TaxTMI 
TaxTMI 
2024 (8) TMI 290
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....079, 3080, 3178, 3179, 3180, 3181, 3182, 3183, 3184, 3185 of 2023 And C.M.P. Nos. 22016, 22017, 22018, 22019, 22020, 22022, 22023, 22024, 22161, 22164, 22168, 22169, 22175, 22178, 22183, 22215 of 2022 and 336, 340, 344, 346, 348, 350, 351, 353, 355, 358, 3271, 3275, 3276, 3278, 3281, 3282, 3283, 3287, 3290, 3293, 3294, 3295, 3298, 3300, 3303, 3307, 3308, 3310, 3312, 3314, 3318, 3348, 3351, 3701, 3748, 3769, 3793, 3821, 3824, 3833, 3839, 3843, 3855, 3883, 3890, 3912, 3921, 3973, 3981, 3989, 4523, 4534, 4542, 4549, 4579, 4589, 4857, 4865, 6961, 6963, 6965, 6967, 6968, 6970, 6971, 6972, 6973, 6974, 6975, 6976, 6977, 6978, 6979, 6980, 6981, 6982, 6983, 6984, 6985, 6986, 6988, 6989, 6990, 6991, 6992, 6993, 6994, 6996, 6997, 7003, 7006, 7014, 7057, 7061, 7062, 7063, 7064, 7065, 7066, 7068, 7070, 7073, 7074,7075, 7076, 7077, 7078, 7079, 7080, 7084, 7086, 7087, 9296, 9298, 9303, 9306, 9309, 9324, 9347, 9982, 9989, 9998, 10001, 10009, 10026, 12543, 25430, 25431, 25438, 25440, 25445, 25448, 25454, 25485, 26047, 26050, 26053, 26056, 26058, 26059, 26062, 26089 of 2023 Hon'ble Mr.R.Mahadevan, Acting Chief Justice And The Hon'ble Mr.Justice Mohammed Shaffiq CASE NUMBERS W.A. Nos....
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....Counsel for Mr.N.R.R.Arun Natarajan For the Respondent : Mr.A.P.Srinivas, Senior Standing Counsel and Mr.A.N.R.Jaya Prathap W.A. Nos. 703, 710, 718, 741, 719, 324, 342, 353, 328, 334, 338, 325, 326, 329, 333, 335, 356, 331, 332, 337, 339, 343, 344 of 2023 For the Appellant(s) : Mr.M.Velmurugan For the Respondent : Mr.A.P.Srinivas, Senior Standing Counsel and Mr.A.N.R.Jaya Prathap W.A. Nos. 381,420, 409, 410, 415, 422, 423, 425, 426, 413, 388, 400 of 2023 For the Appellant(s) : Mr.A.R.Karthick Lakshmanan For the Respondent : Mr.A.P.Srinivas, Senior Standing Counsel and Mr.A.N.R.Jaya Prathap COMMON JUDGMENT MOHAMMED SHAFFIQ, J. The present batch of writ appeals are filed against the common order of the learned Single Judge insofar as it has rejected the following challenges viz., a) Validity of search under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). b) Centralization of assessments. c) Notices in terms of Section 153A of the Act. d) Notices in terms of Section 153C of the Act . e) Attachment orders under Section 281B of the Act. f) Notices under Section 143(2) of t....
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....a Distillers, Kaycee Distillers, Nandhini Transports Pvt. Ltd., C.Mariappan. Section 143(2): Kandasamy Thirumoorthy, Thirumoorthy Kala, Ramamoorthy Srithar, Srithar Sudha Challenge to notices under Section 143(2) of the Act and orders of assessment under 143(3) of the Act. 2.2. As set out in the table supra, the appellants herein have challenged the assessment proceedings at different stages commencing with the validity of the search under Section 132 of the Act and culminating in the challenge to the orders of the assessment while also laying a challenge to Centralization of Assessments, Notices issued under Section 153A and 153C, validity of attachment Orders and the Orders of Assessment under Section 143(3) of the Act. Since the issues raised relate to jurisdiction giving rise to pure question of law, neither the learned Judge nor the counsels before us dealt with the facts in detail, instead focused on jurisdictional errors stated to have been committed by the respondent at different stages of the proceedings. We therefore do not intend to set out / narrate the facts extensively/ in detail, instead shall confine to those necessary to resolve the following legal issues tha....
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....quired to be submitted pursuant to the above summons. d. In order to attract Section 132(a) and 132(b) of the Act, the past conduct of the appellant should be taken into account and in the past, the appellant should have willfully failed or had not submitted the books of account or other documents required to be submitted pursuant to the above summons. e. SNJD and SNJB have been doing business from 2009 and 2011 respectively and have been paying income tax regularly. f. SNJD and SNJB have not received any notice either under Section 131(1) or Section 142(1) nor have they failed to cooperate with the department. g. SNJD scrutiny assessment under Section 143 of the Act for the year 2017-18 was completed on 21-12-2018. h. There have been no further queries raised in this regard. As such, there could have been no basis to form an opinion of the existence of circumstance enumerated in Clauses (a) to (c) to Section 132 which is prerequisite for a valid search and seizure. i. Under Section 132 (c) of the Act, the authorities mentioned in Section 132 of the Act, should have reason to believe that the search will yield unaccounted cash, ....
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....nge, it may be necessary rather relevant to take a look at the relevant portions of Section 132 of the Act which read as under: "132. Search and seizure. (1) Where the Director General or Director or the Chief 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- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (X1 of 1922), or under subsection (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922 (X1 of 1922), or under subsection (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) 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, any books of account or other documents which will be useful for, or ....
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....h 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. (9B) Were, during the course of search or seizure or within a period of sixty days from the date on which the last of the authorisations for search was executed, the authorised officer, for the reasons to be recorded in writing, is satisfied that for the purpose of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the Principal Director General or Director General or the Principal Director or Director, by order in writing, attach provisionally any property belonging to the assessee and for the said purpose the provisions of the Second Schedule shall, mutatis mutandis, apply." 4.5. From a reading of Section 132 of the Act, it is evident that a search may be authorized only if the officer (specified in that section) has reasons to believe that any circumstance as enumerated in clauses (a) to (c) of Section 132(1) of the Act exists on the basis of information b....
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....hority shall not be disclosed to any person, authority or Tribunal. It is thus only the superior courts in exercise of their powers of judicial review under Article 226 or 32 of the Constitution of India, which can examine the satisfaction note, if a challenge is made to the assumption of jurisdiction and the Court in its discretion finds it necessary to call for the files to satisfy itself that circumstances existed warranting authorizing a search u/s Section 132 (2) of the Act [Mamchand & Co. v. CIT, (1970) 76 ITR 217 (Cal); Narayan R. Bandekar v. ITO. (1989) 177 ITR 207, 212 (Bom); Kusum Lata v. CIT, (1989) 180 ITR 365, 368 (Raj)]. 4.8. Courts while examining a challenge on the premise that invoking Section 132 of the Act was not warranted, will bear in mind that the opinion which has to be formed by the authorising authority under Section 132 of the Act, is subjective and the jurisdiction of the court to interfere is very limited. The court will not act as an appellate authority and examine meticulously the information in order to decide for itself as to whether action under Section 132 of the Act was called for [Asst. DIT v. Apparasu Ravi, (2011) 332 ITR 497 (Mad) thus suff....
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..... when more than 150 officials of the Department 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. Simultaneously, his permanent residence located at Chitharanjan Salai, Teynampet and other locations i.e., companies owned by the Directors of the Brewery, the registered office of the appellant 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 appellant companies, auditor and employees were also searched. In all, 56 locations spread over 7 States in India were raided. 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, which is excessive. b) CCTV cameras were switched off at the appellant premises during the course of search. The Managing Director of the appellant and his family members were in illegal custody of the respondents during the entire period of the search from 06.....
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....o coerce and force the Managing Director to sign pre-drafted sworn statements under section 132(4) of the Act. g) The search was ordered only for the purpose of preventing the appellant from submitting a winning bid for M/s Apollo Distilleries, which is a subsidiary company of M/s Empee Distilleries Pvt. Ltd. h) Importantly, the panchanamas do not set out the correct dates and time of the search. Secondly, the panchas were not drawn from the locality in which the search was conducted. The panchas who signed in the panchanamas were not inhabitants of the locality in which the search was conducted thereby violating Rule 112(6) of the Income Tax Rules, 1962 and Para 3.23 of the Search and Seizure Manual. i) As far as the individuals are concerned, they challenged the search on the ground that no warrant was produced at the time when the authorities visited their premises, while alleging gross violation of human rights. 4.12. The learned Senior Counsel on behalf of the appellants that placing reliance on the above facts, urged the following aspects: (a) That the search was conducted in gross violation of the safeguards provided under Section 132 o....
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....essary measures were taken to address the medical issues which cropped up during search, the submissions to the contrary by the appellant are without basis. A number of judgments were relied on by the respondents in support of their contention [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. v.. Lakhmani Mewal Das (103 ITR 437); Principal Director Of Income Tax (Investigation) v. Laljibhai Kanjibhai Mandalia((2022)140 taxmann.com); Commissioner of Income-tax, Gujarat v. Vijaybhai N. Chandra (357 ITR 713); P.Murugesan v. Director of Income-tax (Inv.) (222 CTR 619); Agni Estates and Foundations (P) Ltd. v. DCIT (357 ITR 713); MDLR Resorts (P) Ltd. v. Commissioner of Income tax (361 ITR 407); Madhupuri Corporation v. DDIT (256 ITR 498); Arti Gases v. DGIT (Inv) (248 ITR 55);Digvijay Chemicals Ltd. v. ACIT (248 ITR 381); Sambhu Prasad Agarwal v. DIT (245 ITR 660); Commissioner of Inc....
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....if a search had been illegal, the evidence seized can be validly used in the assessments to follow." (emphasis supplied) 4.15.1. The learned Judge also records a finding that these measures are consciously undertaken to "intimidate", and finds that the allegation of not extending medical help immediately had not been met effectively by the respondents. Thereafter, the learned Judge proceeds to hold that the appellant herein can approach the Civil Court and seek redressal. The learned Single Judge refers to the discharge summary and records that the patient was diagnosed with "Break Through Seizure" and under the Head "Chief Complaints" it was inter alia recorded as "History of recent decreased sleep", "History of fever associated with chills since 1 day". The following observations of the learned Judge are relevant in this regard: "37. As the Hon'ble Supreme Court has observed in the case of Pooran Mal (supra), search and seizure, by its very nature, is bound to cause some dislocation to the parties concerned. Some of this dislocation is also intended as a conscious measure to intimidate. However, there are limits that must be adhered to and in the present case, ....
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....o the authorisation. Interestingly, insofar as denial of timely medical attention to the family members of the Managing Director and the act of switching off the CCTV camera, the learned Judge prima facie records that she is left with the impression that all is not well with the search. However, thereafter the learned Judge only permitted the appellant to seek remedy before the appropriate forum with regard thereto. 4.18. To appreciate as to why the failure to examine the above contentions of mala fides, high-handedness and oppressive behaviour during the course of search and render a finding thereon may warrant interference, it is necessary to keep in view the facets relating to search and the statutory and constitutional implications of a search, not in compliance with the provisions of the Income Tax Act and Rules. 4.19. Search and seizure of documents and objects alleged to be incriminating have been the reason behind many litigations. The safeguards necessary to insulate the legislation and its administration from falling foul of constitutional guarantees is over the years forged out of conflict between the excessively enthusiastic or over zealous tax collectors/ adminis....
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....ed, it can also be immediately returned to the person concerned after he makes appropriate provision for the payment of the estimated tax dues under sub-section (5) and lastly, and this is most important, the provisions of the Criminal Procedure Code relating to search and seizure apply, as far as they may be, to all searches and seizures under Section 132. Rule 112 provides for the actual search and seizure being made after observing normal decencies of behaviour. The person in charge of the premises searched is immediately given a copy of the list of articles seized. One copy is forwarded to the authorizing officer. Provision for the safe custody of the articles after seizure is also made in Rule 112. In our opinion, the safeguards are adequate to render the provisions of search and seizure as less onerous and restrictive as is possible under the circumstances. The provisions, therefore, relating to search and seizure in Section 132 and Rule 112 cannot be regarded as violative of Article 19(f) and (g)." (emphasis supplied) 4.21. The validity of the provision having been saved in view of the safeguards contained in the provision, it is only necessary that the search under Se....
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....rivacy is not a fundamental right, came to be followed in a series of decisions. However, there have been occasions when the Supreme Court found that right to privacy was a strictly protected fundamental right, some of them being: (i) Gobind vs. State of M.P. Reported in (1975) 2 SCC 148; (ii) R.Rajagopal vs. State of T.N. Reported in (1994) 6 SCC 632; (iii)PUCL vs. Union of India reported in (1997) 1 SCC 301; (iv) District Registrar and Collector vs. Canara Bank reported in (2005) 1 SCC 496. 4.26. There was thus uncertainty over the nature of the right to privacy, more particularly whether right to privacy is a fundamental right under the Constitution, in view of the divergent views. All doubt over the question whether right to privacy is a fundamental right or not is laid to rest by the Constitution Bench Judgment in the case of K.S.Puttaswamy (2017) 15 SCC 1, wherein the decisions in the case of M.P.Sharma and Kharak Singh were overruled and it was held that right to privacy is a fundamental right encompassed under Article 21 of the Constitution of India which protects "right to life". 4.27. In this regard, it may be relevant to refer to....
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....ic society for a legitimate aim: 4.32. The object of section 132 is two fold: (i) to get hold of the evidence, which have a bearing on the liability of a person which the person is seeking to withhold from the assessing authority; and (ii) to get hold of assets representing the income believed to be undisclosed income. The above object is legitimate rather necessary to suppress the evil of tax evasion. (c) Procedural safeguards against abuse of power: 4.33. Section 132 of the Act provides for inbuilt safeguards which have to be strictly complied with. Failure or breach of these safeguards during search in the light of the Constitution Bench decision in Puttaswamy's case holding "Right to Privacy", to be a fundamental right under Article 21 of the Constitution of India, may no longer constitute a mere violation of the statutory provision, but may also have an impact on the right to privacy as seen supra and therefore impairing the subject's fundamental right to privacy. It may also render itself vulnerable to challenge as being unconstitutional for violating Article 265 of the Constitution of India, which provides that "no tax shall be levied and collected except by....
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....essence of doctrine of proportionality is beautifully captured by Dickson, C.J. of Canada in R. v. Oakes, reported in 1986 SCC OnLine Can SC 6; (1986) 26 DLR (4th) 200. The following observations are relevant: "..... This involves "a form of proportionality test" Although the nature of the proportionality test will vary depending on the circumstances, in each case courts will be required to balance the interests of society with those of individuals and groups. There are, in my view, three important components of a proportionality test. First, the measures adopted must be rationally connected to the objective. Second, the means should impair "as little as possible" the right or freedom in question. Third, there must be a proportionality between the effects of the measures which are responsible for limiting the right or freedom, and the objective which has been identified as of "sufficient importance". The more severe the deleterious effects of a measure, the more important the objective must be if the measure is to be reasonable and demonstrably justified in a free and democratic society." 4.37. The exercise which is thus to be undertaken, is to find out as to whether th....
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.... In fact the power of taxation may be defined as "the power inherent in the sovereign State to recover a contribution of money or other property, in accordance with some reasonable rule or apportionment, from the property or occupations within its jurisdiction for the purpose of defraying the public expenses". Constitutional provisions relating to the power of taxation do not operate as grants of the power of taxation to the Government but instead merely constitute limitations upon a power which would otherwise be practically without limit. This inherent power to tax extends to everything over which the sovereign power extends, but not to anything beyond its sovereign power. Even the federal Government's power of taxation does not include things beyond its sovereign power. But where exclusive jurisdiction over land is granted to another State or country, the land remains subject to the taxing power of the State within whose boundaries it is located." 18. To the same effect is the decision of this Court in Jagannath Baksh Singh v. State of U.P. [Jagannath Baksh Singh v. State of U.P., AIR 1962 SC 1563 : (1963) 1 SCR 220] where this Court observed : (AIR p. 1570, para 15....
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....nder Section 132 of the Act. Needless to state the above enquiry would vary from case to case. 4.44. Any violation of the statutory and constitutional safe guards during a search which impairs / impinges on the right to privacy of the subject may thus have to be examined applying the doctrine of proportionality. It may be relevant to note that following the 9 Judge Constitution Bench judgment, the Constitution Bench decision in the case of K.S. Puttaswamy reported in (2019) 1 SCC 1, while testing whether Aadhaar Regime infringes Right to Informational Privacy and Data Protection particularly against the apprehension that it may be susceptible to data profiling or leakage thereby impairing the Right to Privacy, reiterated the four fold test laid down in the 1st Puttaswamy's case to be applied whenever challenge is laid to an action of the State on the ground that it violates the right to privacy. 4.45. The Doctrine of proportionality in the context of Right to Privacy was examined in great detail in the Puttaswamy case (2) reported in (2019) 1 SCC 1 wherein it was observed as under: "109.6. Right to privacy cannot be impinged without a just, fair and reasonable la....
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....earch without authority / sanction of law or in disregard of the statutory safeguards may constitute an infringement of the right to privacy, thus the need to comply with the statutory safeguards assumes greater significance and any violation would have to be tested applying the Doctrine of Proportionality. We say so, for any violation of the statutory safeguards relating to search may well touch on the right to privacy guaranteed under the Constitution thereby rendering the action susceptible to challenge on the ground of not just being illegal but also being unconstitutional which could change the complexion of the consequences that may ensue. This would be clear if we bear in mind that any action that is unconstitutional is rendered "void". Though the validity of Section 132 of the Act, has been upheld, however, the individual search can be questioned as being violative of the statutory conditions or the guarantees under the Constitution. In this regard, it may be relevant to refer to the decision in Maneka Gandhi's case reported in (1978) 1 SCC 248 wherein it was held as under: "36. ....It is true, and we must straightaway concede it, that merely because a statutor....
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....ter overruling M.P.Sharma, in the case of Justice K.S. Puttaswamy (Retd.) and Anr. v. Union of India and Ors. [(2017) 10 SCC 1], the 9 judge bench of the Supreme Court recognized Right to Privacy as an extension of the fundamental rights under Article 19 and Article 21 of the Constitution of India. 4.48. The learned Judge has erred in not dealing with any of the issues which are of great constitutional significance and has thereby erred in merely rejecting the contentions by stating that even in Pooran Mal's case before the Supreme Court, there were allegations of excessive and highhanded behaviour, which have 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 mala fide, oppressive or excessive, "So too in this case." 4.49. While, on the excesses during the search, we also find that the learned judge ought to have examined the impact of denial of timely treatment to the appellants which was recorded by the learned Judge while also expressing concern over the same but has concluded stating that the appellant may approach the appropriate forum for redressal. The significance ....
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....fies the test of relevance, while referring to Pooran Mal wherein it was held that evidence obtained in an illegal search can be used if it is found relevant. The relevant finding of the learned Judge is extracted hereunder: " 27. ..... The Bench held further that even if a search had been illegal, the evidence seized can be validly used in the assessments to follow". 4.51.3. It is relevant to trace the judicial history as to the manner in which illegally obtained evidence is dealt with by the judiciary across jurisdictions. We find that by and large the approach of the judiciary has been not to exclude evidence on the ground of it being procured through illegal means. Evidence has been weighed by Indian Courts based on its relevancy/probative value, and irregularity or impropriety in the method of procuring said evidence does not, by itself, make the evidence inadmissible. 4.51.4. One of the oldest cases on the question of admissibility of illegally obtained evidence is R v. Leatham [R v. Leathem, (1861) 8 Cox CC].. This was a case of allegations of corrupt practices, heard before a Commission appointed under the Corrupt Practices Prevention Act, 1854. A letter writ....
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....larly, in the case of Pooran Mal v. Director of Inspection of Income Tax (Investigation), New Delhi, reported in (1974) 1 SCC 345, while ruling on the question of admissibility of material seized in a search, alleged to be vitiated by illegality, the Court held that "unless there is an express or necessary implied prohibition in the Constitution or other law, evidence obtained as a result of illegal search or seizure is not liable to be shut out". 4.51.8. In State of M.P. through CBI v. Paltan Mallah, reported in 2005 (1) CTC 457 (SC) it was held that "the evidence obtained under illegal search could still be admitted in evidence, provided, there is no express statutory violation or violation of the constitutional provisions". The Court also went on to say that "The general provisions given in the Criminal Procedure Code are to be treated as guidelines and if at all there is any minor violation, still the court can accept the evidence and the courts have got discretionary power to either accept it or reject it." 4.51.9. Thus, Courts in India have by and large taken a view that if the evidence is relevant it is admissible, and it does not matter how it has been obtained. The e....
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.... or substantially watered down the above reasoning. Though there is no doubt that Pooran Mal approved the principle that 'ends justify the means', while dealing with the admissibility of illegally obtained evidence, the subsequent jurisprudential development in particular recognition of "Right to Privacy" as a fundamental right needs to be examined to see if it had altered the very foundation of Pooran Mal. Secondly, Article 265 of the Constitution of India was not considered in Pooran Mal. Now, one cannot reduce the declaration under Article 265 of the Constitution of India to a dead letter. Importantly in Pooran Mal the search was not found to be vitiated by any illegality. 4.56. Apart from the fact that the decision in Pooran Mal insofar as it finds that illegally obtained evidence can be used if found relevant needs to be examined keeping in view the above aspects, it is relevant to note that even prior to Puttaswamy, there have been instances where Courts have disallowed illegally obtained evidence, if in a given case, the strict rules of admissibility would operate unfairly against the accused. 4.57. In Umesh Kumar v. State of A.P., reported in (2013) 10 SCC 591, for in....
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....ere given weightage during a trial, the investigators might feel incentivized to, "compel such statements - often through methods involving coercion, threats, inducement or deception." In the view of the Supreme Court, the right against self-incrimination serves as a safeguard against torture and other methods that could be used to elicit information and the exclusion of such testimonies was important as otherwise, investigators will rely more on such violative methods instead of following the due process of law and this would frustrate the protection against self-incrimination provided under the Constitution. The Supreme Court remarked, "The frequent reliance on such 'short-cuts' will compromise the diligence required for conducting meaningful investigations." The Supreme Court further noted that reliance on involuntary statements by way of polygraph tests and narco-analysis was likely to push investigators to compel such statements through coercion, threats, inducement or deception, which would be against the constitutional right against self-incrimination, while proceeding to state that the "fruits of poisonous tree" principle is incorporated in Sections 25 and 26 of the Evidenc....
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....he trial stage, the onus is on the prosecution to prove the charges levelled against the defendant and the "right against self-incrimination" is a vital protection to ensure that the prosecution discharges the said onus. 104. These concerns have been recognised in Indian as well as foreign judicial precedents. For instance, Das Gupta, J. had observed in State of Bombay v. Kathi Kalu Oghad [AIR 1961 SC 1808 : (1961) 2 Cri LJ 856 : (1962) 3 SCR 10] , SCR at pp. 43-44: (AIR p. 1819, para 30) "30. ... for long it has been generally agreed among those who have devoted serious thought to these problems that few things could be more harmful to the detection of crime or conviction of the real culprit, few things more likely to hamper the disclosure of truth than to allow investigators or prosecutors to slide down the easy path of producing by compulsion, evidence, whether oral or documentary, from an accused person. It has been felt that the existence of such an easy way would tend to dissuade persons in charge of investigation or prosecution from conducting diligent search for reliable independent evidence and from sifting of available materials with the care necessary f....
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....5, set aside certain interception orders and directed the destruction of copies of the intercepted messages. Here, the issue was whether the orders which directed interception of telephone calls were ultra vires Section 5(2) of the Telegraph Act, 1885 and the Rules and whether they were violative of the petitioner's fundamental rights. 4.62. Reference was made to the judgment of the Supreme Court in People's Union for Civil Liberties (PUCL) v. Union of India, reported in (1997) 1 SCC 301, which recognised holding a telephonic conversation in one's home or office without interference as a part of the right to privacy. The Supreme Court observed that adopting the adage 'the ends justify the means', "would amount to declaring the government authorities may violate any directions of the Supreme Court or mandatory statutory rules in order to secure evidence against the citizens. It would lead to manifest arbitrariness and would promote the scant regard to the procedure and fundamental rights of the citizens, and law laid down by the Supreme Court". This decision, again, seems to place unconstitutionally obtained evidence on a higher pedestal than evidence which is merely ....
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....ct the wrath of Article 21 of the Constitution of India. That apart, whether failure to comply with the safeguards under Section 132 of the Act would offend Article 265 of the Constitution of India, may require consideration. 4.65. It may be relevant rather necessary to refer to the decision of the 5 Judge Bench in the case State of Punjab vs. Baldev Singh reported in (1999) 6 SCC 172, wherein while the question as to whether non-compliance with Section 50 of the Narcotics Drugs and Psychotropic Substances Act, 1985, would vitiate the trial, was considered and the decision in Pooran Mal was explained from a different dimension. Section 50 of the said Act casts an obligation on the empowered officer conducting the search of the person of a suspect, on the basis of prior information, to inform the suspect that he has a right to require his search being conducted in the presence of a gazetted officer or a Magistrate. The question was whether the illicit article seized from the person of an accused/ suspect during search conducted in violation of the above safeguard provided under Section 50 of the Act can be used as admissible evidence of proof of unlawful possession of the contrab....
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....ovisions of Section 50 of the Act can be used as evidence of unlawful possession of the illicit article on the person from whom that contraband had been seized during an illegal search. Apart from the position that in Pooran Mal case [(1974) 1 SCC 345 : 1974 SCC (Tax) 114] on facts, it was found that the search and seizure conducted in the cases under consideration in that case were not vitiated by any illegality, the import of that judgment, in the present context, can only be to the effect that material seized during search and seizure, conducted in contravention of the provisions of Section 132 of the Income Tax Act cannot be restrained from being used, subject to law, before the Income Tax Authorities in other legal proceedings against the persons, from whose custody that material w as seized by issuance of a writ of prohibition. It was not the seized material, in Pooran Mal case [(1974) 1 SCC 345 : 1974 SCC (Tax) 114] which by itself could attract any penal action against the assessee. What is implicit from the judgment in Pooran Mal case [(1974) 1 SCC 345 : 1974 SCC (Tax) 114] is that the seized material could be used in other legal proceedings against an assessee, before the....
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....ses where, after a violation of the Charter, the accused is conscripted against himself through a confession or other evidence emanating from him. The use of such evidence would render the trial unfair, for it did not exist prior to the violation and it strikes at one of the fundamental tenets of a fair trial." (emphasis supplied) 4.65.1. From a reading of the above, it is clear that the argument that keeping in view the drug menace, insistence of Section 50 of the NDPS Act, would result in more acquittal was rejected and while doing so, it was held that brushing aside violation of Section 50 of the NDPS Act, would bring the very legitimacy of judicial process under a cloud. If the Court is seen to condone the act of lawlessness of the investigating agency during search operation, it may well undermine the respect for the law and may have the effect of unconscionably compromising administration of justice. That not just the end result which is important but the means to achieve it must remain above board. The remedy cannot be worse than the disease itself. The Apex Court thereafter proceeded to deal with the judgment in Pooran Mal which was relied upon to contend that illegal....
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....discussion, we are of the view that it is necessary to examine closely if the search is made strictly in accordance with law and whether violation of any of the statutory/constitutional safeguards renders the action/search vulnerable to challenge as offending Articles 21 and 265 of the Constitution of India. It may also be necessary to examine the resultant impact, if any, on the decision of the Supreme Court in Pooran Mal wherein it was held that illegally obtained evidence can be used if the test of relevancy is satisfied. 4.67. We intend to clarify that the above discussion was for the limited purpose of highlighting the contours of the enquiry that may have to be made while dealing with the allegations of illegal search and violation of human rights offending Article 21 and 265 of the Constitution of India which was not made and also its resultant impact on the decision in Pooran Mal's case insofar as it finds that illegally obtained evidence can be used as long as it satisfies the test of relevance. We have not decided the above aspects on merits. 4.68. In the circumstances, we are inclined to remand the matter to the learned Judge leaving it open to the parties to r....
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.......... The question then arises whether the reasons are at all required to be communicated to the assessee. It is submitted, on behalf of the Revenue, that the very fact that reasons are recorded in the file, although these are not communicated to the assessee, fully meets the requirement of Section 127 (1). We are unable to accept this submission. 10. 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 mala fide or arbitrary or that it is based on irrelevant and extraneous considerations. Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question. ....... 15. When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in court, it ceases to be a mere administrative order and the vice of violat....
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....he order of transfer is rendered a nullity. The above view has exceptions. 5.7. If an assessee has acquiesced in the jurisdiction of the assessing officer to whom a case has been transferred under Section 127 of the Act, he cannot subsequently object to the jurisdiction of the Officer and seek to get the order of transfer quashed by invoking the jurisdiction of the Court under Article 32 or 226 of the Constitution of India. [Pannalal Binjraj vs. Union of India, (1957) 31 ITR 565, 594(SC); Ram Kumar Sitaram vs. Certificate Officer, (1963) 49 ITR 797, 800 (Cal)]. 5.8. In other words, where the assessee has acquiesced in the jurisdiction of the transferee-authority, all statutory rights which the assessee gets by virtue of Section 127 of the Act vanish and therefore, the assessee cannot assert that without affording opportunity as required under Section 127 of the Act, the case has been transferred. [Steel Engineering and Processing Works vs. Union of India, (2000) 243 ITR 721, 725-26, 726 (Pat)]. In this regard, it may be relevant to refer to the following decisions: (i) Pannalal Binjraj v. Union of India , reported in 1 956 SCC OnLine SC 34: "42. There is mor....
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....tion." 17. Thus, there is no doubt that law is well settled that in respect of the transfer of income-tax cases from one Income-tax Officer to another Income-tax Officer, the procedure as laid down under the provisions of section 127 of the Act is to be followed and opportunities as contemplated thereunder must be afforded to the assessed failing which, the order of transfer is rendered a nullity." (emphasis supplied) 5.9. In the case of Shivabhai Khodabhai Patel vs. CIT, reported in (2000) 244 ITR 457, from the facts, it was established that the order of transfer was passed and communicated to the assessee and he has permitted the assessing officer to whom the transfer has been made, to complete the assessment against which he has preferred an appeal. It was held that writ petition challenging the order of transfer was liable to be rejected. 5.10. In the light of the above discussion it may be necessary to examine if there has been acquiescence on the part of the assessee in which event the non furnishing of reasons pales into insignificance. The above enquiry was apparently not made by the learned judge inasmuch as the learned judge was of the view that communic....
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.... v. Union of India and others reported in (2021) SCC OnLine Ori 1784 iv.CIT v. Chetan Das reported in (2012) 254 CTR 392 Del v. K.V.Krishnaswa naidu and Co. v. CIT reported in (1987) 166 ITR 244 6.2. To the contrary, it was submitted by the learned Senior Standing counsel for the respondents that Section 153A of the Act, though titled as 'Assessment in the case of search or requisition', the section does not impose any pre-condition for the issuance of notices, including the necessity for incriminating materials found and seized in the course of search. Thus, the submission of the appellants that Section 153A notices can be issued only after receipt of all seized materials is misconceived. It was further submitted by the learned Senior Standing Counsel that once a search is initiated under Section 132 of the Act, the Assessing Officer is under a mandate to issue notice under Section 153 A of the Act, that for issuance of notices the assessing officer need not be in possession of any books/ documents / material (incriminating) and initiation of search would necessitate issuance of notice under Section 153 A of the Act. The reliance on the fourth proviso ....
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....o 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." 6.5. We find that while the order of the learned judge is dated 20.10.2022, the Supreme Court had explained the scope of Section 153A of the Act in the case of CIT v. Abhisar Buildwell (P) Ltd., reported in (2024) 2 SCC 433 dated 24.02.2023, wherein the question as to whether in respect of completed assessments/unabated assessments, the jurisdiction of the assessing officer to make assessment is confined to incriminating material found during the course of search under Section 132 of the Act or requisition under Section 132-A of the Act or not i.e., whether any addition can be made by the assessing officer in absence of any incriminating material found during the course of search under Section 132 of the Act or requisition under Section 132-A of the 1961 Act was examined. 6.6. It was contended on the side of the Revenue before the Apex Court that once a search under Section 132 of the A....
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....s or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. Under the circumstances, the aforesaid appeals preferred by the assessee - M/s Kesarwani Zarda Bhandar, Sahson, Allahabad deserve to be dismissed and are accordingly dismissed. In the facts and circumstances of the case, no costs." 6.7. A reading of the above judgment of the Apex Court would show that in case, any incriminating material is found in unabated / completed assessments, the assessing officer would assume jurisdiction to assess or reassess on the basis of such incriminating material. However, in case, no incriminating material is unearthed during the search, the assessing officer cannot assess or reassess taking into consideration other materials in respect of completed / unabated assessments. The order of the learned Judge insofar as it f....
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....t could be interfered only if incriminating materials were unearthed and that it would be impermissible to reopen or reassess in relation to assessment years with respect to which the incriminating documents gathered did not relate while following the judgments in Sinhgad Technical Educational Society and Abhisar Buildwell. 7.4. To the contrary, the learned Senior Standing Counsel for the respondents would submit that on the basis of the plain language of Section 153C of the Act, issuance of notice for 6 years is mandatory subject only to recording of satisfaction by the officer that the seized material relate to a third party. That proper satisfaction note has been recorded in compliance with Section 153C of the Act. 7.5. The learned Judge after extracting a sample satisfaction note in the case of Anitha Bottles, a sole proprietory concern of C.Mariappan, held that the sample satisfaction note extracted above is detailed and complies with the requisites of Section 153C of the Act. 7.6. We find that the learned Judge has erred in generalizing the challenge to the notices under Section 153C of the Act issued to 12 entities on the basis of a satisfaction note for a single en....