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2026 (4) TMI 1710
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.... Court Act, 1961. FACTUAL MATRIX 2. The brief facts are that a search under Section 132 of the Income Tax Act, 1961 (for short "Act") was conducted on 14.09.2017 in the case of Sri K. Narayan Raju. Pursuant to the satisfaction recorded under Section 132 of the Act by the competent authority, having reason to suspect that books of account, documents, and other valuable articles or things belonging to Sri K. Narayan Raju were kept or secreted in the premises of the respondent, the residential premises of the respondent came to be searched. 2.1 Thereafter, the Assessing Officer of Sri K. Narayan Raju initiated proceedings under Section 153A of the Act. In the course of such proceedings, the Assessing Officer recorded satisfaction that the seized documents, books of account, and other materials belonged to the respondent and accordingly handed over the said material to the Assessing Officer of the respondent. 2.2 Upon due compliance with the requirements under Section 153C of the Act, the Assessing Officer of the respondent issued notice under Section 153C of the Act for the assessment years 2011-12 to 2018-19. 2.3 The notice issued under Section 153C of the Act was chal....
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.... Section 132 of the Act is essentially person-specific and not premise-specific. Once satisfaction is recorded in respect of a person, as required under clauses (a), (b), and (c) of Section 132(1), the premises to be searched may fall within the ambit of clauses (i) to (v) thereof. 3.3 Learned counsel further submits that Rule 112(2A) & 112(3) of the Income Tax Rules, 1962 (for short "the Rules") mandates the recording of satisfaction, specifying the person to be searched and, in that context, the place or premises to be searched. It is contended that once satisfaction is recorded under Section 132 of the Act in respect of a person, the premises to be searched may be any place where the competent authority has reason to suspect that the specified items are kept, and such premises need not necessarily belong to the said person. 3.4 It is further submitted that, in the absence of satisfaction recorded in respect of a person, mere search of the premises belonging to such person would not render him as 'searched person' within the meaning of the Act. Learned counsel submits that the warrant of authorization and the panchanama clearly disclose the name of the person against whom t....
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....COUNSEL FOR THE RESPONDENT/ASSESSEE 4. Sri A. Shankar, learned Senior Advocate appearing for the respondent, submits that pursuant to the search conducted in the residential premises of the respondent, the authorities have seized documents belonging to the respondent and have also recorded his statement. It is contended that, based on the documents and other materials so seized, as well as the statement recorded, notice under Section 153C of the Act has been issued. It is therefore submitted that, for the purposes of Sections 132 and 153A of the Act, the respondent is to be treated as the 'searched person'. 4.1 Learned counsel further submits that, but for the warrant of authorization issued for searching the premises of the respondent, the very search would be rendered illegal. It is contended that since the premises searched belongs to the respondent and the seizure pertains to books of account and other documents of the respondent, proceedings ought to have been initiated under Section 153A of the Act by treating the respondent as the searched person. 4.2 It is further submitted that the person searched is to be determined with reference to the premises subjected to sea....
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....e warrant issued for searching the premises of the respondent would determine the respondent as the person searched. 4.9 Learned Senior Advocate, with reference to the second proviso to Section 153C of the Act, submits that in the case of proceedings under Section 153A, any pending proceedings abate as on the date of search, and the period of six assessment years is to be reckoned from the date of search. In contrast, under Section 153C of the Act, the abatement is deferred to the date on which the books of account or documents are handed over to the Assessing Officer, and the period of six assessment years is to be reckoned from the date of such handing over. 4.10 It is submitted that the interpretation sought to be placed by the Revenue on Section 153A of the Act would lead to absurdity and would not be in favour of the Revenue. It is further contended that such an interpretation would amount to rewriting the statutory provisions, which is impermissible in law. 4.11 Learned Senior Advocate further submits that the very contentions now urged by the Revenue have already been considered and answered in the case of Sunil Kumar Sharma v. DCIT [(2023) 146 taxmann.com 553 (Karn....
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....1459 of 2021 (xvi) CIT(A) and others vs. Sunil Kumar Sharma - RP No. 218 of 2024 (xvii) CIT vs. Wipro Finance Ltd., (2010) 323 ITR 467 (Karnataka) (xviii) Mary Pushpam vs. Telvi Curusumary and ors Civil Appeal No.9941 of 2016 (ix) CIT vs. Sunil Kumar Sharma, SLP (Civil) Diary No. 21526 of 2024. (xx) CIT vs. Sunil Kumar Sharma - SLP (Civil) Diary No.23406 of 2024 (xxi) CIT vs. Sunil Kumar Sharma - SLP (Civil) Diary No.33939 of 2024 (xxii) Parashuram Pottery Works Co. Ltd. vs. ITO (1977) 106 ITR 1 (SC) (xxiii) CIT vs. Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bombay) (xxiv) Ranganath Associates vs. Union of India, (2003) 128 Taxman 228 (Karnataka) (xxv) Sri D. Ramachandrappa and others vs. Union of India and others, WA 3462-63 of 2003 and connected matters (Karnataka) (xxvi) The Century Spinning Mfg. Co and others vs. State of West Bengal and others (1989) 73 STC 277 (xxvii) CIT vs. Vallabhdas Vithaldas, (2002) 123 taxman 110 (Gujarat) (xxviii)Suganthi Suresh Kumar vs. Jagdeeshan (2002) 2 SCC 420 (xxix) CIT vs. Jagadish Jakati and Co. (1979) 119 ITR 19....
