-judicial act. The Commissioner were enjoined to issue such warrant only based upon information in his possession in consequence of which he forms the necessary belief, the matter is not subject to scrutiny by the Court. 24. In this connection, they referred to a decision of the Allahabad High Court in Income-tax Officer, A-Ward, Agra and Ors. v. Firm Madan Mohan Demma Mal and anr. (70 ITR 293). The ratio of the aforesaid judgements has been applied over the years, Courts taking note of the allegations of assessee's on a case on case ....
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....cer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued. Again, any irregularity in the course of entry, search and seizure committed by the Officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the Officer has in executing the authorisation acted bona fide. 26. The ratio of the aforesaid judgments was reiterated in the case of Pooran Mal (supra) when a constitutional challenge was laid to the provisions of Section 132 stating that the provisions violated Articles 19(1)(f) and (g) of the Constitution of India. This was repelled by the Hon'ble Supreme Court in the following terms at page 518: "......We are, therefore, to see what are the inbuilt safeguards in section 132 of the Income Tax Act. In the first place, it must be noted that the power to, order search and seizure is vested in the highest officers of the department. Secondly, the exercise of this power can only follow a reasonable belief en....
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....n 132 and rule 112 cannot be regarded as violative of Articles 19(1)(f) and (g)". 27. The Bench notes that undoubtedly search and seizure is a drastic process and is bound to be accompanied by unsavoury events and sometimes inconvenient results. A sudden search and seizure will no doubt unnerve inmates of the location under search. In the cases before me, allegations and rebuttals have been advanced in regard to the highhandedness of the officials as well as the oppression that was allegedly meted out to the residents. So too in Pooran Mal's case. This has been noticed in the judgment itself, but the Bench takes an overall view of the matter stating that on the whole, the search was not established to be malafide, oppressive or excessive. So too in this case. The Bench held further that even if a search had been illegal, the evidence seized can be validly used in the assessments to follow. 28. The ambit of phrase 'reasons to believe' have been interpreted in the seminal judgment in the case of Lakmani Mewal Das (supra) in the context of Section 147 of the Act, which also deploys the same phrase. At page 445, the Bench states as follows: The grounds or reasons which l....
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....tio of the judgment in Pooran Mal beyond what the Court had intended. 31. In the case of Spacewood Furnishers Pvt. Ltd.(supra), 8. What is significant and, therefore, must be noticed is that in both the aforesaid two decisions while this Court has emphasized the necessity of recording of reasons in support of the 'reasonable belief contemplated by Section 132, nowhere, in either of the decisions any view had been expressed that the reasons recorded prior to authorizing the search needs to be disclosed or communicated to the person against whom the warrant of authorization is issued. The same is the view expressed by this Court in Dr. Pratap Singh v. Director of Enforcement 155 ITR 166 (SC) while considering a pari materia provision in the Foreign Exchange Regulation Act. The material on which the officer has reasons to believe that any documents will be useful for or relevant to any investigation need not be disclosed in the search warrant; such material may be secret, may have been obtained through intelligence, or even conveyed orally by informants. In the said case, the Petitioner contended that, if the court is going to look into the file produced on be....
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....issued to him; or iv) Such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed; v) Such reasons may have to be placed before the High Court in the event of a challenge to formation of the belief of the competent authority in which event the Court would be entitled to examine the reasons for the formation of the belief, though not the sufficiency or adequacy thereof. In other words, the Court will examine whether the reasons recorded are actuated by mala fides or on a mere pretence and that no extraneous or irrelevant material has been considered; vi) Such reasons forming part of the satisfaction note are to satisfy the judicial consciousness of the Court and any part of such satisfaction note is not to be made part of the order; vii) The question as to whether such reasons are adequate or not is not a matter for the Court to review in a writ petition. The sufficiency of the grounds which induced the competent authority to act is not a justiciable issue; viii) The relevance of the reasons for the formatio....
