TaxTMI 
TaxTMI 
2024 (5) TMI 599
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....without jurisdiction and in violation of the mandatory provisions of the Income Tax Act, 1961(herein after referred as 'the Act') 3. The facts of the case is that the petitioner is an assessee under the Income Tax Act, 1961 and is regularly filing income tax returns and discharging tax liabilities by paying income tax and TDS. A search and seizure operation was conducted by the Additional Director of Income tax (Investigation) and his team at the residential premises of the petitioner on 4-12-2020 on the basis of the authorization dated 4-12-2020 issued by the Principle Director of Income Tax (Investigation) dated 4-12-2020. A survey operation was also conducted at the coal depot of the petitioner on 4-12-2020. During the search operation cash amounting to Rs. 2,69,920/-, jewellery amounting to Rs. 10,44,695 was found. Inventory of Bank accounts found was prepared which related to the petitioner and his family members and a restraint order was passed as regard to book accounts. Some loose paper, notes books and data of cell phone and laptop was also seized. Restraint order under Section 132(3) of the Act was passed in respect of two bank lockers on the date of seizure i.e. on 4-....
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....xercise of powers u/s 131 (1A) of the Act directing the petitioner to appear before the said authority on 25-1-2021 to give and/or produce either personally or through an authorized representative the books and account and other documents specified in the said notice. 9. The petitioner again vide reply dated 25-1-2021 submitted that since as per Rule 6F and 6F(5) of the Income Tax Rules, the prescribed period of maintaining and keeping the books of account is six years from the end of Assessment Years, the books of account for Assessment Years 2011-12 were not available with the petitioner. The petitioner also informed the respondent No. 3 that the petitioner had already produced the books of account for the Assessment Years 2013-14 to 2014-15, which though was not legally required. The petitioner also provided the data for the financial year 2012-13 to financial year 2020-2021. 10. The respondent No. 3, again, issued another notice dated 28.01.2021 in the purported exercise of powers u/s 131 (1A) of the Act directing the petitioner to appear before the said authority on 02.02.2021 to give and/or produce either personally or through an authorized representative the books and ....
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....fore the authority concerned had taken any action under Section 132 (1) (i to v) of the Income Tax Act. He further submits that as in the instant case, the action under Section 132 (1) (i to v) had already been taken, therefore, the condition precedent for invoking Section 131 (1A) is absent in the present case. 16. Mr. S. C. Keyal, learned Standing Counsel for the Income Tax Department, Government of India, on the other hand, submits that Section 131 (1A) of the Act was introduced w.e.f. 1-10-1975 to empower officers of the Investigation Wing, to exercise the power mentioned in Section 131 (1) of the Act. He further submits that Section 131 (1A) of the Act was introduced to extend similar powers to an authorized Officer within the meaning of sub-section (1) of Section 132 before he takes search and seizure action under clauses (i) to (v) of that sub-section. He further submits that notice under Section 131 (1A) confers powers on the authorities as mentioned under Section 131 (1), if he has reason to suspect that any income has been concealed or is likely to be conceded. 17. He further submits that it is only an enabling power and does not in any way affect the search and sei....
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....ction 132 provides power of search and seizure and if the notice would be given, then the whole purpose of conducting search and seizure will vanish, as because the assessee after knowing the fact that a notice for initiating proceeding under Section 132 will be given, he will destroy all the documents making the proceeding a futile exercise. In support of the aforesaid submission, he relies upon the following judgments; I. Liberty Marine Syndicate (P) Ltd. v. PCIT, Cuttack (2017) 394 ITR 277:77 taxmann.com 52 (Orissa High Court.) II. Classic Builders & Developers V Union of India (2001) 251 ITR 492 (MP High Court) III. Arti Gases Vs DIT (Inv.) (2001) 248 ITR 055 (Gujrat High Court) paragraph 16 IV. Dr. Roop Vs Commissioner Income Tax(2012) 254 CTR 14(High Court of Allahabad) V. Nessa Leisure Ltd Vs Union of India (2011) 245 CTR 634 VI. Emaar Alloys Pvt Ltd Vs DGIT (2016) 288 CTR 413 paragraph 9(v). 21. Heard the rival submissions made at the bar and perused the materials available on records. 22. The question that falls for determination is as whether notice under Section 131 (1A) of the Act to the assessee is an essentia....
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.... it or any other income-tax authority. (3) Subject to any rules made in this behalf, any authority referred to in sub-section (1) [or sub-section (1A) or sub-section (2) may impound and retain in its custody for such period as it thinks fit any books of account or other documents produced before it in any proceeding under this Act: Provided that an Assessing Officer or an Assistant Director or Deputy Director shall not- (a) impound any books of account or other documents without recording his reasons for so doing, or (b) retain in his custody any such books or documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner or Principal Director or Director therefore, as the case may be." 24. Section 132 (1) of the said Act is also reproduced hereunder for ready reference; "132. Search and seizure.- (1) Where the [Principal Director General or] Director General or [Principal Director or] Director or the [Principal Chief Commissioner or] Chief Commissio....
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....uilding, place, vessel, vehicle or aircraft] where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; [(iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing;] [(iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents;] (iii) seize any such books of account, other documents, money, bullion, jewellery or ....
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....int Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so.] [Explanation.-For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.]" 25. From a plain reading of Section 131 (1A) of the Act it is crystal clear that the power under Section 131 (1A) cannot be said to be an independent power in itself but is the power for the purpose of making enquiry and investigation relating to any income which has been concealed or is likely to be concealed by any person or class of persons, equipping him with the powers regarding discovery, production of evidence, etc., as provided under Section 131(1) of the Act. The expression 'before he, i.e., Authorized Officer, takes action under clauses (i) to (v) of section 132 (1) of the Act' is material and relevant, that is the power regarding discovery, production, etc., as provided under Section 131(1) can be exercised by the Authorized Officer before exercise of the power of search and seizure mentioned in clause (i) to (v)....
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....f the Act, the concerned authority cannot exercise power as enumerated in clauses (a), (b), (c) and (d) of s. 131(1) of the Act, on the basis of the reasons to believe consequent upon information in his possession in regard to the undisclosed income or property in regard to the income or property which is concealed or is likely to be concealed. Sub-s. (1A) of s. 131 of the Act empowers him or makes him competent for exercise of power, in his jurisdiction, as conferred under sub-s. (1) of s. 131 on the authorities mentioned under sub-s. (1) for proceeding against such person or class of persons for making enquiry or investigation relating to concealed income provided he has reason to suspect." 28. The Kerala High Court in the case of Amway India Enterprises vs. Union of India & Anr [(2003) 262 ITR 428] while examining the provisions of Section 131 (1A) of the Act in paragraph 5 and 7 held as under: "(5) On a reading of section 131 (1A) it can be seen that various officers referred to therein are vested with powers as are vested in the civil court while trying a suit in respect of discovery and inspection, enforcing the attendance of any person and examining him on oath, ....
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....ce under Section 131 (1A) of the Act has to be issued and since the taxing provisions of the statutes are to be interpreted strictly, the issuance of the notice under Section 131 (1A) of the Act in the instant case after conducting of the search is absolutely illegal & without jurisdiction. TAXING STATUTES ARE TO BE INTERPRETED STRICTLY: 31. It is a well settled law that taxing statutes are to be interpreted strictly and while interpreting the taxing statue one must have argued to the strict letter of law and not merely to the spirit of law and one cannot be taxed by inference or by analogy. In Cape Brandy Syndicate V. Commissioner of Inland Revenue, was expressed thus by Rowlatt, J: [1921] 1 K.B. 64 held as under: "In a taxing Act one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." 32. The Apex Court in M/s Murarilal Mahabir Prasad & Ors. Vs. Shri B.R. Vad & Ors, reported in (1975) 2 SSC 736 has held that the true implication of the principle that a taxing statute must fi....
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....tion of A.P. Chambers of Commerce & Industry and Ors. Vs. State of A.P. and Ors, reported in (2000) 6 SCC 550 at paragraph 7, the Apex Court held that it is trite law that a taxing statute has to be strictly construed and nothing can be read into it. In Ajmera Housing Corporation & Anr. Vs. Commissioner of Income Tax, reported in (2010) 8 SCC 739 at paragraph 36 it was held as under: "36. It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment". AMBIGUITY IN THE PROVISIONS - BENEFIT MUST GO TO THE TAX PAYER: 38. It is a settled law that in case of an ambiguity in the taxing provision, the benefit of the same should go to the taxpayer. The Apex Court in M/s Murarilal Mahabir Prasad &Ors. (supra) in paragraph 28 held as under: "28. ......... If the statute contains a lacuna or a loop-hole, it is not the function of the court to plug it by a strained construction in reference to the supposed intention of the Legislature. The Legislature must then ....
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....ion 131 has to be issued. 43. The submission of the respondents that Section 131 (1A) of the Act was introduced to extend similar powers to an authorized Officer within the meaning of sub-section (1) of Section 132 before he takes search and seizure action under clauses (i) to (v) of that sub-section which is in conformity with the submissions advanced on behalf of the petitioner that Section 131 (1A) was introduced in the statute empowering the Authorized Officer before he takes search and seizure action under clauses (i) to (v) of that sub-section. 44. The decisions of the Orissa High Court in the case of Liberty Marine Syndicate (P) Ltd. PCIT, Cuttack, [(2017) 394 ITR 277], relied by the respondent is not applicable in the present case in as much as in the said case, a notice under Section 142(1) of the Act was issued prior to making of the search. 45. The decision of the Madhya Pradesh High Court in the case of Classic Builders & Developers vs. Union of India & Ors., [(2001) 251 ITR 0492], relied by the respondent is also not applicable in the present case inasmuch as there was no search in the said case and only survey was conducted under Section 133 of the Act. 46....
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....ection 131 (1A) was not matter of challenge, the High Court had not examined the validity of said notice and thereby, the aforesaid decision cannot said to be have any applicability in the present case. 49. Pertinent also to refer to the affidavit-in-opposition filed on behalf of the respondents no. 2 and 3, wherein the respondents have stated that a search and seizure action under Section 132 of the Act in the case of the petitioner was conducted on 04.12.2020, on the basis of the authorization dated 02.12.2020, issued by the Principal of Income Tax (Investigation), NAR, Guwahati (respondent no. 2). In the said affidavit, it is further stated that during the post search investigation, Deputy Director of Income Tax (Investigation) Unit (2) (3), Dibrugarh (respondent No. 3) issued notices to the petitioner under Section 131 (1A). It is thus, evident that search was carried on without issuance of notice under Section 131 (1A) merely on the basis of the authorization dated 02.12.2020. On this score alone, the search conducted and subsequent impugned notices are illegal and without jurisdiction. 50. Further, in the facts of the instant case, there could not have been any material....