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....ents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,- (A) the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director, or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to- (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of acco....
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....oner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such person may be prejudicial to the interests of the revenue : Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii): Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing, being stock-in-trade of the business: Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do s....
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....h officer may take such steps as may be necessary for ensuring compliance with this sub-section. Explanation.-For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this subsection shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-section (1). (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. Explanation.-For the removal of doubts, it is hereby declared that the examination of any person under this subsection may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding und....
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....d under sub-section (1) or subsection (1A) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. (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 subsection (8) or sub-section (9) shall be exercisable by such Assessing Officer. [(9B) Where, during the course of the 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 authori....
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...., vessel, vehicle or aircraft to be searched where free ingress thereto is not available ; (ii) for ensuring safe custody of any books of account or other documents or assets seized. [Explanation 1.-For the purposes of sub-sections (9A), (9B) and (9D), with respect to "execution of an authorisation for search", the provisions of sub-section (2) of section 153B shall apply.] Explanation 2.-In this section, the word "proceeding" means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year. Assessment in case of search or requisition. 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 ....
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....r is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.] (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal pro....
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....nder section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made 3[and for the relevant assessment year or years as referred to in sub-section (1) of section 153A] except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for t....
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....lawful for the authorised officer executing the authority, with such assistance of police officers or of officers of the Central Government, or of both, as may be required, to enter such building or place and search therein and in order to effect an entrance into such building or place, to break open any outer or inner door or window of any building or place, whether that of the person to be searched or of any other person, if after notification of his authority and purpose and demand of admittance duly made, he cannot otherwise obtain admittance: Provided that, if any such building or place is an apartment in actual occupancy of a woman, who according to custom does not appear in public, the authorised officer shall, before entering such apartment, give notice to such woman that she is at liberty to withdraw and shall afford her every reasonable facility for withdrawing and may then break open the apartment and enter it. (4-A) If ingress into any vessel, vehicle or aircraft authorised to be searched cannot be obtained because such vessel, vehicle or aircraft is moving or for any other reason, it shall be lawful for the authorised officer with such assistance of p....
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....fore making a search, the authorised officer shall,- (a) where a building or place is to be searched, call upon two or more respectable inhabitants of the locality in which the building or place to be searched is situate, and (b) where a vessel, vehicle or aircraft is to be searched, call upon any two or more respectable persons to attend and witness the search and may issue an order in writing to them or any of them so to do. (7) The search shall be made in the presence of the witnesses aforesaid and a list of all things seized in the course of such search and of the places in which they were respectively found shall be prepared by the authorised officer and signed by such witnesses; but no person witnessing a search shall be required to attend as a witness of the search in any proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or the Act unless specially summoned. (8) The occupant of the building, place, vessel, vehicle or aircraft searched, including the person in charge of such vessel, vehicle or aircraft, or some person on his behalf, shall be permitted to attend during the search and a copy of the list prepared under sub-rule (....
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.... of the Reserve Bank of India or the State Bank of India or of its subsidiaries or the authorised bank or a Government Treasury. (iii) Where any money has been deposited with the Custodian, he may credit the money, or remit the money through the nearest branch of the Reserve Bank of India or the State Bank of India or of its subsidiaries or any authorised bank for being credited in the personal Deposit Account of the Chief Commissioner or Commissioner in the branch of the Reserve Bank of India or the State Bank of India or of its subsidiaries or any authorised bank at the place where the office of the Chief Commissioner or Commissioner is situate. (13) (i) Whenever any sealed package is required to be opened for any of the purposes of the Act, the authorised officer may, unless he is himself the Custodian, requisition the same from the Custodian and on receipt of the requisition, such package or packages, as the case may be, shall be delivered to him by the Custodian. The authorised officer may break any seal and open such package in the presence of two respectable witnesses after giving a reasonable notice to the person from whose custody the contents were seized....
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.... pursuant to such authorization, including the place or premises where the search is to be carried out and the consequential steps that may follow. 7.4 Thus, while the "reason to believe" is person-centric, the execution of the authorization extends to the premises where the competent authority has reason to suspect that the specified materials are kept. 7.5 When satisfaction is recorded for the issuance of a warrant of authorization for search, the competent authority is required to specify the details of the building, place, vessel, vehicle, or aircraft in respect of which it has reason to suspect that books of account, documents, money, bullion, jewellery, or other valuable articles or things are kept. 7.6 A close reading of clauses (a) to (c) and clauses (i) to (v) of Section 132(1) indicates that the satisfaction contemplated under clauses (a) to (c) is in relation to a person, whereas the authorization under clauses (i) to (v) pertains to the premises or locations where the search is to be carried out. The provision does not mandate that the premises to be searched must necessarily belong to the person referred to in clauses (a) to (c). Rather, it is sufficient if th....
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....person, referred to in Clause (a) to (c) of Section 132(1) of the Act, are kept in such building, place, vessel, vehicle, or aircraft. 9. In order to determine whether the warrant of authorization was issued against the respondent, and whether the respondent can be regarded as a 'searched person' within the meaning of Section 132 of the Act, we directed the appellant-Revenue, during the course of hearing, to place on record the satisfaction note recorded under Section 132 of the Act, the warrant of authorization in Form No.45, and the panchanama drawn during the course of the search. 9.1 The said documents were accordingly produced before the Court. Upon perusal of the satisfaction note, the warrant of authorization, and the panchanama, we further directed the officer present in Court to place attested copies of the said documents in a sealed cover. In compliance with the said direction, the documents have been placed before the Court in a sealed cover. 9.2 A perusal of the satisfaction note recorded by the competent authority indicates that the satisfaction, as contemplated under clauses (a) to (c) of Section 132(1), has been recorded in relation to Sri K. Narayan Raju. T....