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....2 is called for, yet at the same time we may emphasise that the power to search a person is a stringent power provided by law and this requires the officers to scrupulously follow the mandate and the rigor of the law prior to authorising such an action, and unless the conditions to exercise such power are shown to exist, we would have no hesitation in striking down such an action. We are compelled to interfere as there was complete lack of information prior to the action of search, exhibiting gross non-application of mind and arbitrariness by the appropriate authorities. The reason to believe in the present case was non-existent prior to the search. Even after the search, there was no material to conclude that no such disclosure had been made, or that no disclosure would be made so as to satisfy the pre- requisites of section 132 of the Act. The respondents have merely acted on the basis of surmises and conjectures, and without due authorisation. Their actions are in contravention of law, making the action of search and seizure bad in law. III(d) - Conclusion 36. In fine, the challenge to the search is rejected and all writ petitions on this score, are dismissed. However, I a....
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....here is yet another aspect of the matter. The petitioner states that there are CCTV cameras that were disabled by the petitioners. According to the revenue, the cameras were disabled at the instance of the petitioners. This a question of fact but one that can be ascertained by examination of evidence. On this aspect too, there are factual disputes as to both the coverage if any, that could have been provided, and the reasons for their disabling. 41. Learned Standing counsel does not dispute the medical record. His attempt is to state that the child had a pre-existing medical condition and thus, the Department cannot be held responsible for the sudden distress needing hospital attention. There has been a specific allegation by the petitioner in regard to the delay in permitting the family to seek medical assistance. Though denied in general terms, I am unconvinced that the respondents did exercise necessary measures, as warranted, in such a situation. 42. The necessity for speculation in such a situation could have been avoided had the footage from CCTV cameras been available. In light of the discussion as above, I do find that the response of the officials in the medical emer....
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.... Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, - (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order; .............. 48. There is no dispute on the fact that reasons have been recorded by the officials prior to initiation of the proceedings for transfer and it is not the case of any of the petitioners before me that no reasons are recorded. The statutory provisions are also clear to the effect that the assessee must be afforded a reasonable opportunity of being heard in the matter, wherever it is possible to do ....
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....he revenue counsel undertook that a copy would be furnished to the petitioners and that was recorded. IV (c) Discussion 56. Learned counsels have been heard and files were summoned to peruse the orders passed. The files contain, inter alia, Notification 13/2020 in C.No.142/2020-21/PCIT-1/CBE dated 29.12.2020 that has been issued recording the fact that Ramamoorthy Srithar and Kandasamy Thirumoorthy have not responded to the notices and hence it is presumed that they have no objections in the transfer of their assessments to Chennai. 57. The reasons set out, are, to facilitate comprehensive and coordinated assessment proceedings. However, there is subsequent Notification bearing No.27/2021 dated 09.02.2021, wherein the objection of Kandasamy Thirumoorthy is recorded. His objection was that since the proposal for transfer was during the pandemic period, travel between Coimbatore and Chennai would prejudice him, quite apart from involving substantial time and cost. 58. Therefore, he has requested that his file not be transferred 'in entirety' from Commissioner of Chennai. The request has been rejected in the interests of coordinated examination and assessment. 59. Likew....
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....officer to another, within the Central Circle. 65. This leaves the aspect of non-service of the orders upon the petitioners and I discuss below the decisions cited at the Bar. The relevant portion of the judgment in re. Ajanta Industries (supra) reads thus: The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under article 226 of the Constitution or even this Court under Article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is based on irrelevant and extraneous condonations Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question We are clearly of opinion that the requirement of recording reasons under section 127(1) is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee. ..... When law requires reasons to be recorded in a particular order affecting prejudicially the i....
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....cated. 28. Keeping in view the aforesaid principles, if it is held that the order would become a nullity, it really does not serve the purpose of the Control Order. On the contrary, it frustrates it and, therefore, the interpretation placed by the High Court on Para 9 in juxtaposition with Para 10 to treat the order as null and void is neither correct nor sound. It is desirable that the authority shall pass an order within 30 days from the date of show-cause. Be it noted that there are two contingencies when the show-cause is issued for violation or when an order of suspension is passed. There can be no trace of doubt that the order will take effect from the date when it is served. The order, unless it is served, definitely neither the agent nor the dealer would suspend its activities or obey any order, for he has not been communicated. ................. 70. In Government Wood Works (supra), Justice T.L.Viswanatha Iyer decided the same issue holding that an order cannot be said to be passed unless it is in some way pronounced or published or the party affected has the means of knowing it. Merely passing the order signing it and keeping it in the file would be i....
