VKJ Latest News Update

VKJ Law Offices of Vinay K. Jain Advocates & Solicitors

A Search warrant need not be restricted to mentioning only the registered place of business; it can mention any place which the Revenue has reason to believe, harbors unaccounted assets: HC

2019-TIOL-1718-HC-KAR-IT

IN THE HIGH COURT OF KARNATAKA

AT DHARWAD

ITA No.100015/2017
C/W ITA No.100016/2017
ITA No.100014/2017
ITA No.100018/2017
ITA No.100019/2017
ITA No.100017/2017

ITA No.100015/2017
ITA No.100016/2017
ITA No.100014/2017
ITA No.100018/2017
ITA No.100019/2017
ITA No.100017/2017

1) THE PRINCIPAL COMMISSIONER OF INICOME TAX, (CENTRAL)
CENTRAL REVENUE BUILDING, QUEENS ROAD
BENGALURU, PIN:560001

2) THE DEPUTY COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE 1(3), BENGALURU

Vs

M/s ASSOCIATED MINING COMPANY
NO.18/35, 2ND LINK ROAD, PARVATHI NAGAR
BALLARI-583101, PAN NO:AAFHA3896P

Aravind Kumar & Bellunke A S, JJ

Dated: July 22, 2019

Appellant Rep by: Sri Y V Raviraj, Adv.
Respondent Rep by: 
Sri Mayank Jain, Adv. For Sri Shivaraj S Balloli, Adv.

Income Tax – Sections 132(1) & 153A

Keywords – Address in search warrant – Official place of business – Reason to believe

The Revenue conducted search upon the assessee during the course of which various documents came to be seized. Based on the materials recovered, notices u/s 153A for the the AYs 2005-06 to 2010-11 were served on the assessee at its new address and not the address where the search was conducted. The AO also served notices on the erstwhile partner of the assessee who refused to acknowledge the notice on the grounds that he was no longer a part of the firm. The AO passed the assessment order after recording the statements of existing partners. The validity of notices on the ground that notices were issued at a different address than the one where the actual search happened, was called into question. The CIT(A) refused to set aside the notices, following which the ITAT held that address given by the assessee in its return for the AY 2010-11 was different and not the address of the premises which came to be searched. Hence, holding the search itself improper, the notices were quashed.

Having heard the parties, the High Court held that,

Whether in order to conduct a valid search, it is imperative for the search warrant to mention only the official/registered place of business and not any other place where the Department has reason to believe that the information related to unaccounted assets of the assessee is kept – NO: HC

++ from the perusal of section 132 r/w section 153A, the intention of the legislature is clear. It provides that location of the premises is in relation to the satisfaction to be reached by the authorities mentioned therein and authorised officer would be empowered to search any place mentioned in the warrant as well as any other place where he suspects that books of accounts belonging to the assessee have been kept. Thus, change in the address of firm, action initiated u/s 132 in respect of the erstwhile premises of the firm would not invalidate the search. Address mentioned in the warrant of search and panchanama need not be registered office or head office of the company, but it has to be placed where search has to be conducted which in fact would be place where books of account, documents, jewels and unaccounted assets, can be located;

++ having perused the warrant of authorisation, it clearly indicates that the warrant was issued for conducting the search of the assessee expressing thereunder that authority contemplated u/s 132 has reason to suspect that such books of account, other documents of the noticee, are to be found in the premises. What has been disputed is, that such 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 accounts belonging to the assessee are kept. As such, the mere change of address of the assessee even being in the know how of the income tax department by itself would not vitiate or invalidate the search conducted u/s 132.

Revenue’s appeals allowed

Case followed:

MDLR Resorts (P.) Limited vs. Commissioner of Income Tax – 2013-TIOL-1096-HC-DEL-IT

JUDGEMENT

Per: Aravind Kumar:

These appeals have been admitted to consider the following substantial questions of law:

“1. Whether in law it is necessary that in order to conduct a valid search under Section 132 of the Act, it is necessary that only the official place of business of an assessee can be searched and search conducted in any place or location, where books of accounts, documents, jewellery, unaccounted assets etc. belonging to the assessee are located/found and recovered would render such search in valid in the eyes of law?

2. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law, is right in not referring to the decision of the Hon’ble High Court of Delhi in the case of MDLR Resorts (P) Ltd., Vs. the Commissioner of Income Tax, (2013) 40 Taxmann.com 365 = 2013-TIOL-1096-HC-DEL-IT holding that, the address mentioned in the search warrant need not be registered office or the head office, but is the place where books of accounts, documents, etc., can be located and as such the order of the Tribunal perverse?

3. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law, in relying upon the decision of the Tribunal in the case of J.M.Trading Corporation Vs. ACIT 20 SOT 489 the facts of which are different and not applicable to the present case?”

BRIEF BACKGROUND OF THE CASE:

2. A search was conducted in the case of Sri.K.M.Vishwanath Group of cases on 10.12.2010 on the strength of warrant of search dated 09.12.2010. During the course of search conducted at the business premises of M/s.Associated Mining Company, 18/35, II Link Road, Parvathinagar, Ballari various documents belonging to the assessee came to be seized.

3. Consequently, assessment proceedings under Section 153A of the Income Tax Act, 1961 came to be initiated for the years 2005-06 to 2010-11 by issue of notice dated 15.03.2012. Said notice was served on the assessee on 21.03.2012 at the address No.123/250, Opposite to Kumaraswamy temple, Club Road, Veeranna Gouda Colony, Ballari, as this was in new address of the firm after the reconstitution of the partnership firm on new partners Mr.Gali Janardhana Reddy and Smt.Gali Lakshmi Aruna took over from 01.08.2009. Simultaneously, notices under Section 153A for the assessment years 2005-06 to 2010-11 were also served on 23.02.2012 at No.64/3, Lakshmi Venkateswara Nilaya, 16th Cross, Vyalikaval, Bengaluru, wherein Sri.K.M.Vishwanath was residing and who was the erstwhile partner of M/s.Associated Mining Company till 31.07.2009. However, till the date of assessment order came to be passed in respect of the assessee-respondent herein, no return of income for the assessment year 2006-07 had been filed in response to the notice issued under Section 153A of the Act. However, a communication was sent on 03.03.2012 by him contending thereunder that he is no longer a partner of the firm and as such, he is unable to file return of income for the assessment years 2005-06 to 2009-10. After recording the statements of the existing partners, the assessment order came to be passed.

4. Being aggrieved by the orders of assessment, the assessee – respondent filed appeals in ITA Nos.185 / 186 / DCIT, CC1(3) / CIT(A) – VI / B’LORE / 2013-14; 187 / 188 / 190 DCIT, CC1(3) / CIT(A) – VI / B’LORE / 2013- 14; 185 / 186 / DCIT, CC1(3)/ CIT(A) – VI / B’LORE / 2013-14; 187 / 188 / 189/ 190 DCIT, CC1(3) / CIT(A) – VI / B’LORE / 2013-14; 187 / 188 / 189/ 190 DCIT, CC1(3) / CIT(A) – VI / B’LORE / 2013-14; 187 / 188 / 189/ 190 DCIT, CC1(3) / CIT(A) – VI / B’LORE / 2013-14 before CIT (Appeals). Regarding validity of the search conducted by the department which was challenged was not examined by the appellate authority on the ground that such question cannot be raised during the assessment proceedings before the assessing officer or in appeal before CIT (A) or ITAT. The first appellate authority by order dated 25.08.2014 dismissed the appeals.

5. Being aggrieved by the order of the first appellate authority, the assessee filed second appeal before the ITAT in ITA Nos.1355-1360/B/2014. Tribunal, by order under challenge has held that assessee had given the address in return of income filed for the assessment year 2010-11 on 15.10.2010 was different address and not the address of the premises which came to be searched and in fact, Assessing Officer himself had noted the new address of the firm after reconstitution which was on 01.08.2009 and as such, the search carried out at the address indicated in the search warrant being different from the address of the assessee-firm is improper search and as such, allowed the appeals filed by the assessee. Tribunal has relied upon its earlier order in the case of J.M.Trading Corporation vs. Assistant Commissioner of Income Tax reported in (2008) 20 SOT 0489 to allow the appeals filed by assessee. Hence, these appeals are by the revenue.

6. We have heard the arguments of Sri.Y.V.Raviraj, learned Advocate appearing for Revenue and Sri.Mayank Jain, learned Advocate appearing for the assessee.

7. It is the contention of Sri.Y.V.Raviraj, learned Advocate appearing for revenue that Tribunal erred in not appreciating the language employed in Section 132 of the Act to contend that the competent authority, if has reason to believe that any person who satisfies the condition prescribed under Section 132(1) of the Act, then such authority can authorise such officer to enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of accounts, other documents, money, bullion, jewellary or other valuable article or thing kept. Elaborating his submission on this issue, he would contend that location of the premises is in relation to the satisfaction reached by the authorities mentioned therein and authorised officer can search any place mentioned in the warrant as well as any other place where he suspects that books of accounts belonging to the assessee are kept and thereby the change of address in the firm of the assessee would not invalidate the search.