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....o.24, Lakshmi Niwas, 4th Cross Road, K.R. Layout, J P Nagar, 6th phase, Bangalore (specify particulars of the building/place/vessel/vehicle/aircraft); This is to authorise and require you as per overleaf [name of the Addl. Director or of the Addl. Commissioner or of the Joint Director or of the Joint Commissioner or of the Deputy Director or of the Deputy Commissioner or of the Assistant Director or of the Assistant Commissioner or of the Income-tax Officer] - (a) to enter and search the said building/place/vessel/vehicle/aircraft; ..." 9.5 Similarly, in the panchanama, the warrant is shown as having been issued in the name of Sri K. Narayan Raju. In the column relating to the warrant of search (details and ownership of the premises searched), the residential premises of the respondent is mentioned. 9.6 While considering the particulars of the residential premises of the respondent as reflected in the warrant of authorization, the mention of Sri K. Narayan Raju as the person in whose name the warrant has been issued cannot be ignored. Both aspects are required to be read conjointly. 9.7 For the sake of convenience, Columns 'A' and 'B' of the panchanama are extract....
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.... that, where a notice under Section 153A is issued with reference to a premises, there is no requirement to record satisfaction in terms of clauses (a) to (c) in respect of a person. When this aspect was queried to the learned counsel for the respondent, it was submitted that such a question could be raised only when a notice under Section 153A is issued on a premise specific basis. 10.3 Section 153C of the Act, on the other hand, expressly applies to a person other than the person referred to in Section 153A. For invocation of Section 153C, the statutory requirements include the handing over of books of account, documents, or assets seized or requisitioned to the Assessing Officer having jurisdiction over such other person, and the issuance of notice by the said Assessing Officer. These constitute jurisdictional preconditions. 10.4 In the present case, compliance with the jurisdictional requirements for invoking Section 153C of the Act is not in dispute. The challenge to the invocation of Section 153C is founded solely on the contention that proceedings ought to have been initiated under Section 153A of the Act, on the premise that the residential premises of the respondent ....
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....under Section 132 of the Act as follows: 40.1. The formation of opinion and the reasons to believe recorded is not a judicial or quasi-judicial function but administrative in character. 40.2. The information must be in possession of the authorised official on the basis of the material and that the formation of opinion must be honest and bona fide. It cannot be merely pretence. Consideration of any extraneous or irrelevant material would vitiate the belief/satisfaction. 40.3. The authority must have information in its possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce books of accounts or other documents for production of which summons or notice had been issued, or such person will not produce such books of accounts or other documents even if summons or notice is issued to him. 40.4. 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. 40.5. Such reasons may have to be placed before the High Court in the event of a challenge ....
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....(iii), (iv) and (v). No warrant will be issued merely on the basis of suspicion or to make a roving or fishing enquiry to unearth the concealed assets. It is only when the authorising officer is fully satisfied that the information would lead to the discovery of undisclosed assets, that the warrant of search will be issued. Therefore, it is obligatory on the part of the empowered officer to record in writing the grounds of search as set out in the aforesaid provision and then only he can authorise an authorised officer to enter and search as provided under the said provision. The provision of the Code of Criminal Procedure relating to searches and seizure are made applicable to searches and seizures under sub-section (1) or sub-section (1A) of section 132 of the Act so far as may be. Under the Criminal Procedure Code, the police officer is bound to record in writing the grounds of his plea, as to the necessity for such search and specify clearly the article or articles for which the search is to be made. The recording of the reasons is an important aspect in the matter of search and to ignore it is to ignore the material part of the provisions governing such search. If this step is....
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....o searches under sub- section (2). 24. It clearly shows that the power to search under subsection (2) is not arbitrary. 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 entertained by such officer that any of the three conditions mentioned in section 132(1) (a), (b) and (c) exists. In this connection, it may be further pointed out that under sub-rule (2) of rule 112, the Director of Inspection or the Commissioner, as the case may be, has to record his reasons before the authorisation is issued to the officers mentioned in subsection (1). Thirdly, the authorisation for the search cannot be in favour of any officer below the rank of an Income-tax Officer. Fourthly, the authorisation is for specific purposes enumerated in clauses (i) to (v) in sub-section (1), all of which are strictly limited to the object of the search. Fifthly, when money, bullion, etc., is seized the Income-tax Officer is to make a summary enquiry with a view to determine how much of what is seized will be retained by him to cover the estimated tax li....
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....other place where he suspects that books of account belonging to the assessee have been kept." "16. In this background, we have perused the warrant of authorisation issued under section 132 of the Act and rule 112(1) of the Income-tax Rules, 1962 which would clearly indicate that the said warrant was issued for conducting the search of M/s. Associated Mining Company expressing thereunder that authority contemplated under sub-section (1) of section 132 has reason to suspect that such books of account, other documents of the noticee, are to be found in the premises at 18/35, II link Road, Parvathinagar, Ballari. The premises which has been searched is the same premises as indicated in the authorisation. This fact is not in dispute. However, what has been disputed is, the said premises did not belong to the assessee. The language or expression of sub-section (1) of section 132 is clear and unambiguous. The location of the premises is in relation to the satisfaction reached by the authorities mentioned therein and the authorised officer can search any place mentioned in the warrant including any other place where he suspects that the books of account belonging to the assessee ....
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....e examining the provisions of Sections 132, 158BC, and 158BD, which are pari materia to Sections 153A and 153C of the Act, has held as under: "13. On analysing the provisions of section 132(1) read with section 158BC and 158BD, while section 132(1) authorises to carry out search and seizure operation where the Revenue comes into possession of information that an assessee may be evading tax or has reason to suspect that a person has money, bullion and jewellery and other valuable articles or things, books of account, etc., which does not depict true income, then a search is necessitated or got conducted." 15. xxxxxx 15.1 Provision of section 158BC is attracted "where any search has been conducted under section 132 in the case of any person". In our view from these words it should statutorily mandate that search should have been carried out under section 132(1) in the name of a person before invoking the provision of section 158BC. "Person" should normally mean name depicted in the warrant of authorisation, and the authority authorising a search has to have information in his possession in respect of a person and such a person should be specifically named i....
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....mation in his possession, has "reason to believe" that conditions stipulated in either of clauses (a), (b) or (c) of the section are satisfied. Such authorization is given in Form 45 under section 132 of the Act read with rule 112(1) of the Income- tax Rules, 1962. The first proviso to section 132(1) also contemplates a WoA and provides that the Principal Chief Commissioner/Chief Commissioner or Principal Commissioner/Commissioner of Income-tax/such other authority as named in the said proviso, has the power to authorize a search of any building, place, vessel, vehicle or aircraft of a person which is under his jurisdiction and also in cases where such building, place, vessel, vehicle or aircraft is in his area of jurisdiction but he has no jurisdiction over the persons concerned, if he has reason to believe that any delay in obtaining authorization from the Principal Chief Commissioner of Income-tax/Chief Commissioner of Income-tax or Principal Commissioner/Commissioner having jurisdiction over the person would be prejudicial to the interests of the Revenue. This authorization is issued under Form 45A under the first proviso to sub-section (1) of section 132 of the Act with rule 1....
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....n section 132(1)(i) in the following words "(i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept." The only crucial factor to be borne in mind is that, while searching the premises under the above provision, there must be reason to believe with the competent authority to search the "person", within the contemplation of clauses (a), (b) or (c) of section 132(1). Indeed, section 132(1) of the Act empowers the Competent Authority to authorize search of a "person" who fails to, or if such competent authority believes will fail to, produce books or account or other documents in response to a summon issued under the Act; or possesses some jewellery, money or other valuable or thing representing income that such person has not disclosed or would not disclose for the purposes of the Act, and seize the relevant material found as a result of the search. Such search against a "person" can be carried out by the authorised officer by searching any building, place, vessel, vehicle or aircraft where he suspects that such books of accoun....
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.... Kochar group under section 132(1) of the Act. The gist of the satisfaction note, as documented in the counter affidavit, has been extracted in the succeeding paras. The same pertains to the Kochar group, whereunder the premises of the petitioner were searched, reveals that the WoA were issued because it was suspected that some of the valuables/documents of Sh. Avtar Singh Kochar were kept at the premises of the petitioner. The search action between February 6, 2019 to February 9, 2019, was therefore, not against the petitioners but against the primary persons. The petitioner's premises was searched not for Vikas or Shilpa Chowdhary's income/books of account/etc., but for the books of accounts/documents/money/bullion/jewellery/etc. belonging to the primary persons who were the subject of the search. The respondents, on physical surveillance, observed movement of cash from the petitioner's premises by motorcycle borne couriers. Therefore, the premises was identified to likely have incriminating evidence. The connection and link between the persons subjected to search (i. e., the primary persons) and the petitioner's premises was thus established. We cannot ignore the....
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....made of such amount under section 68 of the Act; and secondly, while holding that there was excess stock, the Assessing Officer has not considered the stock in the vault; and that had the stock in the vault been taken into consideration, there would have been no excess at all. According to the learned counsel for the petitioner, the petitioner has made out a prima facie case, the balance of convenience lies in favour of the petitioner and the petitioner would have to suffer undue hardship if the demand is not stayed more particularly, considering the fact that the demand is unreasonably high-pitched. 8. On behalf of the Revenue, it has been pointed out that the warrant of authorisation has been issued in respect of the petitioner whereas the places mentioned therein are places other than the business premises of the petitioner. It has been contended that the search is qua a person and not location specific as is sought to be contended on behalf of the petitioner and that it is factually incorrect to say that no search had been conducted in respect of the petitioner. On the merits of the assessment order, it has been contended that what is shown as sales by the petitioner a....
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....us, rule 112 provides for the manner in which search is to be conducted. Sub-rule (2) provides for the forms in which authorisations are to be issued. On a bare reading of rule 112 as a whole, there is nothing therein to indicate that search is location specific as is sought to be contended on behalf of the petitioner. 13. Reference may also be made to the decision of the Delhi High Court in MDLR Resorts P. Ltd. v. CIT (supra), on which reliance has been placed by the learned advocate for the petitioner, wherein the court has held thus (page 416 of 361 ITR): "The contention with regard to their addresses being different, is misconceived and mere ipse dixit. Address of a company will normally mean its registered office, head office, etc. A person can operate from or keep documents, money, etc. at different places and not necessarily from the registered office, etc. or from where business is conducted. The address mentioned in the warrant and the panchanama need not be the registered office or the head office but it has be the place where the search was to be conducted and was conducted. The address at which search could be conducted would be the place or location, ....
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....og v. State of Rajasthan, AIR 1978 Raj 31 and also in the light of the above observations of the hon'ble Supreme Court in the case of Omprakash Jaiswal (supra) we may safely assign to the expression 'search initiated'; the meaning 'search taken' or 'search commenced' or 'making beginning of the search'. If this is meant by expression 'search initiated' it cannot be held that the only signing of the authorizations by the Director of Income-tax, Bangalore, on December 30, 1996 to make a search in the premises of the respective assessees would amount to 'initiation of search'. The signing of the 'authorizations' would at best amount to 'taking of the decision by the said authority to initiate search' in the premises of respective assessees but not initiation of search itself." 14. Thus, the court has held that the address mentioned in the warrant and the panchanama need not be the registered office or the head office but it has to be the place where the search was to be conducted and was conducted. The address at which search could be conducted would be the place or location, where books of account, documents....
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....ere mentioned in the column relating to section 132(1)(c) of the Act. In these circumstances, suspicion of the petitioners is not affirmed. It does not impel us to form and decide the contention in favour of the petitioners. 13. The contention with regard to their addresses being different, is misconceived and mere ipse dixit. Address of a company will normally mean its registered office, head office, etc. A person can operate from or keep documents, money, etc., at different places and not necessarily from the registered office, etc., or from where business is conducted. The address mentioned in the warrant and the panchanama need not be the registered office or the head office but it has to be the place where the search was to be conducted and was conducted. The address at which search could be conducted would be the place or location, where books of account, documents, jewellery, unaccounted assets, etc., could be located/found." 19. From the aforesaid judgments, the following principles emerge: (i) The formation of "reason to believe" under Section 132(1) of the Act is required to be recorded in respect of a person, as contemplated under clauses (a) to (c).....
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....of the learned Single Judge in the said case, to contend that the "searched person" is the person whose premises is subjected to search and from whom seizure is made. 21. Before examining the said contention, it is necessary to note the chronology of the decisions. The order of the learned Single Judge in Sunil Kumar Sharma, WP No.9937/2022 and connected matters is dated 12.08.2022 and the judgment of the Division Bench is dated 22.01.2024. However, the earlier judgments of this Court dealing with the very same issue, namely C. Ramaiah Reddy v. CIT (supra) dated 08.09.2010 and CIT v. Associated Mining Company (supra) dated 22. 07.2019, precede the aforesaid decisions. 22. It is also pertinent to note that the judgments of other High Courts, including the High Court of Delhi, Rajasthan High Court, and High Court of Gujarat, on the same issue, were rendered much prior to both the decisions in Sunil Kumar Sharma. 23. A perusal of the judgments in Sunil Kumar Sharma would indicate that the earlier binding precedents of this Court in C. Ramaiah Reddy (supra) and Associated Mining Company (supra), as well as the judgments of the High Courts of Delhi, Rajasthan and Gujarat on the....
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.... (Karn) in relation to sections 158BC, 158BD, etc., and it was observed that as per the dictionary meaning, the said word refers to beginning, commencement or start of proceedings. Reference was made to the decision of the Supreme Court in Om Prakash Jaiswal v. D.K. Mittal [2000] AIR 2000 SC 1136, wherein the expression "initiate any proceedings for contempt" in section 20 of the Contempt of Courts Act, 1971, was interpreted. It was held that the word "initiate" means introductory steps or action or first move. Black's Law Dictionary was referred to and it was observed that "initiation of contempt proceedings" takes place when the court applies its mind to allegation and decides to direct the alleged contemnor under section 17 to show cause as to why he should not be punished. Thereafter, reference was made to different factual situations. In Wipro Finance's case (supra), it was accordingly observed (page 485): "It is the settled principle that while assigning meaning to any expression in any provision of a statute, the context under which the particular expression is used has to be borne in mind. Therefore, bearing in mind the context in which the expression 'sear....
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....ieve" has been recorded under clauses (a) to (c) of Section 132(1) of the Act. 26.3 As held by the High Court of Delhi in MDLR Resorts (P) Ltd. v. CIT (supra), the panchanama is not a precondition for invoking Section 153A of the Act. In Sunil Kumar Sharma (supra), this Court has proceeded on the basis that since the search was conducted in the premises of the assessee and documents pertaining to him were seized, it would render him as the "searched person", as reflected in the panchanama. 27. However, the said judgment does not advert to or consider the scheme of Sections 132 and 153A of the Act in their proper perspective. Further, the earlier binding precedents of this Court in C. Ramaiah Reddy (supra) and Associated Mining Company (supra) have not been considered. The view taken in Sunil Kumar Sharma (supra) being founded primarily on the panchanama, runs contrary to the principles laid down in the aforesaid judgments. 28. The view taken by this Court in C. Ramaiah Reddy (supra) and Associated Mining Company (supra) is fortified by the consistent line of reasoning adopted by other High Courts, including the High Court of Delhi in MDLR Resorts (P) Ltd (supra) and Shilpa....
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.... Bench of the same Court and the High Courts. The difficulty arises in case of conflict between the two decisions by Benches consisting of same number of Judges, whether to follow the earlier or later and in absence of the Apex Court decision, similar difficulty may arise with regard to the High Court decisions. The normal rule is that in the absence of any decision of the Apex Court, subordinate Courts are bound to follow the decisions of High Court to which they are subordinate and where conflict is between the judgments of a single Bench and Division Bench, Division Bench decision will have to be followed and where there is conflict between Division Bench and larger Bench, the decision of larger Bench has to be followed. But where the conflict is between two decisions pronounced by Benches consisting of same number of Judges, difficulty arises which decision is to be followed when after careful examinations of the decisions, conclusion is that both of them directly apply to the case before the Court, High Courts have expressed different views, we have found, some taking the line that the Court will be at liberty to follow that decision which seems to it more correct irrespective....
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....s supplied) 30.2 In view of the principles summarized above, where there are conflicting decisions of courts of coordinate jurisdiction, the later decision is to be preferred only if it is rendered after due consideration of the earlier decisions. 31. In the present case, as noticed hereinabove, the Division Bench of this Court in Sunil Kumar Sharma (supra) has not considered or adverted to the earlier Division Bench judgments of this Court in C. Ramaiah Reddy and Associated Mining Company, which had already dealt with the identical issue. In the absence of such consideration, the judgment in Sunil Kumar Sharma (supra) cannot be regarded as laying down the correct binding precedent on the issue. 32. The Hon'ble Supreme Court, in the following Judgments, while analysing the law relating to binding precedents, ratio decidendi, per incuriam, and sub silentio, has held as under; (i) In CIT v. Sun Engineering Works (P) Ltd., [1992 SCC OnLine SC 287 / (1992) 198 ITR 297 (SC)] : "39. ........ It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and ....
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....P., (1990) 1 SCC 109] did not discuss the matter and had observed that the State cannot levy sales tax on industrial alcohol. In the subsequent matter which arose from the High Court between the same parties, it was held by this Court that the conclusion of law by the Constitution Bench that no sales or purchase tax could be levied on industrial alcohol was per incuriam and also covered by the rule of sub silentio and therefore, was not a binding authority or precedent. 153. Thus, although it is the ratio decidendi which is a precedent and not the final order in the judgment, however, there are certain exceptions to the rule of precedents which are expressed by the doctrines of per incuriam and sub silentio. In-curia legally means carelessness and per incuriam may be equated with per ignoratium. If a judgment is rendered in ignoratium of a statute or a binding authority, it becomes a decision per incuriam. Thus, a decision rendered by ignorance of a previous binding decision of its own or of a court of coordinate or higher jurisdiction or in ignorance of the terms of a statute or of a rule having the force of law is per incuriam. Such a per incuriam decision would not have....
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....acts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in the judgment. Every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein. The enunciation of the reason or principle on which a question before a court has been decided is alone binding as a precedent. The concrete decision alone is binding between the parties to it, but it is the abstract ratio decidendi, ascertained on a....
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....at would be its purport would be considered a little later. Suffice it to say for the present that the finding that solatium and interest are not payable for the lands acquired under the Central Act as part of compensation is a binding precedent. Obviously, therefore, this Court followed the ratio therein in Distt. Judge case [(1994) 4 SCC 737 : JT (1994) 3 SC 629]. The contention, therefore, that Hari Krishan Khosla case [1993 Supp (2) SCC 149] cannot be treated as a binding precedent since therein there is no ratio but a conclusion without discussion, is not tenable and devoid of force. In that view, it is not necessary to discuss in extenso the effect of the decisions cited by Shri Vaidyanathan. Equally, the contention of Shri Vaidyanathan that the ratio in Hari Krishan Khosla case [1993 Supp (2) SCC 149] is in conflict with the ratio in Satinder Singh case [(1961) 3 SCR 676 : AIR 1961 SC 908] which was neither distinguished nor overruled and that the decision of a coordinate Bench cannot have the effect of overruling decision of another coordinate Bench, cannot be given countenance. The effect of the ratio in Satinder Singh case [(1961) 3 SCR 676 : AIR 1961 SC 908] will be cons....
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....not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio. 12. In Gerard v. Worth of Paris Ltd. (k). [(1936) 2 All ER 905 (CA)], the only point argued was on the question of priority of the claimant's debt, and, on this argument being heard, the court granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith Ltd. [(1941) 1 KB 675], the court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided "without argum....
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....sion and isolate from it the ratio decidendi." "69. The doctrine of binding precedent helps in promoting certainty and consistency in judicial decisions and enables an organic development of the law besides providing assurance to individuals as to the consequences of transactions forming part of daily affairs. Thus, what is binding in terms of Article 141 of the Constitution is the ratio of the judgment and as already noted, the ratio decidendi of a judgment is the reason assigned in support of the conclusion. The reasoning of a judgment can be discerned only upon reading of a judgment in its entirety and the same has to be culled out thereafter. The ratio of the case has to be deduced from the facts involved in the case and the particular provision(s) of law which the court has applied or interpreted and the decision has to be read in the context of the particular statutory provisions involved in the matter. Thus, an order made merely to dispose of the case cannot have the value or effect of a binding precedent. 70. What is binding, therefore, is the principle underlying a decision which must be discerned in the context of the question(s) involved in that case fr....
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....d by a Division Bench, is examined in the context of the earlier decisions on the very same issue in C. Ramaiah Reddy (supra) and Associated Mining Company Ltd. (supra), the principle of per incuriam would aptly apply. The said decision has been rendered without consideration of the statutory provisions of Section 132, 153A, 153C and the aforesaid judgments of this Court in C. Ramaiah Reddy (supra) and Associated Mining Company Ltd. (supra). 34. Further, the judgment in Sunil Kumar Sharma (supra) has not considered two judgments of the High Court of Delhi and one judgment each of the High Courts of Gujarat and Rajasthan, wherein the identical issue has been decided, laying down principles consistent with those enunciated in C. Ramaiah Reddy (supra) and Associated Mining Company Ltd. (supra). All the aforesaid judgments were rendered much prior even to the order of the learned Single Judge in Sunil Kumar Sharma (supra). 35. In the light of the principles laid down by the Hon'ble Supreme Court in Bilkis Yakub Rasool (supra) and other judgments referred (supra), we are inclined to follow the earlier judgments of this Court in C. Ramaiah Reddy (supra) and Associated Mining Compan....
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....iction of this Court under Article 136 should be exercised or not and if used, on what terms and conditions, is a matter depending on the facts of each case. If at the stage when special leave is granted the respondent-caveator appears and resists the grant of special leave and the ground urged in support of resisting the grant of special leave is rejected on merits resulting in grant of special leave then it would not be open to the respondent to raise the same point over again at the time of the final hearing of the appeal. However, if the respondent-caveator does not appear, or having appeared, does not raise a point, or even if he raised a point and the Court does not decide it before grant of special leave, the same point can be raised at the time of final hearing. There would be no technical bar of res judicata. The Constitution Bench thus makes it clear that the order disposing of a special leave petition has finality of a limited nature extending only to the points expressly decided by it. 26. The underlying logic attaching efficacy to an order of the Supreme Court dismissing SLP after hearing counsel for the parties is discernible from a recent three-Judge Bench d....
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....by the Court would attract applicability of Article 141 of the Constitution if there is a law declared by the Supreme Court which obviously would be binding on all the courts and tribunals in India and certainly the parties thereto. The statement contained in the order other than on points of law would be binding on the parties and the court or tribunal, whose order was under challenge on the principle of judicial discipline, this Court being the Apex Court of the country. No court or tribunal or parties would have the liberty of taking or canvassing any view contrary to the one expressed by this Court. The order of Supreme Court would mean that it has declared the law and in that light the case was considered not fit for grant of leave. The declaration of law will be governed by Article 141 but still, the case not being one where leave was granted, the doctrine of merger does not apply. The Court sometimes leaves the question of law open. Or it sometimes briefly lays down the principle, may be, contrary to the one laid down by the High Court and yet would dismiss the special leave petition. The reasons given are intended for purposes of Article 141. This is so done because in the ....
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....o in sub-section (1) of section 153A : Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made 3[and for the relevant assessment year or years as referred to in subsection (1) of section 153A] except in cases where any assessment or reassessment has abated. 40. Section 153C was introduced into the statute by the Finance Act, 2003. Prior to its insertion, the corresponding provi....
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....ther documents relating to such other person, the jurisdictional assessing officer may proceed to issue a notice for the purpose of completion of the assessments under Section 158-BD of the Act, the other provisions of Chapter XIV-B shall apply. 36. The opening words of Section 158-BD of the Act are that the assessing officer must be satisfied that "undisclosed income" belongs to any other person other than the person with respect to whom a search was made under Section 132 of the Act or a requisition of books was made under Section 132-A of the Act and thereafter, transmit the records for assessment of such other person. Therefore, the short question that falls for our consideration and decision is at what stage of the proceedings should the satisfaction note be prepared by the assessing officer: whether at the time of initiating proceedings under Section 158-BC for the completion of the assessments of the searched person under Sections 132 and 132-A of the Act or during the course of the assessment proceedings under Section 158-BC of the Act or after completion of the proceedings under Section 158-BC of the Act. 37. The Tribunal and the High Court are of the opi....
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....respect of the person other than the searched person." 44. A similar issue concerning the interpretation of Section 153C of the Act came up for consideration before the Hon'ble Supreme Court in Super Malls (P) Ltd. v. CIT [2020 SCC OnLine SC 306]. Applying the principles laid down in Calcutta Knitwears (supra), it has been held as under: "7. This Court had an occasion to consider the scheme of Section 153-C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of the Act in Calcutta Knitwears [CIT v. Calcutta Knitwears, (2014) 6 SCC 444] as well as by the Delhi High Court in Pepsi Food (P) Ltd. [Pepsi Food (P) Ltd. v. CIT, 2014 SCC OnLine Del 4029 : (2014) 367 ITR 112] As held, before issuing notice under Section 153-C of the Act, the assessing officer of the searched person must be "satisfied" that, inter alia, any document seized or requisitioned "belongs to" a person other than the searched person. That thereafter, after recording such satisfaction by the assessing officer of the searched person, he may transmit the records/documents/things/papers, etc. to the assessing officer having jurisdiction over such oth....
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....ed from the searched person belonged to the other person. Once the note says so, then the requirement of Section 153-C of the Act is fulfilled. In case, where the assessing officer of the searched person and the other person is the same, there can be one satisfaction note prepared by the assessing officer, as he himself is the assessing officer of the searched person and also the assessing officer of the other person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the assessing officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. 45. Similarly, Section 153C of the Act came up for consideration before a Division Bench of this Court in Commissioner of Income Tax v. IBC Knowledge Park Pvt. Ltd, [2016 SCC Online Kar 6036 / (2016) 385 ITR 346 (Karnataka)]. This Court, after noting that Secti....
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....searched person is different from the Assessing Officer of the "other person". The second is where the Assessing Officer of both the "searched person" and the "other person" is one and the same. 49. In a case where the Assessing Officer of the "searched person" and that of the "other person" is the same, it has been held to be sufficient if the Assessing Officer records, in the satisfaction note, that the documents seized from the searched person belong to the "other person". Once such satisfaction is recorded, the requirement of Section 153C of the Act stands fulfilled. Section 153C of the Act does not mandate that satisfaction be recorded with reference to a specific assessment year. 50. In such a situation, a single satisfaction note would suffice, as the Assessing Officer is common to both the searched person and the "other person". However, it is imperative that the Assessing Officer consciously arrives at, and records, satisfaction that the documents seized or requisitioned from the searched person indeed belong to the "other person". 51. In such cases, the requirement of transmitting the seized material from one Assessing Officer to another would not arise, since th....
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.... Sharma (supra), rendered by a Coordinate Bench of this Court, does not advance the case of the respondent. 59. The bona fides of the respondent in filing the writ petition also merit consideration. The respondent has filed the writ petition seeking to quash the notices under Section 153C issued for the assessment years 2011-12 and 2018-19, both dated 07.11.2019. The other impugned notices, relating to the assessment years 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18, are dated 30.03.2019. The statement of objections filed by the Revenue in the writ proceedings discloses that multiple notices under Section 142(1) of the Act were issued between 19.11.2019 and 01.11.2024, in all eight notices, none of which were complied with by the respondent- assessee. 60. It is also brought on record that the assessments were required to be completed on or before 31.12.2024, whereas the writ petition came to be filed on 26.11.2024. Thus, the writ petition has been instituted after a lapse of more than four and a half years from the date of issuance of the impugned notices, and barely a month prior to the expiry of the time limit for completion of the assessment. 61. No doubt, ....
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....thin a reasonable time same has been invoked and even submitting of memorials would not revive the dead cause of action or resurrect the cause of action which has had a natural death. In such circumstances on the ground of delay and laches alone, the appeal ought to be dismissed or the applicant ought to be non-suited. If it is found that the writ petitioner is guilty of delay and laches, the High Court ought to dismiss the petition on that sole ground itself, inasmuch as the writ courts are not to indulge in permitting such indolent litigant to take advantage of his own wrong. It is true that there cannot be any waiver of fundamental right but while exercising discretionary jurisdiction under Article 226, the High Court will have to necessarily take into consideration the delay and laches on the part of the applicant in approaching a writ court." 63. Applying the aforesaid principles, we are of the considered view that the writ petition was filed after an inordinate and unexplained delay and was, therefore, liable to be dismissed on the ground of laches. Tested on the touchstone of the principles laid down by the Hon'ble Supreme Court in the judgment referred to above, the lear....
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....ced on the order passed in Review Petition No. 218 of 2024 in Sunil Kumar Sharma (supra), whereby the review sought by the Revenue came to be rejected. The said order also does not advance the case of the respondent. 64.6 Reliance is further placed on the judgment of the Calcutta High Court in Century Spinning & Manufacturing Co. Ltd. v. State of West Bengal [(1989) 73 STC 277], to contend that the High Court cannot explain or interpret a judgment of the Hon'ble Supreme Court. There is no dispute with regard to the said proposition. 64.7 Learned counsel has also relied upon the judgment of the Gujarat High Court in CIT v. Vallabhdas Vithaldas [(2002) 253 ITR 543], to contend that the law declared by the Hon'ble Supreme Court is binding under Article 141 of the Constitution of India. The said proposition is well settled and requires no further elaboration. 64.8 Reliance is also placed on the judgment of the Hon'ble Supreme Court in Suganthi Suresh Kumar v. Jagdeeshan [(2002) 2 SCC 420], to contend that it is not permissible for the High Court to disregard or overrule a decision of the Apex Court, even on the ground that certain aspects were not considered therein. There is ....
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....e I.T. Act and consequently, Section 153C would neither be applicable no invocable as against the petitioner, who was a searched person to whom this provision would not apply and the impugned notice being illegal, arbitrary and without jurisdiction or authority of law and all further proceedings pursuant thereto deserve to be quashed." 66. The said conclusion has been reached after extensively extracting the judgment of the Division Bench in Sunil Kumar Sharma (supra). It proceeds on the basis that the premises of the respondent were searched and, therefore, the respondent was a searched person; consequently, the initiation of proceedings under Section 153C of the Act, treating the respondent as 'other person', is unsustainable. 67. The Revenue has relied upon the judgment of the Coordinate Bench in Associated Mining Company (supra) and the judgment of the Delhi High Court in MDLR Resorts (P) Ltd. (supra), both of which deal with the identical issue involved. In addition, reliance is also placed on judgments of other High Courts. However, upon consideration of only those judgments, the following observations are made: "15. Insofar as the various judgments relied upon....