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....nai. 72. The counter filed by the respondents in that matter was to the effect that the impugned order was passed based on certain reasons that had been recorded by the officer, and kept in the jurisdictional file. Since the note containing the reasons was very lengthy, the contents had not been incorporated in the notice or in the transfer order, the latter of which was challenged. 73. The Court has summoned the file and had perused the reasons, on the basis of which the impugned order had been passed. Ultimately, the order came to be set aside as being violative of principles of natural justice, since it was the reasons that form the substratum of the impugned decision and those reasons had, admittedly, not been furnished to that assessee. IV(d) - Conclusion 74. The perusal of the files has left me in no doubt that sufficient opportunity has been afforded to the petitioners prior to the passing of the impugned orders. On the aspect of non-service, I am of the view that it constitutes an irregularity in procedure, but one that may be cured by supplying a copy of the order now. The reasons for centralization have admittedly been communicated to the petitioners even in t....
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....r General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that- ....... (9A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub-section (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 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. 81. I have, in a batch of Writ Petitions in the case of Agni Estates and Foundations Private Limited V. ....
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....cisions, the Courts have observed that though the provisions of Section 153A do not refer to evidence or material found in the course of the search or post-search material or information, whether incriminating or otherwise, relatable to the evidence found in the course of search, the provisions of Section 153A require that a search assessment be framed based only upon such seized material. 88. They also rely on Instruction in F.No.286/161/2006-IT dated 22.12.2006, as well as the Manual of the Income Tax Department, particularly Annexure 92 falling under Appendix V, setting out the procedure for conduct of assessments following searches. 89. Paragraph 1.3 of the Manual thereof states that upon receipt of the appraisal report and seized material, the Assessing Officer and Range Head must jointly scrutinize the same and prepare an examination note to decide upon which cases require the issuance of notices under Sections 153A/153C/148, segregate those cases where the seized materials pertain to persons other than the searched entities and the centralization of assessments. 90. The above Instruction finds place at paragraph 6.41 of the search and seizure manual and reads thus: ....
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....ween the two Sections is apparent. 95. They rely on the decisions of the Delhi, Kerala and Gujarat High Courts in the cases of (i) Commissioner of Income Tax V. Anil Kumar Bhatia (352 ITR 493), (ii) Madugula Venu V. Director of Income Tax (29 taxmann.com 200), (iii) Commissioner of Income Tax V. St. Francis Clay (385 ITR 624), (iv) E.N.Gopakumar V. Commissioner of Income-ttax (Central) (390 ITR 131) and (v) Amar Jewellers Ltd. V. Assistant Commissioner of Income-tax (444 ITR 97). V (c) - Discussion 96. The provisions of Section 153A, to the extent they are relevant to decide the issue on hand, read thus: 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 [but on or before the 31st day of March, 2021], 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 y....
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....irrespective of whether the seized material are received or otherwise. No doubt, it stands to reason that the materials seized must be analysed and forwarded to the receiving Assessing Officer at the very earliest to enable the officer to peruse the same even prior to issuance of notice. However, it is not a statutory precondition. 100. This is amply demonstrated by a comparison of the provisions with Sections 153A and with Section 153C. Section 153A is direct and requires an Assessing Officer to compulsorily issue a notice in the case of any person searched calling for returns of income in the prescribed form. 101. The 4th proviso to Section 153A deals with assessments or reassessments falling outside the block of 6 years and for which an additional condition is imposed. It states that notice may be issued only when the Assessing Officer has, in his possession, books of accounts, other documents or evidence that reveal that income, represented as an asset, of a pecuniary limit of Rs.50.00 lakhs or more, either for an assessment year or the aggregate of the assessment years, has escaped assessment. Thus, in such a situation, the existence of the seized materials is a sine qua....
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....ace. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax. iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the comple....
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....onths from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed: Provided that in case of other person referred to in section 153C, the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a) or clause (b) of this sub-section or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later: 108. Circular No.3/2006 dated 27.02.2006 which explains the provisions of the Finance Act, 2005 contains the following paragraph explaining the purport of Section 153C(2): A new sub-section (2)....
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....e pre-condition is the existent of an asset valued at Rs.50 lakhs or more. The ascertainment of this aspect also necessitates the existence of the seized material prior to the issuance of notice. Then again the inclusion of the seventh year, being the year of search under Section 153C(2) is also only after the receipt of books by the officer. In contrast, the only pre-condition for issuance of the notice under Section 153A is the search itself. I am thus unable to accept the argument of the petitioners to the effect that the transfer of the seized material is a pre-condition to the issuance of the notice under Section 153A as such a conclusion would tantamount to re-writing of the provision to read in such a condition, which is legally impermissible. 112. Having said so, the report of the Comptroller and Auditor General of India for the year ended March 2019 (Report No.14 of 2020) makes a recommendation for setting of a time limit for issuance of notices under Sections 153 A and C and the relevant portion of the report is extracted below: 2.4.2 Absence of prescribed time limit for issue of notice u/s 153A/153C of the Act. There is no specific time limit prescri....
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....made by Ramamoorthy Srithar, Srithar Sudha, Nandhini Transports Pvt. Ltd., Kandasamy Thirumoorthy, Thirumoorthy Kala, Manickam Karthikayen, Kaycee Distillers, Chandran Somasundaram, C. Mariappan, Shanmugakani Sivajothi, Somasundaram Rishi Sharaan and Leela Distillers. 116. These petitioners are in receipt of notices under Section 153 C of the Act on the basis of materials found in the course of search, that are stated to relate to them. The first submission made by the petitioners is that in some of the cases, panchanamas have been drawn in their name and hence the substratum for issuance of Section 153 C notices itself fails, as the Statute provides for the issuance of a notice under Section 153A in such cases. Reliance, in this regard, is placed upon the decision of the Delhi High Court in Saraya Industries Ltd. V. Union of India ((2008) 306 ITR 189). 117. However, I am, on a perusal of the search records, unable to locate any panchanama relating to the petitioners to whom Section 153C notices have been issued. At best, I have been able to locate panchanamas drawn in the names of the employees of some of the aforesaid concerns, but not the concerns themselves. Thus, relianc....
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....n for the block period. 122. The satisfaction recorded must state that the seized materials relate or pertain to such other person, and to the period in question, that is, the block of six years as stipulated under Section 153A. 123. I extract a sample satisfaction note in the case of Anitha Bottles a sole proprietary of C. Mariappan, petitioner in W.P.No.19414 of 2021, to examine whether the satisfaction arrived at by the authority may be said to be perverse or contrary to law. Satisfaction Note u/s 153C of the Income Tax Act, 1961, in the case of M/s.Anitha Bottles (ASMPM9473H) AY 2019-20 A search and seizure action u/s 132 of the Income Tax Act, 1961, was conducted in the case of Shri. N.Jayamurugan, Smt.J.Geetha, M/s.SNJ Distilleries Pvt. Ltd., M/s.SNJ Breweries Pvt. Ltd. M/s.SNJ Sugars & Products Ltd, on 06.08.2019. In connection with the same, the business premises of M/s.Anitha Bottles (Prop. Shri C.Mariappan), at No.192/1060/1. Venkateswara Rice Mill, G.S.T. Road, Madhuranthakam - 603 306, was also covered. The SNJ group was notified to this office for making search assessments and coordinates investigation vide PCIT (Central-1) Chennai noti....
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....statement. On verification of the bought notes, it was noticed that they have mentioned only names in the bill without any other details and it was also noticed that seller copy was retained with them. When it was asked to explain the same, Shri K.Rajkumar in the sworn statement recorded from him u/s 131 on 08.08.2019 stated in his answer to question number 22 of the statement that the purchases booked under the head 'Bottle Purchase Account' are bogus and no actual purchase were made for such bills. The names mentioned in the bought notes are dummy names and hence no contact details or addresses can be provided. Thus, in order to match the inflated sales invoices with the books of account (sale invoices), M/s.Anitha bottles was booking bogus purchases with the handwritten purchase vouchers (bogus bought notes), in his answer to question number 21 of the statement recorded on 08.08.2019, Shri K.Rajkumar as instructed by Shri C.Mariappan, he had to book twice the quantity of bottles in the purchase register in order to match the inflated sales invoices raised in the name of SNJ group. Further, it was noticed that before implementation of GST, in order to match the ....
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....n,Prop: M/s.Anitha Bottles also confirmed in the sworn statement u/s 132(4) recorded from him on 09.08.2019 that they are not maintaining any inward, outward and stock register. During the course of search proceedings, when it was asked to provide the details of the unregistered dealers from whom bottles were purchased which the assessee could not produce the same. He has not produced any evidences regarding the quantity of purchases booked under the head 'Bottle Purchase Account' along with the details of unregistered dealers. Further, huge cash withdrawal equal to amount of inflated bottle purchase shows the inflation in sales of old bottles made to SNJ group and equal amount of inflation in bottle purchases by the assessee. The assessee could not provide evidence for cash expenses vis-à-vis the cash withdrawal. The cash receipts notings of Shri A.Saravanan, employee of M/s.SNJ group who collects cash from suppliers on behalf of SNJ group in the packet dairies seized vide ANN/KSI/HNP/B&D/S from the premise of M/s.Hotel Nandhini Palace also contains the entries of receipts from M/s.Anitha Bottles and Shri A.Saravanan also stated that he was receiving back excess am....
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....cordingly, notice u/s 153C is issued for the AY 2014-15, 2015-16, 16-17, 17-18, 18-19 & 19-20). For A.Y. 2020-21 relevant to the previous year 2019-20 in which the search is conducted assessment has to be completed u/s.143(3)/144. Accordingly, notice u/s 153C is issued for the A.Y. 2019-20. 124. In the case of Ameeta Mehra V. Additional Director of Income Tax ((W.P.(C) No.1471 of 2013 dated 16.05.2017), the Delhi High Court states thus: 14. The Satisfaction Note preceding the issuance of the search authorisation has been summarized earlier. The law in relation to searches under Section 132 of the Act has been explained in a large number of decisions of the Supreme Court and the High Courts. The jurisdictional facts that have to be established before a search under Section 132(1) of the Act can be authorised are that (i) the authority issuing the authorisation is in possession of some credible information, other than surmises and conjectures (ii) that the authority has reason to believe that the conditions stipulated in clauses (a), (b) and (c) of Section 132(1) qua the person searched exist; and (iii) the said information has nexus to such belief. 125. The s....
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....de only the substantial questions of law that arise from the order of the Income Tax Appellate Tribunal, the order of the Tribunal being final on the questions of facts. Thus, barring any perversity in the recording of facts, what travels to the High Court are only the substantial questions of law. 131. In the cases relied upon, the Tribunals had rendered categoric findings that there were no seized materials in the case of those assesses relatable to the assessment years at issue. It is at the instance of the Income Tax Department that the matters had travelled to the Hon'ble Supreme Court and the substantial question of law was decided noticing, and based upon the facts found by the Tribunal. 132. This situation is hardly analogous to the situation before me. We are at a very preliminary stage where the materials found are yet to be assimilated and used, if at all, in an assessment. The petitioners have approached this Court even at this stage, crying foul. 133. This Court is of the categoric view that it is only the process of assessment that would bring to light inadequacies or perversities in the materials found. Be that as it may, and to assuage the grievance of the ....
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....to be utilized by the respondents shall be supplied to the petitioners who shall have full liberty to put forth their defence in regard to the same. VI (d) - Conclusion 139. The challenge to notices in terms of Section 153 C is decided against the petitioners. V II. I SSUE - 5 - Challenge to notices under Section 281B of the Act VII (a) - Submissions of the petitioner 140. The challenge to notices of provisional attachment under Section 281B of the Act are on the basis that the attachments are bad in law seeing as the proceedings upon which such notices are based, are themselves contrary to law. They also state that the attachments have been extended far beyond the time frame provided under statute. VII(b) - Submissions of the I T Department 141. In counter, the respondents have disputed that the attachments are contrary to law. They point out, though in general terms, that the attachments have been extended from time to time, and also take benefit of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 enacted on account of the pandemic to extend statutory timelines. VII(c) - Discussion and Conclusion 142. The provisions....