8. He would also draw the attention of the Court to the judgment in the case of MDLR Resorts (P.) Limited vs. Commissioner of Income Tax reported in (2013) 40 TAXMANN.COM 365 (Delhi) = 2013-TIOL-1096-HC-DEL-IT, wherein, it came to be held that in search proceedings address mentioned in warrant and panchanama need not be registered office or head office of the company, but has to be placed wherein search has to be conducted, which in fact, would be the place where books of account, documents, jewellary etc. can be found. Hence, he prays for answering the substantial questions of law in favour of Revenue and against the assessee.

9. Per contra, Sri.Mayank Jain, learned Advocate appearing for respondent would contend that the Department had in its hand the new address of the assessee as on the date of conducting search and as such, search conducted in respect of different premises, wherein, alleged records belonging to the assessee cannot be used against the respondent-assessee. He would submit that premises where search was conducted neither belongs to assessee-company or its partners and as such, notice under Section 153A of the Act cannot be issued to the assessee. He would submit that search has been conducted in premises of which the assessee was not in occupation and as such, the very invoking of Section 153A is bad in law. On these grounds, he sought to justify the order passed by Tribunal.

10. Having heard the learned Advocates appearing for parties and after perusing records, we proceed to determine the substantial questions of law.

RE: SUBSTANTIAL QUESTIONS OF LAW:

11. In order to appreciate the contentions raised, it would be apt and appropriate to extract the relevant provisions of the Act, which would have a bearing on the said contentions.

Search and seizure.

132. (1) Where 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 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 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (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 relevant to, any proceeding under the Indian Incometax Act, 1922 (11 of 1922), or under this Act, or

(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents 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 account, other documents, money, bullion, jewellery or other valuable article or thing are kept;

(ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available;

(iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing;

(iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents;

(iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search:

Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business;

(iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom;

(v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing :

Provided that where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within the area of jurisdiction of any Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, but such Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in section 120, it shall be competent for him to exercise the powers under this sub-section in all cases where he has reason to believe that any delay in getting the authorisation from the Principal Chief Commissioner 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 so.

[Explanation.-For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.]

(1A) Where any Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the Principal Director General or Director General or Principal Director or Director or any other Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner to take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-section (1), such Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may, notwithstanding anything contained in section 120, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft.

[Explanation.-For the removal of doubts, it is hereby declared that the reason to suspect, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.]

(2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub-section (1) or sub-section (1A) and it shall be the duty of every such officer to comply with such requisition.

(3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to sub-section (1), 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 officer and such 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 sub-section 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 exami-nation of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.

(4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed-

(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

(ii) that the contents of such books of account and other documents are true ; and

(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.

(5) [***]

(6) [***]

(7) [***]

(8) The books of account or other documents seized under sub-section (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment under section 153A or clause (c) of section 158BC unless the reasons for retaining the same are recorded by him in writing and the approval of the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director for such retention is obtained :

Provided that the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed.

(8A) An order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the order.

(9) The person from whose custody any books of account or other documents are seized under sub-section (1) or sub-section (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 subsection (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period of sixty days from the date on which the last of the authorisations for search was executed and thereupon the powers exercisable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer.

[(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 authorised officer, for 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 purposes, the provisions of the Second Schedule shall, mutatis mutandis, apply.

(9C) Every provisional attachment made under sub-section (9B) shall cease to have effect after the expiry of a period of six months from the date of the order referred to in sub-section (9B).

(9D) The authorised officer may, 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, make a reference to a Valuation Officer referred to in section 142A, who shall estimate the fair market value of the property in the manner provided under that section and submit a report of the estimate to the said officer within a period of sixty days from the date of receipt of such reference.]

(10) If a person legally entitled to the books of account or other documents seized under subsection (1) or sub-section (1A) objects for any reason to the approval given by the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Principal Director or Director under subsection (8), he may make an application to the Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents and the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit.

(11) [***]

(11A) [***]

(12) [***]

(13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1A).

(14) The Board may make rules in relation to any search or seizure under this section ; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer-

(i) for obtaining ingress into any building, place, 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 subsections (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 Incometax 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.

Section 153A.

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 May, 2003, the Assessing Officer shall-

(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;

(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made [and for the relevant assessment year or years] :

Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years [and for the relevant assessment year or years] :

Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years [and for the relevant assessment year or years] referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate :

Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases 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 [and for the relevant assessment year or years]:

[Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless-

(a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or 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 subsection, 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 subsection (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner:

Provided that such revival shall cease to have effect, if such order of annulment is set aside.

Explanation.-For the removal of doubts, it is hereby declared that,-

(i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section;

(ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.”

12. A plain reading of Section 153A would indicate that it is a non-obstante provision which is invoked in case of a person where the search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A. It mandates that notice under Section 153A is to be issued, calling upon the assessee in whose case the search was conducted to file return of income for six assessment years in the prescribed form and thereupon the Assessing Officer is required to assess or re-assess the total income of the said six years. This provision when read in conjunction with Section 132 would indicate that mere conducting of search or in other words, where a search has been initiated under Section 132 would suffice to issue notice under Section 153A and the limitation for completion of the assessment is reckoned and would be counted for the date as recorded in the last panchanama drawn in relation to any person.

13. A plain reading of Section 132 of the Act would disclose that when the competent authority has reason to believe that any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion or jewellery or other valuable articles or other thing represents either wholly or partly, income or property which has not been or would not be disclosed for the purposes of the Act would partake the characteristic of an undisclosed income or property, then, warrant of search would be issued authorising the officer indicated in subclause (A) or (B) to enter and search any building, place, vessel etc., are kept. Thus, the intention of the legislature is clear from the expression and language found in subsection (1) of Section 132 that location of the premises is in relation to the satisfaction to be reached by the authorities mentioned therein and authorised officer would be empowered to search any place mentioned in the warrant as well as any other place where he suspects that books of accounts belonging to the assessee have been kept.

14. Thus, change in the address of firm, action initiated under Section 132 in respect of the erstwhile premises of the firm would not invalidate the search. In fact, under similar circumstances, the High Court of Delhi in MDLR Resorts (P.) Limited vs. Commissioner of Income Tax reported in (2013) 40 TAXMANN.COM 365 (Delhi) = 2013-TIOL-1096-HC-DEL-IT has held that address mentioned in the warrant of search and panchanama need not be registered office or head office of the company, but it has to be placed where search has to be conducted which in fact would be place where books of account, documents, jewels, unaccounted assets etc., can be located.

15. In fact, before the High Court of Delhi the assessee placed reliance on J.M.Trading Corporation case which judgment has been relied upon in the instant case by the Tribunal for allowing the appeals of the assessee and held that the respondent – assessee therein was a partnership firm and had claimed that they had no relation or business connection with the group subjected to search and after examining the factual matrix, the Tribunal in the said case, had arrived at a conclusion that though search was initiated by issue of warrant, but no search was actually conducted in the case of respondent-assessee. It was further recorded by Tribunal therein that premises where assessee was functioning/found was not searched or in other words, the premises occupied by the assessee was not entered upon and searched by the authorised officer. Hence, the judgment of J.M.Trading Corporation was held as not espousing the cause of the assessee – MDLR Resorts (P) Limited.

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 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 accounts belonging to the assessee are kept and as such, the mere change of address of the assessee even being in the know how of the income tax department by itself would not vitiate or invalidate the search conducted under Section 132 of the Act.

17. Even otherwise, in the instant case, the search conducted is in respect of the premises where the business of the firm carried earlier and continued by Sri.K.M.Vishwanath, who no doubt had retired from the partnership of the assessee-firm and it is in this premises where the books of accounts relating to the assessee-firm has been found and seized, which by itself proves the fact that the said premises was used by the assessee even as on the date of search conducted. In fact, the Hon’ble Delhi High Court has held that “address being different” would not vitiate the search and a person can also operate or keep books of accounts, jewellary etc., at different places and not necessarily the registered office or where the business is conducted. Hence, the search conducted in the premises in which the assessee may not be carrying on the business would not nullify the search. However, if the search is conducted in a premises other than what is reflected in the authorisation, then, the consequences would be different. In the instant case, search has been conducted in the premises, the address of which is reflected in the authorisation and undisputedly, occupied by Mr.K.M.Vishwanath, who was the erstwhile partner of the assessee-company till he retired on 31.07.2009. Despite notice issued under Section 153A of the Act, the said Sri.K.M.Vishwanath had not filed his return of income and had replied to the said notice contending that he is no longer a partner by enclosing the deed of retirement and deed of admission of other two partners. In this background, Assessing Officer has concluded the proceedings under Section 144 of the Act which had been affirmed by the CIT (Appeals) and erroneously on the ground of search having been conducted in the premises not belonging to the assessee, appeal came to be allowed which is contrary to the tenor and language of Section 132 of the Act. Hence, we answer the substantial questions of law in favour of the revenue and against the assessee.

18. For reasons aforestated, we proceed to pass the following:

ORDER

(i) I.T.A. Nos.100015, 100016, 100014, 100018, 100019 & 100017 of 2017 are hereby allowed.

(ii) Order passed by Tribunal dated 18.10.2016 in I.T.A. Nos.1355 to 1360/B/2014 is hereby set aside and appeals filed by the assessee are hereby dismissed.

(iii) Costs made easy.

Leave a Reply

Close Menu
%d bloggers like this: